The biggest independent spender in the contentious Alabama Senate race is a super PAC backing Democrat Doug Jones. But voters will have no idea who is funding its seven-figure ad blitz until the election is over.
Super PACs are required to disclose their donors, but the group Highway 31 has structured its spending in a way that campaign-finance experts say is almost unprecedented. While legal, it will have the effect of obscuring the group’s benefactors, who will have financed a series of ads over the last two months of the campaign propping up Jones and hammering his Republican opponent, former State Supreme Court Justice Roy Moore.
Highway 31 has reported nearly $2 million worth of ads in the race, according to filings with the Federal Election Commission, making it the single largest independent spender of the general-election contest. The group filed what was expected to be its first itemized disclosure of donors and expenditures Thursday. But in the filing, Highway 31 said it had received and spent no money whatsoever.
Instead, the filing revealed, a handful of Democratic campaign vendors have produced and placed a number digital ads for the group entirely on credit. Though it disclosed no income or expenditures, Highway 31 listed debts owed to those vendors, and the amounts owed match up precisely with the values of the ads it reported to the FEC.
In other words, the group is financing its ad campaign on debt. A donor could step in after the race and contribute enough money to Highway 31 to pay off those debts. Or, alternatively, the vendors could choose to forgive the debts, in which case the services provided to the super PAC would be counted as in-kind contributions to the group, and require an amended FEC filing classifying them as such.
In either case, voters will have no way of knowing who effectively paid for the ads until the Alabama race is over and Highway 31 files its post-election report with the FEC. That filing won’t be public until January.
Campaign-finance experts say this method of effectively obscuring the funds behind a high-dollar super PAC is extremely rare, and potentially troubling. Super PACs can accept and spend unlimited sums. But disclosure of its donors is supposed to provide a degree of accountability for the organizations. The structure of Highway 31’s spending negates that accountability almost completely, at least in the near term.
“This is wild,” said Brendan Fischer, the director of FEC and federal reform programs at the Campaign Legal Center, an ethics watchdog group, when alerted to Highway 31’s FEC filing. “This looks like a blatant effort to dodge disclosure requirements. And it could have the effect of keeping voters in the dark about who is funding these ads until after Election Day.”
“I suspect that the vendors who created these ads will wait to invoice the campaign for a few weeks. And then, after Election Day has passed, some megadonor will drop a few million into the Highway 31 super PAC and pay off its debts,” Fischer said.
The debts are owed primarily to two Democratic campaign consultancies, both based in Washington: Bully Pulpit Interactive and Waterfront Strategies. Fischer acknowledged that the vendors could simply forgive the debts, and that the super PAC could then report the ads as in-kind contributions. But, Fischer said, he doubts that’s what will happen. “If the vendors intended to produce the ads for free, they could have disclosed these as in-kind contributions at the front end.”
Highway 31’s executive director, Alabama media consultant Adam Muhlendorf, defended its structure in an email to The Daily Beast. The group “continues to follow every appropriate rule and regulation,” Muhlendorf said. “The end of the reporting period was in the middle of the PACs startup. The PAC will file contributors per the FEC reporting schedule.”
But that reporting schedule doesn’t call for another FEC filing until mid-January, meaning Alabama voters won’t know who financed the group until more than a month after they’ve elected their next senator. “At least we'll eventually find out who funded this super PAC,” Fischer noted. “If Jones wins, that information will let the press and public know whether the beneficiary of this spending later takes action to benefit these donors.”
Highway 31’s odd reporting practices are not entirely without precedent. A Republican super PAC opposing Missouri Republican Gov. Eric Greitens’ 2016 campaign set up its finances in a similar way, reporting debts to three advertisers and consultants before it had any income. It later received contributions from a company headquartered at the same address as the super PAC—contributions totalling almost precisely the sum it owed to those vendors.
But that super PAC, Patriots for America, disclosed those contributions months before the election (though the company behind them remained somewhat mysterious). By contrast, Alabama voters will have no idea who is financing Highway 31’s ads when they go to the polls a week from Tuesday.
Assuming, as Fischer predicted, that the vendors do not end up having provided their services pro-bono, he said, “this looks like a shady scheme to deprive voters of information about who is trying to influence them.”