Posts Tagged Campaign finance law

Obama’s Campaign Finance Loopholes

Newly-inaugurated Pres. Obama promised that transparency would be the hallmark of his administration in a statement on January 21, 2009:

“The way to make government responsible is to hold it accountable. And the way to make government accountable is to make it transparent so that the American people can know exactly what decisions are being made, how they’re being made, and whether their interests are being well-served.”

Unfortunately, the Obama campaign hasn’t been a model of transparency itself, and it now appears as though it may well have been exploiting loopholes in campaign finance reporting requirements to circumvent the law and collect foreign campaign contributions.

A report from Peter Schweizer’s Government Accountability Institute, “America the Vulnerable: Are Foreign and Fraudulent Online Campaign Contributions Influencing U.S. Elections?,” has as its centerpiece an examination of the fundraising practices of the Obama campaign.

The domain, “” is owned by a U.S. businessman based in Shanghai, with close ties to both the Obama administration and the Chinese government, and whose business, Acorn International, is involved in processing credit card transactions. The “” domain reroutes its traffic – roughly 2/3 of which is from overseas IP addresses – to, the fundraising site of the Obama campaign.  What’s happening is that a large number of foreign site visitors are being added to the Obama campaign’s email rolls.

The Obama campaign has been emailing campaign solicitations to foreign email addresses, often asking for contributions in the odd amount of $190. The cutoff is $200, below which campaigns are not required to collect or report information about the donor.

The campaign has only minimal Address Verification settings, making it possible for a foreign contributor to enter, undetected, a U.S. address for his credit card, and have the transaction processed. In addition, the campaign doesn’t ask for CVV (that three- or four-digit number on the back of your credit card) for campaign contributions, even though it does for merchandise purchases.

In essence, the campaign has disabled virtually all of the electronic safeguards that would allow it to detect fraudulent or foreign contributions, and it is under no legal obligation to collect or report information about those contributors, for future audit. Regardless of that, it is illegal for a campaign even to solicit contributions from foreign nationals.

Katie Pavlich has written a nice summary of the findings here. In the meantime, Schweizer’s dismemberment of the Obama campaign’s non-response to the findings can be found here and here.

It will – and should – be noted that many Congressional campaigns, including those of Republicans, are similarly at risk for failing to require CVV and to use the strictest AVS settings. However, few Congressional or Senate campaigns feature candidates of international star status, or offices capable of influencing, setting, and managing trade policy and its execution. This limits both the ability of those campaigns to solicit foreign donations, and the interests in foreign donors in contributing to them.  President Obama’s re-election campaign is, in this regard, something special.

Certainly the evidence is mostly circumstantial, but that will always be true in instances where the law simply doesn’t require the reporting necessary to trace violations. The evidence isn’t enough to convict, but it most certainly is enough to warrant the sort of investigation that can subpoena internal memos and emails, depose witnesses, and use normal prosecutorial techniques to get to the truth of the matter.

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