There’s a curious exchange in the DNC fraud lawsuit transcript of motion to dismiss. It’s between counsel for defense Bruce Spiva and Judge William Zloch. After opening statements, the judge asks DNC counsel an ostensibly simple question that can be summed up as, “Explain the DNC relationship with primaries at the state level.” I thought, ‘well this is going to be boilerplate,’ and started to skim ahead. But then I noticed the DNC’s attorney stumbles through nine re-phrasings of the original question without offering a straight answer.

This should have been the easiest question of the day: “How does your client do its job?” Ten times the judge asked Spiva to explain the working relationship with the DNC and the primary process in the states. Ten times Spiva gave vague and confusing answers.

Here are attempts 2-4:

THE COURT: Does the DNC help to fund the state primaries? MR. SPIVA: Uhm, you mean literally, the mechanics of the primaries, your Honor, the actual holding of the election, the primary election? THE COURT: Does the DNC, with the money that it raises, use some of that money to help fund the states put on their individual state primaries? MR. SPIVA: I don’t believe so, your Honor. No. THE COURT: But you don’t know. MR. SPIVA: I’m 90 percent on that, your Honor, but I don’t believe that’s the case. I believe that’s generally state funded. In my experience — and I have had experience with a number of these — the funds for actually having the election is — they’re state funds.

I thought for a moment that the DNC’s counsel came unprepared to discuss basic operations of his client. But Spiva is a partner at the Democrats’ powerhouse law firm, Perkins Coie, so it’s a safe bet he’s familiar with how the DNC works.

Here’s more (emphasis mine):

THE COURT: And does the DNC give its preference to the state democratic parties as to any particular candidate? MR. SPIVA: No, not in — certainly not in the presidential elections, they don’t set forth a preference, no. THE COURT: What about the primaries, the democratic primaries? MR. SPIVA: I’m sorry, I thought that was what you were referring to, your Honor. No, the DNC does not take sides in the state primaries, presidential primaries. THE COURT: What type of strategic support does the DNC provide to the state democratic parties? MR. SPIVA: Well, I mean I actually — I don’t know — I can’t answer that in detail, your Honor, but, you know, certainly support in terms of issues, you know, addressing issues, I think funding support, and the like. THE COURT: But I mean in light of the plaintiffs’ allegations, you see the thrust of my questions.

I can help counsel in this line of questioning. In the context of this court case, the judge’s “thrust” is about mechanisms in their working relationship that would serve to rig the primary—mechanisms such as “funding support, and the like.”

More simply, how did funding arrangements influence the primary? It’s an especially pertinent question in light of the fact that the 2016 election cycle was the first to test the limits of a new Supreme Court decision that massively increased funding in “joint fundraising agreements.” This was also the first Presidential cycle to establish funding agreements with a candidate a full year prior to announcing a nominee.

Hillary’s Victory Fund is the name of the entity (also represented by Perkins Coie) responsible for raising “funding and the like” for DNC and state committees. They did this through joint fundraising agreements that were constructed more than a year prior to the nomination. This effectively made the DNC and state parties surrogates for the Clinton campaign.

NEW FUNDRAISING LAWS CHANGED THE POLITICAL LANDSCAPE

Enormous new contribution limits were permitted for the first time in a Presidential election cycle thanks to the 2014 Supreme Court decision, McCutcheon v. Federal Election Commission. This decision struck down limits on total donations to federal campaigns in aggregation. These are bundled contributions to many political entities. Donations to joint fundraising committees had previously been limited to approximately $120,000 per person, per year. McCutcheon raised that amount to around $350,000 per year. The biggest donors (often lobbyists) who came to the table early could give $700,000 (combining 2015 and 2016).

According to Open Secrets, there are five buckets that joint fundraising money can aggregate from. Contribution limits for those categories are: the candidate’s campaign ($2700), to each PAC ($5000), to state, district and local party committee ($10,000 combined limit), to national party committees such as the DNC ($33,400), and finally to “additional national party committee accounts” ($102,200). The lion’s share is allowed to go to national committees.

