Secret, Foreign Money Floods into Obama Campaign
Monday, September 29, 2008 9:23 PM
By: Kenneth R. Timmerman
The Barack Obama campaign has raised a whopping $426.9 million — nearly twice that of John McCain’s campaign, according to new campaign finance report.
But because of Obama’s high expenses during the hotly contested Democratic primary season and an early decision to forgo public campaign money and the spending limits it imposes, all that cash has not translated into a financial advantage — at least, not yet.
The Obama campaign and the Democratic National Committee began September with $95 million in cash, according to reports filed with the Federal Election Commission (FEC).
The McCain camp and the Republican National Committee had $94 million, because of an influx of $84 million in public money.
But Obama could easily outpace McCain by $50 million to $100 million or more in new donations before Election Day, thanks to a legion of small contributors whose names and addresses have been kept secret.
Unlike the McCain campaign, which has made its complete donor database available online, the Obama campaign has not identified donors for nearly half the amount he has raised, according to the Center for Responsive Politics (CRP).
Federal law does not require the campaigns to identify donors who give less than $200 during the election cycle. However, it does require that campaigns calculate running totals for each donor and report them once they go beyond the $200 mark.
Surprisingly, the great majority of Obama donors never break the $200 threshold.
“Contributions that come under $200 aggregated per person are not listed,” said Bob Biersack, a spokesman for the FEC. “They don’t appear anywhere, so there’s no way of knowing who they are.”
The FEC breakdown of the Obama campaign has identified a staggering $222.7 million as coming from contributions of $200 or less. Only $39.6 million of that amount comes from donors the Obama campaign has identified.
It is the largest pool of unidentified money that has ever flooded into the U.S. election system, before or after the McCain-Feingold campaign finance reforms of 2002.
Biersack would not comment on whether the FEC was investigating the huge amount of cash that has come into Obama’s coffers with no public reporting.
But Massie Ritsch, a spokesman for CRP, a campaign-finance watchdog group, dismissed the scale of the unreported money.
“We feel comfortable that it isn’t the $20 donations that are corrupting a campaign,” he told Newsmax.
But those small donations have added up to more than $200 million, all of it from unknown and unreported donors.
Ritsch acknowledges that there is skepticism about all the unreported money, especially in the Obama campaign coffers.
“We and seven other watchdog groups asked both campaigns for more information on small donors,” he said. “The Obama campaign never responded,” whereas the McCain campaign “makes all its donor information, including the small donors, available online.”
The rise of the Internet as a campaign funding tool raises new questions about the adequacy of FEC requirements on disclosure. In pre-Internet fundraising, almost all political donations, even small ones, were made by bank check, leaving a paper trail and limiting the amount of fraud.
But credit cards used to make donations on the Internet have allowed for far more abuse.
“While FEC practice is to do a post-election review of all presidential campaigns, given their sluggish metabolism, results can take three or four years,” said Ken Boehm, the chairman of the conservative National Legal and Policy Center.
Already, the FEC has noted unusual patterns in Obama campaign donations among donors who have been disclosed because they have gone beyond the $200 minimum.
FEC and Mr. Doodad Pro
When FEC auditors have questions about contributions, they send letters to the campaign’s finance committee requesting additional information, such as the complete address or employment status of the donor.
Many of the FEC letters that Newsmax reviewed instructed the Obama campaign to “redesignate” contributions in excess of the finance limits.
Under campaign finance laws, an individual can donate $2,300 to a candidate for federal office in both the primary and general election, for a total of $4,600. If a donor has topped the limit in the primary, the campaign can “redesignate” the contribution to the general election on its books.
In a letter dated June 25, 2008, the FEC asked the Obama campaign to verify a series of $25 donations from a contributor identified as “Will, Good” from Austin, Texas.
Mr. Good Will listed his employer as “Loving” and his profession as “You.”
