At a May 3, 2000, press conference, Rep. Patrick Kennedy, D-R.I., announced that the Democratic Congressional Campaign Committee (DCCC) had filed a lawsuit, prepared by its counsel, Robert F. Bauer, alleging that Rep. Tom DeLay, R-Texas, was using a series of nonprofits and political committees (called section 527s, after the section of the tax code under which they’re created) to circumvent campaign finance laws, extort money from donors, and evade disclosure. Kennedy and Bauer presented the charges, based for the most part on media reports about DeLay’s fundraising tactics, as an unprecedented assault on campaign finance law. “Money laundering,” Bauer elaborated on one of the main charges, is “the way in which he avoids public disclosure and washes the fruits of his illegal fundraising operation through these unregistered organizations, which do not disclose the source or object of their expenditures.”
A reporter then asked Bauer,
It’s not unheard of for either party to make contributions to 501(c)(4)s or 527s. Has the DCCC, in this cycle, made any transfers to any such organizations, either a 501(c)(4) for get-out-the-vote efforts or a 527, and will you be making any for the rest of the year?
…to which Bauer responded,
Well, the answer to the first question is no. And we haven’t even addressed the issue. And I don’t know of any circumstance under which we would. And so it’s very hard for me to answer the question in the abstract.
In the third quarter of 2000, the DCCC made a $53,000 contribution to Impac 2000, a 527organized to “formulate, coordinate and implement redistricting efforts.” Impac 2000 paid more than $7,800 to Perkins Coie, Bauer’s law firm, in the same quarter it received money from the DCCC. (Impac 2000 would later donate $25,000 to the DCCC; though it is impossible to tell from the disclosures, it is possible that Impac 2000 was transferring “hard” money, which could be used with fewer restrictions, to the DCCC in exchange for a larger amount of soft money, use of which faced more restrictions at the federal level.)
The DCCC also contributed more than $14,000 to another 527 called the New Democrat Network, which also disclosed making small payments to Perkins Coie. Overall, according to the only available online database of 527 expenditures in the 2000 election cycle, Perkins Coie billed eight 527s — the others were the Democratic Properties Corporation, the Democratic Legislative Campaign Committee, Majority 2000, Campaign for a Progressive Future, Pro Choice Vote, and the Sierra Club Voter Education Fund — in the 2000 election cycle.
Bauer, President Barack Obama’s choice to take on some of the responsibilities of Norm Eisen, the special counsel for ethics and government reform who is moving on to become ambassador to the Czech Republic, has occasionally been identified in the press as an “ethics expert” or an “ethics attorney.” But his expertise has served some unethical characters: while Bauer has attacked the ethics of Tom DeLay and his network of 527s, he’s defending those of Tony Coelho (resigned amidst a congressional ethics inquiry) and Robert Torricelli (did not seek reelection amidst a federal investigation). He represented Richard Sullivan, the Democratic National Committee finance director who was involved in a number of the fundraising irregularities in the 1996 election that were investigated by House and Senate Committees.
Bauer has also used his expertise to help his clients do some of the same things the DCCC accused DeLay of. In 1999, the Washington Post reported on a new wrinkle in campaign finance: members of Congress who had their own 527 committees, allowing them to raise unlimited funds from donors–including unions and corporations, barred from contributing directly to their federal campaigns. The Post noted that at least 20 members of Congress had set up their own soft money operations. While they couldn’t use the funds for their federal campaigns, they could spend it on polling or to pay for consultants, donate it to state and local politicians or national party committees, and travel to political events.
The Internal Revenue Service, which now publishes 527 filings on its website, didn’t require these organizations to disclose their donors until July 2000. Post reporters Susan B. Glasser and Juliet Eilperin reported that some election lawyers advised their clients to provide disclosure at the state level, while others advised against it:
Some, such as Republican Benjamin Ginsberg of Patton Boggs, say that registering in states such as Virginia is the best way — in part because it provides at least some disclosure. But Democrat Robert F. Bauer, whose firm, Perkins Coie, advises 15 congressional Democratic leadership PACs (four of which raise soft money), insisted such registration is unnecessary if the intent is to raise soft money on a national level.
Glasser and Eilperin note that one of the 527s–the Rhode Island PAC–belonged to Rep. Patrick Kennedy. A Kennedy spokesman told the Post reporters that Rhode Island PAC donated “$70,000 in soft money Kennedy raised went almost entirely to the Democratic National Committee and the Democratic Congressional Campaign Committee.” Bauer did not comment on whether moving money from Kennedy’s 527 to the DCCC constituted money laundering.