If you're having trouble viewing this email, you can view it in a browser.

Beast Inside members can weigh in for a chance to get published on our homepage. Not a member yet? Sign up here.

Watchdog: Mysterious Donor May Have Illegally Laundered Trump Super PAC Cash

A mysterious company that donated $325,000 to a leading Trump super PAC this year may be illegally hiding the sources of money it used to support GOP political efforts, according to a legal complaint set to be filed today.

The Campaign Legal Center alleges in a complaint with the Federal Election Commission that Global Energy Producers LLC, the company behind that sizable contribution in May to America First Action, has all the hallmarks of a financial “conduit” set up to funnel money into political contests in ways that mask the real sources of the funds.

The Daily Beast revealed two of the individuals behind the group, Igor Fruman and Lev Parnas, in a story Wednesday. Fruman told the Russian-language news website ForumDaily that he attended a March donor retreat at Mar-a-Lago. He was pictured there with President Donald Trump amid meetings about the president’s and his party’s political efforts in the midterms and the 2020 general election.

That may not have been the last time Fruman met with Trump. CLC’s complaint cites an interview that Fruman gave to the New York-based outlet Jewish World. Fruman said he and Parnas were among nine attendees at a private meeting with Trump in early May in Washington. They discussed the midterm election and efforts to retain Republican majorities in Congress.

The White House did not respond to attempts to confirm the meeting and Fruman’s account of it.

Fruman recalled the meeting taking place in the first few days of May. About two weeks later, Global Energy Producers made its sizable contribution to America First Action. Over the following month, Fruman and Parnas donated $111,000 to Protect the House, a joint fundraising committee supporting the National Republican Congressional Committee and a host of GOP House campaigns. They also gave to the re-election campaigns of Republican Reps. Pete Sessions (Texas) and Joe Wilson (SC), and to the Senate campaign of Florida Gov. Rick Scott (R).

It’s the GEP contribution that drew CLC’s scrutiny. The group, a nonpartisan ethics watchdog, says the company doesn’t appear to have existed long enough, or conducted sufficient business, to set aside such a large sum for a single political contribution, let alone the additional $50,000 it donated to Republican Rep. Ron DeSantis’ Florida gubernatorial campaign in June.

That likely means, CLC alleges, that the company was illegally used as a pass-through entity to mask the original sources of the contributions.

RT Promises Not to Air Russian State Secrets

Russian state broadcaster RT is still very upset that its Washington, D.C.-based production company has been required to register as a foreign agent under U.S. law. But it nonetheless continues to file disclosures as such, and this week notified the Justice Department of a new contract with Russian broadcaster ANO TV-Novosti that underscores its closeness with Kremlin interests, notwithstanding the persistent denials.

Novosti inked the contract with T&R Productions LLC, the entity that broadcasts RT’s U.S. programming. Language in the contract prohibits RT broadcasts from including “information which is a state secret or any other secret protected by law; information inciting the seizure of power, forced change of the constitutional order and state integrity; information inciting national, racial and confessional hatred and dissension; [and] information inciting a war and advocating a war.”

RT regularly broadcasts programming regarding high-profile leaks and hacks of U.S. state secrets—it gives extensive airtime to WikiLeaks, Edward Snowden, Chelsea Manning, and the secrets they’ve publicly released—but it appears to be contractually prohibited from doing so with comparable information about the Russian government.

Russian state broadcaster RT is still very upset that its Washington, D.C.-based production company has been required to register as a foreign agent under U.S. law. But it nonetheless continues to file disclosures as such, and this week notified the Justice Department of a new contract with Russian broadcaster ANO TV-Novosti that underscores its closeness with Kremlin interests, notwithstanding the persistent denials.

Insider Reveals How High-Dollar Donors Shop for Dark-Money ‘Cap Space’

This week, PAY DIRT sat down with a leading Republican consultant to get a 30,000-foot view of the flows of dark money in the political process. The consultant has worked in the field for years, including for presidential, congressional, gubernatorial, and state legislative campaigns, as well as independent political spenders. The consultant agreed to give a behind-the-scenes view of how big-money donors seek to keep their identities hidden as they work to sway major electoral contests. The consultant asked to remain anonymous because a number their clients are the sorts of groups we discussed. What follows is a summary of our conversation.

