According to a published report this week, the Federal Election Commission is unlikely to vote to audit the Obama campaign finances, and will sweep aside a formal demand for an full audit that was filed by the Republican National Committee on Oct. 6.
But interviews with current and former FEC officials, as well as a review of FEC commissioners' public statements, suggest that the commission could pursue an “audit for cause” of the Obama campaign, based in part on allegations of widespread fraud and illegal donors as reported by Newsmax.com and other publications during the election season.
“There are standards in a bureaucratic sense for who might be eligible for an audit for cause,” said FEC spokesman Bob Biersack. “Those are objective standards. Committees that meet those standards are eligible to be audited.”
Confusion or concern with information in the campaign finance reports submitted by the committees are generally what trigger such an audit, Biersack said.
Such concerns can include a significant number of donors who have exceeded the limits of $2,300 per election. According to the Obama campaign’s own disclosures, more than 4,000 of its donors fit that bill.
Those concerns also can include receiving money from foreign donors. The FEC compiled a list last month of more than 16,000 contributions from overseas sources. A Newsmax survey of roughly one-fifth of those names found 118 individuals who appeared to be foreign citizens.
The Republican National Committee based its demand for an audit of the Obama campaign on reports from Newsmax and other media organizations that suggested widespread irregularities, including taking money from foreign donors and from donors with fictitious names.
“We’re still awaiting action on our complaint and will press forward,” RNC spokesman Alex Conant told Newsmax on Friday.
Three Republicans and three Democrats now sit on the FEC as commissioners. But the commission was crippled until June because of partisan wrangling.
Helping impede the FEC was the junior senator from Illinois, Barack Obama, who placed a “hold” on a Republican nominee in October 2007. That action had the effect of keeping the commission on the sideline for the entire primary season.
But will the commission act now? Incoming commissioners Don McGahn, a Republican, and Cynthia Bauerly, a Democrat, insisted that they would hear cases at the FEC in terms of their merits, not party affiliation.
Even though they had worked on partisan campaigns in the past, Bauerly told senators during her confirmation hearing in May that “the most important determination is to be objective and to read the law as objectively and fairly as possible.”
McGahn said he doesn't believe commissioners are partisans. “Ultimately, the commission’s core constituency is the general public,” he said at the May 21 hearing.
Obama campaign spokesman Ben LaBolt dismissed talk of an audit “We have had a first rate compliance operation for an unprecedented national grassroots fundraising effort,” he told reporters this week.
But the Obama campaign more often than not failed to respond within the statutory 60 day limit to the more than dozen letters it received from the FEC asking for clarification of apparent foreign donors, or the refund of excess contributions, a Newsmax review of the correspondence shows.
For example, on April 15, the FEC asked the Obama campaign to refund or reassign contributions from two brothers in the Gaza Strip, Hosam and Monir Edwan. Together, they had given more than $31,000 to the Obama campaign. But much of the money had yet to be returned three months later.
Most of the contributions from the Edwan brothers were made in October 2007, so the Obama campaign was able to use the money for cash flow when it needed it the most and when the FEC was down to just two commissioners.
In the April 15 letter, the FEC failed to point out that the two brothers had listed their address as “Gaza Strip, Rafah,” and had obviously used a foreign currency credit card to make the donations.
On May 6, the FEC questioned excessive contributions from a woman identified as Deborah Heitz of La Canada, Calif. As of Jan. 31, she had given $17,900 to the campaign, nearly eight times the limit per election.
In this case, the Obama campaign began refunding the money soon afterwards. But once again, they had gained precious cash flow at the peak of the primary campaign, without ever paying a price.
On June 25, FEC analysts sent the Obama campaign a sharply worded notice with a 58-page single-spaced list of donors whose contributions were over the limits.
The June 25 letter first identified excess contributions from a donor named “Will, Good” from Austin, Texas.
The list of Mr. Good Will’s contributions the FEC sent the Obama campaign ran seven pages. And yet, the campaign was slow to start returning the money.
As Newsmax revealed in September, the Obama campaign still showed a positive balance from Mr. Good Will of $8,950 as of their Sept. 20, 2008 report to the FEC, three months after they were warned about these contributions in June.
[Editor's Note: See "Secret, Foreign Money Floods Into Obama Campaign."]
The FEC letters all include a stern warning, “Failure to adequately respond by the response date noted above could result in an audit or enforcement action.”
And yet, despite repeated delays or just downright refusals to respond to the FEC letters, the Obama campaign has yet not been audited nor has the FEC announced any enforcement action.
Massie Ritsch, a spokesman for the Center for Responsive Politics, saw little reason for an audit. “The assumption is, the more money you raise, the less potential there is for any single individual or groups of individuals to corrupt your campaign.”
There had been “a few instances of contributions that shouldn’t have made their way into the Obama campaign or the McCain campaign,” he said. But when it came to Obama, “the corrupting influence of a few contributions here or there that shouldn’t have made it in the door is negligible.”
The Center for Responsive Politics lobbied heavily for the McCain-Feingold campaign finance reform act of 2002, which imposed limits on how much federal candidates could raise and spend in their campaigns. The Washinton, D.C.-based group calls itself “nonpartisan, independent, and nonprofit.”
In case you thought that position would have brought them to criticize the Obama campaign for abandoning the McCain-Feingold campaign finance limits, think again.
“Obama's victory in the general election was aided by his tremendous fundraising success,” the center's Web site says.
“After becoming his party's nominee, Obama declined public financing and the spending limits that came with it, making him the first major-party candidate since the system was created to reject taxpayers' money for the general election.”
On the day after the election. RNC Chairman Mike Duncan told reporters at the National Press Club that public financing of presidential campaigns was dead.
“Presidential campaign finance as we know it died last night,” he said. “No major candidate will ever again submit to public funding restrictions. Less than two election cycles since the passage of campaign finance reform, the system has failed.”
On Thursday, the RNC filed two additional complaints, one in Louisiana, and the other in Washington, D.C., challenging the constitutionality of key parts of the Bipartisan Campaign Reform Act, the official title of the 2002 McCain-Feingold campaign finance law.
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