No Duh... Bush is Violating Law

Election Law Experts: Jeb Bush is Violating Campaign Finance Laws

by Sarah Rumpf

Former Gov. Jeb Bush (R-FL) has been hitting the presidential campaign trail hard, following a whirlwind schedule of events in early primary states and raising unprecedented sums through a Super PAC, possibly as much as $100 million by the end of this month.

But Bush is not yet actually a candidate, and he has been very coy about when he might officially get into the race. His unique approach to building a presidential campaign is raising eyebrows, and several campaign finance law experts told Breitbart News that they believe Bush is violating the law.

Breitbart News interviewed Cleta Mitchell, a political law attorney at Foley & Lardner’s Washington, D.C. office, and Nancy Watkins, a Certified Public Accountant (CPA) with Robert Watkins & Company in Tampa, Florida.

Mitchell has four decades of experience in election, campaign finance, and ethics law, has testified before Congress on multiple occasions and authored numerous publications on these topics. Mitchell also previously served as the Chairman of the American Conservative Union Foundation and as President of the Republican National Lawyers Association. Watkins has more than twenty-five years experience in campaign finance law compliance and federal tax law, and has served a long list of Senate, Congressional, and legislative candidates, as well as party committees and PACs.

Both Mitchell and Watkins emphasized that they like Jeb Bush, and did not want to attack him personally, just comment on the campaign finance issues. “I like all the Bush people, I like Jeb Bush,” said Watkins, and Mitchell made similarly respectful comments.

They expressed surprise that Bush seemed to be willing to launch his presidential campaign in a way that was not completely by-the-book, noting the contrast with his prudent reputation as Florida governor. “We’ve always thought of Jeb Bush as being a proper and very upstanding person, if you ask anyone who knew him when he was governor,” said Watkins. “This seems a bit out of character for him…coloring outside the lines is not his normal m.o. at all.”

Still, both told Breitbart News they noticed a number of significant problems for Bush, both in how he was structuring his campaign and the PACs that will support him, and in statements that he has made over the past few months.

Jeb Bush, of course, is the son of one president, George H.W. Bush, and the brother of another, George W. Bush. He has been out of political office since his tenure as Florida Governor ended over eight years ago. Long rumored to have aspirations for the White House himself, he announced last December that he was going to “actively explore the possibility of running for President of the United States,” via posts on his Facebook and Twitter accounts.

Bush also wrote that he would be forming a leadership PAC to “facilitate conversations with citizens across America to discuss the most critical challenges facing our exceptional nation” and “to support leaders, ideas and policies that will expand opportunity and prosperity for all Americans.” On January 6, 2015, Bush filed the paperwork for that leadership PAC, called Right to Rise PAC. On that same day he also filed for a separate Super PAC with a nearly identical name, Right to Rise Super PAC.

A third group with a similar name, Right to Rise Policy Solutions, was established as a nonprofit advocacy organization, a structure that federal law allows to accept secret, unlimited donations from both individuals and corporations. According to a report earlier this month in the Washington Post, this group will be focusing on policy and has “[a]t least four people with expertise on energy issues, foreign affairs and communications” working with it.

The appeal of Super PACs is clear: presidential campaigns are limited to donations of only $2,700 per donor per election, but Super PACs can be funded with unlimited donations. This is how Bush aims to pile up that $100 million.

However, the Super PAC money comes with some serious restrictions. Official candidates cannot coordinate with Super PACs, and are sharply limited in how much money they can ask their supporters to donate to their Super PAC. Bush was never expected to enter the presidential race in the early months, and his ferocious fundraising for his Super PAC has led many to wonder how late into the summer he might wait.

Super PACs have been a factor in the last few elections cycles, but in a subservient role to the campaign of the candidates they were supporting. For the most part, they were mainly limited to tasks such as running negative attack ads against opponents, giving the actual candidate some plausible deniability. Restore Our Future, the Super PAC that supported former Gov. Mitt Romney (R-MA) in his 2012 presidential campaign, spent only about one-third of what the Romney campaign spent, according to Politico.

Bush’s team has indicated it will flip this model, with the Super PAC raising and spending much more than the campaign itself. In fact, the plan is for key campaign functions to be carved out and assigned to the outside groups.

Right to Rise Policy Solutions will reportedly handle developing Bush’s campaign platform. “No one ever needs to know who is funding the development of Bush’s policies,” wrote Taegan Goddard at The Week, bemoaning the lack of transparency on this key segment of the campaign infrastructure.

The Right to Rise Super PAC will handle functions like polling and voter mobilization. Bush is so committed to this strategy that Mike Murphy, a longtime Bush ally who was expected to be on the short list for campaign manager, will instead head up the Super PAC, according to National Journal.

Once Bush officially launches his campaign, he will no longer be able to communicate with his PACs, that much is clear. Those who are considering running for a federal office are permitted to spend money for what is referred to in the federal campaign finance laws as “testing the waters,” but there are strict requirements to qualify for that.

