Obama bundler tied to Chinese government?

Most Republicans recall the Doodad Pro controversy from almost exactly four years ago, where Team Obama campaign websites turned off credit card security checks that allowed fraudulent and foreign donations to flow into the campaign.  Could that be happening again?  According to a new independent report from the Government Accountability Institute and reported by Breitbart, not only is it actually happening again — it’s actually gotten worse.  A bundler for Barack Obama has set up a shady website operation to collect donations to the campaign, but it’s based in Shanghai, and the bundler has ties to the Chinese government:

In an explosive report set to send shockwaves through official Washington, the Government Accountability Institute (GAI) released a 108-page GAI investigation into the threat of foreign and fraudulent Internet campaign donations in U.S. federal elections (visit campaignfundingrisks.com to download the full report).

Breitbart News obtained an advance copy of the bombshell report which reveals that the Obama.com website is not owned by the president’s campaign but rather by Obama bundler Robert Roche, a U.S. citizen living in Shanghai, China. Roche is the chairman of a Chinese infomercial company, Acorn International, with ties to state-controlled banks that allow it to “gain revenue through credit card transactions with Chinese banks.”

There’s more.

The unusual Obama.com website redirects traffic directly to a donation page on the Obama campaign’s official website, my.barackobama.com, which does not require donors tob enter their credit card security code (known as the CVV code), thereby increasing the likelihood of foreign or fraudulent donations. The website is managed by a small web development firm, Wicked Global, in Maine. One of Wicked Global’s employees, Greg Dorr, lists on his LinkedIn page his additional employment with Peace Action Maine and Maine Voices for Palestinian Rights. According to the GAI report, 68 percent of all Internet traffic to Obama.com comes from foreign visitors.

GAI notes that the connections between the bundler and the Beijing regime come through China’s state-run media:

Obama.com Purchased By An Obama Bundler In Shanghai, China With Questionable Business Ties to State-Run Chinese Enterprises: In 2008, Obama.com was purchased by an Obama fundraiser living in Shanghai, China, whose business is heavily dependent on relationships with Chinese state-run television and other state-owned entities. (see page 62)

And not surprisingly under these circumstances, more than two-thirds of all traffic to Obama.com comes from outside the US:

68% Of Traffic To Anonymously Registered Obama.com Is Foreign: According to industry leading web analytics site Markosweb, an anonymously registered redirect site (Obama.com) features 68 % foreign traffic. Starting in December 2011, the site was linked to a specific donation page on the official BarackObama.com campaign website for ten months. The page loaded a tracking number, 634930, into a space on the website labeled “who encouraged you to make this donation.” That tracking number is embedded in the source code for Obama.com and is associated with the Obama Victory Fund. In early September 2012, the page began redirecting to the standard Obama Victory Fund donation page

Breitbart promises more about the China connection later, but let’s take a look at the domestic side of Doodad Pro II: Chinese Boogaloo. According to the executive summary of the report, Team Obama disabled the security processes for credit-card transactions designed to detect fraud and other illegal activity — but only on contributions.  Those security protocols are fully engaged for merchandise purchases:

Obama Campaign Lacks the Industry-Standard Level Of Credit Card Security For Donations, But Uses It For Merchandise Purchases: To purchase Obama campaign merchandise, the campaign requires buyers to enter their credit card CVV security code, but does not require the credit card security code to be entered when making an online campaign donation (see page 60). By GAI’s estimates, the Obama campaign’s failure to utilize industry-standard protections potentially costs the campaign millions in extra processing fees. (see pages 35 and 59)

There is no other conclusion to reach but that this decision was deliberate, especially since it became an issue just before the 2008 election.  The Washington Post reported on it, at least for a brief time, and it became a topic of some interest among Republicans in Congress.  Even if one was inclined to chalk it up to error by an inexperienced campaign in 2008, that excuse no longer applies in 2012 — especially not when the campaign seems more concerned about fraud in merchandise sales, which would cost them more in reversals (product costs) than returned donations would.

Our Salem colleague Katie Pavlich has a great analysis of the report:

OFA seems to be taking advantage of a “foreign donor loophole” by not using CVV on their campaign donation page. When you donate online to the Obama campaign using a credit card, the contribution webpage does not require donors to enter a secure CVV number (also known as CSC, CVV2 or CVN), the three-digit securing code on the back of credit cards. This code, although not 100 percent effective, is used to ensure a person making a purchase physically possesses the card. According to the report, 90 percent of e-commerce and 19 of the 20 largest charities in the United States use a CVV code, making its use standard industry practice in order to prevent fraud. Another anti-fraud security measure includes software, better known as an Address Verification System, to verify a donor’s address matches the address on file with the credit card company. The investigation could not determine whether OFA is using this type of software to prevent fraudulent or illegal donations.

Because of the lack of a CVV code requirement, the door is opened for OFA to accept robo-donations, or in other words, large numbers of small and automatic donations made online to evade FEC reporting requirements. Although it isn’t illegal to decline the use of a secure CVV credit card code for campaign donations, it is illegal to accept campaign donations from foreign sources. Campaigns are required under criminal code not to solicit, accept or receive foreign donations in any amount. The Federal Elections Commission doesn’t require campaigns to disclose the names of donors making contributions of less than $200 unless audited. In addition, FEC rules don’t require campaigns to keep records of those giving less than $50. These rules combined with the lack of a CVV numbers make it easy for campaigns to get away with taking foreign donations. …

As of September 26, 2012, the Obama campaign has raised $271,327,755 in contributions under $200 for the 2012 cycle. In 2008, it was $335,139,233. The Romney campaign has raised just $58,456,968 in contributions under $200 and has all CVV and online security measures in place. In total, the Obama campaign raised $500 million online in 2008 with $335 million in contributions–more than half–falling under the $200 reporting requirement. Obama has raised more online funds than any campaign in history. ….

In this situation, the foreign donation problem coming from online sources can be solved and President Obama’s promise of transparency can be kept in one click by enabling all security protections and releasing the names and records on all transactions under $200 to verify Obama for America is a clean campaign operating within FEC law.

Katie drills deeply into this report, and demonstrates that this is no accident.  Be sure to read her whole post.

Update: Speaking of Chinese state media, members of Congress have begun pointing to one Chinese telecom as a threat to national security:

According to CBS, U.S. officials believe Huawei could “intercept high-level communications, gather intelligence, wage cyber war, and shut down or disrupt critical services” in the United States on China’s behalf.

While there is no “hard evidence” for these claims, according to CBS, the possibility has led the Obama administration to interfere with Huawei’s efforts to expand in the United States.

In one case, federal officials convinced Sprint not to sign a $5 billion contract with the company to build a 4G wireless network, CBS reported.

Huawei already maintains a “handful” of networks in rural America, according to CBS, but is trying to gain a bigger foothold with an “army of lobbyists and public relations firms.”

That’s just a reminder of the stakes involved.

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