The Independent View

Barack Obama’s cam­paign mas­sive fund rais­ing effort appears to have achieved suc­cess in part because they ignored the law on cam­paign fundrais­ing and refused to fol­low indus­try stan­dard pro­ce­dures designed to ver­ify the name, address, and employer of their con­trib­u­tors. My research indi­cates that at least 26 mil­lion dol­lars of the $425 mil­lion raised by Obama that I reviewed is ques­tion­able or ille­gal. Oth­ers report sig­nif­i­cantly higher num­bers, likely more than $100 mil­lion. In other words, over 10% of the money he received came from sources that appear to vio­late the laws gov­ern­ing Fed­eral cam­paign dollars.

Obama’s on-​line con­tri­bu­tion tool has been designed to by-​pass much of the read­ily avail­able ver­i­fi­ca­tion meth­ods that most credit card mer­chants employ. This is no accident.

Obama’s fund rais­ing totally dis­re­gards cam­paign finance laws — in spirit, if not in fact. A few of the problems:

• Obama accepts con­tri­bu­tions from any­one with­out any ver­i­fi­ca­tion that they are who they say they are, that they have pro­vided required infor­ma­tion, and that their con­tri­bu­tion is legal
• There are 694 con­trib­u­tors listed with more than the $4,600 allowed, result­ing in $805,190.90 excess contributions
• Numer­ous sus­pect names like “LAST NAME, FIRST NAME” that has made over $14,250 incon­tri­bu­tions; oth­ers like A, A and KHV, KHV are equally sus­pect. There are many other exam­ples scat­tered through­out the list
• Listed cities are often sus­pect. For exam­ple: Null, just street addresses, or with names like X, CA, XXX, OHW, NC, USA in CA, LA, MI, IL, and NC, and TX, TX
• There are 58 incor­rectly listed states used over and over again: 1, 60, 75, AB, AC, AU, BA, BC, BE, BR, CH, CN, DF, DJ, EN, EU, FI, FR, GE, HO, IR, IS, IT, JA, JP, JT, KT, LN, LO, ML, MX, N, N., N/​, NA, NL, NS, NT, NU, OC, ON, PE, PO, QB, QC, QU, RM, SA, SK, SO, SP, ST, SW, U., UK, YT, ZU, ZZ
• There are many for­eign addresses. For exam­ple: Alme­ria, Spain, PA; Athens, Greece, IL; Barcelona, Spain, NJ; Berlin, Ger­many, MD; Toronto, ON M4C 1N, GA or Toronto, Ontario, MN; Tokyo, Japan, NJ
• There are 12,480 indi­vid­ual con­tri­bu­tions using invalid states for $3,679,089.65
• There are 4,333 indi­vid­ual con­tri­bu­tions that list ZIP Code sim­ply as zeros for $1,891,108.53.
• Even with the media atten­tion to “Will Good” and “Doo­dad Pro”, there are still $3,225 and $305, respec­tively that has not been refunded. Nor, if the con­tri­bu­tions are being kept, has their names and other required infor­ma­tion been corrected
• Numer­ous null or sus­pect employ­ers are listed. In fact, 47,050 who con­tributed $17,452,233.88 left the field blank. Oth­ers entered clearly bogus infor­ma­tion. For exam­ple: “(Red)”, ASDFASDFASDFASDF, all X’s, REFUSED, and “EMPLOYED IN SOUTH AFRICA FOR OBAMA”.
• Occu­pa­tions include such entries as “Parent’s LA County DA”, “MOTHER OF 2 BOYS, PARENT’S ASS”, SEX SLAVE, SEXOLOGIST, BEAN COUNTER, SLAVE, SLUMLORD, TROUBLE-​MAKER, and WHIPPING BOY
• Over $107 mil­lion in con­tri­bu­tions come from peo­ple list­ing either no employer and that they are unemployed
• There are 237 indi­vid­ual con­tri­bu­tions trans­ac­tions over $2,300 report­edly received after the Demo­c­ra­tic National Con­ven­tion for $957,613.
• There are 94 indi­vid­ual con­tri­bu­tion trans­ac­tions over $4,600 for $706,524.54
• There are 23 indi­vid­ual con­tri­bu­tion trans­ac­tions over $4,600 received after the Demo­c­ra­tic National Con­ven­tion­for $171,200
• Among trans­fers from “autho­rized com­mit­tees” there are seven indi­vid­ual con­trib­u­tors with more than $4,600 con­tri­bu­tions and 322 with more more than $2,300 con­tri­bu­tions since the Demo­c­ra­tic National Con­ven­tion for a total of $35,251.27 and $1,271.652.30, respectively.
• Among trans­fers from “autho­rized com­mit­tees” there are 557 indi­vid­ual con­trib­u­tors with invalid addresses (e.g., bad state des­ig­na­tions) for $757,508.33
• Among trans­fers from “autho­rized com­mit­tees” there are 111 indi­vid­ual con­trib­u­tors with invalid ZIP Codes (e.g., zeros) for $121,656.01
• Among trans­fers from “autho­rized com­mit­tees” there are 1,406 indi­vid­ual con­trib­u­tors with null employer fields for $1,453,123.81

