http://www.politico.com/story/2016/07/dnc-leak-clinton-team-deflected-state-cash-concerns-226191PHILADELPHIA — Leaked emails show the Democratic National Committee scrambled this spring to conceal the details of a joint fundraising arrangement with Hillary Clinton that funneled money through state Democratic parties.
During the three-month period when the DNC was working to spin the situation, state parties kept less than one half of one percent of the $82 million raised through the arrangement — validating concerns raised by campaign finance watchdogs, state party allies and Bernie Sanders supporters.
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The arrangement, called the Hillary Victory Fund, allowed the Clinton campaign to seek contributions of hundreds of thousands of dollars to attend extravagant fundraisers including a dinner at George Clooney’s house and a concert at Radio City Music Hall featuring Katy Perry and Elton John. That’s resulted in criticism for Clinton, who has made opposition to big money in politics a key plank in her campaign platform.
Clinton’s allies have responded publicly by arguing that the fund is raising big money to boost down-ballot Democratic candidates by helping the 40 state parties that are now participating in the fund.
But privately, officials at the DNC and on Clinton’s campaign worked to parry questions raised by reporters, as well as Sanders’ since-aborted campaign, about the distribution of the money, according to a cache of hacked emails made public late last week by WikiLeaks.
The emails, released the day before the opening of the Democratic National Convention here, exposed DNC staffers seemingly undermining Sanders’ insurgent campaign against Clinton. The leak hampered the convention’s mission of uniting the party by convincing fervent Sanders supporters to get behind Clinton. And the controversy forced the resignation of DNC chairwoman Debbie Wasserman Schultz, a close Clinton ally accused by Sanders backers of using the party apparatus to undermine them.
The emails show the officials agreeing to withhold information from reporters about the Hillary Victory Fund’s allocation formula, working to align their stories about when — or if — the DNC had begun funding coordinated campaign committees with the states. They also show one official blaming Sanders for putting the DNC between “a real rock vs hard place” by forcing “a fight in the media with the party bosses over big money fundraising.”
The DNC’s deputy communications director Eric Walker in late April emailed a group of top officials asserting that the party shouldn’t “discuss funding allocations in the press for the RNC to see what we’re doing.” His boss Luis Miranda responded “There's been no coverage that we've found, which is what we wanted.”
Miranda argued in the emails that the committee should try to shape any coverage by claiming that “while the funds are going to the DNC right now to build tools and capacity for the general election, there will be a point when the funds stay in the states to fund coordinated campaigns that are now beginning to get organized.” But in a subsequent email in early May he admitted he wasn’t sure if the coordinated campaigns with the state parties were already getting started “or does it start later in the summer?”
Wasserman Schultz responded: “It starts now.”
But a POLITICO analysis of Federal Election Commission records shows that very little money from the victory fund went to the states after that point.
Between the creation of the victory fund in September and the end of last month, the fund had brought in $142 million, the lion’s share of which — 44 percent — has wound up in the coffers of the DNC ($24.4 million) and Hillary for America ($37.6 million), according to a POLITICO analysis of FEC filings. By comparison, the analysis found that the state parties have kept less than $800,000 of all the cash brought in by the committee — or only 0.56 percent.
Officials from the DNC and the Clinton campaign did not respond to questions about why so little of the cash raised by the fund has gone to — and remained with — the participating state parties. But they have previously argued that, even when state parties aren’t receiving cash transfers, they are benefiting from the political infrastructure paid for by money raised by the fund.
The fund represents one of the most ambitious hard-dollar fundraising efforts in modern presidential politics. It was made possible by a 2014 Supreme Court decision in a case called McCutcheon v. Federal Election Commission that struck down aggregate limits on total giving to federal campaigns. They had capped donations to joint fundraising committees to $123,200 per person per year.
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Sanders: ‘Clinton must become the next president’
By KATIE GLUECK
Hillary Victory Fund, which now includes 40 state Democratic Party committee, theoretically could accept checks as large as $436,100 -- based on the individual limits of $10,000 per state party, $33,400 for the DNC, and $2,700 for Clinton's campaign.
