Web Campaign Donations Face New Scrutiny

Washington Post: Obama’s Record Haul Prompts Questions About Collecting Via Faceless Credit Card Transactions

(Washington Post)  This story was written by Matthew Mosk.

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Sen. Barack Obama's record-breaking $150 million fundraising performance in September has for the first time prompted questions about whether presidential candidates should be permitted to collect huge sums of money through faceless credit card transactions over the Internet.

Lawyers for both the Republican and Democratic parties have asked the Federal Election Commission to examine the issue, pointing to dozens of examples of what they say are lax screening procedures by the presidential campaigns that permitted donors using false names or stolen credit cards to make contributions.

"There is so much money coming in and yet very little ability to say with certainty that you know who is giving it," said Sean Cairncross, the Republican National Committee's chief counsel.

While the potentially fraudulent or excessive contributions represent about 1 percent of Obama's staggering haul, the security challenge is one of several major campaign-finance-related questions raised by the Democrat's fundraising juggernaut.

Concerns about anonymous donations seeping into the campaign began to surface last month, mainly on conservative blogs. Some bloggers described their own attempts to display the flaws in Obama's fundraising program, donating under such obviously phony names as Osama bin Laden and Saddam Hussein, and reported that the credit card transactions were permitted.

Obama officials said it should be obvious that it is as much in their campaign's interest as it is in the public's interest for fake contributions to be turned back, and said they have taken pains to establish a barrier to prevent them. Over the course of the campaign, they said, a number of additional safeguards have been added to bulk up the security of their system.

In a paper outlining those safeguards, provided to The Washington Post, the campaign said it runs twice-daily sweeps of new donations, looking for irregularities. Flagged contributions are manually reviewed by a team of lawyers, then cleared or refunded. Reports of misused credit cards lead to immediate refunds.

In September, according to the campaign, $1.8 million in online contributions was flagged, and $353,000 was refunded. Of the contributions flagged because a foreign address or bank account was involved, 94.1 percent were found to be proper. One-tenth of one percent were marked for refund, and 5.77 percent are still being vetted.

But clearly invented names have been used often enough to provoke an outcry from Republican critics. Donors to the Obama campaign using false names such as Doodad Pro and Good Will gave $17,375 through 1,000 separate donations, with no sign that they immediately tripped alarms at the campaign. Of more concern, Cairncross said, are reports that the campaign permitted money from 123 foreign nationals to enter its accounts.

Obama officials said they have identified similar irregularities in the finance records of their Republican rival, Sen. John McCain. "Every campaign faces these challenges -- John McCain's campaign has refunded more than $1.2 million in contributions from anonymous, excessive and fraudulent contributors -- and we have reviewed and strengthened our procedures to ensure that the contributions the campaign accepts are appropriate," said Ben LaBolt, an Obama spokesman.

McCain's contributor database shows at least 201 donations from individuals listing themselves as "anonymous" or "anonymous anonymous," according to Obama's campaign. In one particularly embarrassing episode, the McCain campaign mistakenly sent a fundraising solicitation to the Russian ambassador to the United Nations.

Rather than relying primarily on a network of wealthy and well-connected bundlers -- as candidates have since President Bush pioneered that technique in 2000 -- Obama also tapped a list of 3 million ordinary donors, many of whom who gave in increments of $25 and $50.

Obama's success with these kitchen-table contributors has set up one of the most lopsided financial advantages in modern presidential campaigning. During the first two weeks of October, Obama spent four times more than McCain, including for an unprecedented $82 million saturation-advertising campaign that blanketed the airwaves in key battleground states.

Campaign finance experts have already classified this contest as one of the transformational elections that will dramatically change the way politicians pay for campaigns in coming cycles.

"It's the model of the future," said Rick Hasen, an election law specialist at Loyola Law School. "Gone will be the $2,300-a-plate dinner. That will be replaced by the $30,000-a-plate dinner, the kind of select event Obama had hosted by folks like Warren Buffett. And the rest will be the micro-donors -- entirely Internet-based."

Hasen said the 2008 campaign is a mirror of other races that led to major shifts in fundraising. The Watergate scandal of 1972 led Congress to create a public financing system for presidential bids. Ronald Reagan harnessed the power of direct-mail solicitation in 1980. In 1996, political parties opened the door to runaway donations in the form of unregulated "soft money."

One immediate result of Obama's fundraising showing this fall is that it may render obsolete the current system of public financing for presidential campaigns. Because McCain opted into the system, he was limited to spending the $84.1 million provided to his campaign by the Treasury once he claimed the GOP nomination. Obama, who chose to remain outside the system after initially suggesting that he would participate in it, is expected to raise and spend at least three times that amount in the general election campaign.

Obama's advantage, said FEC Chairman Donald F. McGahn II, makes it likely that Congress will rethink whether the program still makes sense.

