By John F. Di Leo
Our young volunteer learns how easy it is to skirt the campaign finance laws.
“Hey, Paully, come over here.”
Pavel muttered “Just a second, Pockets” and put the last card in the envelope before setting it down on the “completed” pile and walking over to Pockets’ desk in the corner.
Pockets understood perfectly. Pavel was working on a mailing on the collating table at 51st Ward Party Headquarters, including a three page letter, a brochure, a newspaper article, a donor card, and a return envelope. No matter how important the subject, you don’t let yourself get distracted in the middle of a stack; only after that envelope is done can you allow a conversation. The time to stop is between envelopes, not in the midst of one.
“What can I do for you, Pockets?” the boy asked. Young Pavel Syerov, Jr. (Paul to his friends) had been volunteering at 51st Ward Party Headquarters since last summer, and had become a regular fixture around the place, almost as ubiquitous as Pockets and the Boss were.
Pockets didn’t even look up from his desk, where he was squinting at some very fine print on old IBM paper – the green and white striped kind from the old days. Pavel was too young to recognize it; to him the old printouts from an ancient dot matrix was downright exotic.
“Ya got a checking account, son?”
“Umm, no, my parents just set me up with a debit card. They said I should get a checkbook when I’m in college, though.”
Now Pockets looked up. “Well, you’ll need both to be of full service to the party. Start filling these out, Paully,” and Pockets handed Pavel a few forms. Pockets, the old Deputy Committeeman of the 51st Ward, had been collecting dust in his corner desk at Headquarters for more than double the young high schooler’s years on this earth. He always seemed to have more forms, records, and schemes in his desk than Pavel would have expected its creaky old drawers to hold… and usually with nefarious purposes the high schooler would never have dreamed of.
Pavel started filling in fields. It was always better to comply first, and ask questions later; he didn’t want Pockets and the Boss to ever question his dedication to the party. “So tell me, Pockets… what’s this all for?”
Pockets reached for a bag of pretzels – honey wheat pretzel braids, his favorite – and filled up the snack bowl, as he started to explain.
“Well, here’s the thing, Paully. Politics isn’t just about walking precincts and sending out mailings. It takes money.”
“Well, sure, Pockets. There are money folks, and there are volunteers. I’m just a kid in high school; you know I don’t have any money!”
Pockets chuckled and looked around to make sure they were alone. “When you finish that form, Paully, we’ve gotta few minutes; I’ll explain.”
“Just finished, Pockets! Shall I get a grenade?”
“Sure, why not. Thanks, Paully.”
Pavel handed the forms to him, then headed back to the refrigerator to pick up a longneck for Pockets and a diet soda for himself. Returning, he handed the beer to the old man, helped himself to a couple of pretzels, and sat back. “So, tell me… what’s all this about?”
Pockets sat back and enjoyed his first swig of the day. “Ahhh. Money is the mother’s milk of politics, son. And to be successful, you need a very delicately balanced organization.”
He took another drink, then sat forward seriously and began the day’s lecture.
“It all started in the sixties, or so I’m told… the goo-goos (ya know, the ‘good government’ types) were starting to scream about ‘getting the money out of politics.’ Impossible, of course, and thoroughly stupid… as if ya could have elections in a country of 300 million people widdout the money for printing, for mailings, radio ads, tv spots, and staff… it’s just crazy. But we found a way to make the most of it.”
“Okay, I see where you’re going, Pockets… you’re talking about the Federal Election Campaign Act, and the Federal Election Commission, right? And a lot of states have their own versions, right?”
“Exactly, Paully. Reporting requirements, contribution limits, spending limits, all kindsa wonderful red tape ta help us out.” He raised his bottle in a toast: “To the FEC, the Party’s greatest pal!”
His student was baffled. “But the rules apply to both parties equally, don’t they, Pockets? How can this be particularly good for our side?”
Pockets grinned the slightly devious grin that he reserved for the most important of secrets. “They’re rules, Paully. Which party obeys rules, and which party doesn’t?”