Sum­mary of Cam­paign Finance Rules
The basic rules are rather straightforward:

• Only U.S. cit­i­zens and non-​citizens with legal per­ma­nent res­i­dency (green card) may make a con­tri­bu­tion or expenditure
• Indi­vid­u­als must pro­vide name, address, employer, and occu­pa­tion when their aggre­gate dona­tion exceeds $200 per year. Anony­mous dona­tions are per­mit­ted for aggre­gate con­tri­bu­tions under $50 per election
• Indi­vid­u­als may con­tribute to a can­di­date $2,300 for the pri­mary elec­tion and $2,300 for the gen­eral election
• Indi­vid­u­als may con­tribute $28,500 to the national party com­mit­tee per year
• Indi­vid­u­als may con­tribute $5,000 to PACs per year
• Indi­vid­u­als may con­tribute a com­bined total of $10,000 to state, dis­trict, and local party com­mit­tees per year
• Thus, unless I’m mis­taken, you may make anony­mous con­tri­bu­tions if your aggre­gate total is below $50. Oth­er­wise you must include your name, address, employer, and occu­pa­tion. When your aggre­gate con­tri­bu­tion exceeds $200, the cam­paign is then required to report it
• For the pur­poses of my analy­sis, I have used August 28, 2008, when Sen­a­tor Barack Obama gave his accep­tance speech, as the last day of the pri­mary election.

Source for cam­paign finance rules is Fed­eral Elec­tion Com­mis­sion.

Typ­i­cal Com­plaints About Obama’s Fundrais­ing
Talk­ing strictly of online fundrais­ing, the Obama campaign:

• Accepts con­tri­bu­tions with­out ver­i­fy­ing that the entered name matches the name on the credit card
• Accepts anony­mous gift credit cards
• Does not ver­ify that the entered city, state, and ZIP Code match
• Does not ver­ify that the entered address is valid
• Does not require a valid U.S. location
• Appears to accept for­eign credit cards
• Does not request and val­i­date the AVS num­ber on the credit card.

There are many arti­cles through­out the Inter­net dis­cussing this. For exam­ple, I wrote Cam­paign con­tri­bu­tion Lim­its? No Prob­lem, Just Con­tribute Online (also at NoQuar​terUSA​.net).

Obama’s Expla­na­tion
Writ­ing in the Wash­ing­ton Post, Matthew Mosk says,

Sen. Barack Obama’s pres­i­den­tial cam­paign is allow­ing donors to use largely untrace­able pre­paid credit cards that could poten­tially be used to evade lim­its on how much an indi­vid­ual is legally allowed to give or to mask a contributor’s iden­tity, cam­paign offi­cials confirmed.

Faced with a huge influx of dona­tions over the Inter­net, the cam­paign has also cho­sen not to use basic secu­rity mea­sures to pre­vent poten­tially ille­gal or anony­mous con­tri­bu­tions from flow­ing into its accounts, aides acknowl­edged. Instead, the cam­paign is scru­ti­niz­ing its books for improper dona­tions after the money has been deposited.

.…

The Obama orga­ni­za­tion said its exten­sive review has ensured that the cam­paign has refunded any improper con­tri­bu­tions, and noted that Fed­eral Elec­tion Com­mis­sion rules do not require front-​end screen­ing of donations.

