How An Outright Scam Run By A PAC Can Work
For example, let me tell you how conservatives can be (and have been) ripped off by scam groups. Let’s say Ronald Reagan is still alive and someone starts the Re-Elect Ronald Reagan To A Third Term PAC. Because people love Reagan, let’s suppose that conservative donors pony up $500,000 to help the organization. However, the donors don’t know that Ronald Reagan has nothing to do with the PAC. Furthermore, the real goal of the PAC is to line the pockets of its owner, not to help Ronald Reagan. So, the PAC sets up two vendors, both controlled by the PAC owner: Scam Vendor #1 and Scam Vendor #2. Let’s assume it costs $50,000 to raise the half million the PAC takes in. Then, the PAC sends $100,000 to the first company and $100,000 to the second company to “promote Ronald Reagan for President.” Each of the companies then goes out and spends $1,000 on fliers. The “independent expenditures” that show up on the FEC report? They’re at 40%. That’s because the FEC doesn’t require vendors to disclose how much of the money they receive is eaten up as overhead. The dubious net benefit that Ronald Reagan receives from an organization that raised $500,000 on his name? It’s $2,000. On the other hand, the net profit for the PAC owner is $448,000. Is that legal? The short answer is, “It’s a bit of a grey area, but, yes, it is legal.”
How can that be? Well, election law is complex, onerous and difficult to follow, but after setting a few clear boundaries, it gives groups a wide latitude in how they spend their money. Additionally, there is also very little public oversight for these groups because figuring out how these groups are spending their money is far too complex for the average person. Moreover, few conservative media outlets are willing to report on what’s going on for obvious reasons. For example, my partner, who helped put this together, once worked for two of the groups that were investigated — Tea Party Express and TheTeaParty.net. She also had business dealings with The Tea Party Army, among others. I’ve worked with theTeaParty.net and have friends, acquaintances and people I’ve cooperated with on various projects at a number of these PACs. Are they going to be happy with us if they lose donors because a report comes out showing that they could have done a better job of spending their money? Probably not. These kind of connections understandably discourage a lot of conservative journalists from digging too deeply into these organizations out of fear they’ll find something that will hurt their friends or sources. On top of all that, it’s always possible that a report like this can turn people off to donating to grassroots groups altogether. While that’s certainly not what we want to happen, when you start to realize that the bottom 10 performing PACs we researched spent $54,318,498 overall and only paid out $3,621,896 to candidates, that risk is worth taking given how much damage is already being done to the conservative movement.