Pavel sat back and pondered as Pockets continued. “First, let’s talk about the rules themselves. You’ve got a few basic rules, which of course vary by jurisdiction and office. Donations to duh president gotta different limit that your donations to your congressman… each state has huge differences. Pretty wide open in Illinois, much tighter in Wisconsin, ya know. It varies.”
Pockets started ticking them off, one by one. “Limits. You’re limited to so much per cycle, per person. So how do ya think ya get around that one?”
Pavel didn’t even have to think about it. “Well, I guess if you have a family, both the husband and wife can write a check, doubling the limit, right? But if you’re single, you’re stuck.”
“Rightee-oh, Paully! Gold Star!” said Pockets, as he hoisted his beer and took a healthy swig. “But there’s more… parents might have kids, right? So there’s two, three, four more who can donate the limit, in most jurisdictions. And that’s still without breaking or even twisting the law.”
Pockets started using a pretzel braid as a pointer, pointing in the air to check off the points as if on an imaginary blackboard. “One down… we’ll get back to it in a minute… the next rule is who can donate. Who da ya think is allowed to donate to campaigns, Paully?”
Pavel thought a minute, and guessed “Anybody in the district of voting age, I would guess? No, wait, you just said kids could too, so I guess, anybody in the district, period, right?”
Pockets shook his head and drew a big X in the air. “Nope, Paully, No such geographical limits, most of the time. We start with any US citizen. Only non-citizens are banned from federal donations. And since there are US citizens all over the world, we can therefore take contributions from all over the world.”
“But only if they’re US citizens, right?” Pavel clarified.
Pockets smirked. “Yup, only if they’re US citizens.” He took a healthy swig and continued. “But there are still restrictions there, and they vary. Corporations can’t donate to federal campaigns, so they invented Political Action Committees – PACS – that could, so that employees of a corporation can voluntarily give money to their company for political purposes. States are all over da map on this, sometimes, for example, a state allows companies to donate, but not if they bid on state contracts. Makes it tricky to comply; some big companies don’t even realize they have divisions that compete for state contracts. At least, that’s our story, eh Paully?!”
“What about government employees, Pockets? There are millions of them, and they probably care more about who gets elected than anybody, right?”
“Right again, Paully. Dere’s another big change in recent years. Always used to be that all yer government employees had to help raise money for the party and for the important officials – yer committeeman, yer alderman, yer party, and of course, whuddever udder campaign da party is really pushing that year, like fer example the president or governor in an open seat year.”
Times like this, Pavel sure wished the old man could refrain from talking with his mouth full. Pockets finished his pretzels, washed it down with a beer, and continued.
“Unfortunately, a few years ago, duh governor – a Republican, in fact... go figure, huh? – got nailed for having state employees do fundraising on the job, and one of ‘em got blamed for giving a driver’s license to some clod of a trucker whose subsequent accident caused the press to pay attention to this sort of thing for the first time ever in Illinois. Ryan was sent to jail, and it got a lot harder to use patronage workers to fundraise.” Pockets took another swig as Pavel’s eyes went wide, then clarified.
“We still do it, of course, I’m just saying it got harder.”
One question had been nagging Pavel for a few minutes, so he asked it here. “How about unions, Pockets? They’re not businesses or individuals; what are the rules for unions?”
Pockets shook his head. “Aren’t you the son of two shop stewards?” Pavel nodded his head in the affirmative. “What rules ever apply to unions, son?”
“Well, they pretty much don’t obey any rules, do they?”
“Exactly. So that takes care of AFSME and such.” Pockets polished off the last of his longneck and returned to where he had left off. “Now is where we get creative. Another grenade, Paully?”
Pavel quickly retrieved another beer for Pockets and sat back down. “So how do we get around these rules?”
“Well, first we start with the incorporation rules. You can use DBAs and other assumed names rules to get extra identities, each of which has a checking account. You can create subsidiaries and stuff. This isn’t necessarily the easiest, and it doesn’t always work – a business auditor might find it. But it’s something; it’s there, it’s used a little. Especially for when ya don’t want the public to know you’re behind the money. For example, George Soros doesn’t want it known how much he does for us, so he has different groups, different DBAs, spreads it around, and so forth.”
