A Putin SuperPAC?

Recent revelations have led some commentators to conclude that President Vladimir Putin of Russia might be taking more than an observer’s interest in the 2016 presidential election. Certain public statements certainly point to Putin viewing the candidacy of Donald J. Trump very favorably. While any alleged assistance to the Trump campaign on the part of the Kremlin or its resident has been the stuff of spy stories and foreign nationals are, of course, prohibited from providing financial support to campaigns for U. S. federal office, there are serious loopholes in campaign finance law that make very real the threat of Russian intervention in our democratic process.

Despite the blanket prohibition on foreign nationals contributing to American political campaigns, the mischief caused by the Supreme Court’s decisions in Citizens United and subsequent cases has created an opportunity for foreign nationals to discretely fund Super PACs supporting candidates of their choice.  The process starts with forming a limited liability company (LLC) in Delaware.  Delaware has no citizenship or residency requirements for starting an LLC, and virtually anyone can do it—the only requirement is that Putin (he’ll serve as the example here) hires a “registered agent” located in Delaware for as little as $45 for a year.  What’s more, many registered agents will file all the necessary LLC paperwork on any prospective LLC owner’s behalf without requiring any additional information from the owner. Thus all official documentation surrounding Putin’s new LLC will have the registered agent’s name and address on it rather than Putin’s (this will be important later). 

Putin now has his freshly-minted Delaware LLC and he’s ready to start having a tangible impact on the American presidential election without even opening an American bank account. He can simply get a money order in any amount—say, perhaps, ten million dollars.  Putin’s LLC cannot legally make a contribution directly to the Trump campaign, but Super PACs do not have such restrictions and can accept unlimited contributions from any LLC.

So Putin can find a pro-Trump Super PAC of his choosing and send along the $10 million money order, which the Super PAC can then use on television ads, mailers, or anything else it deems appropriate. After the Super PAC receives and spends the $10 million contribution, it must later disclose the sources of all its contributions to the Federal Election Commission (FEC).  In the case of Putin’s LLC, the Super PAC will need to disclose the name and address of Putin’s LLC—but as noted above, the address will actually be that of the registered agent.  In the event of an FEC investigation into Putin’s LLC, the trail will only lead back to the registered agent. Moreover, if Putin covered his tracks well when he hired the registered agent (by paying with cash, for instance), that is where the investigation will end: No one ever learns the true origin of that $10 million contribution, and the Super PAC doesn’t have to return it.

If foreign nationals (and governments) can contribute unlimited amounts of money to American Super PACs, which can then in turn spend that money electing candidates to U.S. office, there is a grave risk of American foreign policy being shaped by decidedly un-American preferences.  The recent changes to the official Republican Party Platform regarding Ukraine are but a small indication of the threat.  One can easily imagine state actors from China using Super PAC contributions to influence a change in U.S. policy towards Taiwan, or money from Saudi Arabia encouraging U.S. officials to continue looking the other way concerning its many human rights abuses—all to say nothing of even more significant abdications of American power that might have seemed almost unthinkable mere weeks ago. And the danger is not localized to presidential campaigns, especially given how much further $10 million goes in a House race.

While we cannot know how often or severely this loophole has been exploited to date, it is indefensible to allow it to remain.  Fortunately, there is an easy fix (ideally as part of broader, more comprehensive campaign finance reform): If Congress simply requires all political contributors to disclose the information of at least one American citizen to whom the contribution is connected, with that citizen being held legally responsible for any violations of campaign finance law relating to that contribution, we will have erected a significant roadblock against the intrigues of nefarious foreign meddlers.  

This astonishing gap in the regulation and enforcement of our campaign finance system should offend the sensibilities of every American regardless of ideology. There is no excuse for allowing this problem to linger. It’s time for us as citizens to know just as much (preferably more) about our campaign finance laws as outside actors, or we may well find the rules changing under our feet—and not for the better.

Matthew J. Strabone is an attorney and a Partner of the Truman National Security Project. Views expressed are his own.