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Elections Watchdog Says FEC Turned Blind Eye to Stealth Donor

Asking a federal judge to crack down on campaign-finance violations, a political watchdog group claims that regulators dropped the ball.

WASHINGTON (CN) - Asking a federal judge to crack down on campaign-finance violations, a political watchdog group claims that regulators dropped the ball.

CREW, a nonprofit whose name is short for Citizens for Responsibility and Ethics in Washington, filed the complaint on Aug. 4 in Washington — taking issue with the anticlimactic conclusion of what it calls an open-and-shut case of stealth donor activity.

Section 30122 of federal election law prohibits anyone from making a political contribution in the name of another person, but CREW says that it is exactly what happened in 2012 when the political action committee Republican Union received a $1 million donation from a Georgia woman named Sherry Huff.

Insisting that Huff lacked the assets to make such a contribution — which was 2,000 times the only other donation Republican Union received — CREW brought a complaint in 2013 with the Federal Election Commission.

The group’s new court complaint lays out the apparent scheme with a series of points about Huff’s background and employment history.

Before her seven-figure donation, for example, Huff “had never before made any other federal political contributions or, on information and belief, any state political contributions,” the complaint states.

CREW notes that the same could be not be said of Huff’s employer, Carey Vaughn Brown, described in the complaint as an internet payday loan magnate.

Brown’s political-contribution record includes donations to at least seven Southern Republicans, among them Sen. Rob Corker and Rep. Tom Graves, as well as “contributions to the Republican National Committee, the National Republican Senatorial Committee, the National Republican Congressional Committee, Mike Huckabee for President, the Fred Thompson Political Action Committee, and Bauer for President 2000 Inc.”

Republican Union worked toward similar objectives, CREW claims, saying the committee used most of Huff’s donation to buy billboards across the country “that attacked President Barack Obama for supporting same-sex marriage.”

On its FEC report, according to the complaint, Republican Union described Huff as a “business woman” employed by Account Pros Inc./CPD.

Spelling out the latter company as Credit Protection Depot, CREW says it and Account Pros are two of the more than 20 shell corporations that Brown used to reduce his tax liabilities and protect against lawsuits.

Brown originally described Huff as CPD’s bookkeeper and then as its CFP, according to the complaint, which calls Huff the owner of two Georgia properties, neither of which was valued at more than $100,000 in 2012.

CREW says Republican Union solicited Huff’s $1 million contribution, and that Brown made the contribution in her name illegally.

The FEC closed its file on the Republican Union complaint this past June, but CREW says the commission’s findings relied almost entirely on the joint response issued by Brown, Huff, Republican Union, the PAC’s treasurer, and Brown’s shell companies.

Calling this result arbitrary, CREW wants a federal judge to intervene.

The 14-page complaint notes that the phenomenon of stealth donations is nothing new, pointing to a 2012 report that studied donors who gave more than $1 million to super PACs trying to influence that year’s election.

“The report revealed a dozen donors with policy or business interests that depended on the outcome of the elections, but whose efforts to sway voters largely were out of the public view,” the complaint states.

In 2013, CREW released another report, “Rise of the Machines,” which detailed the growing political influence of high-frequency traders in Washington.

CREW says its core activities are hindered by the efforts that election influencers take to remain anonymous, and by “the FEC’s refusal to properly administer the campaign finance laws.”

The group is represented by in-house counsel Adam Rappaport.

FEC spokesman Christian Hilland declined to comment on the lawsuit, citing a policy of not addressing pending litigation.

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