The Federal Election Commission (FEC) is seeking public input on proposed rule changes to combat fraudulent campaign contributions, particularly through untraceable electronic payments. This comes in the wake of allegations of donation laundering schemes involving stolen identities and false payment methods, raising significant concerns about the integrity of campaign financing.
Last month, Texas Attorney General Ken Paxton called for a Department of Justice investigation into ActBlue, citing evidence of fraudulent donations allegedly laundered through the platform. According to Paxton, a network of false identities was used to make thousands of small-dollar contributions, potentially masking illegal sources of funds.
The scheme, previously highlighted by Peter Bernegger of ElectionWatch.info and journalist James O’Keefe, involves using the identities of senior citizens to funnel repeated small-dollar donations into campaigns. Many victims were unaware their names had been used, and some expressed shock when confronted with records of thousands of dollars in contributions made in their names.
In addition to identity theft concerns, the scheme could expose victims to unintended tax liabilities, further complicating the fallout from these fraudulent practices.
In response to these allegations, the FEC has proposed amendments to its regulations governing credit card contributions. The changes include:
- Enhanced Record-Keeping: Contributions made using credit, debit, prepaid, or gift cards would require a cross-check between the contributor’s reported information and the issuing institution’s records to confirm the cardholder’s name and billing address.
- Restrictions on Prepaid Cards: Contributions from prepaid or gift cards would only be accepted if their issuing institution’s records can confirm the required identifying information.
The FEC opened the public comment period for these proposed amendments on November 26, 2024, and it will remain open until January 27, 2025.
The FEC’s proposed changes come at a time when the Supreme Court has overturned Chevron Deference, which allowed federal agencies significant leeway in interpreting laws. This decision could invite legal challenges to the FEC’s authority to implement these rules or lead to non-compliance by organizations like ActBlue, despite their recent adoption of basic security measures, such as requiring CVV numbers on donations.
While the FEC’s amendments represent a step toward transparency, Congress has yet to act on the issue. Senator Marco Rubio’s proposed CVV Act, introduced in February 2023, would require all internet-based contributions to include a credit verification value (CVV) check. The one-sentence bill has languished in committee for over two years without a vote.
The focus on fraudulent campaign donations has also reignited broader concerns about money laundering in U.S. elections. Former Polish politician Piotr Kulpa recently alleged that half of U.S. aid to Ukraine is being funneled back to Democratic campaigns, claims echoed by investigations into FTX founder Sam Bankman-Fried and NGO payment structures.
Peter Bernegger has further claimed that foreign funds from China and Ukraine may pass through U.S. Treasury channels and multiple NGOs before reaching campaign coffers, with each intermediary allegedly taking a percentage cut.
These controversies come amid striking disparities in fundraising between political campaigns. According to Ballotpedia, Kamala Harris’s 2024 campaign raised an estimated $1 billion, making it the second-highest-funded campaign since 2008. By contrast, Donald Trump’s campaign raised $391 million, the second-lowest during the same period.
With the FEC opening public comment on these crucial rule changes, the issue of campaign finance fraud is once again in the spotlight. Whether these measures will be sufficient to curb illicit donations or face resistance in the courts remains to be seen. However, the revelations about fraudulent schemes and the growing influence of foreign funds underscore the urgent need for reform to restore trust in the electoral system.
For the public, this comment period represents an opportunity to weigh in on safeguarding the integrity of campaign contributions—an essential step in preserving democracy.
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