Is the Hillary Victory Fund using state democratic committees to launder donations from wealthy individuals to the Democratic National Committee? Evidence gathered by Bloomberg would certainly seem to suggest so. So how does it work? Campaign finance laws specifically restrict the amount of money any single person can give to individual candidates ($2,700), a party's various state committees ($10,000) as well as a party's national committee ($33,400). In theory, therefore, that would imply a person would be capped out at $46,100 if he contributed the max his Presidential candidate, his party's national committee and his party's state committee. But, that's just a narrow "interpretation" of the "intent" of the campaign finance laws and Hillary isn't really all about "intent"...just ask FBI Director Comey.
So, the Hillary Victory Fund has come up with a clever way to use state democratic committees (of which there are 33) as money-laundering tools to effectively increase the amount that can be contributed to the Democratic National Committee from $33,400 to $363,400 (it's only like 1,000% more than intended).
How do they do it? Well, the rules say that a single person can only contribute $10,000 to any one State. That said, they don't restrict people from contributing $10,000 to multiple states. Moreover, there are no restrictions on transfers of funds from Democratic State Committees to the Democratic National Committee. See where we're going with this?
Effectively the Hillary Victory Fund acts as a "bundler" which collects large donations from wealthy investors. Per the diagram below, contributions are then maxed out to "Hillary For President" and the "Democratic National Committee." Any remaining funds are then spliced up and sent in $10,000 increments to the 33 different State Democratic Committees. That said, the state committees simply act as flow through entities which subsequently pass the contributions from the Hillary Victory Fund along to the Democratic National Committee. Isn't that neat?
The beauty of this system, of course, is that once the money is aggregated at the Democratic National Committee it becomes very "flexible." The DNC can then use that money to support Hillary and/or any of a number of contentious races in any state it wants (e.g. battleground states).
At this point, you're probably thinking this is just another Hillary conspiracy theory...surely none of this can be proven, right? Well, actually it's pretty easy to track and is happening fairly regularly in the Democratic Party. Bloomberg provided the following example tracking a $343,400 donation from hedge fund manager, Donald Sussman, which was made to the Hillary Victory Fund on March 25, 2016. In April, the maximum of $33,400 of Sussman's donation was transferred to the Democratic National Committee. Then on April 25, 2016, another $10,000 (again the per state maximum) of Sussman's money was transferred to the South Carolina Democratic State Committee along with $169,000 of money from other donors. Wouldn't you know it, that very same day the South Carolina Democratic State Committee passed the full $179,000 on to the Democratic National Committee. Almost like the donation caps never existed!
In fact, Bloomberg found that 83% of all money distributed by State Democratic Committees to the National Committee originated from donors that had already maxed out their $33,400 contributions to the DNC.
That said, as Robert Kelner of Covington & Burling points out, what the Hillary Victory Fund is doing isn't technically illegal. Sure, it probably violates the "intent" of the law but we're not gonna split hairs are we?
“I’m not aware of any case law or regulations that would prohibit a state party from transferring to a national party committee funds raised through a joint fundraising committee,” Robert Kelner, an election law expert at Covington & Burling said. “But as a practical matter, it does appear that the DNC may be using Hillary Victory Fund as a mechanism for allowing donors to give more to the DNC indirectly than would otherwise be permitted directly.”
Oddly enough, Bloomberg pointed out that there is no evidence of similar activities within the Republican National Committee.
There’s no sign that the Republicans are following the same strategy. Donald Trump’s joint fundraising committee has yet to transfer any money to the 11 state Republican parties that are part of the arrangement. So there you go folks. Don't you feel proud to be an American?