Making matters worse, the Senate in 2014 significantly raised limits on contributions for spending on miscellaneous election items including recounts, buildings and the Democratic National Convention. Donors contributed to these kitties through “special political party accounts.” If someone were to take advantage of every contribution allowed, that would amount to $801,600 a year, or $1.6 million over a 2-year election cycle. Clearly, normal people don’t participate in these funding vehicles. Donations in this amount are out of reach of the lifetime budget of most American families.

Thirty-three states participated in the joint fundraising agreement during the primaries. Some of the biggest donors participating in this include Florida-based apartment complex developer James Pugh; Haim Saban, owner of a private investment firm and noted anti-muslim crusader; and Imaad Zuberi, who forgot to disclose his working relationship with the Sri Lankan government.

NEW FUNDRAISING STRATEGIES FIX PRIMARIES

April 18, 2016, the Sanders campaign sent a letter to Debbie Wasserman Schultz alleging irregularities with the Hillary Victory Fund. The letter cited using contributions to pay salaries, direct mail and online advertising for the Hillary For America campaign. Using FEC disclosures for reference, counsel for the Sanders campaign writes that, “at best the joint fundraising committee’s spending … represent an impermissible in-kind contribution to the DNC and … HFA.” The letter continues, “At worst, using funds received from large-dollar donors … may represent an excessive contribution,” to the Clinton campaign.

The joint committee is allowed by law to bring in huge donations to many funds in aggregation. Do those funds remain separate and discrete? In an environment without a functioning mechanism to regulate elections, who’s to say?

The Sanders campaign pressed the issue that the money needed to stay with the national committee rather that slushing around in Clinton campaign coffers. There seemed to be some funny business going on.

May 2, 2016, Politico reported that the DNC had promised big checks to state Democratic parties that signed on to the Hillary Victory Fund joint fundraising agreement, but “less than a half percent” of the $61 million raised at that point had found its way back to state Dems.

The story sent the DNC and the Clinton campaign into crisis mode. Emails posted by Wikileaks show a coordinated effort between DNC and Clinton’s campaign to quell the public relations nightmare (see here and here). Other emails show the DNC, Clinton’s campaign staff, and their attorneys at Perkins Coie (who represent both DNC and HVF) strategizing to block the Sanders campaign from getting media traction with their complaint.

Populist to the core, the Sanders campaign was angered the DNC clawed back money from state Democratic parties—depositing and withdrawing large amounts in state coffers sometimes without anyone aware the money had vanished. They were also concerned that the Clinton campaign was using funds meant for national and state committees. Underlying it all is the premise that the money was influencing the campaign, because state Democratic organizations now had a material interest in maintaining a bias in favor of Clinton.

The state funding controversy prompted an email from a Perkins Coie attorney, also revealed in Wikileaks. The DNC lawyer wrote: “DNC should push back DIRECTLY at Sanders and say that what he is saying is false and harmful to the Democratic party.”

Here you see the DNC strategizing to quash the Sanders complaint about the Hillary Victory Fund. It’s clear in this email that the DNC and Clinton campaign worked in tandem against Sanders. This environment of favoritism breeds cynicism, paranoia and apathy among voters (especially young ones) who expect fair primaries.

The DNC working hand-in-glove with Clinton’s campaign challenged the notion of a fair playing field, to say the least. You could go as far to say the Clinton’s campaign lorded over the primaries as if she were pre-coronated, and it did so with most powerful weapon available—fundraising.

In July 2016, Matt Taibbi wrote in Rolling Stone that, “primary season was very far from a fair fight. The Sanders camp was forced to fund all of its own operations, while the Clinton campaign could essentially use the entire Democratic Party structure as adjunct staff. The DNC not only wasn’t neutral, but helped with oppo research against Sanders and media crisis management.”

