WaPo: In Fundraising's Murky Corners
David All
comes to supporting a Political Action Committee, what you see isn't always
what you get.
How can (and should) the Open House Project play a role in helping add more
transparency to Political Action Committee's? Are there tools already
available that PAC's could/should embrace?
[Full-disclosure: I'm closely involved with a Federal PAC.]
Story link: http://tinyurl.com/2wshta
In Fundraising's Murky Corners
Candidates See Little of Millions Collected by Linda Chavez's Family
By Matthew Mosk
Washington Post Staff Writer
Monday, August 13, 2007; A01
Linda Chavez rose to prominence in the 1980s as a tart-tongued Reagan
administration official and candidate for the Senate, eventually becoming a
well-known Latina voice on social issues and President Bush's choice to lead
the Labor Department. With her conservative celebrity came book deals, a
syndicated column, regular appearances on the Fox News Channel -- and a
striking but little-known success at political fundraising.
In the years since she was forced to pull her nomination as Bush's labor
secretary after admitting payments to an illegal immigrant, Chavez and her
immediate family members have used phone banks and direct-mail solicitations
to raise tens of millions of dollars, founding several political action
committees with bankable names: the Republican Issues Committee, the Latino
Alliance, Stop Union Political Abuse and the Pro-Life Campaign Committee.
Their solicitations promise direct action in the "fight to save unborn
lives," a vigorous struggle against "big labor bosses" and a crippling of
"liberal politics in the country."
That's not where the bulk of the money wound up being spent, however. Of the
$24.5 million raised by the PACs from January 2003 to December 2006,
$242,000 -- or 1 percent -- was passed on to politicians, according to a
Washington Post analysis of federal election reports. The PACs spent even
less -- $151,236 -- on independent political activity, such as mailing
pamphlets.
Instead, most of the donations were channeled back into new fundraising
efforts, and some were used to provide a modest but steady source of income
for Chavez and four family members, who served as treasurers and consultants
to the committees. Much of the remaining funds went to pay for expenses such
as furniture, auto repairs and insurance, and rent for the Sterling office
the groups share. Even Chavez's health insurance was paid for a time from
political donations.
"I guess you could call it the family business," Chavez said in an
interview.
There is nothing illegal about running political committees the way she and
her family have done, and Chavez said that none of the money has been spent
for personal items and that she has done nothing wrong.
Still, Chavez Inc. offers a revealing window into a largely unregulated
corner of the world of political money, where few constraints exist on
spending, candidates often benefit hardly at all and groups face little
accountability from donors who remain largely unaware of where their money
goes.
More than 2,700 "multi-candidate committees" such as those run by Chavez and
her family members are registered with the Federal Election Commission, and
unlike the more conventional committees used by candidates to fuel their
campaigns, the multi-candidate groups face few rules governing how they can
spend money. Only about a dozen are audited each year. And they face little
of the public scrutiny that confronts candidate-run committees because no
opponent scours their spending reports for irregularities.
"Nobody is looking at these," said Melanie Sloan of the group Citizens for
Responsibility and Ethics in Washington. "It would be nice to know if other
people are doing what Ms. Chavez is doing."
Even less information is publicly available about spending by politically
oriented nonprofit foundations -- such as those established separately by
Chavez and her family members. The four foundations collected $1.4 million
from 2003 to 2006 and paid many Chavez family members a steady salary,
according to tax records.
Chavez said the goal of her fundraising committees has been to advance her
political agenda and nothing more. "I have never tried to enrich myself or
my family and have consistently taken salaries from my organizations that
were lower than the market, with very few benefits," she said.
But the spending by Chavez PACs appears to depart from standard practices by
some other issue-oriented groups, according to lawyers and ethics experts.
The National Rifle Association's political committee, for instance, spent
nearly a third of the $11 million it raised in the 2006 cycle on political
activities, including $1.2 million in direct donations to candidates.
In the 2004 and 2006 election cycles, Chavez's anti-union PAC raised
$913,469 and spent less than a fifth on political activity. The Latino
Alliance raised $1.2 million and spent 3 percent on political activity. The
Pro-Life Campaign Committee raised $7.7 million and spent less than 1
percent on political activity, as did the Republican Issues Committee, which
raised $14.6 million, the analysis found. Most of the money came from small
donors.
The amounts the PACs spent on telemarketing could not be readily tallied.
But an FEC investigation of the Pro-Life Campaign Committee turned up
documents showing that the Arizona telemarketing firm Capitol Communications
regularly retained as much as 95 percent of the money it collected, to cover
its fundraising expenses. Chavez's husband, Christopher Gersten, said the
firm handled fundraising for the Republican Issues PAC in the same manner.
Over the past five years, Chavez's family members have been directly paid
$261,237 from the PACs, according to FEC reports. In 2001, the PACs paid
Christopher Gersten $77,190, her son Pablo $25,344 and her son David $9,687.
Chavez and her immediate family members also earned income from executive
positions they held in their nonprofit foundations, such as One Nation
Indivisible and Stop Union Political Abuse. Her salary from her Center for
Equal Opportunity foundation ranged from $125,000 to $136,250 between 1997
and 2003 and was $70,313 in 2004, the last year for which records are
available.
The foundation paid her son David $83,200 in 2004 as its vice president for
development. From 1998 to 2001, Christopher Gersten was paid $64,000 a year
from another family foundation, the Institute for Religious Values.
