If this isn’t illegal, it should be. This has been the “almost universal” reaction, says veteran Nevada political reporter Jon Ralston, to the news he broke March 4 on his “Ralston’s Flash” blog with this arresting headline:
“Rory Reid’s gubernatorial campaign circumvented contribution limits, created 91 shell PACs to infuse $750,000 into campaign.”
Where there are campaign finance laws, there are work-arounds. (On Monday, The New York Times reported on “holes” in Illinois’s new campaign finance law, as demonstrated during Chicago’s recent mayoral race. I did a roundup in January of reports on how likely Republican presidential contenders are skirting campaign donation limits.) And as a seasoned political reporter and self-described campaign finance report “obsessive” in a state with, in Ralston’s words, “a Swiss cheese amalgam of statutes that allow all manner of nonsense,” Ralston knows from loopholes. Still, Ralston told me in a recent interview, “In all the years I’ve looked at these reports, I’ve never seen anything like this.”
“This” being the following (as described by Ralston in the first four paragraphs of his March 4 report):
In one of the most brazen schemes in Nevada history, gubernatorial candidate Rory Reid’s campaign formed 91 shell political action committees that were used to funnel three quarters of a million dollars into his campaign, circumventing contribution limits and violating at least the spirit - and maybe the letter - of the laws governing elections.
Reid, who was fully aware of what was done, essentially received more than $750,000 from one PAC - 75 times the legal limit — after his team created dozens of smaller PACS that had no other purpose other than to serve as conduits from a larger entity that the candidate funded by asking large donors for money. Indeed, the shell PACs were formed in the fall and dissolved on Dec. 31, after they had served their short-term function, which was to help the candidate evade campaign contribution laws.
Reid solicited donations for the Economic Leadership PAC, which raised more than $800,000 over a five-month period - donations that were then disbursed in $10,000 increments to dozens of other PACS, which quickly funneled the money back to the candidate’s campaign account.
Records show many of the PACS had names implying rural provenance -such as the Douglas County Committee for Change and Lyon County Leadership Fund - but they all had the same Las Vegas residential address before being quietly dissolved after the election. The money laundered through these PACS often resided there only for a couple of days, a transaction that was needed to, they believed, comply with contribution limits on a technicality. The Reid campaign could then quickly make use of the money in a futile attempt to salvage his faltering gubernatorial bid.
It may sound simple—the “records show”—but here is what connecting the dots required in this case: The savvy (and time) to download and peruse Rory Reid’s campaign finance report at the Nevada secretary of state’s website and notice a single residential address popping up again and again—attached always to PACs with inconspicuous names each of which made a $10,000 donation to Reid’s campaign, the maximum permitted by law (in some cases, the donation was $9,980); then, to search and download one by one from the web site reports from each of these PACs and notice that the only activity reported for each was a $10,000 infusion from the Economic Leadership PAC (which, upon further searching, you might discover is Reid-affiliated), followed by, a few days later, a $10,000 donation to Reid’s campaign. And, to complicate your records review, some of the PACs wouldn’t come up at all in a search because, as Ralston learned, many of them had been dissolved at the end of 2010 and, Ralston says he discovered, a “quirk in the law” allows dissolved PACS to be removed from the website entirely.