Ocasio-Cortez, chief of staff illegally moved $885K in campaign contributions 'off the books,' FEC complaint alleges
Rep. Alexandria Ocasio-Cortez taken to task by fellow progressives
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New York. Rep Alexandria Ocasio-Cortez and Saikat Chakrabarti, the progressive firebrand's multimillionaire chief of staff, apparently violated campaign finance law by working to funnel nearly $1 million in contributions from political action committees Chakrabarti established to private companies that he also controlled, according to an explosive complaint filed Monday with the Federal Election Commission (FEC) and obtained by Fox News.
In light of the allegations, a former FEC commissioner late Monday suggested in an interview that Ocasio-Cortez and her team could be facing major fines and potentially even jail time if their actions were knowing and willful violations of the law.
The FEC filing asserts that Chakrabarti established two political action commitees, the Brand New Congress PAC and Justice Democrats PAC, and then systematically transfered more than $885,000 in contributions received by those PACs to the Brand New Congress LLC -- a company that, unlike the PACs, is exempt from reporting all of its expenditures over $200. The PACs claimed the payments were for "strategic consulting."
Although such transfers would not necessarily be improper, the complaint, drafted by the conservative, Virginia-based National Legal and Policy Center (NLPC), argues that the goal of the "extensive" scheme was seemingly to illegally dodge detailed legal reporting requirements of the Federal Election Campaign Act of 1971, which are designed to track campaign expenditures.
Ocasio-Cortez and Chakrabarti, according to the complaint, appeared to have "orchestrated an extensive off-the-books operation to make hundreds of thousands of dollars of expenditures in support of multiple candidates for federal office."
The funds, the NLPC writes, were likely spent on campaign events for Ocasio-Cortez and other far-left Democratic candidates favored by Chakrabarti, who made his fortune in Silicon Valley and previously worked on Bernie Sanders' 2016 presidential campaign. But no precise accounting for the expenses is available, and the complaint asks the FEC to conduct an investigation into the matter immediately.
FILE - In this Wednesday June 27, 2018, file photo, Alexandria Ocasio-Cortez, left, the winner of New York's Democratic Congressional primary, greets supporters following her victory, along with Saikat Chakrabarti, founder of Justice Democrats and senior adviser for her campaign. (AP Photo/Mark Lennihan, File)
"These are not minor or technical violations," Tom Anderson, director of NLPC’s Government Integrity Project, said in a statement. "We are talking about real money here. In all my years of studying FEC reports, I’ve never seen a more ambitious operation to circumvent reporting requirements. Representative Ocasio-Cortez has been quite vocal in condemning so-called dark money, but her own campaign went to great lengths to avoid the sunlight of disclosure.”
Added Anderson: “They believe their cause is so great that they don’t have to play by the rules. They believe that they are above campaign finance law." He charged that Ocasio-Cortez “has been quite vocal in condemning so-called dark money, but her own campaign went to great lengths to avoid the sunlight of disclosure."
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Ocasio-Cortez's office did not return a request for comment.
In announcing the complaint the NLPC pointed to a 2016 interview on MSNBC, in which the 33-year-old Chakrabarti told anchor Rachel Maddow that he wanted to employ a "single, unified presidential-style campaign" model to "galvanize" voters nationally to elect progressives to Congress, while helping candidates avoid the stress of fundraising and managing their own campaigns.
Other legal experts also sounded the alarm on Monday, saying Chakrabarti's unusual arrangement was suspect -- and could even result in jail time for Ocasio-Cortez and her team.
Former FEC commissioner Brad Smith told the Daily Caller News Foundation's investigative unit: “If this were determined to be knowing and willful, they could be facing jail time. Even if it’s not knowing and willful, it would be a clear civil violation of the act, which would require disgorgement of the contributions and civil penalties. I think they’ve got some real issues here.”
And former FEC Associate General Counsel for Policy Adav Noti, who currently directs the Campaign Legal Center, told Fox News that it was a "total mystery" to him why Chakrabarti had established an LLC seemingly to take money from the PAC, rather than simply create a "normal venture," like a consulting business, to provide services for candidates on the books.
"Certainly, it's not permissible to use an LLC or any other kind of LLC or any other kind of intermediary to conceal the recipient or purpose of a PAC's spending," Noti said. "The law requires the PAC to report who it disperses money to. You can't try to evade that by routing it through an LLC or corporation or anyone else."
Rep. Alexandria Ocasio-Cortez, D-N.Y., listens to questioning of Michael Cohen, President Donald Trump's former personal lawyer, at the House Oversight and Reform Committee, on Capitol Hill in Washington, Wednesday, Feb. 27, 2019. (AP Photo/J. Scott Applewhite)
Noti added: "What's so weird about this situation is that the PAC that dispersed so much of its money to one entity that was so clearly affiliated with the PAC. Usually, that's a sign that its whats come to be known as a 'scam PAC' -- one that's operated for the finanical benefit of its operators, rather than one designed to engage in political activity."
