Mystery money floods Alabama in Senate race's final days

Super PACs backing both Roy Moore and Doug Jones are exploiting legal loopholes that allow them to hide their donors

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Alabama Senate candidates Roy Moore, left, and Doug Jones, right. 

AP

A last-minute infusion of cash is deluging the already unpredictable special Senate election in Alabama, and outside political groups backing both candidates — Republican Roy Moore and Democrat Doug Jones — are exploiting legal loopholes to hide their donors until after the Dec. 12 vote.

Some super PACs — groups that may accept and spend unlimited amounts of cash in elections — haven’t publicly disclosed anything at all. Others have found creative ways around unveiling the backers fueling final pushes in the waning days of the race, when voters are bombarded with the most ads, mailers and phone calls. 

“It’s a failure of federal election law, and donors have reasons for wanting to stay hidden,” said Brett Kappel, an election law specialist and partner at Akerman LLP. “We have an extremely controversial candidate that a lot of donors don’t want to be associated with, and on the other side, people and companies may be worried about retribution if they publicly oppose Moore and he wins.”

Several of the super PACs, which operate independently of the candidates, are timing their spending to avoid triggering disclosure requirements. As of Thursday, 22 groups spent money boosting or blasting Alabama candidates since Oct. 1. Yet only half of them disclosed the names, addresses and contribution amounts of people who, through Nov. 22, gave them money.

One newly-minted liberal group, Highway 31, aired millions of dollars of ads, despite having no money in its bank account. A conservative character scorched voters’ inboxes with fiery rhetoric, yet the author’s identity proves a challenge to uncover. 

The effect of the late outside spending is tough to predict in a race that has already seen more crazy twists than your average political thriller. 

Moore seemed a lock to win Sen. Jeff Sessions’ former seat. But a Nov. 9 Washington Post article was the first of several reports detailing accusations that Moore engaged in inappropriate sexual behavior with teenage girls, upending the race and boosting the chances of Jones, a former U.S. attorney. Moore has denied allegations of past non-consensual relationships with teenagers. 

Political powerhouses who put millions of dollars behind Sessions’ replacement Republican Sen. Luther Strange in the primary, including the Mitch McConnell-connected Senate Leadership Fund and the U.S. Chamber of Commerce, have so far declined to support Moore. 

Others have dithered: The Republican National Committee and National Republican Senatorial Committee initially cut Moore off, but after the president personally endorsed Moore, the RNC jumped back in. The National Rifle Association, after staying quiet through early December, on Tuesday spent almost $55,000 mailing anti-Jones postcards to prospective Alabama voters.

Second-and-third-tier super PACs with scanty track records and little known about them have jumped in to fill the gap. Those groups, combined with a handful of bigger names such as the Human Rights Campaign and the National Association for Gun Rights PAC, have spent more than $5.7 million on ads, mailers and email blasts since Moore beat Strange in the Sept. 26 Republican runoff. 

The $4.4 million boosting the Democratic candidate comes mainly from one mysterious super PAC and a group founded by Evan McMullin, who ran for president as an independent candidate in 2016. Moore, meanwhile, trails behind with the $1.3 million in support from a smattering of smaller entities. 
 

Meanwhile, Jones’ campaign committee raised more than $10 million from Oct. 1 to Nov. 22, while Moore’s committee raised a comparatively paltry $1.8 million. Politico reported that Jones’ campaign, as of late November, had spent about seven times more than the Moore campaign on TV ads. Campaigns, unlike super PACs, are subject to limitations: They can accept up to $2,700 from individuals and $5,000 from company PACs, and no money from corporations.

Jones’ campaign refused to comment on outside groups’ involvement in the race.

The mystery liberal behemoth 

On Jones’ side, a super PAC called Highway 31 spent nearly $4.2 million on mailers and online and television ads boosting Jones to date.

Who’s funding this massive effort? That’s not clear: Highway 31 is employing the legal, if rarely used, strategy of doing all its business on credit. That means it won’t have to reveal donors — if it even has any, at the moment — until several weeks after Alabama voters have voted.

The super PAC, ostensibly based in Birmingham, Alabama, disclosed carrying $1.1 million worth of debt to established political vendors such as Bully Pulpit Interactive LLC, which worked with President Barack Obama’s campaign and other high-profile liberal groups. It also owes millions of dollars to Waterfront Strategies, the preferred media company for House Majority PAC and Majority PAC, the main super PACs that work to elect Democrats to Congress.