The regulations under 11 C.F.R. § 100.72(a) limits this “testing of the waters” money to “funds received solely for the purpose of determining whether an individual should become a candidate.” Permissible expenditures “include, but are not limited to, conducting a poll, telephone calls, and travel.”

According to Mitchell, as soon as Bush made a reference to his potential candidacy, he should have opened a “testing the waters” account to collect the needed funds and make those expenditures, but instead he was using all these other PAC accounts. Sen. Lindsey Graham (R-SC)49%, currently “testing the waters” himself, has opened one of these accounts.

“I have to tell you, I’ve looked at this thing that Jeb Bush has created, I don’t know how in the world that’s legal,” said Mitchell, referring to his formation of a leadership PAC and Super PAC, but no known testing the waters account.

“Jeb is charting very new territory in this area of campaign finances.” said Watkins. “It’s never been done before.” She noted that Bush’s advisers had defended these PACs, but was not convinced that the Federal Elections Commission (FEC) would agree.

Mitchell also had questions about the outsourcing of key campaign functions to the outside PACs. “I understand the theory of it, but I don’t know how that works in real life,” she said.

The next part of the “testing the waters” regulations, under 11 C.F.R. § 100.72(b), lists several activities that could trigger the end of the “testing the waters” period and cause someone to be treated legally as a candidate. The ones most relevant to Bush are in subsection (b)(2) -(4):

(2) The individual raises funds in excess of what could reasonably be expected to be used for exploratory activities or undertakes activities designed to amass campaign funds that would be spent after he or she becomes a candidate.

(3) The individual makes or authorizes written or oral statements that refer to him or her as a candidate for a particular office.

(4) The individual conducts activities in close proximity to the election or over a protracted period of time.

Once someone in the testing the waters phase triggers an official candidacy, they will have to register with the FEC and start complying with the campaign finance reporting requirements as soon they spent or take in more than $5,000. With the amount of traveling Bush is doing lately, he would likely hit that mark extraordinarily quickly.

As far as raising “funds in excess of what could reasonably be expected” to be needed to test the waters, the efforts to raise $100 million by the end of May for the Right to Rise Super PAC is certainly well beyond what a candidate would need to spend for a few months of travel to early primary states, polling, and other traditional exploratory activities.

The second part of subsection (b)(2), “activities designed to amass campaign funds that would be spent” after becoming a candidate is another problem for Bush, as there are a multitude of media reports describing that $100 million as clearly intended to help Bush compete in the crowded Republican primary, and eventually, if he were to prevail, against Hillary Clinton or whoever the Democratic nominee might be.

It is Subsection (b)(3), making statements that refer to him as a candidate, where Bush has been repeatedly crossing the line, according to our experts. There have been numerous examples, perhaps most notably from an event in Nevada earlier this month, as Breitbart News reported:

Talking with reporters after a town hall in Reno, Nevada, the former Florida governor said, “I’m running for president in 2016 and the focus is going to be about how we, if I run, how do you create high sustained economic growth.”

Bush noted several times in the same conversation he is still thinking about whether to run and caught himself before ending the sentence in which he said he was running by adding that caveat. Earlier in the same exchange he had said, “If I run, it will be 2016.”

This was “pretty much an announcement of candidacy,” said Watkins.

Watkins also pointed out an even earlier example, from the Conservative Political Action Conference (CPAC) in February, “where he may have stepped over the line.” At the beginning of a Q&A session with Fox News Channel host Sean Hannity, Bush said:

And so if I go beyond the consideration of the possibility of running, which is the legal terminology that many of the people here coming to CPAC are probably using to not trigger their campaign, if I get beyond that, and I run for President, I have to show what’s in my heart.

“He made it clear that he didn’t believe what he was saying,” said Watkins. By noting that he was saying what his lawyers have to say, she continued, “to me, sent a clear message that, ‘I’m only saying it because the lawyers say I have to say it, but it’s not what I really mean, and we all understand what I really mean.'”

Then, last week in Iowa, Bush spoke in detail about his campaign plans, telling an interviewer that he intended to campaign hard in Iowa but would not be participating in the Iowa Straw Poll:

Look, I’m a really competitive guy to begin with. It’s hard for me to imagine that I’m going to plan for fifth place. I mean, that’s not going to happen. We’re going to work hard here. I’m not going to participate in Straw Polls anywhere. That’s a distraction to be honest with you.

Subsection (b)(4) is probably the simplest to understand and see where the longer the months drag on where Bush has not declared his candidacy, the more likely he is to run into trouble. Besides the ferocious fundraising schedule, Bush has been keeping a packed schedule of media interviews and events in early primary states, where he appears on stage and follows the same format assigned to Sen. Ted Cruz (R-TX)96%, Sen. Rand Paul (R-KY)93%, Sen. Marco Rubio (R-FL)81%, former Gov. Mike Huckabee (R-AR), former Hewlett-Packard CEO Carly Fiorina, and neurosurgeon Ben Carson, all of whom have officially entered the race.

