FEC Drops Foreign Money Case Involving Super PAC Contributions

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By Kenneth P. Doyle

The Federal Election Commission voted not to investigate allegations that a Florida real estate developer funneled illegal campaign money from Chinese nationals into a super political action committee that supported the 2016 Senate campaign of former Rep. Patrick Murphy (D-Fla.).

Two Democratic FEC commissioners, Ellen Weintraub and Ann Ravel, said the allegations raised “serious questions of misconduct” that should have been investigated.

The case was among the first involving allegations of illegal foreign campaign money released by the FEC following the 2016 election cycle. Pending cases are kept secret until they’re resolved; FEC officials have indicated more than a dozen matters involving foreign money allegations still are pending.

A complaint filed with the FEC alleged that a $50,000 contribution to the pro-Murphy super PAC, called Floridians for a Strong Middle Class, came from money raised by real estate developer Nicholas Mastroianni. The money was collected from Chinese nationals seeking to participate in an immigration program known as EB-5, the complaint said, citing news reports.

The EB-5 visa program, which facilitates immigration by foreigners investing in U.S. projects, has been derided by critics as “cash for citizenship.”

Contributions by LLCs Cited

The FEC complaint said foreign money from aspiring Chinese immigrants was funneled by Mastroianni into a limited liability company called 230 East 63rd -6 Trust LLC, which in turn contributed to the pro-Murphy super PAC.

The complaint also alleged two other LLC contributions to the super PAC, worth an additional $25,000, were made illegally with money that actually came from Mastroianni.

Floridians for a Strong Middle Class spent a total of nearly $2.5 million on ads supporting Murphy and opposing his opponent, Sen. Marco Rubio (R), who won the Florida Senate race. Overall, more than $90 million was spent on the 2016 Senate race in Florida, according to FEC reports analyzed by the Center for Responsive Politics.

Weintraub, Ravel Dissented

A “statement of reasons” was filed in February by Weintraub and Ravel, following a preliminary vote on the case—designated Matter Under Review (MUR) 7081.

“For our democracy to work, the American public must have confidence that they—and not some unknown foreign actors—are financing our candidates for office,” their statement said.

Ravel left the FEC shortly after the vote, and her seat on the commission remains vacant. Documents in the FEC matter weren’t released until Oct. 25.

In a phone interview with Bloomberg Government, Weintraub expressed frustration with the vote to dismiss the matter without an investigation and with the amount of time it took for the FEC to publicly release the result. She noted that the FEC previously pledged to expedite cases involving foreign money due to the heightened public interest in those matters.

Attention has been focused on the foreign-money issue mainly due to the U.S. intelligence community’s assessment, released early this year, that Russia sought to influence last year’s presidential election in favor of President Donald Trump. Investigations by congressional committees and Special Counsel Robert Mueller are continuing to try to determine whether the Trump campaign cooperated with Russia, but it is not known whether the FEC also is probing the Trump-Russia matter.

Trump has denied his campaign cooperated with Russia and has called continuing probes of the matter “a witch hunt.”

FEC Majority Backed Recommendation

According to the FEC documents released in the Florida super PAC case, four of six FEC commissioners voted for a staff recommendation from the FEC general counsel’s office to dismiss the matter without a full investigation, finding “no reason to believe” the allegations.

An analysis of the case approved by the FEC majority last month said that the “evidence available in the record before the Commission does not support the inference that the contributions made” by the LLCs linked to Mastroianni came from foreign nationals or were made in the name of someone other than the true donor.

The statement from Weintraub and Ravel said the other FEC commissioners misconstrued the legal standard for opening an investigation, known as “reason to believe.” The standard doesn’t require proof that the law was broken but only a sufficient justification for determining whether it was broken. They also said Mastroianni was given an opportunity to respond to the allegations that he obtained money from Chinese nationals and didn’t directly address the charge.

No ‘Bare-Bones Denial’

A response letter on behalf of Mastroianni said the LLC contributing to the super PAC was organized in Delaware, not in Florida, and focused on other procedural defects in the complaint.

“The Complaint fails to allege any personal knowledge on the part of the complainant or documentary evidence of any violation of law or wrongdoing by Mastroianni,” said the response letter filed by attorney Paul S. Figg of the Florida law firm Berger Singerman.

Weintraub and Ravel’s statement said the response “did not even muster up a bare-bones denial of the allegations, much less a sworn statement.”

Weintraub told Bloomberg Government that dismissal of the enforcement case indicates a majority of FEC commissioners remain reluctant to open investigations even in matters involving allegations of foreign money in U.S. elections. The result, she added, is that no one really knows whether foreign money was used to fund the pro-Murphy super PAC in 2016 and “we’re never going to know.”

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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