Santos investigation puts spotlight on Scam PACS
The media, as is its proper role (though it ought to have performed that role sooner), is still hunting Santos, relentlessly like Tommy Lee hunted Harrison Ford in The Fugitive. Hound dogs barking off in the distance and everything! Except that it is not altogether clear that Santos’s Harrison Ford really didn’t do it, I guess. And Santos is sort of a fugitive sitting still in plain sight. Sheeesh, what a total mess he’s made. Anyway, The Times is now trying to figure out just where Santos’s nearly $1 million campaign money came from and are focusing on so-called “scam PACs.”
If a group raised money under false political pretense, that activity could lead federal election officials to regard it as what is commonly known as a “scam PAC” — a group that raises money without spending it on the stated political purpose, a practice that is increasingly a concern of the F.E.C., Mr. Hilland said.
Redstone Strategies LLC of Florida listed one other manager in its incorporation records: Jayson Benoit, a business partner of Mr. Santos and former colleague at Harbor City Capital, which shut down after the S.E.C. filed a lawsuit accusing it of operating as a Ponzi scheme. (Neither Mr. Santos nor Mr. Benoit, who did not respond to requests for comment, were named in that suit.)
Another potential area of concern about RedStone Strategies was the way it was described in its donor solicitation email as a 501c4 — a type of tax-exempt group organized for the promotion of social welfare. These entities pay no federal taxes and may engage in politics so long as their major purpose is not electing candidates to office. “They can spend up to 49.9 percent of their budget on candidate election work,” explained Paul S. Ryan, an expert in federal election law, who added that political spending was allowed as long as it was not the group’s primary purpose. But while the donor email describes the group as a 501c4, it also pledges to dedicate “all its resources” to electing Mr. Santos — language that Mr. Ryan suggested was troubling. “You can get away with it if you are not foolish enough to put in writing that you’re all about candidate elections,” Mr. Ryan said. RedStone Strategies was not the only group whose activity raised warning flags among campaign finance experts. Rise NY is a state PAC created in December 2020 by Mr. Santos’s campaign treasurer, Nancy Marks, and his sister. A Twitter profile of the group describes its purpose as “new voter registration & education as well as raising election awareness & voter enthusiasm.” The PAC raised vast sums from donors who had otherwise maxed out donating to Mr. Santos’s campaign, as reported by Newsday. One donor contributed $150,000, according to New York State Board of Election records, well beyond the limits of $2,900 per election placed on federal campaign contributions for direct campaign activity. Social media posts show that Rise NY organized demonstrations and voter registration events on Long Island. In a Twitter post from August 2021, Rise NY claimed it had “pulled in 7800+ new Republican voters on LONG ISLAND, NY alone.” A close examination of the group’s spending, however, reveals that many of Rise NY’s actions would be considered unusual, if not a violation. PACs like Rise NY are allowed under New York State law to give directly to candidates or authorized committees, but may not spend in other ways to help a campaign. Yet Rise NY issued payments for wages and professional services to Santos campaign workers, including Mr. Santos’s press secretary. It also directed $10,000 in payments to a company run by Ms. Marks, the campaign treasurer. And Ms. Santos earned $20,000 for her work as the PAC’s president. She did not respond to a request for comment. Its expenditures took place at many of the spots that Mr. Santos’s campaign filings show he liked to frequent, including Il Bacco, a restaurant in Queens where his campaign spent roughly $14,000, and an Exxon Mobil gas station that is a two-minute drive from his former apartment in Whitestone, Queens.
Actually, Scam Pacs are more often used to cheat donors — by raising money purportedly to support a particular candidate, but which money is actually pocketed by the operators. If the allegations against Santos are true he may not have scammed donors — it just seems like somebody with deep pockets supported him, knowingly (and that person(s) is probably not sleeping well either these days) — he scammed the electorate, which is probably worse than the typical scam pac scam. Read more about scam pacs in “Fraudulent Political Fundraising in The Age of Super Pacs.”
darryll jones