Customized super-PACs test giving limits
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The Committee to Elect an Effective Valley Congressman has one particular congressman in mind: Howard Berman, a 15-term California Democrat who is struggling to hold on to his redistricted San Fernando Valley seat.
The political fundraising committee is essentially the creation of one man trying to keep a close friend and political ally in office.
"Howard and I have been friends for 30 years," said Marc Nathanson, a cable TV magnate and investor who founded the super-PAC and has given it $100,000. "It's a friendship beyond what I call political friendships -- it's a personal relationship. When it was clear he needed help, I figured out a way to do that."
Amid the hundreds of super-PACs created to help favored candidates and causes, Mr. Nathanson's group is part of an even more specific class -- highly customized, highly personalized political action committees, often created overnight when a relative or friend writes a check.
The phenomenon began in the Republican presidential primary, when a handful of millionaires lined up to support their candidates through specially targeted super-PACs, including one funded by Jon Huntsman Jr.'s billionaire father.
The same kinds of very personalized groups have sprouted in House and Senate races across the country, inundating voters with ads and mailings and testing the limits of federal rules forbidding coordination between fundraising committees and candidates.
The trend has alarmed watchdogs who say the groups make a mockery of federal contribution limits, which are supposed to guard against corruption by capping the amount of money supporters can give to a campaign. But with a personalized super-PAC, supporters can write as big a check as they wish as long as they do not technically coordinate with the campaign.
"They are essentially undermining the whole rationale behind contribution limits," said Craig Holman, government affairs lobbyist for the Public Citizen watchdog group. "These are the exact same people who work with the campaign or are close to the campaign setting up a second, unlimited funding source."
The pattern is evident in California, which held a revamped primary contest Tuesday allowing the first two candidates of any party to proceed to the general election.
At least a dozen primary races in the state featured super-PACs founded or funded by close allies and associates of the candidates, according to Federal Election Commission filings.
In the High Desert east of Los Angeles, for example, Republican Paul Cook was aided by more than $200,000 worth of ads and mailers from two super-PACs in the newly created 8th Congressional District. The groups were formed by the same lawyer within a month of the primary and have not yet had to disclose their donors.
The Golden State is hardly alone in its fondness for custom-crafted super-PACs.
In Texas, Dallas billionaire Harold Simmons has dumped $1 million into two super-PACs focused solely on the GOP Senate primary there. One group is running ads supporting Lt. Gov. David Dewhurst, a Republican, while the other is attacking his Tea Party opponent, Ted Cruz.
But the prize for the most personalized super-PAC must surely go to North Carolina, where GOP congressional candidate George Holding was aided by a group funded almost entirely by his family.
Mr. Holding, a former U.S. attorney who launched the corruption case against Democrat John Edwards, defeated well-known former Raleigh Mayor Paul Coble in the May GOP primary, making Mr. Holding the de facto representative of the deep-red district in 2013. Starting behind in the polls and lower in name recognition, Mr. Holding went on to win in part thanks to more than $500,000 in television ads from the American Foundations Committee super-PAC.
Formed in late February, the group was funded almost entirely by members of Mr. Holding's wealthy banking family, including $100,000 each from an aunt and uncle and $250,000 from a group of cousins, FEC records show.
Representatives of the Holding and Coble campaigns did not respond to requests for comment last week. During the campaign, Mr. Coble complained of the "disadvantage when one individual can afford to buy an election," while Mr. Holding representatives characterized the group as a simple gesture of support from family and friends.
"In North Carolina, this was probably one of the first clear examples of what a super-PAC is and how it completely changes the rules of the game," said Bob Phillips, executive director of the state's Common Cause chapter.
He said Mr. Coble was "overcome by the money, and I don't imagine that the average voter probably knew that it was from his opponent's family."
One common thread in many of the races is allegations that super-PACs are improperly coordinating their activities with candidates.
In the San Fernando Valley race, the campaign manager for Democratic Rep. Brad Sherman filed an FEC complaint alleging that the pro-Berman group and the Berman campaign were illegally coordinating by using the same political consultant. The Berman campaign denied the allegations.
Parke Skelton, a Sherman political adviser, said there are "multiple overlaps" between the Berman super-PAC and the campaign that call into question the group's independence. The group has spent about $550,000 on Mr. Berman's behalf, helping him survive the primary to face Mr. Sherman this fall.
"He's counting on the super-PAC to be able to raise a lot of money very quickly for him because he's at a huge cash disadvantage to Brad going into November," Mr. Skelton said, referring to $3 million that Mr. Sherman has in the bank. Funding from the super-PAC, he said, "is going to be enough money to impact the race."
Elliot Berke, a Republican campaign finance lawyer at McGuireWoods in Washington, D.C., said super-PACs and other independent groups have wide flexibility as long as they avoid direct contact with candidates or their campaigns.
"The legal question really isn't who is behind the super-PAC from a relationship perspective," Mr. Berke said. "Friends or relatives setting up a super-PAC to support someone's candidacy may create political questions and even trigger an FEC complaint by political opponents, but it doesn't on its face violate any law or regulation."
Mr. Nathanson, the investor who helped form the pro-Berman super-PAC, said the group has abided by all regulations and will continue to do so.
"Look, I hate super-PACs. I'm a Democrat, and I always thought they were a Republican thing," Mr. Nathanson said.
"But I also realize now that there's a law of the land, whether I like them or not. It's part of the political financing world we have to deal with."
First Published June 11, 2012 12:00 am