Welcome to Pay Dirt—exclusive reporting and research from The Daily Beast’s Lachlan Markay on corruption, campaign finance, and influence-peddling in the nation’s capital. For Beast Inside members only.
As late as last fall, a federal grand jury was investigating the owner of an array of companies run by a political fundraiser scrutinized by federal authorities and his own bank for suspect financial dealings.
Previously unreported federal court records reveal the grand jury was probing telemarketer Richard Zeitlin late last year. Zeitlin operates a host of fundraising firms that raked in money during the 2018 election cycle from a network of so-called scam PACs, political groups that spend little on electioneering activity and instead steer funds to their executives and consultants. The grand jury investigation came as the Justice Department stepped up its prosecution of such groups and their operators, two of which have been charged with fraud and other crimes since November.
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Zeitlin has not been charged with any crimes to date, and the status of the investigation against him is unclear. His attorney declined to comment.
The investigation came as federal prosecutors stepped up efforts to go after fundraisers who use federal political committees to dupe unsuspecting donors, who are often lured by promises of charitable good deeds and the groups’ innocuous-sounding names.
The existence of the investigation was revealed in court proceedings related to a Federal Trade Commission probe into two of Zeitlin’s companies, Donor Relations LLC and Courtesy Call Inc. The FTC suspected the companies of engaging in deceptive fundraising practices, but abandoned the proceedings in September, citing an ongoing grand jury investigation into Zeitlin personally.
“The FTC stated that the grand jury investigation has impacted their ability to request necessary documents related to this case,” according to minutes of court proceedings in August. The FTC again referenced the investigation the following month in agreeing to temporarily abandon the matter.
PAY DIRT examined a network of 22 such scam PACs active in 2017 and 2018 and found that more than half of all small-dollar donations to super PACs during the 2018 cycle ended up in those groups’ bank accounts. A number of the groups used that money to pay at least four of Zeitlin’s fundraising companies nearly $17 million. Altogether, the 22 PACs spent just over 2 percent of their funds on political activity—donations to other committees, or independent expenditures supporting or opposing candidates
As news of the grand jury investigation trickled into court in August, Bank of America froze accounts for eight of Zeitlin’s companies, and him personally, citing “irregular, unauthorized, fraudulent, or illegal activity,” according to a lawsuit he subsequently brought against the bank. Two months later, all but one of the accounts were unfrozen, and it remains unclear what specific activity raised those red flags.
Political groups are not bound by the same restrictions, or subject to the same scrutiny, as charitable nonprofits. So malicious fundraisers, including many that were previously sanctioned by federal or state charity regulators, have found them an appealing alternative for raising money under the banner of supposed charitable causes.
The 22 groups examined by PAY DIRT go by just those sorts of innocuous-sounding names:
- American Coalition for Injured Veterans PAC
- Americans for Police and Trooper Safety
- Americans for the Cure of Breast Cancer
- Association for Emergency Responders and Firefighters
- Autism Hear Us Now LLC
- Childrens Leukemia Support Network LLC
- Community Health Council PAC dba Breast Cancer Health Council PAC
- Cops and Kids Together
- Firefighters Alliance of America LLC
- For a Better America
- Heart Disease Network of America
- Heroes United PAC, dba Volunteer Firefighters Association, dba Association of Police & First Responders
- Law Enforcement for a Safer America PAC
- National Assistance Committee
- Police Action Fund
- Police Officers Defense Alliance LLC
- Put Vets First! PAC dba Association for American Veterans
- Standing by Veterans Pac Inc.
- United American Veterans PAC
- United Police Officers Association
- United Veterans Alliance of America LLC
- US Veterans Assistance Foundation
To visualize the flows of money from these groups to some of their most common vendors, and from the vendors to those who benefit from them, we put together this interactive chart (click to view online).
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