Taken together, Bush’s intense fundraising, participation in so many candidate events, and repeated public statements about running for president, including details of his plans to compete in places like Iowa, all add up to someone who is no longer testing the waters, but is actively preparing for a presidential campaign. No rational person would argue that $100 million is what is actually needed to test the waters.

Mitchell told Breitbart News that she had recently looked at several past FEC Advisory Opinions that dealt with similar situations.

Interestingly, one key FEC Advisory Opinion was about Bush’s father, when he was Vice-President and considering running for President. In 1986, the elder Bush was the founder and honorary chairman of a PAC that was created to support the Republican party and recruit and support candidates. He had publicly stated that he would not consider a presidential campaign until after the 1986 elections.

Given these facts, the FEC cleared George H.W. Bush to continue working with the PAC, and to spend money on travel, publications, administrative expenses, and other related items. Repeatedly throughout the nine-page Opinion, the FEC pointed out that this would “not apply to [the PAC’s] expenditures for this activity after the Vice President qualifies, if he does, under the [Federal Election Campaign] Act and regulations, as a candidate for Federal office.”

However, as Mitchell pointed out, his father’s PAC activity had been to support other candidates, and there was a clear deadline set — the 1986 elections — before which he was not going to become a candidate. “That is not what Jeb Bush is doing,” said Mitchell. “I just don’t see how they get away with it…it’s very different,” she added, pointing out how Bush was traveling and spending money to promote his own pending candidacy.

Another FEC Advisory Opinion dealt with former Sen. Howard H. Baker, Jr. (R-TN), who was also considering a 1988 presidential run. Baker had formed a testing the waters account and had submitted several questions about what he was allowed to do with the funds and what would happen once he did announce his candidacy, if he decided to move forward.

The FEC was very clear, that the more relaxed fundraising and reporting rules for testing the waters accounts only applied “during the period in which an individual is determining whether to become a candidate.” Once Baker became a candidate, he would not be able to continue to operate under the testing the waters rules, and would have to comply with the stricter reporting rules and the lower contribution limits imposed on candidates.

The FEC Opinion regarding Baker was still applicable, said Mitchell. “None of that has changed legally, and when people start talking about themselves as candidates that publicly, then you need to be in the hard dollar world.”

On Wednesday, the American Democracy Legal Fund (ADLF) filed a complaint against Bush, alleging he is violating the campaign finance laws with his Super PAC, as reported by the Miami Herald. This complaint was the third filed by the ADLF against Bush. The group is liberal and devotes its resources to filing complaints against Republican candidates, but some of the arguments they use are similar to the issues raised by Watkins and Mitchell, who are both Republicans.

In the press release announcing the complaint, ADLF wrote:

It was clear before, but it is now crystal clear that Mr. Bush and Right to Rise Super PAC, Inc. have violated the Act in the following ways: (1) Mr. Bush, now a self-declared candidate for federal office, has been soliciting and raising funds outside of the federal limits for Right to Rise Super PAC, Inc., and (2) Right to Rise Super PAC, Inc., an independent expenditure-only committee that was established and is directed and controlled by Mr. Bush and his agents, has been soliciting, receiving, and spending funds not subject to the limitations and restrictions of the Act. And even if Mr. Bush stops raising money for Right to Rise Super PAC, Inc. and completely separates himself from the committee now that he has publicly declared his candidacy, Right to Rise Super PAC, Inc. will still be in violation of the law if it raises or spends soft money because it was established by and will be controlled by Mr. Bush and his agents.

Without action, Mr. Bush’s illegal behavior will set harmful precedent that would allow independent expenditure-only committees established and controlled by candidates to wholly finance a candidate’s campaign using funds that are not subject to the law’s limitations or requirements, a clear violation of the law’s prohibition on federal candidates establishing, directing, and controlling a soft money entity.

The current makeup of the FEC is tied 3 to 3 between Republicans and Democrats, leading many to predict stalemate decisions. However, if Bush continues to have complaints filed against him on his way to that $100 million war chest, that may be enough to push the FEC into action.

If the FEC does reach a decision that Bush violated the campaign finance laws, then that $100 million will help insulate him, just as it is expected to be able to insulate him from negative attack ads from his opponents in the race. According to Watkins, if the FEC assessed Bush with double the largest fine in FEC history, that would be about $7 million. That is a hefty sum on its own, but when taken from a $100 million pot, it is less than 10 percent.

Bush and his advisers may have simply decided that a $7 million fine is a worthwhile risk, the cost of doing business that allowed them to pour unlimited donations into the PACs for Bush to then use for his campaign. What Americans still struggling from the aftereffects of the recession would think about someone who can just shrug off such a large penalty, however, is another question all together.

“As a cost of doing business, it could be a pretty clever and smart move,” said Watkins. “Whether it’s a good political move or not, I don’t know, because there are a lot of people now questioning.”

Breitbart News left a message with Bush’s legal counsel, Raquel Rodriguez of Miami, regarding the complaints filed, but had not received a response at the time of publication. This article will be updated if there is a response.