.…

Lawyers for the Obama oper­a­tion said yes­ter­day that their “exten­sive back-​end review” has care­fully scrubbed con­tri­bu­tions to pre­vent ille­gal money from enter­ing the operation’s war chest. “I’m pretty sure if I took my error rate and matched it against any other cam­paign or com­pa­ra­ble non­profit, you’d find we’re doing very well,” said Robert Bauer, a lawyer for the campaign.

.…

When asked whether the cam­paign takes steps to ver­ify whether a donor’s name matches the name on the credit card used to make a pay­ment, Obama’s cam­paign replied in an e-​mail: “Name-​matching is not a stan­dard check con­ducted or made avail­able in the credit card pro­cess­ing indus­try. We believe Visa and Mas­ter­Card do not even have the abil­ity to do this.

“Instead, the cam­paign does a rig­or­ous com­pre­hen­sive analy­sis of online con­tri­bu­tions on the back end of the trans­ac­tion to deter­mine whether a con­tri­bu­tion is legitimate.”

Addi­tional discussion:

• Michael Luo and Griff Palmer, Fic­ti­tious Donors Found in Obama Finance Records, New York Times, Octo­ber 9, 2008.
• Michael Luo, Democ­rats and Repub­li­cans Feud Over Donor Data, New York Times, Octo­ber 25, 2008.

Ana­lyz­ing Obama’s Reported Fundrais­ing
I have accessed the lat­est fundrais­ing con­tri­bu­tion data­base released this week that cov­ers con­tri­bu­tions through Octo­ber 15, 2008. As noted above, if the aggre­gate total con­tri­bu­tion per elec­tion is above $50 you must include your name, address, employer, and occu­pa­tion and when your aggre­gate con­tri­bu­tion exceeds $200, then the cam­paign is required to report it. The lat­est fundrais­ing report lists this infor­ma­tion, plus refunds or reas­sign­ment of con­tri­bu­tions when they’ve occurred.

Get­ting past this bland intro­duc­tion, the data itself is stun­ning and sub­stan­ti­ates Sen­a­tor John McCain’s state­ment that this is a scan­dal in the mak­ing (See my arti­cle ref­er­enced above).

Here are some big pic­ture numbers:

Indi­vid­ual Contributor’s Name (By State and City)

The only mean­ing­ful way to ana­lyze indi­vid­ual con­trib­u­tors by name is to also con­sider their state and city. Oth­er­wise, the same named per­son in two dif­fer­ent places is treated as the same per­son. A down­side to this is that if the per­son moved or is using two or more addresses, they are then treated as dif­fer­ent people.

City
City is an inex­act field inso­far as it is not val­i­dated against a city-​state-​ZIP Code list. In its present state, it is great for anec­do­tal exam­ples of sus­pect indi­vid­ual contributions.

State

As if Obama’s not know­ing the cor­rect num­ber of states in the United States isn’t bad enough — recall him once giv­ing the count of 57 and insin­u­at­ing there were more — within the con­tri­bu­tion report his cam­paign offers up 123 states.

ZIP Code
ZIP Code by itself is not illus­tra­tive except unless used to do fur­ther demo­graphic analy­sis. It is, when matched with city and state, an excel­lent com­po­nent to iden­tify sus­pect trans­ac­tions by using com­par­ing lists of valid city, state, and ZIP codes.

City-​State-​ZIP Code
City-​State-​ZIP Code is not yet tested for lack of time. There are numer­ous city, state, and ZIP Code data­bases that can be used to val­i­date that the reported city, state, and ZIP Code are valid com­bi­na­tions. As a test, this will high­light those trans­ac­tions that should be fur­ther scru­ti­nized. I may address this in a future arti­cle, espe­cially if inter­est is expressed.

Employer
Employer is very inex­act as peo­ple list the same appar­ent com­pany with many spellings, mis­spellings, and vari­a­tions of the com­pany name.

Date of Con­tri­bu­tion
Con­tri­bu­tions are reported from Jan­u­ary 16, 2007 through Octo­ber 15, 2008 with the high­est count and amount on Sep­tem­ber 30, 2008, with 47,083 con­tri­bu­tions total­ing $7,330,579.23 for an aver­age amount of $155.69.