“Assumed names. Got it. Okay, but that doesn’t sound terribly devious…”
“We’re just gettin’ started, Paully! Here’s where it gets fun.” Pockets took a swig and dove in. “Ever hear of Buddhist monks?”
“Um, sure. Buddhists who live the contemplative life, kind of like Christian monks. Right?””
“Yup,” said the old man, “but didja ever hear of a Christian monk who was rich enough to donate thousands of dollars to a presidential campaign?”
The boy chuckled. “No, I don’t think so, Pockets. Monks usually take a vow of poverty, don’t they?”
“Well, this one bunch found a way. In the run-up to the 1996 campaign, Vice President Al Gore went to a California Buddhist center, the Hsi Lai Buddhist Temple, I think it was called, and collected some good bucks from the monks there. Maria Hsia set it up… Al Gore thought he had plausible deniability because it was a temple and he didn’t ask directly for the money – what a dodo, huh? Maria had sold tickets, and then filled the place with monks and nuns, none of which had any money of their own. Ha!”
Pavel was confused. “If they didn’t have any money, how did they get the tickets?” Pockets just moved right on…
“Speaking of California, also in 1996, the Democratic Party hired a California businessman named Johnny Chung whose specialty was finding ways to get Mainland Chinese money into the Clinton-Gore reelection effort. They took in hundreds of thousands of dollars from the Chinese military. Had to give back some of it, of course, when Chung was caught and went to jail, but the net we kept was still enough to buy a lot of ads!”
“The same year, Charlie Trie, James Riady and John Huang also played a role in the Chinese fundraising effort. All nailed, darn it. They too brought in millions of Chinese dollars to the campaign. These weren’t nobodies, either, Paully… Huang was Deputy Assistant Secretary of Commerce, one of the guys responsible for approving export licenses for controlled products… always helps ya to raise money if you’ve got a little quid pro quo to offer, ya know?” Pockets raised his glass as if to toast this, but Pavel was beginning to feel sick. Pockets saw him wince, and thought to himself that for a 17-year-old kid, he sure has a delicate constitution. “Anyway, these were the geniuses who helped us defeat Bob Dole in 1996. Mighta been a hard year, otherwise, but the Republicans nominated a lackluster senator (when will they ever learn that the only way to beat an incumbent president is by running a governor?), and we had so much money in the bank, we just steamrolled over ‘em!”
Pockets signed. “Lost a lot of people afterward, though. In the investigations that followed, 22 people were convicted of campaign fraud in favor of the DNC or the Clinton campaign. And that’s not even counting the ones who fled the country to avoid prosecution. Yup, nothing comes without a cost, Paully.”
Before he could move on, Pavel asked point blank “I still don’t get it. How do people without money make campaign contributions? And how do foreigners who do have money make donations if they are banned outright for being non-citizens?”
“Gimme a minute, Paully. We’ll come back to this… I need you to open this account at the 51st Ward Federal Bank and Trust.” He took out an envelope of $1100 in cash from his desk, and handed it to Pavel. “Now, you take those forms you signed, and open an account with this. If anybody asks, just tell ‘em that your parents said you’re old enough to have a bank account to keep your lawnmowing money in. And then once the checking account is open, you’ll need to write a donation for $1000 to this campaign fund,” as the old man shoved a donor form over to him so he’d have the name to put on the check.
“But you gave me $1100, and you’re only asking for $1000 back… what’s the other $100 for?”
Pockets shook his head and smiled. “That’s for the trouble! The donor who’s already over his limit and handed me this cash wouldn’t expect you to go through all this bother for free!”
Pockets sat back a moment and thought about it objectively. “But aren’t there forms? Can’t the FEC audit this sort of thing and discover it?”
Pockets munched a pretzel and said “You think they have time? An underfunded little bureau deep in the heart of a nation of 300 million? They’ve got all they can stand just to make sure all the candidates keep up to date on their report filings, let alone really dig into any of them.”
Pavel asked how commonplace this was… this practice of one man’s money being spread around among willing volunteers. “Hard to tell, son, because of bundling.”
