How Straw Donor Schemes Undermine Transparency in Elections

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Voters have a right to know who is spending to influence their vote and their government. Federal campaign finance laws protect this right by requiring federal candidates and committees to disclose their contributors. 

But the law hasn’t stopped some wealthy individuals and special interests from attempting to conceal their political contributions with “straw donor” schemes, an increasingly common practice explicitly prohibited by federal law in which the true source of a political contribution is hidden from the public.  

In a straw donation, a donor first gives funds to another person or entity – often a shell company created for this purpose – which then contributes those funds to a political committee.  

CLC fights to end this practice by analyzing campaign finance data, investigating potential straw donations, and filing legal complaints with the Federal Election Commission (FEC), the government agency that is responsible for enforcing federal campaign finance laws. 

On August 10th, CLC filed a complaint with the FEC against an obscure, opaque Texas entity called “SHBT, LLC.” SHBT, which was registered in June 2022, has no website, social media presence, Chamber of Commerce membership, trademarks, patents, or any of the other hallmarks of a bona fide business or organization. The only substantive trace of activity by SHBT is holding legal title to seven undeveloped real estate properties valued at just $7,002 in total.  

Yet despite its extremely limited activity, SHBT was the reported source of a $1,000,000 contribution to “Tell it Like It Is PAC,” a super PAC supporting former New Jersey Gov. Chris Christie’s 2024 presidential campaign.  

It’s unclear how SHBT, LLC — with virtually no commercial activity — could have made a million-dollar political contribution without others funneling money into the LLC to make the contribution, in violation of federal law. 

CLC’s complaint alleges that SHBT was not the true source of this contribution but was instead provided funds for this purpose by one or more unknown persons, who were able to conceal their identities by illegally contributing through SHBT instead of in their own names. 

Our allegations against SHBT, LLC are just one of many straw donor complaints that CLC has filed.  

In July, CLC filed a complaint alleging that “PassionForest, LLC” was used to make a $500,000 straw donation to a super PAC supporting the 2024 presidential candidacy of Miami mayor Francis Suarez. The super PAC described PassionForest as a “flower wholesaler,” but the eleven-month-old company’s only apparent activity was selling artificial flowers through a mostly defunct Amazon storefront – insufficient on its face to raise enough funds for a half-million-dollar political contribution.  

Immediately after CLC filed its complaint, the super PAC amended its report to the FEC, reattributing PassionForest’s $500,000 contribution to Ivan Soto-Wright, a cryptocurrency executive who, through a company spokesperson, told reporters that he had “personally donated the $500,000 through PassionForest, LLC.”  

This statement essentially admits to CLC’s allegation that PassionForest was used as a straw donor. What’s more, the super PAC’s reattribution of “PassionForest’s” contribution following CLC’s complaint does not “cure” these actions. 

PassionForest and SHBT’s “straw” donations are part of an ongoing pattern. In 2022 alone, CLC filed seven straw donor complaints, collectively involving over $2.5 million in political contributions in which the true source of the funds was hidden through LLCs or other opaque entities. These companies, featuring abstract names like “SQI Limited,” “Snow Goose LLC,” and “ML Organization,” had never engaged in any apparent business at all: they appeared to exist solely to make political contributions while hiding the true source of that funding. 

Some of CLC’s prior complaints involving straw donor schemes have even led to criminal convictions.  

In 2020, CLC filed a complaint after a mysterious $150,000 political contribution by a “Society of Young Women Scientists and Engineers LLC,” which had been created just five weeks earlier and had no apparent activity of any kind, to 1820 PAC, a super PAC supporting the 2020 reelection campaign of U.S. Senator Susan Collins.  

A subsequent FBI investigation found that the true source of this contribution was a federal contractor called Navatek, whose top executives engaged in a deliberate scheme to illegally contribute money not only to 1820 PAC but also to Collins’s campaign.  

Federal contractors like Navatek are prohibited by law from making federal political contributions to prevent “pay to play” schemes, in which contractors give to political campaigns with the aim of being rewarded with future contracts. Navatek executives ultimately pled guilty to federal criminal charges

Schemes like Navatek’s demonstrate that illegal straw donations aren’t just undermining transparency: in the worst scenarios, they can also be used to cover up political corruption and other political contributions that are already illegal.  

CLC’s researchers are constantly on the lookout for straw donors. When a contributor’s background doesn’t add up, our team files a complaint to protect voters’ legal right to know who is behind influential spending in elections.

Roger is a Senior Researcher, Campaign Finance and Ethics.