Political Money Laundering
What is the worst local campaign finance violation? According to <a href="http://www.dailynews.com/crime/ci_16429092" target="”_blank”">an article yesterday
from the Los Angeles <i>Daily News</i></a>, 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.<br>
<br>
According to the Los Angeles City Ethics Commission's <a href="http://ethics.lacity.org/PDF/press_abramsenforce.pdf" target="”_blank”">press
release</a> 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.<br>
<br>
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.<br>
<br>
In <a href="http://ethics.lacity.org/PDF/press_021405Accusation.pdf" target="”_blank”">a press release</a> 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."<br>
<br>
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.<br>
<br>
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.<br>
<br>
For more on this sort of political money laundering, read <a href="http://ethics.lacity.org/newsletter/issues/2007-3/5-MoneyLaundering.cfm…; target="”_blank”">the
Los Angeles EC's newsletter piece</a> on it.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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