Mueller Investigation Shines Light on Pro-Trump Super PAC’s Suspicious Activity

Image
Trump at rally
By Alex Hanson from Ames, Iowa - Trump in Des Moines

The pro-Trump super PAC Rebuilding America Now is reportedly under scrutiny in special counsel Robert Mueller’s investigation into Russian interference in the 2016 election. But from its inception, Rebuilding America Now has engaged in dubious legal maneuvers.

The super PAC’s close ties to the Trump campaign, its sources of funding, and its activity both before and after the 2016 election could give rise to additional campaign finance charges if Mueller’s team continues examining the group.

Rebuilding America Now was deeply enmeshed in the Trump orbit from the start.

In mid 2016, then-candidate Trump dropped his opposition to super PACs, and signaled that wealthy donors should support the newly-created Rebuilding America Now.

Trump’s campaign chair at the time, Paul Manafort, had dispatched two of his close associates to run the PAC. Manafort asked Trump’s longtime friend Tom Barrack—who would later run Trump’s inaugural committee—to help raise money for the group. Trump’s vice-presidential nominee, Mike Pence, even endorsed the super PAC and expressly encouraged donors to give.

At several points during the 2016 cycle, Rebuilding America Now appeared to cross legal lines prohibiting coordination with the Trump campaign. But it nonetheless raised $23 million in the 2016 cycle, and was one of the top super PACs supporting Trump’s 2016 election.

The PAC went dormant after the November 2016 election—but recently emerged as a subject in the Mueller probe.

Super PAC Under Scrutiny by Special Counsel

Last month, Mueller’s team filed a memo stating that Manafort lied to prosecutors about a $125,000 payment from Rebuilding America Now towards Manafort’s debt, paid through another unidentified firm. Manafort responded to that memo this week, confirming the transaction.

Then, the New York Times further reported on December 13 that prosecutors are examining whether Rebuilding America Now had received foreign contributions, possibly via American intermediaries:

"Among other issues, they asked about a Mediterranean cruise that Mr. Barrack and Mr. Manafort took after Mr. Manafort was fired in August 2016 from the Trump campaign because of a scandal over his previous work for pro-Russian politicians in Ukraine. Mr. Manafort was in serious financial trouble at the time, and Mr. Barrack, who has an extensive business network in the Persian Gulf, may have been attempting to help him find clients. 

On the cruise, the pair met one of the world’s richest men, Hamad bin Jassim bin Jaber Al Thani, the former prime minister of Qatar. Until 2013, Mr. Al Thani presided over the country’s $230 billion sovereign wealth fund. He remains a highly influential member of the nation’s governing royal family. 

Investigators also sought information from a businessman, Rashid Al Malik, an associate of Mr. Barrack’s who heads a private investment firm in the United Arab Emirates, according to a person familiar with the inquiry. Mr. Malik, whose lawyer did not immediately respond to a request for comment, has been described as close to a key figure in the U.A.E.’s government."

This is a big deal.

Campaign finance law not only prohibits any foreign national from making a contribution, but also bars any other person from soliciting or receiving such a contribution, or from “knowingly providing substantial assistance” in the making of a foreign national contribution.  

Any foreign nationals who contributed to Rebuilding America Now would have violated the law. If Manafort or Barrack solicited a foreign national to make a contribution, or knowingly provided substantial assistance in the making of such a contribution, they too would have violated the law. Moreover, if any U.S. citizens made contributions in their own name using funds from foreign nationals, they would have violated both the foreign national ban and the “straw donor” ban.

But that’s only the beginning. Even before the Mueller probe, it was clear that Rebuilding America Now was engaged in some shady business.

Violating Coordination Rules from Day One

In early 2016, shortly after Manafort joined the Trump campaign, he hired two longtime associates to join him on the campaign: Laurance Gay, a close friend and godfather to Manafort’s daughter, and political operative Ken McKay.

Just weeks later, Manafort dispatched Gay and McKay to form Rebuilding America Now.

This arrangement was a clear violation of Federal Election Commission (FEC) rules, which require a 120 day cooling-off period before a campaign staffer can play a role in a super PAC supporting that campaign. That way, a staffer can’t take a campaign’s strategic plans to a super PAC and execute them with unlimited funds.

Despite these rules, Rebuilding America Now didn’t wait 120 days: in fact, its first pro-Trump ad ran fewer than 50 days after McKay and Gay first joined the campaign.

CLC filed a complaint, which is still pending with the FEC.

As the 2016 election rolled on, additional evidence emerged suggesting coordination between the Trump campaign and Rebuilding America Now. Both the campaign and the super PAC reportedly placed ads using effectively the same media buying firms, which also implicates FEC coordination rules. (The NRA and the Trump campaign deployed a similar strategy, using the same firms, triggering a CLC complaint to the FEC.)  