A Newsmax analysis of the 1.4 million individual contributions in the latest master file for the Obama campaign discovered 1,000 separate entries for Mr. Good Will, most of them for $25.
In total, Mr. Good Will gave $17,375.
Following this and subsequent FEC requests, campaign records show that 330 contributions from Mr. Good Will were credited back to a credit card. But the most recent report, filed on Sept. 20, showed a net cumulative balance of $8,950 — still well over the $4,600 limit.
There can be no doubt that the Obama campaign noticed these contributions, since Obama’s Sept. 20 report specified that Good Will’s cumulative contributions since the beginning of the campaign were $9,375.
In an e-mailed response to a query from Newsmax, Obama campaign spokesman Ben LaBolt pledged that the campaign would return the donations. But given the slowness with which the campaign has responded to earlier FEC queries, there’s no guarantee that the money will be returned before the Nov. 4 election.
Similarly, a donor identified as “Pro, Doodad,” from “Nando, NY,” gave $19,500 in 786 separate donations, most of them for $25. For most of these donations, Mr. Doodad Pro listed his employer as “Loving” and his profession as “You,” just as Good Will had done.
But in some of them, he didn’t even go this far, apparently picking letters at random to fill in the blanks on the credit card donation form. In these cases, he said he was employed by “VCX” and that his profession was “VCVC.”
Following FEC requests, the Obama campaign began refunding money to Doodad Pro in February 2008. In all, about $8,425 was charged back to a credit card. But that still left a net total of $11,165 as of Sept. 20, way over the individual limit of $4,600.
Here again, LaBolt pledged that the contributions would be returned but gave no date.
In February, after just 93 donations, Doodad Pro had already gone over the $2,300 limit for the primary. He was over the $4,600 limit for the general election one month later.
In response to FEC complaints, the Obama campaign began refunding money to Doodad Pro even before he reached these limits. But his credit card was the gift that kept on giving. His most recent un-refunded contributions were on July 7, when he made 14 separate donations, apparently by credit card, of $25 each.
Just as with Mr. Good Will, there can be no doubt that the Obama campaign noticed the contributions, since its Sept. 20 report specified that Doodad’s cumulative contributions since the beginning of the campaign were $10,965.
And then there are the overseas donations — at least, the ones that we know about.
The FEC has compiled a separate database of potentially questionable overseas donations that contains more than 11,500 contributions totaling $33.8 million. More than 520 listed their “state” as “IR,” often an abbreviation for Iran. Another 63 listed it as “UK,” the United Kingdom.
More than 1,400 of the overseas entries clearly were U.S. diplomats or military personnel, who gave an APO address overseas. Their total contributions came to just $201,680.
But others came from places as far afield as Abu Dhabi, Addis Ababa, Beijing, Fallujah, Florence, Italy, and a wide selection of towns and cities in France.
Until recently, the Obama Web site allowed a contributor to select the country where he resided from the entire membership of the United Nations, including such friendly places as North Korea and the Islamic Republic of Iran.
Unlike McCain’s or Sen. Hillary Clinton’s online donation pages, the Obama site did not ask for proof of citizenship until just recently. Clinton’s presidential campaign required U.S. citizens living abroad to actually fax a copy of their passport before a donation would be accepted.
With such lax vetting of foreign contributions, the Obama campaign may have indirectly contributed to questionable fundraising by foreigners.
In July and August, the head of the Nigeria’s stock market held a series of pro-Obama fundraisers in Lagos, Nigeria’s largest city. The events attracted local Nigerian business owners.
At one event, a table for eight at one fundraising dinner went for $16,800. Nigerian press reports claimed sponsors raked in an estimated $900,000.
The sponsors said the fundraisers were held to help Nigerians attend the Democratic convention in Denver. But the Nigerian press expressed skepticism of that claim, and the Nigerian public anti-fraud commission is now investigating the matter.
Concerns about foreign fundraising have been raised by other anecdotal accounts of illegal activities.
