Outside the Beltway

The Blurry Line Between Legitimate PACs And Scams

Spoiler: the same people often work at both

Matt Bernius · Monday, July 29, 2024 · 3 comments

Over the weekend, James wrote a short post about how he was getting spammed with txt messages to support Vice President Kamala Harris’s Presidential Campaign. At the time, James questioned how good a tactic this is. As it turns out, some of those messages may not have been sent by the campaign. Worse, they may be encouraging people to contribute to scam Political Action Committees (or PACs). In fact, this is happening so much that the Harris campaign has put out a warning about it. From The Bullwark:

KAMALA HARRIS’S TEAM IS WARNING DONORS not to fall prey to “financial scams” from groups sending email and text messages that suggest they’re raising money for the vice president. Those messages came rapidly last week as a constellation of seemingly innocuous political action committees tried to take advantage of the swell of donor enthusiasm around Harris.

Sam Stein, at The Bullwark, has an excellent article up about this. These types of scam PACs are unfortunately common in politics:

“Everyone in politics knows this whole operation is a scam designed to trick people who think they are donating to help a candidate they care about,” said one prominent Democratic digital operative. “They point to the fact they give a small percentage of the money they raise directly to campaigns, but that is just the cost of doing business for moments of scrutiny while siphoning the lion’s share into organizations they control.”

These sorts of organizations have existed on the Left and Right for years. Stein notes that the Trump campaign has issued similar warnings in the past. Unfortunately, what they are doing is not illegal so long as some of the monies collected go to candidates:

PACs are not subject to the “personal use” ban, which prohibits the use of donor money for personal benefit. Democratic Power [a “scam” PAC] and the others “were using at least some portion of the funds raised to make contributions to federal and state candidates,” even if it was just a fraction of the money raised.

What’s particularly interesting in Stein’s article is he uses the Harris example as a way to do a deep dive into how some of the staff of these “scam” PACs often are doing legitimate work for the campaigns that they are claiming to represent.

[O]ne of the officers at these [scam] PACs also runs a firm helping the Harris campaign raise money, effectively working multiple sides of the same donor pool. […]

While unaffiliated, exploitative outside groups have been a scourge to office-seekers for years, what sticks out about the current cohort is the infrastructure propping them up.

Many of the groups sending texts in the wake of Harris’s emergence as the presumptive Democratic presidential nominee have leaned on the data list acquisition firm PACtion, text and call platforms provided by Scale to Win, and consulting services through the shop Bluefoot Political, LLC. These entities receive more money from the PACs than the candidate committees themselves.

Bluefoot Political, LLC is a relatively obscure firm that appears to be based in Lake Oswego, Oregon while Scale to Win has partnered with major Democratic institutions.

PACtion, meanwhile, is a big player in D.C., with clients that include hundreds of Democratic campaigns and dozens of members of Congress. It also has done work for the Biden ticket, having earned more than $1 million for list acquisition from the campaign’s joint fundraising committee just this cycle.

When reached for comment, Ryan Morgan, who founded PACtion, declined to directly address whether there was a tension in assisting both a presidential campaign and the PACs that the presidential campaign is now accusing of scamming donors. Instead, he defended his work.

“That’s what I do. I provide fundraising data to Democratic and allied organizations,” he said. “We are absolutely integral to those groups in the same way we are integral to the Biden campaign.”

Morgan initially requested to speak off record. He then twice put The Bulwark on hold for several minutes at a time, explaining later that he was consulting with his communications and legal staff. Eventually, he asked to talk by phone the next morning. Half an hour before the scheduled talk time, he sent a text message acknowledging that in addition to his role at PACtion, he is “an officer” for Democratic Power.

Democratic Power is an example of a “scam” PAC:

One recent text included a picture of Barbra Streisand, the famed singer, actress, and longtime Democrat, saying how “excited” she is “to support KAMALA HARRIS!” and offering a “700% MATCH ACTIVE” for donations to help “crush” Donald Trump.

But the text wasn’t from Streisand or the Harris campaign. It was from “Democratic Power,” a group started in October 2022 at an address that appears to be a UPS store in Southeast Washington, D.C.

Democratic Power has few traces online, save stray websites that contain records of its expenses or solicitations, like this one suggesting Hillary Clinton supports them while offering a “700% MATCH ACTIVE.”

That 700-percent match is almost certainly fake. As for the $2.2 million the group has raised since the start of 2023, federal records show that only a small portion ($363,000) was sent to candidate committees like the Biden-Harris campaign and its allied super PAC. Nearly $1.3 million went to operating expenses, often directed to entities with ties to Democratic Power.

Ryan Morgan is a prime example of someone whose activities blur all the lines. He’s literally triple-dipping into the presidential campaign: selling their data list to the Campaign, selling it to other PACs (scam and legitimate), and also using their list to scam donors. Not only is this legal, but our system of weak campaign finance laws, all but encourages this sort of behavior:

[BRENDAN FISCHER, A LONGTIME campaign finance law expert] suggested PACtion was taking advantage of the central role it had come to play within Democratic circles. “Political committees will pay data firms top dollar for access to a dataset that can help them raise the funds needed to run a campaign,” he said, “but the firm’s executives might be tempted to use that same dataset to raise money for its own sake.”

Stein notes that this is an especially hard temptation to avoid when you have a “lightning in a bottle” moment like the record fundraising that the Harris Campaign is currently experiencing.

So why does this continue to happen? A lot of it comes down to the way lawmakers and the courts have interpreted the First Amendment and, in particular, the idea that donations are a form of political speech. The current maximalist approach makes it difficult to regulate how PACs spend their funds (so long as they are meeting certain conditions). Likewise, the FEC has historically been unwilling to launch serious investigations into these sorts of operations, in part because of the partisan construction of the FEC board and a lack of desire by commissioners to investigate cases occurring on one “their side” of the political divide. So for the moment, at least, caveat emptor and I hope you have a SPAM filter on your txt messages.