The super PAC reports having no cash at the moment.

Asked about its financial arrangement with its vendors and who’s ultimately footing their bills, Highway 31 declined to comment.

“Highway 31 continues to follow every appropriate rule and regulation,” said Adam Muhlendorf, an Alabama communications consultant who heads Highway 31, in an email to the Center for Public Integrity.

Jennifer Kohl, vice president of GMMB, the parent company of Waterfront Strategies, said the firm is “fully compliant, and we don’t discuss client information.” Bully Pulpit Interactives did not return a request for comment.

But Paul S. Ryan, vice president for policy and litigation at Common Cause, questioned the arrangement.

“What does this political committee have, what is the collateral they offered, in order to instill a safe feeling with their vendors, that showed they’ll be able to pay these vendors back?” he asked. 

Election law expert Kappel notes that political committees aren’t obligated to report pledged donations before the money comes in. He added he wouldn’t be surprised if Highway 31 was connected to the Democratic Party somehow.

One of the group’s ads shows a closeup of a young girl’s face as a voiceover says, “If you don’t vote, and Roy Moore — a child predator — wins, can you live with that? Your vote is public record, and your community will know if you helped stop Roy Moore.”

The ad prompted Alabama Secretary of State John Merrill to release a statement Tuesday reminding Alabamians that who they voted for is not a matter of public record and not available to “anyone at anytime.” Google also agreed to remove the ad from YouTube and other platforms it owns.

“We are not really focused on the groups, we are focused on their messages,” said Brett Doster, a strategist for the Moore campaign, in an email. “The Highway 31 super PAC has been deceitful in a number of ways, and they should be investigated by the Federal Election Commission. It is real deception about saying that the way that people vote will be a public record.”

Super PACs need not disclose

And if a super PAC popped up in the race’s final days and spent a truckload of last-minute cash, it could legally hide the identities of its donors until 2018. (Such a scenario has played out before.) That’s just what Drain the DC Swamp PAC did: The Nashville-based group formed Nov. 30 and reported spending $10,000 on pro-Moore direct mail. Drain the DC Swamp PAC treasurer Elizabeth Curtis did not return a request for comment.

A handful of groups were exempt because of a quirk in federal election law: Instead of filing a financial disclosure report less than two weeks before Tuesday’s election, they instead exercised their legal option to file “monthly” reports that, to date, only reveal their donors through the end of October. In at least one case, a well-known megadonor funneled hundreds of thousands into a pro-Moore group.

This way, these groups aren’t required to reveal the identities of any of their contributors in November and December — at least, not until after Alabama voters have selected either Moore or Jones. And these weeks are when voters are flooded with messaging.

Others, such as the pro-Moore group Our Future in America Inc, used another work-around. In late September, it produced a series of ads promoting Moore. Then, during October and November, it went silent. But in early December, it emerged again, spending $35,000 on pro-Moore social media ads. The practical implication is that Our Future in America Inc. won’t have to publicly acknowledge its last-minute donors until after the election.

Another group, Patriots for Economic Freedom, failed to file mandatory campaign finance disclosure reports due in October and November.

Patriots for Economic Freedom’s treasurer Alexander Hornaday, when contacted by the Center for Public Integrity, said his organization simply forgot to file the disclosures.

“Thank you for your email as it reminded me that … we must file additional reports in relation to special elections,” Hornaday said in an email.

The pro-Moore hybrid PAC turned in the forms to the FEC five days late. The filings show the group garnered $26,000 in small-dollar donations in the last four months.

They also show Patriots for Economic Freedom spent almost all its money, or $90,000, on a consulting firm called Amagi Strategies for sympathetic email campaigns that cast doubt on Moore’s accusers and blame the “D.C. establishment.” Amagi Strategies is a New York City-based firm that shares an address with Patriots for Economic Freedom, a fourth-floor East Village apartment. Amagi is run by 29-year-old Tyler Whitney, the founder of the super PAC that employs it. Whitney ran a similar PAC that claimed to raise money to support conservatives, Conservative America Now, that benefited Whitney’s own firm

Whitney did not return multiple requests for comment, though in 2014 he told Breitbart that Patriots for Economic Freedom “is just another grassroots conservative PAC trying to make a difference.”

Lingering questions

At least two groups elicit more questions about their operations than answers.