AN “EVENTUAL TAKEOVER OF THE NATIONAL PARTY STRUCTURE”

Joint fundraising prior to the nomination had already become a creeping menace. Politico reported in July of 2015—a year before the Democratic National Convention—that Clinton staffers stated their campaign model would result in an “eventual takeover of the national party structure.” Think about that. A candidate’s campaign crowed to Politico that they intended “an eventual takeover of national party structure.” How is that fair? In contrast, Obama’s campaign refused to allow joint fundraising agreements with the DNC until after he had secured enough primary votes to be the Democratic nominee.

Political reporters wrote about the new fundraising agreements, but instead of sounding alarms, the coverage normalized it. Very few voters pay attention to “inside baseball” reports on fundraising. We assume that everything is on the up-and-up, otherwise we’d hear about it—possibly through high profile court cases. But, as we know from this DNC fraud lawsuit, the media is on a strict diet of pro-Clinton propaganda, and any news running counter is off the menu.



Hillary’s Victory Fund most certainly influenced the Democratic presidential primary. The only question is how far did it go. Were caucus clusterfucks and flipped party affiliations the direct result of this money’s influence? How about the purge of 126,000 voter registrations in Sanders’ hometown of Brooklyn? I’d love to know.

One thing is for sure—no state receiving cash from Hillary’s Victory Fund has since issued a clarion call in support of campaign finance reform.

Without regulation, all this shady arm-twisting is legal, but that doesn’t make it beneficial. On this subject, election law expert Richard Hansen is quoted in the Prospect, “Sometimes the real crime is not what’s illegal, but what’s legal.” Joint fundraising agreements are perfectly legal. In the past they were employed after a nominee was picked by voters. Kicking-off the entire primary process with one candidate dominating national and state committee funding makes a mockery of “fair and evenhanded” primary elections.

HILLARY’S MONEY FUNNEL ULTIMATELY DRAINED HER OWN CAMPAIGN

This is all-new terrain. The 2016 election cycle was the first employing joint fundraising arrangements so early prior to the nomination. With no regulation and a fundraising regime ruled by Wall Street and fat cat donors, it’s not hard to imagine downticket corporate Democrats would receive preferential treatment over champions for economic justice.

There is an important pragmatic problem with this as well. Clinton’s campaign focused intently on fundraising in Martha’s Vineyard, Silicon Valley and Hollywood, at the expense of working and middle class areas in Wisconsin, Ohio and Pennsylvania. The money chase occurred in the country’s most elite zip codes, while the rest of us—voters—were ignored.

Given the margins Hillary lost by in working-class America, it’s easy to see how their laser focus on high-dollar fundraising actually hurt her by crippling the campaign’s ability to reach out to ordinary folks, and created a false sense of security that led to her loss to Donald Trump.

BACK TO THE JUDGE’S ORIGINAL QUESTION

Counsel for the DNC tap-danced around the judge’s initial line of questioning before finally answering that primary elections are “generally state funded.” But he left out how the Clinton campaign’s “takeover of national party structure” completely changes the context for “state funded.” Sure, there’s accounts with the state’s name on them, but the money was supplied by the Clinton campaign. At the very least, counsel for the DNC is being disingenuous when he says the DNC doesn’t fund state elections. In 2016 alone, FEC filings show that Florida received almost $22 million from DNC Services corp. How does that not constitute DNC funding?

It’s misleading that Hillary Victory Fund raised most of that money, but when it’s reported by the states, it comes from DNC. Checks with lots of zeros buy favoritism, full stop. The mechanism for fixing elections is with “funding support, and the like.” That’s precisely what this lawsuit is about.

Sanders supporters raised record amounts of small dollar donations believing the primary process would be fair and evenhanded. Donations came from people who never contributed to a candidate, and who could barely afford the expense. They believed the sacrifice was worth it to help repair democracy.

The DNC and Clinton campaign really showed them, huh?

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Recommended reading:

Election Justice USA, “Democracy Lost: A Report on the Fatally Flawed 2016 Democratic Primaries,” ElectionJusticeUSA, July 25, 2016, http://www.election-justice-usa.org/Democracy_Lost_Update1_EJUSA.pdf .