First, a few housekeeping notes.
Last week, in a story about the Open Society Policy Center’s lobbying efforts, I wrote that OSPC “has quietly dropped millions of dollars this year in an attempt to steer proposals to overhaul the Foreign Agents Registration Act.” That was phrased inaccurately. The group has spent millions of dollars on its lobbying operation this year, but FARA reform is just one of a number of proposals the group has sought to influence, and it has not spent “millions” on FARA reform alone. I deeply regret the error.
Introducing the Dirties!
In place of our usual programming, we’re introducing the first edition of The Dirties, PAY DIRT’s biennial awards for some of the election cycle’s most notable chicanery. We’ve rounded up some of the shadiest practices from the 2018 midterms, and picked what we believe are the most egregious examples of political money’s role in our elections.
Senate Majority PAC—for pioneering work in anonymous political spending
In the week leading up to Tuesday’s vote, a mysterious new super PAC called Texas Forever popped up and began dropping massive sums attacking Sen. Ted Cruz. Between Oct. 26 and Nov. 4, the group reported spending more than $2.3 million. But it didn’t disclose any donors, and it still hasn’t. That’s due to the timing of its registration with the Federal Election Commission. It was formed after the last period for pre-election disclosure—meaning we won’t know who financed its torrent of last-minute ads until early December, when PACs file their post-election financial reports.
There were some hints, however. Texas Forever’s anti-Cruz independent expenditures were paid to Waterfront Strategies, a prominent Democratic consultancy that has produced and placed ads for, among other groups, Senate Majority PAC, the leading Democratic political group spending on races for the upper chamber. And indeed, SMP has financed a number of other super PACs that do exactly what Texas Forever did: Drop into a race at the last minute under a local-sounding name, using a local treasurer as its public face, and spend huge sums without having to disclose any donors until the election is over.
This cycle saw that tactic skyrocket in popularity. A joint investigation by Politico and ProPublica in mid-October found at least 63 super PACs structured to avoid disclosing their donors until after the electoral contest on which they were spending.
But SMP was the pioneer. In late 2017, it dumped millions into a group called Highway 31, a super PAC supporting Sen. Doug Jones’ successful race against former Alabama Supreme Court Justice Roy Moore. But SMP’s involvement wasn’t disclosed until after Alabama voters went to the polls. More recently, SMP bankrolled an Arizona political group called Red and Gold. The super PAC spent more than $1.6 million in August attacking Rep. Martha McSally in the run-up to the state’s Republican Senate primary. Only after McSally prevailed in that contest did Red and Gold disclose that it had received the bulk of its money from SMP (another sizable chunk, voters then found out, came from liberal billionaire George Soros). Like Texas Forever, Red and Gold and Highway 31 both routed their ad buys through Waterfront Strategies.
We won’t know if SMP bankrolled Texas Forever for another month. But if it’s not behind the group, SMP undoubtedly pioneered the financial tactic that’s allowed some of the cycle’s most deep-pocketed super PACs to keep voters in the dark about who is trying to sway their decisions at the ballot box. For that, SMP gets a Dirty.
Matt Rosendale—for the cycle’s most creative accounting
Montana State Auditor Matt Rosendale came a hair’s breadth away from unseating Democratic Sen. Jon Tester, and his near-successful effort came with a major financial assist enabled by what good-government groups dubbed “legal money-laundering.” The scheme was fairly brilliant. As we first reported in these pages, Rosendale managed to take money from individuals who’d already donated the legal maximum to his campaign, route that money through his personal bank account, and deposit it back into his 2018 general-election fund. And the whole thing was legally above-board.
We’ve gone through the structure of the transactions before, but just a refresher: Over the summer, Rosendale began soliciting donations for “debt retirement” to pay back money he himself had lent to his campaign committee back when he was running for a House seat in 2014. The retirement of debts from previous campaigns is not considered a donation to the current one, so donors who’d already given the legal maximum to Rosendale’s 2018 coffers could contribute thousands more to pay down those debts. The lender being repaid was Rosendale himself, and what he did next was, as far as I can tell, without precedent: He used the debt-retirement funds to pay down his own loans to his prior campaign, then re-lent the exact same sum—nearly $33,000—to his ongoing campaign. In effect, the “debt-retirement” donors were providing the money to Rosendale’s 2018 campaign, not to his 2014 one, by virtue (if that’s the word here) of this creative accounting maneuver.
And it wasn’t the last time Rosendale pulled that maneuver. On Oct. 5, his campaign reported paying down $125,000 in candidate debt using a host of contributions from PACs and individuals that, had the money gone directly toward his 2018 campaign, would’ve far exceeded per-cycle donation limits. Five days later, Rosendale re-loaned his campaign exactly $125,000.