A Lexington, Kentucky-based group named Club for Conservatives has been blasting out enraged emails signed by the treasurer, Brooke Pendley, a self-described “fire-breathing young female conservative patriot.” The emails berated liberals for their “feminazi hypocrisy,” attacked the character of women accusing Moore of sexual assault and bragged about the lack of financial help from the Republican establishment.

“If you’re a conservative, the slightest allegation that you dated younger women forty years ago (no matter how respectfully) becomes an excuse to demand that you withdraw or resign, as you are unfit to serve,” Pendley wrote in a Nov. 21 email. “LET ME BE ABSOLUTELY CLEAR: I am not disgusted in Judge Moore, or in what his dating habits were forty years ago. No, I am DISGUSTED by the gutless and STUPID response [of] our so-called Republican leadership,” in an email from Nov. 13.

The super PAC created this July has not reported any donors or spending to the FEC. The group is not required to do so until it collects or spends $5,000 or more, or exceeds $10,000 in independent expenditures. A public records and social media search of variations of Alexa Brooke Pendley by the Center for Public Integrity could not locate any additional information on the treasurer. The group did not return email requests and phone calls for comment.

Club for Conservatives has gone to notable lengths to reveal as little about itself as possible.

Roll Call reported the group used the same email address as another pro-Moore group, Solution Fund PAC. Club for Conservatives’ website domain was registered to a Tuscaloosa, Alabama post office box. The domain registration included a phone number of a man named Bob Blain, who told Roll Call he had never heard of Club for Conservatives before and that he did not register the domain. The address included on the FEC filing is a coworking space office, Your Smartoffice Solution, that told Roll Call this super PAC was not a client.

Another out-of-state group called IndianaFirst has yet to even register with the FEC — something it must legally do within 10 days of raising or spending more than $1,000.

It’s unknown how much money IndianaFirst has raised, but it’s captured Moore’s attention. His campaign thanked the super PAC for its endorsement and plans to run ads supporting Moore.

IndianaFirst’s leader, Caleb Shumaker, is a 25-year-old man who previously led the National Youth Front, a branch of white nationalist group American Freedom Party, according to NBC News. Shumaker told NBC he did not share the group’s racist views.

U.S. Senate hopeful Mike Braun, an Indiana Republican, released a statement at the end of November saying his campaign ended its contract with Shumaker, who worked as a contract employee collecting signatures, after the campaign learned of his ties to the white nationalist group. Shumaker disputed this, saying he left for family reasons.

NBC reported IndianaFirst formed in early November. 

What we know

While many of the super PACs and other political groups involving themselves in Alabama’s special election are new organizations, at least one well-established political megadonor is helping fuel one of them.

Richard Uihlein, the CEO of shipping supplies distributor Uline Inc, pumped $100,000 into a pro-Moore group, Proven Conservative PAC, formed this August. The group received half of Uihlein’s funds on Nov. 22 — two weeks after the sexual assault allegations surfaced, according to federal disclosures.

“This PAC was formed by friends of Judge Moore because he has been a consistent and principled conservative throughout his career,” said Mike Hanna, a Proven Conservative PAC spokesman.

Proven Conservative PAC reported spending $234,000, mainly on TV ads boosting Moore, paid to a Plant City, Florida-based firm called Te Deo Gloria LLC linked to Design4 Marketing Communications

Almost half of the funds raised by Baton Rouge-based Solution Fund PAC came from one source: its treasurer, Robert San Luis, investor and “mobile home park expert.” He founded Excalibur Fund, a real estate investment firm specializing in RV and mobile home parks.

But a majority of the pro-Moore super PAC’s spending went back to a company with ties to San Luis, the Daily Beast found. At least $143,000, or 60 percent of its independent spending, went to two vendors with the same Newport Beach, California, UPS store address and unit number: Digital Victory and Digital Triumph. According to Louisiana incorporation records, the registered agent and manager of Digital Triumph LLC is San Luis. Solution Fund PAC paid these two companies for direct mail campaigns, calls and Internet and radio ads.

San Luis did not respond to requests for comment.

“With your financial support we are discrediteing [sic] Roy Moore’s accusers by directly reaching Alabama voters with the facts just uncovered on the ground,” a Nov. 30 email blast said. “Click here to help us get Alabama voters the truth.”

This article was co-published by NBC News.

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