Donors Unaware
Several of those who donated to the Pro-Life Campaign Committee, run by
Pablo Gersten, said they were surprised to learn how little of the money was
spent where they expected. David Barnes, 45, a typesetter from Williston,
Tenn., gave the group $500 in February 2006, figuring "the money would go to
back candidates who are pro-life."
"I'm appalled," Barnes said. "I try to be a responsible giver. I'm aware
that with many charities you have to be careful. I knew better. I
contributed based on an outward appearance and didn't do my homework."
Chavez and her husband began operating their first political organizations
in the 1980s. They had met in college and moved to Washington, where Chavez
worked for the House Judiciary Committee and Gersten was an intern and then
the national director of the voter registration arm of the AFL-CIO. At 29,
Gersten became the political director of the Operating Engineers
International Union and helped build it into a powerhouse.
"I wrote the book on unions using the 'check-off' so their dues could be
directed to political giving," he said in an interview.
Chavez was the staff director of the U.S. Commission on Civil Rights under
President Ronald Reagan from 1983 to 1985, giving her a prominent platform
to talk up traditional family values, to criticize affirmative action and to
debate comparable pay for men and women. Gersten, meanwhile, became
political director of AIPAC, the powerful pro-Israel political committee.
In 1986, Chavez unsuccessfully ran for the Senate on the Republican ticket
in Maryland. By then, Gersten had launched a nonprofit group to build ties
between Republicans and Jews and a second one to promote reform of the
criminal justice system. The latter failed, Gersten said. "I was very
amateurish."
A Religious Turn
The family took a break from politics when Bill Clinton was elected
president, briefly operating a Mexican restaurant in Gaithersburg called the
Santa Fe Express, with Chavez taping television interviews on politics
during the day and working the cash register at night. The restaurant went
broke. As Gersten recalls it, that was around the time the "partial birth"
abortion issue attracted attention.
"I became a point man to organize the Jewish community on that issue," he
said. "I knew enough about the Jewish law to understand that it does not
allow for a late-term abortion. I got 250 rabbis to sign statements to
support the ban on partial-birth abortion and made a lot of good friends in
the pro-life movement."
This led him to launch the Institute for Religious Values. Soon after, Pablo
Gersten started the Pro-Life Campaign Committee. Christopher Gersten said he
drafted solicitations in his kitchen and then, using a small vendor in
Purcellville, experimented with mailings. "I couldn't afford to rent lists
of 5,000 names, so I got the list vendors to send lists of 2,000 names. I
realized I could do this," he said.
Gersten was appointed as a mid-level official in President Bush's Health and
Human Services Department and paused his political work. But in 2001, during
the period after Chavez's failed nomination to be Bush's labor secretary,
the family's political activity thrived. It founded three more PACs -- the
Republican Issues Committee, Stop Union Political Abuse and the Latino
Alliance -- all to pursue political agendas that had become the foundation
of the family members' advocacy careers.
The groups hired direct-mail and telemarketing firms based in Mesa, Ariz.,
and made solicitations nationwide for each of the PACs. The letters were
often strident in tone. One that Chavez sent in 2003 seeking contributions
for the Stop Union committee promised that the group would help pass the
"Workers' Freedom of Choice Act."
"If we stop now," she wrote, "the terrorists win."
Prospecting on such a scale can be expensive. Lawrence M. Noble, a former
general counsel of the FEC, said a new organization looking for donors might
choose to plow most of its money back into the fundraising operation but
more established ones would not. "Generally the way it works is your initial
costs are very high. You're developing a donor base. But as that stabilizes,
your costs are supposed to go down," he said.
Authorities' Scrutiny
Over the past two years, the FEC has fined three of the Chavez family PACs a
total of $262,500 for repeatedly failing to file timely reports and for not
promptly disclosing all the money raised and spent. Chavez notes that the
FEC found no intentional wrongdoing.
The Pro-Life Campaign Committee also briefly attracted the attention of
state authorities. In 2003, recipients of its phone solicitations in Kansas
complained about pushy telemarketers. "They were very aggressive -- pushing
for automatic withdrawals from a credit card," said Mary Kay Culp, executive
director of the group Kansans for Life, which received complaints from its
members.
The Kansas attorney general brought a civil case against Pablo Gersten and
the group, alleging that it had engaged in "deceptive solicitation." Gersten
denied the allegations, and the case was dismissed three months later. A
spokeswoman for Attorney General Paul J. Morrison declined to comment.
Chavez and her husband said the fundraising committees have been productive
for their political causes. The Latino Alliance, for instance, "did lots of
telephone calls in the 2004 elections," she said. "I believe we did some
radio ads. We did outreach into the Latino communities to try and mobilize
more pro-Republican votes."
That's the whole point, Christopher Gersten said in a separate interview.
"The PACs help Linda and me have a voice. To have a voice in politics in
today's world, you really want to be able to leverage the money that you
give," he said.
As for why so little of the money wound up with candidates, Chavez said that
is simply a reality of the fundraising business. The groups were not formed
to make her family wealthy, she said, adding that if she or her husband were
to join a K Street firm "to do some of what we have been doing on our own,
we would make far more money."
Staff researchers Madonna Lebling and Derek Willis and staff writer Jonathan
Mummolo contributed to this report.