Clinton’s GOP rival Donald Trump started a joint committee called Trump Victory with the Republican National Committee and 11 state parties. By including various sub-funds within the RNC, it can accept donations as large as $449,400. But Trump has not shown an ability to raise big checks, and Trump Victory and another Trump joint committee had raised only $32.4 million combined through the end of last month, FEC filings show.
The Hillary Victory Fund still had $42 million in the bank at the end of June, and it seems likely that more money will be moved to the state parties in the coming months. Typically, though, national parties steer disproportionate resources to the handful of states that are legitimately competitive in presidential years, often leaving the party committees in other states grumbling.
But what happens to the cash in the Hillary Victory Fund after its initial distribution is left almost entirely to the discretion of the Clinton campaign’s chief operating officer, Beth Jones, who serves as the treasurer of the victory fund.
FEC filings show that, since the inception of the Hillary Victory Fund, participating state parties have received $7.7 million in transfers, but within a few days of most transfers, almost all of the cash — $6.9 million — was transferred to the DNC.
The only date on which most state parties received money from the victory fund and didn’t pass any of it on to the DNC was May 2, the same day that POLITICO published an article exposing the arrangement. But those deposits were token by comparison: each state received $10,000, compared with transfers that were passed on to the DNC as large as $300,000, FEC records show.
Beyond the transfers, much of the fund’s $42 million in direct spending also appears to have been done to directly benefit the Clinton campaign, as opposed to the state parties.
The fund has paid $4.1 million to the Clinton campaign for “salary and overhead expenses” to reimburse it for fundraising efforts. And it has directed $38 million to vendors such as direct marketing company Chapman Cubine Adams + Hussey and digital consultant Bully Pulpit Interactive — both of which also serve the Clinton campaign — for mailings and online ads that sometimes closely resemble Clinton campaign materials.
Campaign finance watchdogs and the Sanders campaign had argued that the arrangement represented a circumvention of campaign contribution limits by a national party apparatus intent on skewing the process to help Clinton defeat Sanders, and then win the White House.
And some participating state party officials and their allies grumble privately that Clinton is merely using the state parties to subsidize her own operation, contending that her allies overstate the fund’s support for their parties.
The fund is a bad deal for state parties, said one operative who works with state party committees. State party officials have been buzzing about the WikiLeak emails, said the operative, arguing they show that “the extent to which the game has been rigged goes much deeper at the DNC than what many of us expected.”
In April, when POLITICO began asking state parties about why they weren’t keeping the money being transferred to them from the fund, officials looped the DNC and urged the states to stonewall, according to the leaked emails.
“There is no reason to share that level of strategic information with a reporter,” wrote Ohio Democratic Party communications director Kirstin Alvanitakis.
By NOLAN D. MCCASKILL
But the emails show that officials and lawyers at the DNC and the Clinton campaign became frantic after POLITICO’s May 2 story, which led to substantial follow-up coverage that put the Clinton campaign and the DNC on the defensive. It led the Sanders campaign to accuse the Clinton campaign of “money laundering” and prompted Politifact to downgrade its rating — from “mostly true” to “half true” — of the claim that the bulk of the money collected by the victory fund would go to down-ballot Democrats.
“The DNC should push back DIRECTLY at Sanders and say that what he is saying is false and harmful to the Democratic party,” Marc Elias, an attorney who advises the DNC and the Clinton campaign, wrote in an email to DNC officials.
CEO Amy Dacey responded “I do think there is too much of this narrative out there — I also worry since they are emailing to their list (which has overlap with ours!)”
In another email, Miranda, the communications director, suggested that the campaign tell other journalists seeking to follow POLITICO’s story that “Politico got it wrong.” But the rest of his email failed to indicate any errors in POLITICO’s story, nor did the DNC or the Clinton campaign seek a correction.
Miranda did not respond to a request for comment.
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