Watchdog accuses Trump campaign of illegally masking millions in spending

A nonprofit watchdog group is accusing President Trump's reelection campaign of violating the law by masking millions of dollars in spending. 

In an 81-page filing, the non-partisan, Washington-based non-profit, the Campaign Legal Center, alleged the president's reelection campaign and campaign committee hid nearly $170 million in spending to vendors and Trump relations by funneling money through firms led by then-campaign manager Brad Parscale and senior campaign officials.

The FEC complaint filed Tuesday claims "American Made Media Consultants" and "Parscale Strategy" — firms founded and operated by campaign officials, including Parscale — acted as "clearinghouse" that disbursed Trump campaign funds to contractors, "effectively shielding the identities of the underlying contractors being paid for Trump campaign work."

The Trump campaign and "Make American Great Again committee" — a joint fundraising committee with the Republican National Committee, have reported paying both firms nine-figures for services including digital and online advertising, video production, software, fundraising tools, database rentals and subscriptions digital, consulting, print and online advertising, video production, list rental, software and subscriptions. Yet neither American Made Media Consultants nor Parscale Stategy have disclosed records of being paid by the campaign, resulting in violations of Federal Election Commission rules requiring campaigns to itemize disbursements.

"This is pretty much off the charts," Trevor Potter, President of the Campaign Legal Center and former FEC Commissioner told CBS News. "I've never seen anything like this."

"These schemes have disguised millions in payments to companies engaged in significant work for the campaign, as well as payments to Trump family members or senior campaign staff like Lara Trump and Kimberly Guilfoyle," the Campaign Legal Center complaint reads. 

"By failing to report payments to the campaign's true vendors and employees, the Trump campaign and Trump Make America Great Again Committee have violated, and continue to violate, federal law's transparency requirements and undermine the vital public information role that reporting is intended to serve," the complaint continues. "The campaign's failure to itemize disbursements to its ultimate vendors means that the public is left in the dark about the entities working for the Trump campaign, the nature of their services, and the full amount they are paid."

In a statement to CBS News, Trump campaign communications director Tim Murtaugh said, "[American Made Media Company] is a campaign vendor responsible for arranging and executing media buys and related services at fair market value. AMMC does not earn any commissions or fees. It builds efficiencies and saves the campaign money by providing these in-house services that otherwise would be done by outside vendors," the statement continues. "The campaign reports all payments to AMMC as required by the FEC. The campaign complies with all campaign finance laws and FEC regulations."

"The efficiency is that the campaign writes one check," said Trevor Potter. "But based on everything we can see on the public record and everything the campaign has said, these entities go out and hire vendors to do the actual work of the campaign. And that's what the public is entitled to know," the former legal counsel to John McCain told CBS News. "Who are these vendors? What are they being paid?"

In 2012, Mitt Romney's operation paid a campaign-created firm, American Rambler, for media buys, but FEC records reveal the firm actually placed campaign advertisements. According to the Campaign Legal Center, the Trump campaign's chosen intermediary, AMMC, is not itself providing ad buying or media services, rather it is sub-contracting with outside vendors.

According to FEC reports, Parscale Strategy was paid more than $35 million in total by the Trump campaign, the Republican National Committee and the president's various fundraising vehicles over the past three years. In the run-up to his demotion, Parscale was criticized by colleagues and Trump allies for profiting off the Trump campaign, which afforded him multiple homes and a 32-foot boat. 

Though Parscale helped create American Made Media Consultants, he tweeted in 2019 that does not own American Made Media Consultants and received "no percentage of any ad buys from the campaign."

American Made Media has collected over $165 million from the Trump campaign and joint fundraising committee, according to FEC reports.

Following a campaign staffing shakeup, CBS News has reported Trump campaign officials are conducting an "internal review" of campaign spending and infrastructure after Parscale's demotion from campaign manager, and under the new leadership of Bill Stepien. Jeff DeWit, former chief financial officer for NASA and recently appointed Trump campaign chief operating officer told Business Insider the audit is not focused primarily on Parscale.

Listed in the Campaign Legal Center's complaint is the software company Phunware, which helped develop the Trump campaign app. The Trump campaign has not reported direct payments to the company. CBS News formerly reported the company received millions from the federal coronavirus relief fund for small businesses. Phunware, which has about 60 employees, was eligible for the low-interest loan through the Paycheck Protection Program. But the size of the loan — $2.85 million — was nearly 14 times the current PPP average of $206,000.

Another company, CloudCommerce, whose largest shareholder is Trump campaign manager Brad Parscale received nearly $800,000 from the federal coronavirus relief fund for small businesses, according to a filing with the U.S. Securities and Exchange Commission.

The Campaign Legal Center also filed a civil complaint against the Clinton campaign in 2016 for its failure to disclose payments for the "Trump-Russia dossier," compiled by the opposition research firm Fusion GPS with payments routed through the Washington law firm Perkins Coie. Though the complaint made against the Trump campaign mirrors the legal argument filed against Clinton's operation, the payment size "was about one half of 1% of the amount that the Trump campaign is paying the two firms their executives have created," Potter told CBS News.

The 2020 Biden campaign is directly contracting for media buys, rather than using an intermediary. The Biden campaign's primary vendor, media placement firm Media Buying & Analytics, has actually placed campaign advertisements, according to FCC reports.

It remains unclear how the Federal Election Commission — which frequently faces gridlock and currently lacks a quorum of four commissioners needed to enforce laws — will approach Tuesday's complaint.  While it is unlikely the complaint will be resolved before Election Day, the Campaign Legal Center may file suit in court if the commission fails to act.