Amount
The most obvi­ous prob­lem in amounts are those indi­vid­ual con­tri­bu­tions that in a sin­gle instance are over $4,600. These rep­re­sent con­tri­bu­tions that the cam­paign have accepted that by no inter­pre­ta­tion of the $4,600 limit should have been accepted, much less reported.

An addi­tional prob­lem is trans­ac­tions made using gift cards, pos­si­bly with the full amount of the card — such as $25 cards. How many of these trans­ac­tions come from untrace­able gift cards?

Con­tri­bu­tions from Autho­rized Committees

There are 101,696 trans­ac­tions total­ing $54,523,770.55 from “autho­rized com­mit­tees”. These trans­ac­tions are listed with six vari­a­tions of Obama Vic­tory Fund. Each involves an indi­vid­ual con­tri­bu­tion trans­ac­tion, just as the indi­vid­ual con­tri­bu­tions dis­cussed above. These con­tain the same type of prob­lems found above.

Con­clu­sion
Sen­a­tor Barack Obama’s con­tri­bu­tion list is poorly reviewed by his cam­paign staff or not reviewed at all. It con­tains an incred­i­ble num­ber of errors and instances of appar­ent vio­la­tion of com­mon laws regard­ing polit­i­cal con­tri­bu­tions to fed­eral office can­di­dates. The cyn­i­cal side of me says that this has occurred is either bliss­ful igno­rance or by spe­cific design.

Key points:

• Obama’s online fundrais­ing dis­cards rea­son­able and cus­tom­ary secu­rity mea­sures to ver­ify the iden­tity and con­firm appro­pri­ate­ness of indi­vid­ual contributions
• The campaign’s lawyers, yes, Obama’s lawyers, say this is inten­tional and that they do “rig­or­ous com­pre­hen­sive analy­sis of online con­tri­bu­tions on the back end of the trans­ac­tion to deter­mine whether a con­tri­bu­tion is legitimate”
• The lim­ited review reported in this arti­cle makes abun­dantly clear that a “rig­or­ous com­pre­hen­sive analy­sis” is not per­formed. Records include phony names, employ­ers, occu­pa­tions, and addresses. Fur­ther, many clearly involve money in excess of cam­paign finance limits.

As Sen­a­tor John McCain notes, this is a scan­dal. It is, though, a sim­ple scan­dal to resolve, even if after the elec­tion. Obama’s attor­neys already indi­cate and the records con­firm that refunds are already made when nec­es­sary. Thus, each con­tri­bu­tion is linked to a credit card. Credit card records include or can include name and billing address. To reestab­lish the integrity of the campaign’s financ­ing, Obama needs to match the credit card infor­ma­tion with the reported name and address to root out ille­gal con­tri­bu­tions. If Obama won’t do this, I am hope­ful that a pros­e­cu­tor even­tu­ally will.

Finally, my analy­sis of the 2,069,069 trans­ac­tions in Sen­a­tor Barack Obama’s com­paign con­tri­bu­tion report is very incom­plete. Some basic data­base queries retrieve good counts on the num­ber of bad state iden­ti­fi­ca­tion, num­ber of null employ­ers, zeroed ZIP Codes, and so forth, iden­ti­fy­ing sus­pect names and other reported infor­ma­tion requires a record-​by-​record review. While I have skimmed small por­tions of the two mil­lion records, it is embar­rass­ingly incom­plete and requires for more time than I have avail­able at the present. What I have found makes clear that the Obama cam­paign has not done any due dili­gence to ensure that they are only accept­ing and report­ing autho­rized, cor­rectly doc­u­mented, and accu­rate indi­vid­ual con­tri­bu­tions. That they have con­fig­ured their con­tri­bu­tion form on the cam­paign Web site to accept any user input, that they process this with­out scrutiny, and report the results with­out cor­rec­tion or regards to the laws makes abun­dantly clear this is by spe­cific design.

Cor­rec­tions: This arti­cle was cor­rected to rec­on­cile edits between my orig­i­nal arti­cle on my blog and the edited ver­sion at NoQuar­terUSA. The con­tinue to vary slightly in the word­ing of the text but the sub­stance is iden­ti­cal and unchanged.

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