At the same time, Noti said, Chakrabarti had provided "long descriptions of why they structured it the way they did -- which is not something a scam PAC would do," because it only draws attention to the unusual setup. And Noti cautioned that there is a tendency for some groups to try to gain attention by invoking Ocasio-Cortez.
"But on the other hand," Noti added, Ocasio-Cortez's "explanations don't make a lot of sense on their face. I read their explanation multiple times, and I still don't understand. If you want to start a business to provide services to campaigns -- many of those are organized as LLC's, and you sell your services."
Instead, Chaktrabarti "started a PAC, which has legal obligations to report all of is incoming and outgoing money, and then used the PAC to disperse its funds to the LLC," Noti said.
Added former FEC chairman Bradley A. Smith, in an interview with The Washington Examiner: "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."
Last week, Anderson also raised concerns over Ocasio-Cortez's decision to announce, with much fanfare, that she would offer a minimum salary of $52,000 to her staffers, and a maximum salary of $80,000 -- far below the typical six-figure highs hit by chiefs of staff and other high-level congressional workers.
Leadership starts with our choices.
That’s why I decided that no one on my staff will make less than $52k/year.
It’s likely one of the highest entry-level salaries on the Hill. We pinch pennies elsewhere, but it’s worth every dime to pay a living wage.rollcall.com/news/congress/…
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Government watchdogs pointed out that federal law requires congressional workers making more than $126,000 a year -- which would ordinarily include Chakrabarti -- to file detailed forms outlining all of their outside income, including investments and gifts.
“Purposefully underpaying staffers in order to avoid transparency is an old trick some of the most corrupt members of Congress have used time and again,” Anderson said.
Speaking to the New York Post, Ocasio-Cortez spokesman Corbin Trent dismissed the FEC complaint, saying the campaign had consulted an elections lawyer and that all money was properly accounted for.
“It was payment for services. ... We believe that complaint is politically motivated, basically intended to create a political story,” Trent told the Post.
Noti told Fox News that Trent's explanation could be plausible -- and if so, it might help Ocasio-Cortez's team avoid civil fraud lawsuits.
Rep. Alexandria Ocasio-Cortez (D-NY) speaks during a march organised by the Women's March Alliance in the Manhattan borough of New York City, U.S., January 19, 2019. REUTERS/Caitlin Ochs - RC1647E36CA0
"One possibility -- a strong possibility, based on the description they put out, is they just got really bad legal advice that somehow said they had to to do this," Noti said. "But regardless, when they decided to use the PAC form, which they did, they subjected themselves to all the legal requirements that come with that."
Election laws are complicated, Noti added, and there have been some erroneous recent reports related to Ocasio-Cortez's campaign. For example, FEC filings reviewed by Fox News show that Ocasio-Cortez’s congressional campaign paid the Justice Democrats PAC more than $35,000 from 2017 to 2018 for "web services," “strategic consulting,” and "campaign services."
While some outlets have incorrectly reported that federal rules generally prohibit PACs from providing more than $5,000 in services to campaigns, Noti told Fox News that the payments were likely proper so long as they were for the fair market value of the services rendered.
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In terms of possible penalties, Noti said that Ocasio-Cortez's campaign could be facing FEC fines if it followed bad legal advice and made reporting errors. But civil or even criminal fraud statutes, as opposed to campaign finance laws, would potentially kick in if it were determined that Chakrabarti had intentionally tried to hide the money to use for illicit expenses.
Monday's filing comes on the heels of a separate complaintby the Washington, D.C.-based Coolidge Reagan Foundation, which alleged last week that the Brand New Congress PAC may have illegally funneled thousands of dollars to Ocasio-Cortez's live-in boyfriend, Riley Roberts.
It was first reported late last month that the Brand New Congress PAC paid Roberts during the early days of the Ocasio-Cortez campaign. According to FEC records, the PAC made two payments to Roberts – one in August 2017 and one in September 2017 – both for $3,000.
The FEC complaint specifically cites the use of "intermediaries" to make the payments, "the vague and amorphous nature of the services Riley ostensibly provided," the relatively small amount of money raised by the campaign at that stage and "the romantic relationship between Ocasio-Cortez and Riley" in asserting the transactions might violate campaign finance law.
The Coolidge Reagan Foundation -- a 501(c)(3) -- is requesting that the FEC look into the payments for potential violations on relevant campaign finance laws that state that campaign contributions “shall not be converted by any person to personal use” and that “an authorized committee must report the name and address of each person who has received any disbursement not disclosed.”
Fox News' Perry Chiaramonte contributed to this report.
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