To many, Obama's fundraising success is good news -- it shows that a White House bid can be financed largely without donors who have ulterior motives or agendas, and diminishes the role of the special interests and large institutional givers that were once the backbone of presidential fundraising.

"When you have that many contributors," McGahn said, "it does in a weird way cleanse the system."

Bradley A. Smith, a former FEC chairman, in an essay in today's Outlook section of The Post, agreed that Obama's effort would "put to rest all the shibboleths about campaign finance reform -- that it is needed to prevent corruption, that it equalizes the playing field, or that tax subsidies are needed to prevent corruption."

There are already signs that runaway fundraising efforts built on small donors have the potential to create an entirely new set of problems.

Scott Thomas, another former FEC chairman, said the potential for these types of security breaches has been looming for more than a decade, since the commission first allowed donors to use a credit card when making a contribution.

"The problem itself has been lurking," Thomas said. "What's changed is the sheer volume of donations. At some point that causes enough of a clog that campaigns cannot do all of the vetting and research that would be necessary to figure out if they're looking at a real name."

How the FEC might attempt to tackle these problems is unclear. Both parties have filed formal complaints calling on the agency to investigate their rival. Only McCain will automatically be subjected to an audit, because his campaign accepted funds from the Treasury. There is no requirement that Obama's books be audited, and FEC-watchers predicted that it could be tough to find the four votes needed to approve an audit, given that the panel comprises three Republican and three Democratic appointees.

Under current law, there is also very little policing of small-dollar contributions. The false donations uncovered by news outlets or by rival campaigns have all involved more than $200, because those contributions must be disclosed in published reports. The campaigns are not required to share any information about donors who give less than $200. And they are not required to even keep records of donors who give less than $50 -- they can even give cash.

"Maybe the answer is to revisit [those disclosure thresholds], given that the levels were put in in the '70s, long before the Internet," McGahn said. "This may bring it to the fore."

[fbla1805]

The quotes from Republicans in this story are revealing.

In the last two Bush elections, Big Oil, Big Pharma, and Big Tobacco bankrolled Bush to the hilt. No complaints then from Republicans, as a small oligarchy of corporations was buying the US Presidency away from 300 million Americans!

We didn''t donate enough to Gore''s & Kerry''s campaigns to help them defeat the Republican sleaze machine. They lost, and we, the people, lost big time - Republican-made disasters just keep on breaking down on us every day!

But we learned from that experience - today, more than 3 million citizens have donated between $5 and $100 to the Obama campaign.

By the sheer additive power of this huge public response, we have enabled Obama/Biden to wage this campaign, and to beat the sleaze machine of McCain/Palin/Rove & Fox News.

I am proud to be one of those contributors!

We, the American people, want and desperately need integrity back in our politics, and in our economy, and yes, we%u2019ve been digging deep into our pockets to help Obama & Biden achieve this goal!

In just 8 days we will have the great democratic privilege to put an end to this sickening era. The politics of ploys, stunts, slime, sleazy robocalls, and culture wars, and Rupert Murdoch%u2019s Fox News, will be defeated in a landslide victory!

[fbla1805]

Latest McCain Dirty Trick Backfires - Thwarted by Pittsburgh Police Dept: - McCain Campaign Worker Made Up Attack Story - To Be Charged With Making False Report After Claiming "B" Was Carved Into Face By "6 Foot 4 Inch Tall Black Mugger" PITTSBURGH, Oct. 24, 2008
This story reflects desperation, and shows the level this McCain campaign worker, hopefully a rogue, was willing to sink to in the final pre-election push!

On the Obama side, more than 3 million Americans from all walks of life have made campaign contributions to enable Obama/Biden to wage this campaign, and to beat the sleaze machine of McCain/Palin/Rove & Fox News. I am proud to be one of those contributors!

We want, and desperately need integrity back in our politics, and in our economy, we%u2019ve been digging deep into our pockets to help Obama achieve this goal!

In just 8 days we will have the great democratic privilege to put an end to this sickening era. The politics of ploys, stunts, slime, sleazy robocalls, and culture wars is on the ballot! The politics of Bush/Cheney, McCain/Palin, Karl Rove/Steve Schmidt, and Rupert Murdoch%u2019s Fox News, will be defeated!

Remember, citizens! We need a massive turnout of voters, and a landslide victory, because as we can see today, the Republicans are again trying to steal this election at the polling stations.

We will vote Obama/Biden into office in overwhelming numbers, and return honesty, decency, and integrity to American politics.

