Ai yi yi. The powerful pro-Israeli political advocacy super PAC “American Israel Public Affairs Political Action Committee” (AIPAC) has a financial snafu on its hands.
In a response last week to an FEC notice flagging some late earmarked transfers—the super PACs second response to these questions—AIPAC said it had referred the matter to its outside counsel, indicating that these problems were just the tip of the iceberg.
Now, the outside counsel has replied—with a 984-word missive laying out a sprawling data-cleanup operation that lasted for “several months,” all allegedly due to one donor accidentally making repeat donations to hundreds of candidates.
That “unprecedented event” caused $550,000 of apparently erroneous contributions from the unnamed donor. While AIPAC’s counsel said the money was “immediately refunded to donor and never transferred to the committees,” the reversals had a domino effect across the various information systems and outside vendors that played a role in those transactions.
“Several months ago, one of the committee’s donors accidentally made over 1,100 earmarked contributions in one evening to several hundred candidates totaling more than $500,000. (This mistake probably occurred when the donor repeatedly hit the Donate button for each candidate),” the AIPAC letter read. “Fortunately, the Committee caught the donor’s mistake the next morning and was able to return the money that was donated in error. But the sheer volume of the mistaken donations caused a wave of data errors (not actual financial errors, just data errors) through the Committees reports which has taken the Committee several months to resolve.”
Those steps included reversing automated data entries on the part of AIPAC’s conduit donation processor, Democracy Engine, which were further complicated because credit card processors had automatically charged fees on the refunded contributions, the letter said. But Democracy Engine’s arrangement—like many conduits—passes those fees on to the campaigns, who had to reconcile possible payments for contributions they may not have received in the first place.
The unwinding process across all the committees and vendors apparently took months and led to the reporting issues the FEC had flagged—but, AIPAC said, the clean-up is complete.
However, it’s not clear how much those efforts cost AIPAC—if anything. The letter said that the super PAC had turned to its “reporting and compliance vendor,” Aristotle, to help navigate the mess. But FEC records show that AIPAC has never paid Aristotle—nor has it paid any firm ever for compliance, legal, treasurer, accounting, or financial services.
X marks the spot. American Values, the super PAC backing Robert F. Kennedy Jr. for president, is paying big bucks to X Corp.—as the longshot independent courts owner Elon Musk.
According to documents filed this month with the FEC, the group made an independent expenditure of half a million dollars to the company, which owns the site formerly known as Twitter. The payment came at the end of March, days after RFKJ announced Silicon Valley philanthropist Nicole Shanahan as his running mate. (Shanahan runs in the same circles as Musk and has previously denied allegations that she had an affair with him.)
Since Kennedy announced his candidacy last year, Musk has boosted him, chatting on X Spaces and otherwise cheering him on. Tony Lyons, a co-founder of American Values, told Politico last fall that RFKJ embraced Musk’s support, saying, “if somebody like Elon Musk is willing to join the fight, he’s a very big guy in the playground fight.”
The $500,000 expenditure is notable in a couple of ways. First, it represents nearly 7 percent of the PAC’s total ad spend backing Kennedy this year. Second, it far exceeds the X payments from other political groups. For instance, Nikki Haley’s presidential campaign spent a total of $143,000 on ads and media placement with X over six months. The other super PAC that recently made independent expenditures to the company—a group tied to Sam Altman that backed Rep. Dean Phillips’ (D-MN) short-lived presidential bid—spent only four figures, total. And RFKJ’s own campaign has spent less than $6,000 for advertising on the platform.
Winning streak. After nearly nine listless years, the FEC has finally fined a Trump committee.
The fine—a whopping $6,075—was levied against the Trump-aligned “Make America Great Again, Again!” super PAC in connection with $150,000 worth of in-kind contributions of private donor flights from 2022, which the PAC reported a year late.
