How Clinton Campaign Gamed Super PAC Regulations

Memos prepared by legal counsel for Hillary Clinton’s presidential campaign reveal how the campaign developed workarounds so it could coordinate with a network of pro-Clinton super political action committees or Super PACs. The memos were explicitly developed to ensure regulators at the Federal Election Commission (FEC) would not detect any signs of unethical practices.

While the workarounds may not necessarily be illegal as a result of the Supreme Court’s Citizens United decision, they clearly undermine campaign finance law, and for those concerned about the influence of money in politics, the policies developed show how candidates can easily game the system.

The documents, produced by Marc Elias of Perkins Coie LLP, were attached to emails from the Clinton campaign, which were published by WikiLeaks. They were drafted on April 1, 2015, before Clinton officially launched her presidential campaign.

Perkins Coie recommended, “Secretary Clinton and her agents to make a hard solicitation for $5,000,” when discussing any Super PAC with prospective donors. Super PACs and their personnel would be free to “follow up with the donor—that day or at any other time of their choosing – to ask for additional funds, without any participation by Secretary Clinton or her agents.”

The campaign also asked for a procedure that would permit Clinton and anyone working for her to “discuss Super PACs with prospective donors without making a solicitation for money.” But the law firm the campaign hired advised against this approach and noted there was a “legally prescribed way for the Secretary and her agents to attend Super PAC fundraising events.”

In this “alternative approach,” Clinton and “her agents” could appear at fundraising events and openly discuss the “political objectives” of the Super PAC. Clinton and anyone representing the campaign would be “featured speakers” or “special guests.” They would not directly solicit contributions for the Super PAC. They would not publicize fundraising events.

“To avoid any risk that the statement made by the Secretary or her agents would be construed as a solicitation, a notice should be prominently displayed at the entrance to the event or a card placed on every table,” Elias advised.

The developed disclaimer read:

Solicitations by federal candidates and officeholders are limited by federal law. Any federal candidates or officeholders speaking tonight will not be soliciting donations, or will be soliciting only donations of up to $5000 from individuals and multi-candidate political committees. They will not be soliciting donations of any amount from corporations, labor organizations, foreign nationals, federal contractors, or national banks.

In a separate memo, “Super PACs,” Elias contended the mere fact that a disclaimer was displayed made it possible for Clinton to “make a general request for funds without reference to any dollar amount or source.”

“While the Secretary does not have to repeat this disclaimer in one-on-one conversations with event guests, the Secretary may not encourage them to disregard the notice nor may the Secretary ever ask for contributions in excess of the applicable limit or from prohibited sources.”

This way, if a donor who attended a fundraising event donated far more than $5,000, the act could not be directly connected to the remarks of Clinton, even though that fundraising event may have played a critical role in that donor’s decision to support Clinton substantially.

Despite the historical nature of meetings between potential donors and presidential candidates, Elias maintained the campaign could avoid scrutiny by insisting contributions were not expected as a “condition” or “appropriate response” to the “opportunity to meet with the Secretary or her agents for this political discussion.”

It would be made clear there was no “expectation whatsoever by the Secretary or her agents that the donor make a contribution of any amount to the PAC” or that the meeting was a “fundraising meeting organized to support the fundraising objectives of the PAC.”

Through this arrangement, influential and wealthy people, with or without ties to corporations, might engage in the same actions that they would if Clinton directly solicited contributions at these fundraisers or meetings. The culture of electoral politics would lead such individuals to recognize these interactions as a means to convince them to make contributions. They know the sensitivity around making certain a candidate they support does not draw attention from regulators. But because Clinton did not say words, which explicitly represent a request for funds, this is supposed to be considered acceptable.

In the “Super PACs” memo, Elias contended Clinton and “her agents” will inevitably “find themselves talking to prospective donors about Super PACs. The conversation might be initiated by the Secretary or her agents. Or, more likely, it might be initiated by the prospective donor.”

“Common questions include, ‘Secretary, the Super PAC has asked for my support. Should I contribute?” or ‘I want to give a million dollars to support your campaign—to which organization should I write my check?’” Elias outlines. “There will be hundreds of variants. In these types of interactions, it is not reasonable to expect the Secretary or her agents to make snap-determinations about whether their statements of political support for a Super PAC amount to a solicitation or direction of funds in the context of the particular conversation.”

“Accordingly, our strong recommendation is that the Secretary and her agents make a hard ask for $5,000 or less for the Super PAC in any conversation with a donor in which the Super PAC is discussed,” Elias adds.

The memo further indicated, “The Secretary and her agents should not tell donors that someone from the PAC will be following up with them and should not ask donors to take a call from PAC personnel. Nonetheless, it is permissible for the Secretary and her agents to provide donors with contact information of a PAC representative, so that the donors can execute the $5,000 contribution or learn more information about the PAC if they choose to do so.”

