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Wang: When It Comes to Campaign Cash, There Will Be Scandal

In 2007, Hollywood portrayed the upheaval brought on by the California oil rush in a movie aptly titled, “There Will Be Blood.” As we head into the 2012 elections, critics are predicting similar turmoil from the rush of money in politics brought on by the Supreme Court’s Citizens United decision.

This year, political spending is expected to total $11 billion — more than double the $5.3 billion spent in the 2008 presidential cycle. One Congressional champion of controls on campaign cash has been buzzing around with unsubstantiated allegations of “major scandals.”

Here in the nation’s capital, residents are already hearing the drumbeat of scandal in their own backyard. To date, three associates of Mayor Vincent Gray have pleaded guilty to criminal conduct during his 2010 campaign. In the latest bombshell, PR consultant Jeanne Clarke Harris admitted to funneling more than $650,000 in corporate funds from city contractors to what media have portrayed as a “shadow campaign” for Gray. Is this the canary in the coal mine of corruption that will collapse on us in November?

Hardly. Far from validating all the fear mongering, the Gray scandal demonstrates the Supreme Court got it right when it said that independent spending does not pose the same danger of corruption as contributions given directly to candidates. All of the transgressions in the mayoral race are the classic campaign finance violations of yesteryear, which remain (and likely will always remain) violations, and which have nothing to do with the type of purported “corruption” that critics are going on about.

To understand these points, it is first necessary to explain the violations to which Harris actually pled guilty. Regarding the alleged “shadow campaign” — a term that implies the effort was being run outside of Gray’s official campaign — the plea agreement suggests this is inaccurate. Rather, Harris admitted to using funds from corporations owned by Gray supporter Jeffrey Thompson to pay for yard signs, banners, T-shirts, brochures and other campaign paraphernalia, and delivering these items to Gray’s campaign offices.

In addition, Harris admitted to using corporate funds to bankroll voter identification and get-out-the-vote activities for Gray, at the request or suggestion of Gray’s staff. In coordination with Gray’s campaign, Harris admitted to hiring canvassers, consultants and drivers; and paying for their food and lodging, as well as for rental vans. In most jurisdictions, these corporate expenditures are treated as prohibited and/or excessive in-kind contributions, because services were coordinated with the campaign and materials were delivered directly to campaign offices. In drafting its campaign finance regulations, the District of Columbia apparently attempted but failed to specify that coordinated expenditures are to be treated as in-kind contributions. Prosecutors were able to charge Harris, nonetheless, with failing to report these activities as independent expenditures.

Aside from this coordinated spending on the mayoral race, Harris also pled guilty to using funds from Thompson’s corporations to reimburse tens of thousands of dollars in monetary contributions to federal and D.C. candidates. Colloquially, this practice is known as making “straw contributions.”

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