Consultants are weighing the fallout from the feds’ bust of two brothers accused of running a multi-million dollar scam PAC operation.
Particularly troubling for Republican fundraisers is that Robert and William Tierney, the Arizona-based brothers behind the alleged scheme, were pitching conservative donors by claiming to be groups like the “Republican Majority Campaign” and “Pro-Life Committee, a project of the national campaign.” In the latter case, their fundraising efforts during the 2016 cycle drew media scrutiny for being a scam PAC.
But it wasn’t until May 17 that they were arraigned by federal prosecutors from the Southern District of New York in court in Phoenix. Their arrest sends the message that more enforcement is coming, according to Rob Carter, a veteran GOP fundraiser.
“This is only the tip of the iceberg,” Carter told C&E. “But it looks like [the feds] think they have built an airtight case here or they wouldn’t have moved on it.”
Longer term, he predicted it could help improve the Republican side of the fundraising industry.
“I’m afraid, though, that the short-term ramifications for conservative causes are negative because donors, conservative donors and donors in general, naturally will be more skeptical about giving to anything – at least for a while,” he said.
In the charging documents, the feds allege that the Tierney brothers, who frequently operated using aliases, raised money for a web of nine scam PACs purportedly operating on behalf of Republicans, those with autism and law enforcement.
They solicited donations through fundraising call centers under false pretenses and then laundered the money through pass-through entities with “names that suggested activities related to marketing, consulting and communications efforts.” The donations were always below $200 to avoid FEC reporting requirements.
Between 2014-2017, the scam PACs raised more than $23 million, with more than $14 million going to phone and direct mail costs, $2 million going to overhead, $3 million to William Tierney and $600,000 to Robert Tierney, according to the charging documents. An unnamed co-conspirator received $250,000.
Less than 1 percent went to candidates, who received $109,000 in donations from the scam PACs with names like National Campaign PAC, Grassroots Awareness PAC and Americans for Law Enforcement PAC, according to the feds.
While the charges stem from a period spanning just three years, the feds allege that over the past decade, the Tierneys’ scam PACs raised more than $50 million.
U.S. Attorney Geoffrey Berman told the AP that in 2016 some 8,000 PACs collected more than $4 billion — roughly half of the total contributions.
"Our investigation continues," said Berman. "It's an important area.”
Ann Ravel, a former FEC chairwoman, sounded a note of caution following the announcement. “The facts in this case are very egregious,” she said.
“There was virtually no money at all spent on political activity in any of the numerous PACs. One defendant used a fraudulent identity, and the money was funneled through shell entities.”
Ravel has advocated for lawmakers to give the FEC more authority to enforce against scam PACs, including “forbidding organizations from spending too little on genuine political activity or prohibiting the leaders of these organizations from funneling contributions into their own pockets.”
Now, she noted that some scam PACs have “at least a patina” of legitimacy and spend some money on political communications. But that makes the people behind them harder to prosecute.
“I hope that the DOJ will take all scam PAC cases seriously so that when people donate to political groups with the expectation that they are contributing to an effort they believe in, that is, in fact, where most of the money actually goes,” she said.
Dan Backer, a campaign law attorney who has represented PACs, echoed Ravel’s assessment that what the Tierney brothers are accused of is so egregious that the case doesn’t indicate a federal crackdown is looming.
“This has a lot less to do with the political fundraising industry [than] some particularly bad actors, and unfortunately those people exist in every profession,” he said.
Still, Backer noted there’s an ongoing grand jury investigation in Virginia into Conservative StrikeForce, the alleged scam PAC that was linked to Strategic Campaign Group. The Maryland-based firm was raided by the FBI last May.