Posted on 10/24/2002 9:01:37 AM PDT by SirFishalot
Pelosi's PAC Stirs Questions
By Ethan Wallison
Campaign finance experts and watchdogs are questioning the legality of twin leadership PACs that have enabled Minority Whip Nancy Pelosi (D-Calif.) to double up on hard-dollar contributions she has given and received this election cycle.
The experts suggest that the use of the two committees, PAC to the Future and Team Majority, amounts to a probable violation of laws intended to prevent lawmakers from multiplying their leadership political action committees in order to defy contribution limits. The treasurer for the two committees, former California Lt. Gov. Leo McCarthy (D), acknowledges that the PACs are identical in all but name.
"They've got a real problem here," said Trevor Potter, a former commissioner at the Federal Election Commission, citing "affiliation rules" that are intended to ensure that PACs observe the $5,000 limits on gifts.
"It sounds like a circumvention scheme to double the contribution limits. The law doesn't allow that," said Potter, who based his assessment on a verbal description of the PACs. "They're over the limits for everyone they've given money to. They're probably going to have to ask for that money back."
The so-called affiliation rules deal with PACs that are not connected to political party committees. By law, if a PAC is judged to be "affiliated" with another committee, they would be required to share a joint contribution limit of $5,000.
For instance, the PACs might raise $2,500 each from one contributor or give $2,500 apiece to a candidate.
Pelosi's second PAC, Team Majority, came on line Oct. 16, but has been collecting money and making contributions since April. As of Sept. 30, the committee had made $1,000 contributions to five key House Democratic challengers: Martha Fuller Clark (N.H.), Lincoln Davis (Tenn.), Dutch Ruppersberger (Md.), Joe Turnham (Ala.) and Dan Wofford (Pa.), as well as one Senate challenger, Chellie Pingree (Maine).
"The main reason for the creation of the second PAC, frankly, was to give twice as much hard dollars" to candidates, McCarthy said in an interview this week.
McCarthy acknowledged that he did not seek legal advice before starting Team Majority. Rather, he said he checked with the FEC and said he was assured there was "no impediment of any kind" to creating a second PAC that would mimic the first.
The FEC, however, adamantly maintains that McCarthy could not have been given a green light from the commission without making a formal inquiry, in writing.
"No one [at the FEC] is empowered to provide anyone with an advisory opinion over the phone," said FEC spokesman Ian Stirton. "People here are specifically advised they are not to do that."
McCarthy was equally adamant that he had received an unambiguous go-ahead from the FEC. "If it's a problem, we'll act on it," he said, insisting that the Pelosi operation wants to be "totally in compliance" with the campaign finance laws.
But he added, "At this juncture, I'm counting on the FEC staff with whom I spoke and who gave me guidance on this."
McCarthy was unable to recall the FEC official with whom he spoke about opening Team Majority. But McCarthy said he informed the official that he was already the treasurer of PAC to the Future.
"That FEC staffer was the one who told me that many PACs have the same treasurer or share the same address," McCarthy said.
Pelosi did not respond to a request for comment made with her press secretary.
A top Democratic campaign finance expert, who spoke on condition of anonymity, suggested the rules on affiliation are far murkier than they might look at first blush.
The expert noted, for instance, that donor networks often give to a range of different PACs, knowing that the contributions will wind up in the hands of the same candidates. Nevertheless, the various committees are not considered to be "affiliated" in the eyes of the FEC.
"To me, [giving to a second Pelosi PAC] is not that much different than giving money to Nancy Pelosi's campaign committee, knowing full well she doesn't have a real race, or giving money to the [Democratic Congressional Campaign Committee], knowing they'll give it to the same candidates," the Democratic expert said.
According to the FEC's guidelines, affiliation between two PACs "results when they are established, financed, maintained or controlled by the same persons or organization."
The rules also lay out various circumstances where one committee might be judged to be affiliated with another. Among these criteria is that one committee has an "active or significant role" in creating the other, or that the two PACs have "common or overlapping officers or employees."
Most campaign finance experts point out that without the affiliation rules, political committees could theoretically clone themselves endlessly in an effort to rake in additional hard dollars from donors, or to make greater contributions to candidates. Even the Democratic expert was unable to suggest a mechanism that would prevent such a proliferation in the absence of strong enforcement of the affiliation rules.
Potter said lawmakers recognized this potential when they wrote the original campaign finance law and "specifically forbade it" in 1974. "The affiliation rules are pretty clear," he said. "And those laws have been around for a long time."
Potter said he has never seen an instance where a lawmaker has started a second leadership PAC in order to raise and spend hard dollars.
It is nevertheless common for Members to maintain soft money committees alongside the PACs they use to collect regulated hard dollars. However, a ban on soft money will go into effect the day after the Nov. 5 elections.
Paul Sanford of the Center for Responsive Politics said PACs "would multiply like rabbits" if the affiliation rules weren't enforced. (McCarthy indicated that Pelosi's organization would limit itself to just the two PACs.)
Sanford, a former FEC official, said the commission has not been particularly aggressive in enforcing the affiliation rules, in part because it lacks the resources that would be needed to focus on the issue. But he also suggested the commission might find it hard to overlook a leadership PAC that is essentially a duplicate of another committee.
He cited the common treasurer of the two PACs. "That's a biggie," Sanford said. "I would hope that [dynamic] would be enough to get the FEC's attention."
In fact, Team Majority has already been on the commission's radar. After originally naming it "Team Pelosi," organizers of the committee were admonished by the FEC, which reminded them that PACs could not bear the name of a federal candidate.
Relying in large measure on San Francisco's substantial liberal donor base, Pelosi has long been among the Democratic Party's top fundraisers, even as she has declined to raise soft money and, to some extent, PAC dollars.
Pelosi, who is expected to run for party leader if and when Minority Leader Richard Gephardt (Mo.) vacates the post, has also long been a leading advocate among Democrats for campaign finance reform.
Pelosi's efforts to restrict avenues of fundraising have provided the sharpest point of contrast between the California lawmaker and her likely opponent in a contest for leader, Caucus Chairman Martin Frost (Texas), whose enthusiasm for reform has been lukewarm at best.
Of the contributions Team Majority reported to the FEC in the last quarter, five of them - for $5,000 each - came from donors who had already contributed the maximum to PAC to the Future. Those donors included close Pelosi allies William Hambrecht and his wife, Sally, as well as George Zimmer, the CEO of The Men's Wearhouse.
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