The fact that Rebuilding America Now was created by former Trump campaign staffers, and bought ads using the same vendor as the Trump campaign, was already compelling evidence that the two engaged in unlawful coordination. But, it turns out, that wasn’t all.

When interviewed by the special counsel after the campaign, the New York Times reported, “Mr. Barrack said that Mr. Manafort seemed to view the political committee as an arm of the campaign, despite laws meant to prevent such coordination, according to a person familiar with the interview.” 

Burning Through Leftover Cash, and Lying About It

In August 2016, three months before Election Day, the campaign let Manafort go.

After the election, Manafort came under increasing scrutiny as the Russia probe heated up. Although Manafort was quietly advising the Trump White House, he was no longer treated as a Trump insider.

With Manafort on the outside, the two Manafort associates running Rebuilding America Now—Gay and McKay—could no longer claim any significant connection to Trumpworld. And without that connection, donors no longer had no reason to fund the super PAC —so the Manafort associates running Rebuilding America Now apparently decided to just burn through the remaining cash. Gay told the Daily Beast in 2017 that the PAC was laying the groundwork for the midterms, but Rebuilding America Now didn’t end up running any independent expenditures in the 2018 cycle.

Of the $1.05 million the PAC spent in the year after the 2016 election, $917,000 went towards consulting fees for Gay and McKay, travel, and meals. 

Some of that money indirectly flowed back to Manafort.

On December 7, 2018, Mueller filed a memo stating that Manafort lied to prosecutors about a $125,000 payment in 2017 from Rebuilding America Now towards Manafort’s debt, paid through another unidentified firm. The filing states:  

"The payment came from another firm (Firm A), which performed work for an entity, Entity B. Manafort has a long relationship with the heads of Firm A and Entity B. Entity B had engaged Firm A at Manafort‘s suggestion to perform certain work. Under the terms of the contract, Firm A was to receive a 6% commission on expenditures made to it from Entity B."

The New York Times reported that Entity B is Rebuilding America Now.

On January 8, 2019, Manafort’s team responded, writing:

"Mr. Manafort initially explained that he approached the head of [Rebuilding America Now], who owed him money, seeking help in paying his debt. After further discussion, Mr. Manafort acknowledged that the head of [Rebuilding America Now] had the head of Firm A pay the amount for Mr. Manafort. Despite the confusion, at bottom it appears that the Government’s evidence corroborates Mr. Manafort’s testimony that the head of Firm A paid the money at the head of [Rebuilding America Now]’s request from money the head of Firm A owed to the head of [Rebuilding America Now].

In a subsequent meeting, Mr. Manafort explained that it was unclear to him how this payment was recorded by his accountants and he believed the original plan was to report the payment as a loan, but that it had actually been reported as income on his 2017 tax return. The Government has indicated that Mr. Manafort’s statements about this payment are inconsistent with those of others, but the defense has not received any witness statements to support this contention."

Based on these filings, it appears that Firm A owed Rebuilding America Now money, so “the head of Rebuilding America Now”—possibly Laurance Gay, Manafort’s longtime associate—directed Firm A to pay Manafort’s debt, rather than to repay its own obligations to the super PAC.

The identity of Firm A is not entirely clear. Rebuilding America Now did not disclose any debts owed to it on reports filed with the FEC.

However, after the 2016 election, between February and June of 2017, the media firm Multi Media Services (the super PAC’s top vendor in the 2016 cycle) refunded over $1.1 million to the super PAC. The reason for these payments is not clear, but these were the only apparent debt settlements that Rebuilding America Now reported in 2017. It appears that Multi Media Services was the super PAC’s only debtor.

Notably, although super PACs cannot coordinate spending with candidates, they otherwise face few limits about how they spend money. It appears unlikely that any laws were violated by Rebuilding America Now indirectly paying off Manafort’s debt.

So why would Manafort mislead prosecutors? Perhaps Mueller is further investigating coordination between Manafort and the super PAC—and perhaps Manafort lied about the payment from the super PAC in an attempt to thwart that inquiry.  

Will Mueller Probe Net Additional Campaign Finance Charges?

What’s next? We’ll see—but campaign finance violations do seem to keep popping up as Mueller digs deeper.

Trump’s personal lawyer Michael Cohen has already pled guilty to campaign finance violations. Trump’s longtime friend David Pecker’s publishing company struck a deal with prosecutors effectively admitting the same. Both Cohen and AMI have implicated the president in these violations.

The relationship between Rebuilding America Now and the Trump campaign, and allegations of secret foreign funding for the super PAC, could give rise to new campaign finance charges.

Brendan directs CLC’s work before federal regulatory agencies, such as the Federal Election Commission (FEC).