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The suspicion is, Senator Marco RubioRepublican Florida Senator, Republican Virginia Attorney General Jason Miyares Millions of dollars may be funneled into candidates’ campaign coffers through a technique known as “smurfing.” We’re not talking about little blue cartoon characters making donations, although if the allegations are true, that might be the same thing.
What is campaign finance smurfing? It is a form of campaign money laundering that involves splitting large donations to conceal the true source of funds and circumventing limitations on the amount that can be donated to a particular candidate. It also involves widespread mail and wire fraud and the misuse of personal information of unknowing members of the public in violation of federal and state campaign finance laws.
Several important rules apply to the fundraising of congressional and presidential campaigns under the Federal Election Campaign Act (FECA).
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beginning, Federal law strictly prohibits Prohibit corporations and labor unions from making direct donations to federal candidates. Second, FECA Bans Foreigners Foreigners are prohibited from donating. Only U.S. citizens and permanent resident aliens may donate to the campaigns of individuals running for Congress or President (as well as state and local office).
Third, federal law limits the amount an individual can donate to a candidate. Now 2023-24 During an election period, individuals cannot contribute more than $3,300 to a primary election and the same amount to a general election. Other limits apply to contributions to PACs and party organizations.
The Federal Election Commission, where I once served, has civil enforcement authority for violations of FECA, while the U.S. Department of Justice has criminal enforcement authority for willful and deliberate violations of the law. As an example of a criminal violation related to smurfing, consider a case I saw while I was on the commission.
A senior partner at one law firm told employees that if they donated the maximum amount to a presidential candidate, he would reimburse them for the donations, a practice known as a “conduit donation” in which lawyers tried to get around contribution limits. It is illegal to make campaign contributions in someone else’s name.
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One clue for the Justice Department was that the law firm’s staff had never made political contributions before, but suddenly they were giving the largest amounts, even though they all earned salaries far lower than the firm’s senior partners.
So how does all this fit into smurfing? Imagine an unknown perpetrator deposits a large sum of money into a bank account. The perpetrator ties it to a company’s payment credit card system, which is often used by companies to generate unique credit card account numbers that their employees can use for transactions. The perpetrator then generates the credit card account numbers without the public’s knowledge and uses these individuals as dummy donors for political contributions, perhaps through an aggregator such as ActBlue, a Democratic fundraising website.
Where do these criminals get names and addresses? There are a variety of possible sources, including campaign donor lists on the FEC website. Using individuals’ real names and addresses, criminals can raise thousands of donations to multiple candidates without the candidates’ knowledge, with most donations being small amounts to avoid suspicion.
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Miyares’ letter to ActBlue alleges that “hundreds of thousands of dollars” of “facially implausible and questionable” donations have been made through ActBlue in Virginia. Miyares wrote that “donors in Virginia reported making multiple donations each day, totaling tens of thousands of dollars.” However, many listed their occupation as “unemployed” or “retired,” and given the circumstances, the donations appear to have been made “from fictitious donors or dummy accounts” and “without the reported donors’ consent or knowledge.”
Senator Rubio also raised questions about these transactions in his FEC complaint, specifically the fact that ActBlue “does not require a CVV number as part of the online transaction.” A CVV number is a three-digit “card verification number” found on the back of a credit card that is used to verify the legitimacy of a credit card transaction. Senator Rubio said not requiring a CVV number amounts to a “deliberate lack of security” in ActBlue’s donation process.
ActBlue strongly denies these allegations. investigation U.S. House of Representatives Committee on Administration and Jason Miyares of ActBlue say What he’s doing are “partisan attacks and scare tactics” designed to undermine “small-dollar” Democratic donors.
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The only way to get to the truth is to investigate these suspicious contributions, which means the Federal Election Commission and the Department of Justice, as well as state attorneys general under applicable state fraud laws, will need to be busy talking to donors listed in the reports filed to see if they really made these contributions and if they were not prohibited from making them.
All of these law enforcement agencies have a duty to determine whether there are “smurfs” using money laundering to illegally interfere in elections.
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