INSIDE WASHINGTON: PACs as personal slush funds?
WASHINGTON — John Edwards’ mistress received $100,000 from his political action committee in an 18-week span in 2006, payments that raise this question: Can politicians use PACs as their own personal piggy banks?
From staging fundraisers in Las Vegas to financing ski trips, current and former lawmakers have spent money from congressional leadership PACs on a broad range of seemingly personal activities over the years, all the while maintaining they are doing so for strictly political purposes.
In the wake of the disclosure of Edwards’ affair with videographer Rielle Hunter, Edwards has acknowledged a federal criminal investigation is under way into his presidential campaign fund.
But it was the former senator’s PAC — which is separate from the campaign — that paid $114,000 in 2006 and early 2007 to Hunter’s Midline Groove Productions. Hunter shot videos of Edwards as he spread the populist message he subsequently would adopt in his presidential campaign.
PACs like Edwards’ One America Committee have legal flexibility that campaign committees do not.
It is illegal under federal election law to convert campaign funds to personal use. But that prohibition doesn’t extend to PACs in most cases, according to the Federal Election Commission, which in March asked Congress to tighten the law.
The FEC “has seen a substantial number of instances where individuals with access to the funds received by political committees have used such funds to make unauthorized disbursements to pay for their own personal expenses,” the FEC said in its legislative recommendation to Congress.
Leadership PACs are “a form of giant slush fund; they should be banned,” said Fred Wertheimer, president of Democracy 21, a campaign money watchdog group.
Longtime watchdog groups question whether politicians will engage in any self-policing.
“Congress has always been slow to curb its own excesses,” said Meredith McGehee, policy director at the nonpartisan Campaign Legal Center.
Their political purpose enables PACs to receive tax-exempt status.
“If a politician uses a PAC as a piggy bank for personal expenses he better make sure to accurately disclose the payments on FEC forms and pay taxes on the income,” says Jan Baran, a top campaign finance lawyer in Washington and a partner at Wiley Rein LLP.
Edwards could face a number of issues in the criminal investigation, whose existence he confirmed on May 3.
Was the purpose of the PAC money to Hunter to pay for a handful of online videos on Edwards’ travels? That would seem to be the case based on the PAC’s reports to the FEC. The money to Hunter’s production company was for “Website/Internet Services,” the reports state.
But if the money were for some other purpose, that could amount to a criminal act by those who caused incorrect information to be filed with the FEC.
Another issue surrounds the final $14,000 PAC payment to Hunter on April 1, 2007, from One America, which didn’t have enough money on hand at the start of the day to make the payment, according to records filed with the FEC.
The Edwards presidential campaign injected $14,034.61 into the PAC that day for a “furniture purchase,” the records state. That put enough money in the political action committee account to pay Hunter $14,086.50 the same day.
The Edwards camp has said the money from the PAC was exchanged for 100 hours of unused videotape Hunter shot.
It could be a criminal act if the real purpose was something else, such as an effort to keep the videographer quiet about the affair.
When Edwards disclosed the existence of the criminal investigation early this month, he said in a statement that he was “confident that no funds from my campaign were used improperly.”
This week, Elizabeth Edwards seconded her husband’s assertion, saying that “it’s just not possible” that campaign funds were paid to Hunter.
“The way campaign funds are distributed is all a matter of record,” Elizabeth Edwards said on NBC’s “Today.”
The Justice Department prosecutes the personal use of campaign funds.
Among high-profile politicians who have gotten into legal trouble over personal use of campaign funds are former House Ways and Means Chairman Dan Rostenkowski, D-Ill., and former Rep. James Traficant, D-Ohio. Rostenkowski ultimately pleaded guilty to mail fraud; Traficant was convicted of taking bribes and kickbacks from businessmen and his own staff.
More recently, a former congressional candidate in Kansas pleaded guilty to misusing campaign funds to cover a check for the down payment on a home.
In her new book, Elizabeth Edwards describes her understanding of the first meeting between her husband and Hunter, writing that Hunter greeted Edwards with the come-on line, “You are so hot,” after waiting for him outside a New York hotel.
That was followed within months by Edwards going on the road, with Hunter accompanying him to key primary states. One America paid the videographer $100,000 from July to November 2006, seven weeks before Edwards declared his candidacy.
Filed under Legal Proceedings | Tags: Campaign Finance Improprieties, Campaigns, Cases, Criminal, Criminal Investigations, fraud, Political Action Committees, Political Organizations, Rielle hunter, Us-edwards-pac-money, Waiting, Washington | Comment Below