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Political Money Laundering
Tuesday, October 26th, 2010
Robert Wechsler
What is the worst local campaign finance violation? According to an article yesterday
from the Los Angeles Daily News, it appears to be political money
laundering. Mark Abrams, a former Beverly Hills developer, was fined
$108,000 yesterday, and $270,000 for similar violations back in 2005.
According to the Los Angeles City Ethics Commission's press release back in 2005, Abrams made "$65,500 in contributions in the 2001 and 2003 elections to various city candidates, either through 'assumed named' contributions by reimbursing others or by making contributions through companies he controlled." In other words, he got around contribution limits by dividing his contributions up among individuals willing to fraudulently make the contributions in their own name, and also by using companies he controlled.
L.A. law allows a fine of $5,000 per violation plus three times the amount of the illegal contribution. This is why the fine is so much higher than the amount of the contributions.
In a press release that accompanied the second group of charges against Abrams, the EC said, "City law prohibits money laundering because it circumvents the City’s campaign contribution limits – which are intended to prevent any person from exercising undue influence over candidates or elections -- and deprives the public of information about the true source of a candidate’s financial support."
I would add that the worst thing about political money laundering is that it coopts other individuals into the violator's scheme, often by tacit or express coercion.
It can be very hard to discover this sort of political money laundering, because on its surface it is completely legal. Only if one of the complicit individuals spills the beans, or if one or more individuals are already under investigation, can the scheme be discovered. It probably occurs often, in minor ways, such as a parent giving his children money for contributions.
For more on this sort of political money laundering, read the Los Angeles EC's newsletter piece on it.
Robert Wechsler
Director of Research-Retired, City Ethics
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According to the Los Angeles City Ethics Commission's press release back in 2005, Abrams made "$65,500 in contributions in the 2001 and 2003 elections to various city candidates, either through 'assumed named' contributions by reimbursing others or by making contributions through companies he controlled." In other words, he got around contribution limits by dividing his contributions up among individuals willing to fraudulently make the contributions in their own name, and also by using companies he controlled.
L.A. law allows a fine of $5,000 per violation plus three times the amount of the illegal contribution. This is why the fine is so much higher than the amount of the contributions.
In a press release that accompanied the second group of charges against Abrams, the EC said, "City law prohibits money laundering because it circumvents the City’s campaign contribution limits – which are intended to prevent any person from exercising undue influence over candidates or elections -- and deprives the public of information about the true source of a candidate’s financial support."
I would add that the worst thing about political money laundering is that it coopts other individuals into the violator's scheme, often by tacit or express coercion.
It can be very hard to discover this sort of political money laundering, because on its surface it is completely legal. Only if one of the complicit individuals spills the beans, or if one or more individuals are already under investigation, can the scheme be discovered. It probably occurs often, in minor ways, such as a parent giving his children money for contributions.
For more on this sort of political money laundering, read the Los Angeles EC's newsletter piece on it.
Robert Wechsler
Director of Research-Retired, City Ethics
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