Daily Beast: ‘Scam’ Political Groups Try New Tricks—and Rake In Millions

A network of shady political groups at the center of a new class action lawsuit for bilking donors out of tens of millions of dollars appears to be attempting a legal work-around in order to continue pulling in the money and evading government scrutiny.

The 17 groups in the network bear the tell-tale signs of “scam PACs”—entities which present themselves to donors as nonprofit charities but register as political groups with the government. The loophole allows the groups to operate in a gray zone outside the reach of the different federal agencies that regulate nonprofits and political groups. …

Paul S. Ryan, general counsel for campaign finance watchdog Common Cause, shared Kappel’s analysis.

“For 20 years I’ve been looking at the issue through the other end of the telescope, at ‘dark money’ nonprofits trying to hide that they’re influencing politics,” Ryan said. “This is the opposite—these PACs appear to be trying to pass themselves off as nonprofits and trying to hide that by spending on the political end. It raises the same concern, though, because in both cases they mislead the government about the use of contributions. And that’s where these scam PACs may be running afoul of the law.”

He pointed out that the sudden change in reporting suggests the groups are either mischaracterizing the nature of their spending now, or had been mischaracterizing it for years previously. “It’s illegal to mislead the government,” he said. “And donors should never be lied to.”

Ryan also noted that “it also sounds like we very well could be talking about a federal wire fraud statute violation,” citing the fact that every one of the more than two dozen donors contacted by The Daily Beast over the course of the last year said they had been deceived.