Transparency in elections is vitally important for voters to meaningfully participate in the democratic process. Wealthy special interests often run election ads aimed at influencing voters, particularly at key junctures like the weeks leading up to a primary or runoff election.
Voters need to know who is funding these ads so they can weigh their credibility and cast an informed vote.
That’s why federal law prohibits political contributions made through straw donor schemes, in which the true source of a political contribution transfers funds to another person or to a corporate entity that contributes the money to a super PAC.
Straw donor schemes are a common tactic used to ensure that this straw donor, rather than the true contributor, is disclosed in the super PAC’s publicly available campaign finance reports.
Despite the federal ban on straw donor schemes, this kind of thing happens all the time.
“Fighters for a Strong America PAC” is a super PAC — an “independent” political committee that can raise and spend unlimited amounts of money, including money from corporations and other wealthy special interests — that registered with the Federal Election Commission (FEC) on June 13, 2022.
Nine days later, on June 22, 2022, someone registered a tax-exempt corporation in Delaware called “Leadership Action Fund, Inc.”
Leadership Action Fund contributed over $620,000 to Fighters for a Strong America PAC about one month later, and there’s no indication as to where that money came from.
Leadership Action Fund has no known activity, investments, assets or income, and no online or physical presence — so it appears to have served only one purpose: funneling money from an unknown source to Fighters for a Strong America PAC.
Around the time that cash started flowing in from Leadership Action Fund, which doesn’t disclose its donors and is the only reported contributor to Fighters for a Strong America PAC, the committee started spending big: between July 27, 2022, and August 18, 2022, it spent over $850,000 on election ads, all of which supported T.W. Shannon, a candidate for the U.S. Senate in Oklahoma running in the August 23, 2022, Republican runoff election.
Due to the lack of disclosure, Oklahoma voters viewing the super PAC’s ads during the weeks leading up to the August 23 runoff election were denied their right to know who was actually paying to support Shannon’s candidacy as they prepared to cast their ballots.
In another recent straw donor scheme, someone formed a limited liability company (LLC) in Missouri called “SQI Limited, LLC” on April 13, 2022, and roughly three months later, that LLC was reported as the source of a $300,000 contribution to a super PAC called “Save Missouri Values.”
This super PAC spent over $3.2 million helping Eric Schmitt win the GOP primary election for the U.S. Senate in Missouri, including spending $1.5 million for ads opposing his primary opponents Vicky Hartzler and Eric Greitens.
There’s virtually no publicly available information about “SQI Limited, LLC” and no indication where the money it contributed actually came from.
SQI Limited has no online or physical presence, and no known business operations, investments, assets or commercial ventures from which it might generate the income to contribute $300,000 to a super PAC, unless it received money from someone for that purpose.
But Save Missouri Values’ disclosure report suggests where the money may have come from: the address provided in connection with the $300,000 contribution — which doesn’t match the SQI Limited address registered with Missouri authorities — is listed on the website for Herzog, a Missouri-based conglomerate with businesses in multiple industries, including railway transport and contracting.
It appears that SQI Limited wasn’t the true source of this $300,000 contribution, and the address provided to the super PAC suggests that the money may have come from Herzog or someone affiliated with the company.
Campaign Legal Center (CLC) has filed formal complaints with the FEC regarding both straw donor schemes, alleging that straw donor entities — Leadership Action Fund and SQI Limited, LLC — as well as the unknown persons that illegally contributed money through those entities have violated federal campaign finance laws.
Moreover, because the super PAC Fighters for a Strong America PAC got all of its money from Leadership Action Fund, that complaint further alleges that the super PAC also violated the law by knowingly accepting illegal contributions made through a straw donor.
Robust enforcement of our federal campaign finance laws is essential for a vibrant and inclusive democracy. Voters have a fundamental right to know who’s spending money to influence elections and thus whose interests will be paramount when winning candidates take office.