In June, Libyan leader Moammar Gadhafi gave a public speech praising Obama, claiming foreign nationals were donating to his campaign.
“All the people in the Arab and Islamic world and in Africa applauded this man,” the Libyan leader said. “They welcomed him and prayed for him and for his success, and they may have even been involved in legitimate contribution campaigns to enable him to win the American presidency…”
Though Gadhafi asserted that fundraising from Arab and African nations were “legitimate,” the fact is that U.S. federal law bans any foreigner from donating to a U.S. election campaign.
The rise of the Internet and use of credit cards have made it easier for foreign nationals to donate to American campaigns, especially if they claim their donation is less than $200.
Campaign spokesman LaBolt cited several measures that the campaign has adopted to “root out fraud,” including a requirement that anyone attending an Obama fundraising event overseas present a valid U.S. passport, and a new requirement that overseas contributors must provide a passport number when donating online.
One new measure that might not appear obvious at first could be frustrating to foreigners wanting to buy campaign paraphernalia such as T-shirts or bumper stickers through the online store.
In response to an investigation conducted by blogger Pamela Geller, who runs the blog Atlas Shrugs, the Obama campaign has locked down the store.
Geller picked up on the revelation, which Glenn Simpson of The Wall Street Journal reported first, that donors from the Gaza Strip had given more than $33,000 to the Obama campaign, through bulk purchases of T-shirts they had shipped to Gaza.
The online campaign store allows buyers to complete their purchases by making an additional donation to the Obama campaign.
A pair of Palestinian brothers named Hosam and Monir Edwan contributed more than $31,300 to the Obama campaign in October and November 2007, FEC records show.
Their largesse attracted the attention of the FEC almost immediately. In an April 15, 2008, report that examined the Obama campaign’s year-end figures for 2007, the FEC asked that some of these contributions be reassigned.
The Obama camp complied sluggishly, prompting a more detailed admonishment form the FEC on July 30.
The Edwan brothers listed their address as “GA,” as in Georgia, although they entered “Gaza” or “Rafah Refugee camp” as their city of residence on most of the online contribution forms.
According to the Obama campaign, they wrongly identified themselves as U.S. citizens, via a voluntary check-off box at the time the donations were made.
Many of the Edwan brothers’ contributions have been purged from the FEC database, but they still can be found in archived versions available for CRP and other watchdog groups.
The latest Obama campaign filing shows that $891.11 still has not been refunded to the Edwan brothers, despite repeated FEC warnings and campaign claims that all the money was refunded in December.
A Newsmax review of the Obama campaign finance filings found that the FEC had asked for the redesignation or refund of 53,828 donations, totaling just under $30 million.
But none involves the donors who never appear in the Obama campaign reports, which the CRP estimates at nearly half the $426.8 million the Obama campaign has raised to date.
Many of the small donors participated in online “matching” programs, which allows them to hook up with other Obama supporters and eventually share e-mail addresses and blogs.
The Obama Web site described the matching contribution program as similar to a public radio fundraising drive.
“Our goal is to bring 50,000 new donors into our movement by Friday at midnight,” campaign manager David Plouffe e-mailed supporters on Sept. 15. “And if you make your first online donation today, your gift will go twice as far. A previous donor has promised to match every dollar you donate.”
FEC spokesman Biersack said he was unfamiliar with the matching donation drive. But he said that if donations from another donor were going to be reassigned to a new donor, as the campaign suggested, “the two people must agree” to do so.
This type of matching drive probably would be legal as long as the matching donor had not exceeded the $2,300 per-election limit, he said.
Obama campaign spokesman LaBolt said, “We have more than 2.5 million donors overall, hundreds of thousands of which have participated in this program.”
Until now, the names of those donors and where they live have remained anonymous — and the federal watchdog agency in charge of ensuring that the presidential campaigns play by the same rules has no tools to find out.
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