“Bundling? What’s that, Pockets?”
Pockets developed a positive glow, and explained. “Well, let’s say you’re limited to, oh, $2500 for an office per cycle, and you’ve already given that… but you’d really like to give another $20,000. Well, you just hand the $20,000 to the campaign – that is, to the right person on the campaign – and he divvies it up for you. Ya think that $1100 started out as $1100? Nah, it started out as $25,000 from somebody we know. He handed the money to the Boss, and the Boss had to split it up yesterday. Your $1100 was the last of it, Paully.”
“One thing about fundraisers… when you hold an event, you usually sell tickets, so you’ve got an exact amount from the attendees already, and if they’re too high a dollar figure, you’ve gotta collect, and report, name, address, employer, and occupation of all these donors. Yuck, huh?” Pockets took another swig and continued. “but if you add an extra session, like a cocktail party before or after, maybe connected to a college, or perhaps to a civic group having a convention or something, then you can just put a big donation basket on a table, and ask for people to throw in spare change or whatever when they pick up a bumper sticker or lapel button. If you open up the box at the end of the night and it happens to include five or ten grand in cash, what can you do? You just attribute it to various donors and declare it as a bundle of donations from unknown small donors.”
“Even if you KNOW it was just a stack of money all from the same person?” Pavel asked incredulously.
“Well, Paully,” here the old man took a slow, pensive drink before answering, “we don’t really KNOW it was all from the same person. It was all in the box together; could’ve been lots of people!” Even this old man of the Machine was having trouble keeping a straight face for that one. “…of course, it helps if they remember to remove the rubber band from around the roll before they drop it in the basket!” He let out a laugh and raised his beer in triumph.
Pockets sat back and held up a credit card. “And this brings us to the modern era, son. Behold the noble credit card. Ever buy anything online?”
“Sure, Pockets, all the time.”
“Ya know all those fields about your address, your city, state and country, all those fields that have an asterisk saying they’re mandatory?”
“Sure, Pockets. I suppose that’s how the campaigns can tell on their website if somebody tries to make an illegal donation, like one from a non-citizen or from a foreign country or whatever, huh? A few of the right questions, and you can tell what’s legal and what’s not. Easy.”
“Not if you don’t put in the little asterisk, son.”
Pavel hit his own forehead with the palm of his hand. “The Obama campaign! I’ve heard about this… they say millions were raised illegally from foreign sources, by credit card donations… I was wondering how that was possible.”
“Not millions, Paully,” Pockets proudly corrected him. “Tens of millions. At least. Maybe hundreds of millions. They just turned off all those fields that are usually mandatory. Plausible deniability, ya know?
Even Pavel, who had grown rather cynical over his months at headquarters, was floored at this. “You mean the reports are true? That arabs and Chinese and other foreign interests illegally bankrolled the 2008 presidential campaign of Barack Obama?”
Pockets smiled. “We buy our clothes and electronics from China, all that oil from the middle east… isn’t it nice that we get some of it back?”
Nice? No, that wasn’t the word Pavel was thinking of.
“It’s going to stop now, though, isn’t it, Pockets? I mean, now that there’s an investigation going on, I’m sure they’ll get careful and raise the money for the 2012 campaign legally, right?”
Pockets shook his head. “Paully, we still hafta win, ya know. Too much at stake. Can’t let the Republicans get back in. Why change a system that works? If it ain’t broke, Paully… don’t fix it!”
Pavel started to get that familiar feeling in his stomach, and realized he’d forgotten to bring his little pocket bottle of antacids with him. He was going to have to go home soon.
He told Pockets he had to go home; it was his night to do the wash.
Gee, he thought, as he put on his coat and made a mental note to pick up a bottle of detergent on the way home to do the laundry… isn’t that ironic.
Copyright 2011 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and international trade compliance trainer. Other than writing some copy for a couple of Rep. Bob Dornan’s 1996 effort, his presidential campaign experience is admittedly minimal. Besides, his expertise is limited to campaigns in which they obeyed the law, putting them at a distinct disadvantage when facing Democrats.
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