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Political Parties Laundering Money to Avoid Donation Limits

by Chad Peace, published

Although campaign finance laws limit the amount an individual can donate to a particular candidate, a California Watch Investigation shows that several influential party donors, on both sides of the aisle, are dodging the rules by funneling money through local party committees.  County parties, in many hotly contested races, have become middlemen in money laundering schemes, acting as distribution centers for big donors that have exceeded their contribution limits to individual campaigns.

Because local committees also have contribution limits, donors send large sums of money to county committees across the state, in turn, directing the committees to donate the money to their candidate.  Often times, the candidate's district is hundreds of miles away from the county of the committee that is directly funding the campaign.

“In one case, a single donor gave more than $300,000 in one day to 10 Democratic county committees from Humboldt to San Diego counties. Those committees proceeded to make large contributions to high-profile Democratic Assembly and Senate races at different times in the days leading up to the election.”

“In another case, a Modesto assemblyman made contributions to two Republican committees, which quickly turned around and contributed large amounts to the assemblyman's brother, who was campaigning for a seat in a nearby district.”

When races are tight, party central committees can funnel big donations quickly, evading finance laws intended to level the playing field.  While individual donors are limited to $3,900 in legislative races, party committees in California’s 58 counties can receive up to $32,400 from donors to distribute to campaigns of the “committee’s” choice anywhere in the country.

“In coastal Mendocino County the local Democratic central committee raised $235,000 in October 2008 alone – mostly from unions, insurers and professional groups based in places like Sacramento, Los Angeles and even Washington, D.C.”

“The party then moved $200,000 into the campaign of San Diego Assemblyman Marty Block and $107,000 to the state election campaign of Assemblywoman Joan Buchanan, D-Alamo.”

“Republican committees have employed the same strategy. In the last month before the 2008 election, the Riverside County Republican Central Committee gave $285,600 to candidates after receiving more than $200,000 in contributions that month alone.”

This is testament to why we need real campaign finance reform.  Should we get rid of regulations altogether?  Should we increase regulations on party committees?  Should we cap total campaign expenditures or go to a public finance system?  The answer is unclear, but one this is certain, the debate needs to begin.

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