Pay Dirt had caught the issue, too, flagging MAGAA!’s explanation in our Oct. 12 newsletter last year. At the time, MAGAA! told FEC analysts that an internal review of “communications and schedules” of past and present employees and contractors had missed the in-kind contributions,” stressing that the review was “not triggered by any media or Commission inquiry.”
The agreement with the FEC actually appears to back that up. The enforcement process here came straight out of the FEC’s analysis division, which, perhaps unfortunately for MAGAA!, meant it bypassed the three Republican commissioners who have blocked literally every potential action against Trump—a total 59 cases to date, including 29 where the FEC’s general counsel found reason to believe a violation had occurred.
Axiom of Evil. Will Scharf, a Trump lawyer and candidate for Missouri Attorney General, has hired “enemy No. 1” in Trumpworld to run his campaign: Axiom Strategies.
Axiom landed on Trump’s blacklist because its founder, prominent GOP operative Jeff Roe, along with a number of people in Roe’s orbit, helped administer Florida Gov. Ron DeSantis’s presidential efforts. Most specifically that work went through the “Never Back Down” super PAC, which Roe helmed, and which spun off tens millions of dollars in expenses to Axiom and other firms under Roe’s umbrella.
Top Trump officials mocked Roe and his company both during and after DeSantis’ presidential campaign—at one point the two camps reportedly nearly came to blows in a booze-fueled bar fight during the Iowa State Fair. But Scharf, a top Trump loyalist, still turned to Axiom for his AG campaign.
Axiom was started in Missouri and has deep ties in the state, making it an obvious choice for candidates running statewide there. And thanks to Scharf’s staunch Trump bona fides, the former president appears to have made an exception in his case.
“President Trump loves the work Will Scharf is doing and doesn’t care about what campaign vendors he uses,” a Trump adviser told The Daily Beast.
However, other people around Trump feel differently, believing that Roe may see Scharf as a ticket back into MAGAworld’s good graces.
“Jeff Roe won’t be able to slink his way back into MAGA. People should think twice before hiring Axiom,” one operative working on Trump's election effort told The Daily Beast.
Still, Trumpworld appears to carry a clear message: The former president supports Scharf.
Scharf is “one of President Trump’s strongest defenders,” another source in Trump’s orbit told The Daily Beast, adding, “it’s unfortunate that random individuals are taking pot shots at him as he defends Trump.”
Hiding in plain sight. Over the last 14 years since Citizens United, it’s been taken for granted that for-profit corporations have a blanket license to spend money in federal elections—specifically, through super PACs. But a new report from the Center for American Progress is calling that into question, arguing that Citizens United also opens the door for shareholders to file lawsuits against companies if they don’t approve of those contributions.
The report, authored by Tom Moore—CAP senior fellow and the former counsel for Democratic FEC commissioner Ellen Weintraub—and Alexandra Thornton—CAP senior director of financial regulation—was announced in Bloomberg this week.
While Citizens United acknowledged that for-profit companies have the right to spend corporate funds in federal elections, the CAP report argues, that right does not belong to the corporation itself. Instead, the analysis notes, the Supreme Court’s decision “anchored the right to another source: the U.S. citizenship of the people who associated to make up the corporation.” Corporate boards can’t make contribution decisions, the report notes, because a board’s authority is ultimately derived from voting shareholders, and so the Court rested its decision on the rights of corporation’s U.S.-citizen shareholders.
That, the CAP report says, “raises two serious problems” for corporate overlords who want to influence elections. The first is that every shareholder has an equal voice politically, regardless of how many shares they own. Second, some of those shareholders, including foreign nationals, don’t have any political rights.
“As a result, throughout the post-Citizens United era, whenever for-profit corporate boards and management have spent corporate funds on candidate elections, they have been usurping constitutional rights belonging to their individual U.S.-citizen shareholders and handing them over to large shareholders and foreign nationals,” CAP argues.
Those shareholders, the reasoning goes, have standing to sue if they don’t approve of how their company spends funds in elections. Read CAP’s full analysis here.
