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How A Foreign National Could Fund An American Campaign

How A Foreign National Could Fund An American Campaign
How A Foreign National Could Fund An American CampaignGUEST:Matthew J. Strabone, attorney, Strabone Law

A trial underway in federal court in San Diego is expected to expose the complicated wave of financial networks that finance political campaigns Mexican businessmen Jose Susumo Azano Matsura is accused of funneling money to Bonnie do Manas and former Mayor Bob Filner. He is a foreign national and cannot donate to a political campaign. Prosecutors say Azano's actions broke the law but many other finances stay within the limits and loopholes and our legal. Joining me to talk about camping financing is Matt disturb own. One of the revelations expected out of the Azano trial is how much time and effort it takes for candidates to raise money. However you seen the impact campaigns? Candidates spend the majority of their time raising money as a result of the current campaign finance landscape. I've spoken to countless candidates who said that they would rather be knocking on doors or holding events with their community. They do end up spending time on the phone calling potential donors asking for money. We are starting to see pushback against that from sitting Congressman. There are movements to try and change the law at the federal level, candidates won't spend as much time raising money, so they are able to engage more and get the message out. You talk about candidates on the phone talking to donors, we hear about political candidates holding fundraisers. What were other ways candidates raised cash? The most common way is what we call dialing for dollars were candidate sits in a room with the list of donors and makes phone calls for hours on end, asking potential donors for money. That takes up quite a bit of a candidates time during the course of the campaign. Another way that's becoming popular, is the outreach through emails. Candidates will spend at least the plurality of their time on the phone asking for people -- money. To the peak -- candidates know a lot about people ask After the donation is made, a larger campaign will have someone set aside to Google the name of the person who's made the donation. If something serious comes up, the campaign will return the donation. That's about as far as it goes unless you're talking about a presidential campaign. We've heard a lot in the Azano case about donations made through a straw man. That is more complicated than it might seem. Making a donation to a straw man in terms of one person using a different person to make a donation and hiding the true nature of the original donor is illegal. There are other ways in which a donor could hide a political contribution, not necessarily through a candidate. Candidates campaign has stood disclose the -- the people. Organizations are able to use different methods to hide the original source of the donation. For instance, while a super-Pac does have to disclose all of the donors and they are able to accept donations from an LLC or nonprofit. Neither of those necessarily have to say where their money comes from. The super-Pac just says we got a $10,000,000 note -- donation from so-and-so. Because anyone in the world can start an LLC, it becomes easy for mischief to ensue without the people knowing it's happening. That LLC is limited liability corporation, is that what you refer to as dark money organization? An LLC would qualify, nonprofits who are engaged in political activity without voluntary disclosing are what we call dark money organizations. We say dark money because, they are able to hide the true source of where the money is coming from. It can get very extreme, a lot of time it's just a prominent member of the community whose support may harm a candidate, so they're locked into a securities -- circuitous way to hide the money. There are rules for campaign financing California then nationally. California, I believe it was October last year passed some nationwide leading campaign finance disclosure laws around money in particular. At the federal level there's only one level of disclosure required. A super-Pac only has to disclose where the money came from, even if it's an LLC and that's it. In California, if the California version of a super-Pac receives a donation from a dark money organization, the California authorities have given themselves the authority to reach further and reach out to those organizations and say now you also have to disclose the source of your donation. They can do that until they get to an actual person. This is the first election cycle in which this has been on the books. It could yet be challenged in court. I haven't seen it work in practice, in theory it's wonderful. The Azano trial, a federal trial about alleged illegal campaign donations is something of an outlier in it -- when it comes to donations. Most allegations of illegal financing are handled by commissions, way after the fact. That's exactly right. The reason why the Azano trial is different is because we have a noncitizen who was caught trying to use a straw man, that's why federal authorities got involved. Normally, if there is something untoward going on in the campaign and its finances, it's a federal issue it will be the federal election commission that investigates if it's a state issue California will investigate. Because, federal law was broken by a noncitizen resident, federal authorities step in. That's why the Azano trial involves potential jail time.

Every election cycle seems to bring ever more money into political campaigns — local, state and national.


The trial of Jose Azano Matsura in San Diego federal court for allegedly illegally funding, through straw donors, the campaigns of District Attorney Bonnie Dumanis and former Mayor Bob Filner, illustrates how candidates might be tripped up by the lure of campaign cash.

But it's possible to avoid getting caught altogether. Illegal campaign funders, such as foreign nationals like Azano, can just follow the rules of the Federal Election Commission, leap through gaping loopholes and funnel big bucks to any election campaign in the U.S. That's the case even if you’re Vladimir Putin, said Matthew Strabone, a San Diego-based attorney who advises campaigns on compliance with election rules.

U.S. Supreme Court rulings in the Citizens United case and others affirmed that money is the same as speech and corporations have the right of free speech.

Those rulings, combined with federal election laws, made it possible for anyone anywhere in the world to set up a limited liability corporation, which could directly fund a super political action committee — or PAC — supporting a candidate. Set up that LLC in Delaware, and voila: The super PAC is not obliged to disclose the source of its funds.

The FEC, made up of three Democrats and three Republicans, has thus far declined to close that hole despite calls for reform (Download Acrobat Reader here) from many sides.


Here at home it’s not as easy to keep money dark, thanks to the stricter rules of California’s Fair Political Practices Commission, which, Strabone said, is more proactive than the FEC and requires more disclosure of funding sources.

Strabone discusses money in politics on KPBS Midday Edition on Tuesday.