Republican Group Launders Secret Cash, But Was It Illegal?

Citizens United invited corporations, unions and other groups to find ways to circumvent longstanding limits on their political spending; a bombshell report today in Politico exposes just how skillfully they’ve answered the challenge.

The story recounts how the Republican State Leadership Conference, one of the first “outside groups” established in Citizens United’s wake, coordinated with the Alabama Republican Party to launder contributions and conceal their sources, potentially violating state law.

Mike Hubbard, then-chair of the Alabama GOP, had a problem – he wanted to hit Native American tribes flush with profits from gambling casinos for campaign cash, but avoid the potential embarrassment of directly associating the party with gambling interests. His solution: route industry gifts to the RSLC, which then spent every penny on races in Alabama — with no hint to the public about the true source of the money.

The arrangement apparently raised eyebrows within the RSLC; the group’s board engaged a prominent Washington law firm, BakerHostetler, to look into it.

Says POLITICO:

The confidential report, bearing the logo of BakerHostetler, offers a rare window into the Wild West of unrestricted campaign spending. That sector of the political world has aroused widespread suspicion among campaign finance watchdogs even as powerfully funded outside groups and their leaders have become increasingly part of the political mainstream.

The RSLC is a prime example of the rise of free-spending and largely opaque groups that have taken center stage in national politics over the last few election cycles.

Politico said that RSLC raised about $1.1 million from Alabama between January 2009 and March 2011, according to the Baker-Hostletler report. At the same time, RSLC’s Alabama polticial action committee put $1.4 million into the state party and other Alabama GOP groups. The maneuver prompted BakerHostleter to warn the RSLC board that “the path of the Alabama money could trip over a state law that bans ‘making or accepting a contribution by one person in the name of another,’” Politico said.

No one was ever charged with any crimes in the matter. The RSLC has parted company with Scott Ward, a former RSLC president whom Politico reports confirmed the existence of a “one-for-one deal, under which Hubbard would raise money for RSLC in return for which RSLC would contribute the same amount of money back into Alabama.”

Quite a few of the folks involved in the scheme have moved on to greater prominence – Mike Hubbard is now Speaker of the Alabama House, and Ed Gillespie, who oversaw the RSLC’s fundraising at the time, is now the GOP  Senate nominee in Virginia.

The RSLC was at the forefront of the GOP’s 2010 takeover of the House of Representatives, and is poised to play a key role in the party’s attempt to take the Senate in 2014. What role this newly discovered skeleton in their closet will play in the organization’s future is anyone’s guess.