How ‘ghost corporations’ are funding the 2016 election
By Matea Gold and Anu Narayanswamy, Washington Post
Two days before Christmas, a trust called DE First Holdings was quietly formed in Delaware, where corporations are required to reveal little about their workings. A day later, the entity dropped $1 million into a super PAC with ties to Jersey City, N.J., Mayor Steven Fulop, a Democrat considering a gubernatorial bid. The trust, whose owner remains unknown, is part of a growing cadre of mystery outfits financing big-money super PACs. Many were formed just days or weeks before making six- or seven-figure contributions — an arrangement that election law experts say violates a long-standing federal ban on straw donors. But the individuals behind the “ghost corporations” appear to face little risk of reprisal from a deeply polarized Federal Election Commission, which recently deadlocked on whether to even investigate such cases. Advocates for stronger campaign-finance enforcement fear there will be even more pop-up limited liability corporations (LLCs) funneling money into independent groups, making it difficult to discern the identities of wealthy players seeking to influence this year’s presidential and congressional contests. The 2016 campaign has already seen the highest rate of corporate donations since the Supreme Court unleashed such spending with its 2010 Citizens United v. FEC decision.
So far, 680 companies have given at least $10,000 to a super PAC this cycle, together contributing nearly $68 million through Jan. 31, The Post found. Their donations made up 12 percent of the $549 million raised by such groups, which can accept unlimited donations. That means corporations are on track to far exceed the $86 million they gave to super PACs in the entire 2012 presidential cycle, when such donations totaled 10 percent of the money raised by such groups, according to data from the nonpartisan Center for Responsive Politics. Many corporate givers this cycle are well-established hedge funds, energy companies and real estate firms. But a significant share of the money is coming from newly formed LLCs with cryptic names that offer few clues about their backers. Among the new players is Children of Israel LLC, a company formed in California last June by Shaofen “Lisa” Gao, a real estate agent in Cupertino, Calif., whose Happy Realty firm helps Chinese buyers find homes in Silicon Valley. On a form filed with the secretary of state’s office in September, Gao listed Children of Israel’s type of business as “Donations,” according to a document found by a researcher for End Citizens United, a Democratic PAC that supports candidates in favor of stricter campaign-finance rules.
Weeks after being formed, Children of Israel gave $50,000 to Pursuing America’s Greatness, a super PAC supporting the presidential bid of former Arkansas governor Mike Huckabee, FEC records show. In November, the LLC gave the pro-Huckabee group $100,000. And this January, it donated $250,000 to Stand for Truth, a super PAC backing Sen. Ted Cruz of Texas. Gao — who has no history of making political contributions in California or at the federal level — did not respond to repeated calls and emails seeking comment. Valerie Martin, a senior adviser to End Citizens United, said the blatant admission by the company that its purpose is to make contributions underscores the degree to which donors feel emboldened to hide behind such entities. “This goes to the heart of what’s really wrong with the system and how it’s broken,” she said. “I think it really bothers Americans that people want to influence elections without fingerprints.” Federal law requires political committees to confirm that a donation is legal before accepting it. Eric Lycan, the attorney for the pro-Cruz Stand For Truth, declined to address specific donations but said in a statement that the super PAC “at all times complied with the law” and investigated any potentially illegal contributions.