[dagrandma]

retrovvvisio -- Let''s turn your argument around?
The Republicans are a shameful lot. Not only did they throw their "Mormon" candidate out, but now they campaign against a most decent and capable black politician, Barack Hussein Obama, to take the focus off John McCain. Barack Hussein Obama has always been on the right side of the track, always did the right thing, worked hard, raised a family, did justice in politics, acheieved and passed laws, stopped corruption, did his best for his state as Senator. We know he can be trusted. We know he will deliver. The Republicans on the other hand want to break, ridicule and discard a fantastic candidate like Barack Hussein Obama. Shame on you lot!!! But we the electorate have brains and eyes and yes we can see... even if John McCain thinks we are all morons. How come John McCain was always on the wrong side of the track? Wrong affiliations Washington, D.C.-style politics with Keating, wrong friend terrorist Todd Palin, wrong preacher John Haggee. Wrong supporter American hater islamist Saddam Hussein (see Simmons).

[lordmi]

Why do so many Democrats think that Bush is running again? Are they that stupid? or just uninformed? Either way, should they be voting?

Posted by stlouisman3 at 06:48 PM : Oct 26, 2008
: show me the difference between McBush and Bush, please.
There is NONE any. So it is You, who is completely stupid.

[lordmi]

Over all this article is Baby talking.
Credit card donations same as all credit card transactions are certainly attached to certain person, and there is no necessity to request "to face the donor" - same thing when You are purchasing stuff online. Neithe one credit card would not go without correct address , person''s name and would be declined, if was reported as stolen.
If somebody had feelings, that some person unauthorized used his credit card for donations, that transaction would be cancelled by the bank.
So, please, do not create The store, where it is NONE.
The author 8is just Stupid, sorry, does not know, how things work. In this case - better to skip to say a word.

[flreason]

I sincerely doubt the veracity of assertions that contributions were made using the names of bin Laden or Saddam Hussein. Any transactions would have required a credit card in that name and all of the attendant data for that card.

I do, however, agree that the on-line contribution system needs to be examined and protections put in place. We need to keep the system as honest and transparent as possible.

[libra127]

Berg vs. Obama, Civil Action No. 08-cv-4083, seeking a Declaratory Judgment and an Injunction that Obama does not meet the qualifications to be President of the United States.

Posted by NEEDERBAUR at 09:56 PM : Oct 26, 2008

This lawsuit has been thrown out of court (i.e., dismissed) as "frivolous and not worthy of discussion", as of yesterday.

[tawpdawg111]

I think I''ll charge another 25 bucks for Obama and while I''m at it another hundy or so for Al Franken. Barack has it in the bag.....can you say LANDSLIDE? Franken may need a little boost. Here is where you concerned patriots can surf to do the same:

www.alfranken.com

[strangeworld]

The true party of the big donation is the GOP. It''s plainly evident when you look at our current economic meltdown that the republicans put the profits of their large campaign donors ahead of the well-being on the average American. McCain continues to call for tax breaks and corporate welfare for those rich GOP campaign contributors...even as the rest of the US sinks further into debt, their savings and retirement accounts shrinking daily. The modern republican party is sadly out of touch with the middle class.

[ioweign]

Why do so many Democrats think that Bush is running again? Are they that stupid? or just uninformed? Either way, should they be voting?

Posted by stlouisman3 at 06:48 PM : Oct 26, 2008



Boy - do people want the Republicans out of office !!

[mcfinished]

stlouisman3 at 06:55 PM : Oct 26, 2008 wrote:

"mcfinished, WE should take it serious no matter which part is doing it!!!!!!!!!!"

I completely agree with you.

Personally, I believe there should be limits imposed as to how much money can be raised, and how the money can be raised.

[divitius]

Ah, yes, of course. HOW DARE the little people think they can actually affect politics with their billions of pennies! It MUST be stopped! After all, shouldn''t the obscenely rich and the foreign corporations have their say for once?

[ozzzy3z]

9 more days until democracy is brought back to the White House!

[cheteunice]

mcfinished, WE should take it serious no matter which part is doing it!!!!!!!!!!

[mcfinished]

CBS quoted Sean Cairncross, the Republican National Committee''s chief counsel as saying:

"There is so much money coming in and yet very little ability to say with certainty that you know who is giving it."

I''m sure if it was McCain who had been receiving the donations, Sean Cairncross wouldn''t even this was an issue.

[cheteunice]

Why do so many Democrats think that Bush is running again? Are they that stupid? or just uninformed? Either way, should they be voting?

[cheteunice]

sayfud-deen, Delude yourself all you want, McCain has far more experience than Obama. And he is much more trustworthy.

[sayfud-deen]

i can''t recall mccain ever being president? can you? i also can''t remember him ever being in charge of a war! can you? nor can i remember, mccain even handling a national security situation. so where did he get his experience? someone in the media should remind him that he is no more experienced in these matters than obama!

[cheteunice]

pookieduke1, When it involves a candidate for President under federal reporting rules, the candidate better take some responsibility for making sure the transactions are legit!

[cheteunice]

Veteran22, What about that Liar Obama initially agreeing to take only federal funding for the campaign (as McCain did) and then changed his mind. Will he change his mind on the promises he''s making now?