Or, if the donor contacted the PAC representative, the PAC would now be able to solicit much more than a $5,000 contribution, even though that donor may have never contacted the PAC if they had not been introduced to Clinton.

The law firm additionally advised, “The Secretary and her agents may suggest particular donors to Super PAC personnel. Specifically, the Secretary and her agents may provide the names, contact information, and donor history (if any) of potential donors.”

“A Super PAC soliciting funds outside of federal limits should not tell the donor that the Secretary or her agents provided the PAC with the donor’s name and contact information,” according to the memo.

“To reduce the risk of impermissible coordination, it would be prudent for the Super PAC to place a firewall between its fundraising personnel and its ‘creative’ personnel (e.g. those involved in the creation, production, or distribution of communications and in the strategic discussions informing such communications),” Elias recommended. “And, likewise, the campaign ought to designate a handful of fundraising staff and consultants to liaise with the Super PAC’s fundraising personnel.”

“Beyond this small handful of fundraising staff, there is no need for the Secretary or her agents to interact with Super PAC personnel except for when they are appearing as ‘special guests’ at a Super PAC event.”

It is all a rather elaborate scheme to ensure millions of dollars can be funneled into the coffers of a presidential campaign without having to be inhibited by campaign finance law supposedly in force to provide some regulation of the influence of money.

Perkins Coie explicitly set out to develop guidelines that would make it possible for individuals to wear “two hats,” as in raise money and also serve the campaign in some manner. However, Elias cautioned, “We may decide that some of our fundraising agents are too risky—either because we don’t trust them to follow these guidelines or because we do not think it is credible that they are raising in a capacity other than as a campaign agent—and tell Priorities that they cannot use them to raise.”

As previously reported by the Wall Street Journal, Elias sent a memo on interactions with the Clinton Super PAC, Priorities USA, on April 21, 2015. The memo was attached to an email published by WikiLeaks. It instructed the campaign to make sure the Clinton campaign never explicitly asked Priorities USA to raise “soft money,” which the Sunlight Foundation describes as “cash contributed to a party, candidate, or outside group without being subject to limits.”

The campaign could say, “Donor A works in financial services and has been a long-time contributor. I think she’d be willing to do six figures for Priorities,” but it could not say, “I want you to call Donor A and ask for $250,000.”

Priorities USA has raised over $175 million, according to the Sunlight Foundation, which is more than any Super PAC in history.

The Clinton campaign has faced criticism for its coordination with David Brock’s Correct the Record Super PAC. Brock believes the Super PAC can legally coordinate with the campaign because all the content it produces is posted for free online and exempt from the FEC’s ban on “coordinated communications.”

Sunlight Foundation points out, “Its whole apparently legal existence depends on it not making independent expenditures, because it openly coordinates with the Clinton campaign, which is otherwise forbidden for a super PAC.” Nonetheless, there has been no action by the FEC to shut down this coordination.

The FEC, according to the Washington Post, has yet to “open an investigation into alleged illegal super PAC coordination, closing 29 such complaints,” since 2010. Nevertheless, the campaign was concerned it may engage in activity that could spur an investigation if they were not careful and had Perkins Coie help them avoid any potential scandals.

The New York Times reported, “Democrats have built the largest and best-coordinated apparatus of outside groups operating in the 2016 presidential campaign,” and raised funds at a 2-to-1 rate when compared to Donald Trump.

“There’s no question that we need to make Washington work much better than it does today,” Clinton said in June. “And that means, in particular, getting unaccountable money out of our politics.” She added, “That’s why I’m so passionate about this issue, and I will fight hard to end the stranglehold that the wealthy and special interests have on so much of our government.”

Clinton has openly supported overturning the Citizens United decision. However, she has accepted countless amounts of “unaccountable money” in the 2016 presidential election, and her campaign has pioneered new methods for circumventing regulations against super PAC coordination in order to bring more money into her campaign.

UPDATE

Prior to publication, I requested comments from the Campaign Legal Center, which promotes strong enforcement of campaign finance laws. The following are remarks from the Center’s general counsel, Larry Noble:

“What these emails show is how ridiculous the campaign finance laws are as interpreted by the Federal Election Commission. What they’re talking about here is ways Secretary Clinton can raise money for her Super PAC, which she’s supposedly totally independent of. But the FEC’s rules on independence are so weak that they allow what to any normal person would look like coordination to go on.”

“For example, the solicitation rules that [Elias] sets out unfortunately seem to follow what the FEC has said, which is that even though there is a law that prohibits a federal candidate or federal officeholder from soliciting what was traditionally called soft money. That’s money in excess of the campaign contribution limit from prohibited sources, such as corporations or labor unions. Even though there is a law that prohibits that, they allow a candidate to solicit money for a super PAC, as long as they limit the solicitation to money under the federal limit.”

“It clearly is an aggressive use of the loopholes. Really what it reflects is the damage the FEC has done.”