The key to understanding dark money is the so-called 51-49 rule. Nonprofits organized under section 501(c)(4) of the Internal Revenue Code, which are not required to publicly disclose the names of their donors, must spend a majority of their money, so at least 51 percent, on “social-welfare” activity, which the IRS defined generally as apolitical civic activity that doesn't involve direct politicking. The rest can be spent on politics, though social-welfare groups are somewhat constrained in how directly they can advocate for or against a candidate.

“Sometimes there’s some wiggle room,” the GOP consultant told me. But “attorneys I work with are pretty strong about that because C4s raise suspicion because of the anonymity.”

That often poses a dilemma for high-dollar political donors. All else being equal, they are faced with a choice: A donor can write a huge check to an explicitly political group, in which case his name will be disclosed, but all of the money can go toward direct politicking; or he can donate to a dark-money group and keep the donation secret, but be content with less than half of that money supporting his preferred candidates.

Some prominent political organizations have figured out how to navigate that dilemma effectively, and shape it to the contours of an election cycle. The consultant mentioned the Congressional Leadership Fund, a super PAC, and its sister dark-money group, the American Action Network, as examples. “They do it smartly, and they play by the rules.” The groups’ association with Speaker Paul Ryan helps CLF and AAN raise huge amounts of money—casino mogul Sheldon Adelson and his wife just donated $30 million to CLF in May—and its structure enables the groups to maximize the amount of money that is not disclosed to the public without compromising too much direct political activity.

Early in an election cycle, donors who want to remain anonymous can support activities that fall under the “social-welfare” umbrella and can be housed at AAN. Later in the cycle, that work can supplement activities at CLF, funded by donors who don’t mind having their names out there. AAN, having devoted most of its early energies to ostensibly apolitical activity, can spend significant sums late in the game on political activity before it hits the 49 percent threshold, and thereby provide an outlet for high-dollar donors who want to spend on politics anonymously.

“Their donors are a little more conditioned and they get the the joke,” the consultant explained. “If we invest early, our money goes toward polling, analytics, research, policy, and other things that count toward the 51, and then they have what’s often referred to as cap space.”

Cap space is the amount of money that a dark-money group can spend on political activity before it hits the 49 percent mark for the year. By frontloading “social-welfare” activity, a dark-money group can increase its overall budget for the year, providing a larger outlet down the line for donors looking to anonymously inject larger sums into advertising and other explicitly political activity. As Election Day nears and big donors get off the sidelines, consultants for such groups can reap a windfall by making their organizations available—for a fee—to donors who want to get involved and need a dark-money group with significant cap space.

“Let’s say Americans for Bright Sunny Days has spent two years doing all social-welfare work, and they’ve spent $500,000,” the consultant explained. “You have a donor with $500,000 that wants to spend it on an election.” The next step is to find the consultant managing a dark-money group with cap space to spare. “Through this series of relationships, you find out this person has a lot of cap space, then you just find out what their vig is,” or what percentage of the donor’s money the consultant will take off the top. “Is it 10 percent, is it 20? So maybe 80 percent of [the donor’s] money can go toward what you want it to.”

The problem for many of these Republican donors in the Trump era is the relative youth of the political infrastructure supporting the president—and hence the lack of available cap space leading up to the midterm elections. “The smarter money has already addressed this problem and taken care of it,” but “consultants are drawing [some high-dollar Trump donors] into potentially problematic groups.” They’re the sorts of groups, the consultant said, that might blow past the 49 percent cap and worry about the IRS down the line.

As November approaches, the result will either be an explosion in the amounts of dark money groups spending on political activity with the hope of offsetting it down the line, or a Republican donor base that’s forced to choose between putting their names into the public domain, or limiting the air support they can provide.

“It’s always a challenge to find someone with cap space in the last 30 to 60 days,” the consultant said. “You have these uncomfortable conversations where you say, ‘either reveal your name or only half your money gets spent on politics.’”