The chief of staff to Democratic Socialist Rep. Alexandria Ocasio-Cortez reportedly funneled more than $1 million in political donations from two political action committees he founded into two of his own private companies, reports the Washington Examiner, citing a Monday complaint filed with the Federal Election Commission.
The cash transfers from the PACs — overseen by Saikat Chakrabarti, the freshman socialist Democrat's chief of staff — run counter to her pledges to increase transparency and reduce the influence of "dark money" in politics.
Chakrabarti's companies appear to have been set up for the sole purpose of obscuring how the political donations were used.
The arrangement skirted reporting requirements and may have violated the $5,000 limit on contributions from federal PACs to candidates, according to the complaint filed by the National Legal and Policy Center, a government watchdog group. -Washington Examiner
According to campaign finance attorneys cited by the Examiner, the arrangement is "really weird," and an indication that "there's something amiss," noting that since there's no way to know where the political donations went, "they could have been pocketed or used by the company to pay for off-the-books campaign operations," writes the Examiner's Alana Goodman.
While PACs are required by law to disclose how funds are used, Chakrabarti's private companies are exempt from such reporting.
The FEC complaint names both Chakrabarti and Ocasio-Cortez as respondents, and demands that the two PACs be audited because they were allegedly engaged in "an elaborate scheme to avoid proper disclosure of campaign expenditures."
Tom Anderson, director of the National Legal and Policy Center's Government Integrity Project, said: “It appears Alexandria Ocasio-Cortez and her associates ran an off-the-books operation to the tune of hundreds of thousands of dollars, thus violating the foundation of all campaign finance laws: transparency." -Washington Examiner
The 33-year-old Chakrabarti was a Bernie Sanders organizer during the 2016 election. He founded a PAC called Brand New Congress in 2016, and another in 2017 called Justice Demopcrats which has the stated goal of helping to elect progressives to Congress.
"Our idea is really to run a single unified presidential-style campaign that is going to look a lot like the Bernie Sanders campaign," said Chakrabarti during a 2016 interview with MSNBC's Rachel Maddow. "The campaign infrastructure and fundraising is set aside from the campaigning."
Between 2016 and 2017 his PACs raised approximately $33 million - mostly from small donations, while the committees transferred over $1 million to two shell companies Chakrabarti controlled during the same time period. The shells were formed with similar names to the PACs; "Brand New Campaign LLC and Brand New Congress LLC" according to the Examiner report.
A few weeks after starting the Brand New Congress PAC, Chakrabarti formed one of the companies, Brand New Campaign LLC, in Delaware, using a registered agent service and mailbox-only address.
Over the next seven months, as small-dollar political donations poured into the PAC from progressives across the country, the committee transferred over $200,000, 82 percent of the contributions, to the company Brand New Campaign LLC. The payments were for "strategic consulting," according to federal election filings. They were sent to an apartment address listed for Chakrabarti in the Greenwich Village area of Manhattan.
In 2017, Brand New Congress PAC transferred another $240,000 to Brand New Congress LLC, also for "strategic consulting." Another PAC co-founded by Chakrabarti that year called "Justice Democrats" transferred an additional $605,000 to Brand New Congress LLC in 2017. -Washington Examiner
Of note, Brand New Congress is not registered in any Secretary of State databases, and as such it is unclear where it was incorporated.
According to former FEC lawyer Adav Noti, the arrangement is "highly unusual," and appears to have been designed to obscure the use of funds.
"None of that makes any sense," said Noti, adding: "I can’t even begin to disentangle that. They're either confused or they’re trying to conceal something."
"It does seem like there’s something amiss. I can only think of really two likely possibilities for this sort of pattern of disbursements," he said. "One is the scam PAC possibility — they're really just paying themselves and they’re concealing it by using the LLC. The other is that there’s actually another recipient, that the money is going to the LLC and then being disbursed in some other way that they want to conceal."
Former FEC chairman Bradley A. Smith said that he has never seen an arrangement quite like this, calling it a "It's a really weird situation."
"I see almost no way that you can do that without it being at least a reporting violation, quite likely a violation of the contribution limits. You might say from a campaign finance angle that the LLC was essentially operating as an unregistered committee."
Chakrabarti is reportedly no longer affiliated with Brand New Congress PAC, which communications director Zeynab Dey says went through a recent "transition period."
A spokesperson for Justice Democrats said he did not know why the PAC paid so much money to Chakrabarti’s LLCs. When asked what the Justice Democrats PAC does on a daily basis, he said “it’s very clear what we do” but declined to elaborate. -Washington Examiner
From cow farts to bullshit...