Black Money, Politics, and the Ways People Hide Big Political Donations: NPR

Robert Maguire of Citizens for Responsibility and Ethics in Washington, DC, talks to NPR’s Ari Shapiro about ways people who want to donate to political organizations can hide their money.


Earlier this month, two business partners of Rudy Giuliani were arrested as they left the country. They are accused of violating federal campaign finance laws. Part of their scheme allegedly involved funneling more than $300,000 from a front company to a President Trump-supporting superPAC.

We’ve spoken with election law experts, and many of them aren’t surprised at the size of the donation or the attempt to conceal the source of the funds — these things are actually quite common. They’re surprised that Lev Parnas and Igor Fruman haven’t covered their tracks better because there are options for people who want to completely hide big political donations.

And here to talk about it, Robert Maguire of Citizens for Responsibility and Ethics in Washington. Welcome.

ROBERT MAGUIRE: Thank you for inviting me.

SHAPIRO: Our colleague Jeff Brady spoke to Lev Parnas before the arrest. This is how he explained the gifts.


LEV PARNAS: It was actually the first time that I really started giving bigger donations because I wanted to get my energy company out there. And I thought that might be a great way to, you know, play with the big boys, as you call it.

SHAPIRO: Now this so-called energy company seems to be just a shell company created weeks before the big donations. But if you imagine that Parnas came to you and said, here’s what I want to do, and I want to hide the money, what would you have advised him?

MAGUIRE: Well, you know, America First Action, for example, the superPAC that they donated to, has a 501(c)(4) welfare branch that doesn’t have to disclose its donors. It is run by essentially the same people at the same address. It is theoretically a welfare organization that is supposed to do things that benefit the community. But these operate, essentially, as stealth political groups that have the advantage of not disclosing their donors. So the easiest way for them to avoid the situation they find themselves in now is to simply have donated to this branch of the group.

SHAPIRO: There is obviously a difference in transparency between superPAC on the one hand and (c)(4) on the other. Is there also a difference in how these groups can spend that money?

MAGUIRE: There are – sort of on paper, there are rules for these groups and the degree of political activity that they can engage in. But the reality is that in practice these groups can essentially act as stealth political committees. They can spend millions of dollars buying tens of thousands of ads for months and months before an election and not report those expenses to the Federal Election Commission unless it’s 30 days before a primary or 60 days before. a general.

But there’s also — they can give grants to other politically active 501(c)(4)s and count that as welfare activity, and that creates this rollover where you see kind of a garland of groups that s give grants to offset their political expenses. These groups therefore have a multitude of options to ensure that they maximize the amount of money they spend on politics without disclosing any donors.

SHAPIRO: So if I’m trying to donate half a million dollars to a campaign to buy influence and curry favor with a candidate, but I don’t want the public know, is there any way the candidate can find out – because I want them to know that I’m a big supporter of them, don’t I?

MAGUIRE: It’s actually the key to black money. So we’re not talking about nobody knowing who’s behind the band. We say the public doesn’t know, but the candidates know who funds these groups.

SHAPIRO: Given that there are these more secretive options available, why do you think Lev Parnas and Igor Fruman would have given in such an easy way for them to get caught?

MAGUIRE: Well, I think if you listen to the clip, it sort of gives an indication, that they weren’t sophisticated political donors. They realized the reality – that if you are a major donor, you are buying access to powerful people.

SHAPIRO: And indeed, there were pictures of them with very powerful people, ranging from the governor of Florida to the president himself.

MAGUIRE: Precisely. What they didn’t quite know was how to cover their tracks. And it’s unfortunate that there are much more sophisticated political donors who know exactly how to do this and make sure the public doesn’t know who funds these groups and who gets reimbursed once these people are in power. But it looks like in this case we had two people who had kind of taken the plunge head first and realized that there are ways to do this without getting into the situation they are in right now.

SHAPIRO: Robert Maguire of Citizens for Responsibility and Ethics in Washington, thank you for that explanation.

MAGUIRE: Absolutely. Thank you for.


Copyright © 2019 NPR. All rights reserved. Visit the Terms of Use and Permissions pages of our website at for more information.

NPR transcripts are created under tight deadlines by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative recording of NPR’s programming is the audio recording.