How A Super PAC Turned $6 Million To $140,000
By Joseph Tanfani and Maloy Moore, Tribune Washington Bureau (TNS)
WASHINGTON — Before he entered the race for the White House, Ben Carson signed on to a campaign to raise money to fight Obamacare. When Juanita McMillon saw his name, she was eager to get out her checkbook.
“I think he is sincere, and I think he is honest, and I think he is exactly what we need,” said McMillon, 80, from the small town of De Kalb in northeast Texas. She gave $350.
Her money went to the American Legacy PAC, an organization with ties to former House Speaker Newt Gingrich. With Carson as the face of its Save Our Healthcare campaign, American Legacy raised close to $6 million in 2014 — and spent nearly all of it paying the consultants and firms that raised the money. Just 2 percent was donated to Republican candidates and committees, financial reports show.
“I’m really careful who I give money to, but I guess I did not read it close enough,” McMillon said, adding that she had never heard of American Legacy. “I prefer to give money to individuals, and I assumed, I guess, that Dr. Carson was getting my money.”
Though American Legacy didn’t raise much money for Obamacare-hating Republicans, it was a success at something else: finding people willing to give to Carson. Using those names, and another list generated by a second super PAC, Carson’s campaign built a network of individual donors that has far out-raised those of his rivals.
The fundraising operation also has proved rewarding for the consultants running it. The founder and treasurer of American Legacy, a Virginia-based direct-marketing consultant, is now a senior finance advisor for Carson’s campaign, which has paid his firms $2.8 million.
The story behind the creation of Carson’s fundraising network is another example of the way that super PACs, which are supposed to be independent from campaigns, have become more entangled with candidates than ever before. It also illustrates how effective the checks of tens of thousands of small donors, many of them of modest means, can be at enriching campaign consultants.
Unleashed by Citizens United v. Federal Election Commission and other court decisions, super PACs have spent lavishly on ad campaigns.
But American Legacy’s approach was different. Using old-school tactics like direct mail and telemarketing — mainstays of conservative fundraising campaigns for decades — consultants sent out blanket appeals, prospecting for passionate Carson supporters.
Many turned out to be older conservative voters captivated by his religious faith and up-from-poverty life story.
One of them was 90-year-old Hazel T. Donnell, from Centennial, Colo., who gave $300. Like McMillon, she said she didn’t know she was giving to American Legacy.
“I didn’t give to anybody but Ben Carson — not to any other organization,” Donnell said. “I thought it was all about Carson.”
“I trust him absolutely,” she said. “Washington to me right now is one big mess of a bunch of lies.”
When Carson entered the race, the campaign tapped those donors again. Donnell gave an additional $250 to the campaign, and McMillon $450. Of the more than 4,000 donors to American Legacy, more than 25 percent also ended up giving to the Carson campaign, a Los Angeles Times analysis showed.
The American Legacy effort was “one of a half-dozen things that added up to the notion that he could be viable” and persuaded Carson to run, Watts said.
“That’s when we found out how much equity he really had out there,” said Doug Watts, a Carson campaign spokesman. “He attracted a lot of interest, a lot of donations, a lot of engagement — and that’s how direct marketing works.”
Using the same playbook and some of the same firms, the campaign pulled in about $20 million in the third quarter, far more than for any other Republican presidential candidate. But it’s also costing Carson a lot to keep his fundraising machine going — more than $14.7 million this year for mail, phone and Web marketing firms, postage, printing and other expenses. An additional $1.2 million went to political consultants, campaign reports show.
Watts defended the American Legacy effort and offered reassurance to donors. “I would say to those people, you did give to Dr. Carson,” Watts said. “They participated in the building of a list” of donors for the campaign.
American Legacy was founded in 2010 by Gingrich and his wife, Callista, along with Mike Murray, president of a marketing firm called TMA Direct.
The PAC has a history of churning donors’ money into fundraising costs. In 2013, the group raised about $2 million and spent nearly all of it on consultants, contributing just $42,750 to candidates.
Neither the Gingriches nor Murray responded to requests for comment.
There’s no rule that says political committees can’t burn up contributions on costs. Federal election law says only that candidates can’t spend campaign money for personal use. And even that rule doesn’t apply to independent committees, says Kenneth Gross, an election and ethics lawyer who served as chief enforcer at the FEC.
“A political committee has no fiduciary duty to its donors,” Gross said. “If I have a PAC and want to spend it on a trip to Atlantic City, that’s fine,” as far as the law is concerned. (All spending must be reported accurately, he said, and taxes paid if funds go to personal expenses.)
In January 2014, with his political reputation already on the rise, Carson became chairman of the Save Our Healthcare campaign. In a video, he said Obamacare was “seriously flawed.”
“We can once again have the greatest health care system on Earth, if Washington gets out of the way,” he said. The phone number in the video rang at Infocision, a telemarketing firm in Akron, Ohio.
Carson, the soft-spoken retired neurosurgeon, turned out to be a fundraising powerhouse. But just as before, there was little money left over for candidates. American Legacy gave a total of $143,750 in 2014 for midterm campaigns; most of the money went to costs and to Infocision and other vendors. Murray’s firms received $248,000.
Once the marketing firms find donors, the names turn out to be business assets. Murray’s firm offers the donor lists, including names of people who gave to American Legacy and to Gingrich’s 2012 presidential campaign, to other organizations for a fee. After Gingrich quit the presidential race, leaving big debts, Murray’s firm generated more than $1 million by renting those lists to other clients, reports show.
Direct marketing also drove fundraising for Run Ben Run, the pro-Carson super PAC that changed its name to the 2016 Committee. That group’s list of donors also was used to jump-start Carson’s campaign.
That’s legal, provided the outside groups charge campaigns a fair rate. Watts said that happened in both cases.
Those early mass mailings, financed by the outside groups, will probably prove to be a huge boon to Carson’s fortunes, said Candice Nelson, a government professor at American University. The big expense of such fundraising tactics comes at the beginning, she said, in scouting for the donors.
“Usually, once people give, they’re invested and they continue to give,” Nelson said. “That’s why once you have a house list, it’s something that can provide a steady source of income to a campaign. Because they are small donors, they usually don’t max out” by reaching the individual contribution limit of $2,700.
More than 550,000 people have given money, Watts said, more donors than to any other Republican candidate. Carson ended the third quarter with about $11 million in cash on hand, less than Sen. Ted Cruz of Texas but more than former Florida Gov. Jeb Bush, whose fundraising has lagged.
Carson has made a point of thanking his fundraising workers, appearing with Murray at a rally at an Infocision call center. “What an enthusiastic group … dedicated, hardworking people who truly want to see this nation change,” the candidate said in a campaign video.
Infocision has received about $2 million, and an Akron digital firm called Eleventy Marketing Group, run by an Infocision veteran, has received $4.7 million.
(Tanfani reported from Washington and Moore from Los Angeles.)
©2015 Tribune Co. Distributed by Tribune Content Agency, LLC.
Photo: Republican presidential candidate Ben Carson smiles as he is announced during a Presidential Town Hall Series at Bob Jones University in Greenville, South Carolina, November 13, 2015. REUTERS/Chris Keane