The Rosendale campaign’s financial creativity caught the eye of other campaigns as well. Indiana businessman Mike Braun, who succeeded in unseating incumbent Democrat Sen. Joe Donnelly on Tuesday, engaged in a similar scheme late in the cycle. Like Rosendale, Braun is personally wealthy, and that’s the only type of candidate who can afford to pull this sort of maneuver—the kind with the financial liquidity both to provide tens of thousands of dollars or more to his own campaign in the first place, and to write new checks every time that debt is repaid.
There will likely be imitators next cycle as well. With his own personal fortune, President Donald Trump himself could even take a page from this playbook. But Rosendale was the pioneer, and for that, he earns a Dirty.
Duncan Hunter—for the most brazen combination of corruption and sleaze
The contents of the indictment against Duncan Hunter alone would put him in the running for a Dirty, but it’s what he did afterward that secured one for him. Hunter, you’ll remember, is facing federal criminal charges over allegations that he flagrantly misused campaign funds to buy family vacations to Disney Land, cover household expenses, and pick up expensive Washington, D.C. bar tabs. He’s denied any wrongdoing, and his constituents apparently aren’t too perturbed; they re-elected him on Tuesday.
But the tactics that Hunter employed to win re-election are a rare mix of flagrant cronyism and outright bigotry that, even in the first midterm of the Trump era, had no parallel. Faced with a federal indictment that alleged, among other offenses, that Hunter and his wife conspired to bilk a veterans’ charity so he could buy a pair of golf shorts, the congressman suddenly faced a more threatening challenge than he expected. It came from Democrat Ammar Campa-Najjar, a young former Obama White House staffer. Campa-Najjar is a Christian of Mexican and Palestinian descent. He also happens to be the grandson of a Palestinian Liberation Organization terrorist who was complicit in the attacks on the 1972 Munich Olympics. Campa-Najjar never met his grandfather.
Hunter, though, was determined to paint his opponent not just as soft on terrorism, but as a potential terrorist himself. The Hunter campaign circulated a letter in October warning that his opponent might feed sensitive national-security information to Islamist terrorist elements. It was an egregious slander for which Hunter managed to court the endorsements of three former Marine Corps generals. All three of them, it turns out, are now defense-industry lobbyists with extensive business before the committees on which Hunter sat before he was indicted, and to which he could be returned if he’s able to dodge a conviction. Hunter has pursued policies in the past that befitted their clients, so it’s no surprise they hoped to keep him in Congress, even if the tactics were reprehensible.
Corruption, cronyism, and financial improprieties are nothing new in Washington. It’s Hunter’s ability and willingness to combine those unseemly traits with perhaps the cycle’s most jarring example of gutter politics that earned him a coveted Dirty.
MotiveAI—for the sneakiest attempt to hoodwink voters
Suppose a less-than-savvy news consumer came across a Facebook post during the fight over Brett Kavanaugh’s nomination to the Supreme Court. This Facebook user, a die-hard conservative, might have been shocked to find out that Kavanaugh was, in fact, a pawn of Bill and Hillary Clinton, potentially complicit in the murder of their late friend and White House aide Vince Foster. The same Facebook page also knocks Kavanaugh for supporting warrantless National Security Agency surveillance and notes that trusted conservative legal scholars preferred a different nominee anyway. That Facebook user might begin to question Kavanaugh’s conservative bona fides.
That, at least, appears to have been the purpose of the Facebook page Drain the Swamp News. But it wasn’t operated by any right-winger. The page is one of nearly 50 set up to host paid advertisements by the Democratic digital firm MotiveAI. The firm, founded by former Facebook staffer and journalist Dan Fletcher and funded in part by LinkedIn Executive Chairman Reid Hoffman, is blazing new trails in digital political advertising, attempting to rethink how that advertising can affect voters’ political decisions, and doing what it can to tailor a social-media-centric ad strategy to various key demographics.
But MotiveAI’s tactics are occasionally deceptive, as with its Drain the Swamp News page, which clearly aims to feed disinformation to conservative users. Other pages are downright offensive, such as one that ran ads dubbing Hawaii Rep. Tulsi Gabbard a C.W.I.L.F.—an acronym for “congresswoman I’d like to fuck”—and mocked the appearance and recent divorce of Republican megadonor Rebekah Mercer. A sizable chunk of MotiveAI pages are made to look like they are from news organizations. In fact, the whole project is an ideological, if not overtly partisan, attempt to feed information to voters that will steer them to the left, by hook or by crook.
MotiveAI’s ads are all purchased through a handful of faceless, anonymous LLCs incorporated in Colorado. There is virtually no transparency in its ad-buying process, and indeed without a crucial tip about who is behind the effort, PAY DIRT might never have uncovered it. This persuasion effort is opaque, and occasionally downright dishonest. We’re likely to see similar efforts going forward, but MotiveAI is this year’s first mover, and for that, it gets a Dirty.
