- Political committees reported at least $2.7 million in 2020 losses from theft and fraud, per federal disclosures.
- At least $71,000 was swiped from accounts belonging to Joe Biden’s presidential campaign.
- Many of the affected committees told Insider they’re instituting new security protocols.
- Visit the Business section of Insider for more stories.
Joe Biden enjoyed some of the nation’s finest security as a presidential candidate. But apparently no one could stop thieves and fraudsters from raiding his presidential campaign committee.
Last March, an unauthorized “external actor” used the Biden campaign bank card to spend $6,000 at a Philadelphia interior-design company, according to federal disclosures reviewed by Insider. Then, in June, “fraudulent activity” caused a nearly $65,000 Biden campaign payment to be “misdirected” from a vendor to an “unknown account” at Bank of America.
The criminal incidents that befell the campaign of the future president of the United States are among several dozen examples of bad actors plundering political committees during the most recent election cycle. In all, federal political committees together reported at least $2.7 million worth of initial losses, Insider’s analysis of campaign income and spending records shows.
Some of the methods used to pilfer political campaigns are decidedly digital — cyberattacks and stolen credit-card numbers — while others are overtly old-school, such as forgery and paper-check tampering.
Together, the thefts underscore an open secret in politics: that some political committees’ operations are far from secure, potentially exposing them to other kinds of trouble beyond the financial, such as meddling by foreign actors or the hacking of sensitive information.
More than a dozen political committees told Insider they strengthened their financial protocols only after experiencing a theft. But there are also numerous steps some political committees — and even Congress — could take to tighten their security even more. They just haven’t yet.
“The lack of internal financial controls at campaign committees has been a problem for a long time,” said Brett Kappel, an election law and ethics attorney for Harmon, Curran, Spielberg & Eisenberg LLP.
Several congressional candidates and state or local political parties are among those affected. So, too, are the political committees of various corporations, labor unions, trade associations, and advocacy groups including Google, the International Brotherhood of Teamsters, the National Association of Mutual Insurance Companies, and The Humane Society.
Some committees have recovered at least a portion of the money lifted from them, particularly if the theft involved a stolen credit-card number or an unauthorized bank transaction.
But others say they’re still out the cash — and may be for good.
Red? Blue? Thieves just want green.
Why might thieves target political committees?
Recall the quote attributed to the bank robber Willie Sutton about why he robbed banks: “Because that’s where the money is.”
There’s certainly a lot of money in politics: The nonpartisan Center for Responsive Politics pegged the overall price tag of the 2020 US election at $14 billion.
While $2.7 million may represent only a small fraction of that big number, that’s still $2.7 million that American political donors expected would go toward promoting a political candidate or cause of their choosing.
And even relatively modest thefts can cause major headaches for candidates in the midst of campaigning.
For Biden, a White House representative told Insider an unknown thief “compromised” a campaign vendor’s email account. The thief then used the compromised email account to provide the Biden campaign with a fraudulent account number.
So, when the Biden campaign went to pay the vendor’s invoice in June, it actually paid the thief. The vendor realized the problem about two weeks after the fact. A small amount has since been recovered, the Biden campaign told the FEC.
“This is an example of an unfortunately common business-email compromise,” the White House representative said. “The campaign put in place additional protections to prevent a recurrence.”
In Georgia, the Republican Doug Collins also got hit during his unsuccessful Senate campaign. More than $15,200 that donors gave the then-congressman to hire staff members and fund political ads instead bankrolled a thief’s retail purchases at British companies such as Vodafone, Boots UK, and Fragrance Direct.
Collins’ campaign manager, Scott Paradise, told Insider his committee immediately notified its bank and local authorities when it flagged the bogus charges in early 2020. But by then much of the damage couldn’t be fixed.
“We worked for several months with our financial institution to recoup as many of the charges as possible, though, given that charges were placed in quick succession from outside the country, it proved difficult,” Paradise said, adding that the campaign recouped a “portion” of the money it lost.
A filing with the Federal Election Commission on October 18 said $1,524 had been recovered to that point.
The Lafayette County Democratic Party in Mississippi lost $13,500 from its federal political account in 2019 when it fell victim to an embezzlement, federal records show.
The suspect was the party’s treasurer, Hunter Davis Pace.
Party officials did not respond to requests for comment, but police reports, jail records, and FEC filings indicate the party removed Pace as treasurer in August 2019 and the police identified Pace as a suspect. Authorities in Georgia arrested Pace in October 2019 on a “fugitive from justice” charge. Pace could not be reached for comment, and his current status is unclear.
“We have since implemented stricter oversight to ensure any fraudulent activity will never happen again,” the new party treasurer, Martha Scott, and the party chairperson, Cristen Hemmins, wrote to the FEC in October 2019.
The political committees of Rep. David Scott, a Georgia Democrat; John James, a Republican US Senate candidate in Michigan; and the Green Party presidential candidate Howie Hawkins are among several other 2020 candidates to report three- or four-figure thefts or unauthorized charges.
James, who could not be reached for comment, disclosed to the FEC about $8,300 worth of “fraudulent charges” involving purchases with the ride-hailing service Uber. Someone appears to have used Scott’s campaign debit card to buy $276 worth of items from the UW Shop — an online store that specializes in Wisconsin-related sports merchandise. (Scott’s congressional office directed questions to his campaign committee, which didn’t return requests for comment.)
Former Rep. Mia Love, a Utah Republican, lost more than $2,000 from her political action committee last summer after a committee debit card was “stolen from a committee staffer’s bag,” according to a federal disclosure. The PAC told the FEC it contacted law enforcement, its bank provided a refund, and its treasurer, Paul Kilgore, said Monday that he knew of no developments since then.
No political committee suffered more from theft last election cycle than the Republican Party of Wisconsin, which fell victim to a $2.35 million theft in October from its federal campaign account.
At the time, Republican Party of Wisconsin’s chairman, Andrew Hitt, told the Associated Press that people behind a “sophisticated phishing attack” manipulated invoices from four vendors the party was paying for pro-Donald Trump direct mail as well as pro-Trump promotional material, such as hats.
In a situation similar to that described by the Biden campaign, Hitt further told the AP that the hackers altered invoice documents so that when the Wisconsin Republican Party paid them, the hackers got paid — not the vendors.
A party representative, Anna Kelly, declined to comment this week, citing the “sensitive nature of the case.”
The Republican Party of Wisconsin said in a letter to the FEC that it had reported the matter to the FBI, which declined to comment on this and other pending investigations.
Scamming special interests
Some high-profile corporate and union political interest groups have also experienced suspected financial crimes.
Among them, per federal records: the Morgan Stanley Political Action Committee, Google’s NetPAC, Humane Society Legislative Fund, National Association of Mutual Insurance Companies PAC, National Air Traffic Controllers Association PAC, National Corn Growers Association PAC, American Association of Clinical Urologists PAC, Regions Financial Corporation Political Action Committee, Teamsters Education and Mobilization political committee, and the United Fresh Produce Association PAC.
Read more: Thieves stole $31K from an Alabama-based bank’s political committee that gives to Republicans and Democrats
PACs of ideological groups, too, have been hit. They include the left-of-center MoveOn.org, CHC Bold PAC, and Brand New Congress.
Even the political action committees of two leading law firms, Akerman LLP and Blank Rome LLP, each lost tens of thousands of dollars, according to FEC records. Representatives for both firms did not return several messages left in recent days.
Several of the PACs, including that of MoveOn.org, told Insider that unknown thieves stole committee credit-card numbers and fraudulently used them online.
In a twist, someone apparently used a stolen bank card number to make hundreds of dollars in purchases late last year from the Teamster’s online store, a union representative, Galen Munroe, said.
Cargill, the food and agriculture giant, attributed the theft of $2,000 from its PAC to a paper check stolen and altered at some point after the PAC mailed it last year. Destination: the campaign committee of Rep. Michael McCaul, a Texas Republican.
The National Air Traffic Controllers Association PAC, which lost more than $29,000 in July 2019 to forged checks, proved to be luckier than most, telling Insider in a statement that it contacted the police and “ultimately recovered all funds that had been stolen.”
Morgan Stanley got back the more than $3,500 stolen from it by electronic means, the PAC’s treasurer, Mark Ferland, told the FEC. The National Association of Mutual Insurance Companies PAC’s bank refunded $500 it lost when a fraudulent check cleared its bank, an association representative, Matt Brady, said.
Google spokesperson Jose Castaneda declined to comment on the more than $2,500 in “unauthorized charges” reported in January by his company’s PAC, although a letter from the PAC’s assistant treasurer, Seth Webb, to the FEC attributes the theft to an “external party” cashing “three counterfeit checks from the Committee’s Wells Fargo Bank account.”
Through its bank, the National Corn Growers Association PAC also recouped the nearly $1,900 it lost from “two fraudulent electronic debits,” an association representative, Liz Friedlander, said.
How to defend against a heist
If a political committee wants to avoid victimization, it needs to check itself.
The FEC — which enforces and regulates the nation’s civil campaign-finance laws — offered several recommendations and expectations for what political committees should do if they become victims of a financial crime.
First, as soon as a misappropriation is discovered, the “political committee must notify criminal law enforcement authorities,” the agency told Insider in a statement.
Second, the committee also must notify the FEC and file amended reports to correct any reporting errors caused by the misappropriation.
The Humane Society’s political committee, for one, beefed up its procedures after thieves, using fraudulent checks, pilfered more than $20,600 in 2019.
“Working with our bank, we have implemented additional safeguards, now requiring every PAC transaction to be confirmed by our team, and increasing the frequency of audits and reconciliations,” the committee’s political director, Brad Pyle, said.
Other advice the FEC offered political committees to avoid being victimized by thieves:
- Limit the number of people authorized to sign checks. For four-figure checks, require two people to sign.
- Carefully control access to committee debit cards because they “represent easy access to committee assets.” Also, committees should ask their bank or credit-card issuer about placing dollar restrictions and prohibitions on withdrawals.
- Record mailed-in contributions as they’re received and consider using a lockbox service.
- Enroll in any bank or financial institution fraud detection or defense program offered, even if it costs a bit of money to do so.
- Keep petty cash funds to a minimum — ideally, under $500.
- Mail checks “promptly and directly” to vendors and other payees.
- Implement “a daily back-up system for the committee’s electronic data to avoid a loss of data that can interfere with the committee’s ability to file timely and accurate disclosure reports.”
- Implement a “positive pay system” — good for identifying potential fraud — for financial transactions. During the 2018 election cycle, for example, the aerospace giant Boeing’s PAC disclosed a theft from its account and acknowledged the credit union it used didn’t have a positive pay system.
The FEC also said Congress could help. Since 2009, it’s asked the House and the Senate — to no avail — to amend federal law to strengthen prohibitions on the personal use of campaign money. Such changes, the FEC argues, would help defend against theft.
“If Congress were to enact this recommendation, the commission would have additional civil law enforcement tools to address this problem, and the US Department of Justice would have additional criminal law enforcement authority,” the FEC said in a statement.
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