A web of new political action committees raised nearly $6 million in recent months under the guise of supporting police, veterans and cancer research. But nearly all the money has gone to their own vendors and staff, as opposed to those causes — hallmarks of so-called scam PACs.
Several of the people and entities involved in the new PACs have been investigated for alleged fraud and other illegal practices in the charity sphere. But after coming under scrutiny, they have shifted recently into the much less regulated realm of politics, a POLITICO investigation has found.
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The new PACs have feel-good names like Cops and Kids Together and Americans for the Cure of Breast Cancer. They have succeeded in raising millions of dollars from small donors in a matter of months — and spent most of it just as quickly, without supporting political candidates or making a mark on a policy issue. Their activities highlight an unpleasant truth: Political groups often receive less oversight and get more leeway than charities, even though they have to disclose more details about their donations and spending. Indeed, the Federal Election Commission has said it is all but powerless to crack down on scam PACs.
“A lot of money can be collected without a lot of regulation,” said FEC Commissioner Ellen Weintraub. “It’s like when they asked Willie Sutton, ‘Why do you rob banks?’ He said, ‘Because that’s where the money is.’”
The initial paperwork for two of the PACs bears the name of a former charity operator, David Dierks, who has been sued by attorneys general in multiple states. Four other PACs were registered by Robert Piaro, another ex-charity operator who co-founded and formerly worked at a veterans nonprofit in Wisconsin that was criticized for spending an unusually high percentage of its money on fundraising and lost a lease with the federal government in Tomah, Wisconsin, after a veteran died on the property.
A telemarketing firm used by several of the PACs for fundraising, Donor Relations LLC, is being probed by the Federal Trade Commission for alleged deceptive practices while raising money for charities in the past, according to federal court records. All seven of the PACs paid businesses listing the same address as Donor Relations LLC — in a Las Vegas strip mall — and spent most of their money there, FEC spending records show.
Before late 2017, no businesses at that address — 1835 E. Charleston Blvd. in Las Vegas — had provided services to federal campaigns or PACs, FEC records show. But in April, the seven new PACs disclosed spending $3.9 million with Donor Relations LLC and other vendors at the same address, according to FEC spending records. Thousands more went to Dierks and others involved with his PACs.
When POLITICO contacted Donor Relations to ask about its fundraising practices, an attorney representing the company and its president denied that Donor Relations had done any work for PACs.
“Donor Relations does not now, nor has it ever, performed any type of fundraising services for PACs,” attorney Robert Bernhoft wrote in an email. “It appears that the company hired to make and file various quarterly reports with the FEC mistakenly listed Donor Relations on those reports, in spite of the fact that Donor Relations doesn’t have anything to do with those PACs, or any other PACs, for that matter. I am advised that amended reports are being prepared for filing with the FEC that will correct these mistakes by removing Donor Relations.”
But Piaro confirmed in a previous interview that he had in fact hired Donor Relations to raise money for his PACs. “They fundraise for me, that’s about all they do,” Piaro told POLITICO.
Altogether, the seven PACs raised $5.9 million and spent $5 million, without spending a dime on contributions or ads supporting candidates or other political groups, according to their FEC disclosures. The groups spent a higher share of their funds on operating expenses than 95 percent of all federal PACs that spent at least $100,000 in 2017 and 2018, FEC data show.
Federal campaign finance watchdogs have flagged activity like this — “high operating expenses and/or large disbursements to entities associated with the managers of the PAC” — as indicators of “scam PAC” activity. In 2016, Weintraub and fellow FEC Commissioner Ann Ravel wrote a memo imploring their fellow regulators to go after such groups, which “collect political contributions, frequently in the name of a candidate, but which spend little to none of the proceeds on political activity benefitting” that cause.
The FEC has dismissed past complaints lodged by candidates who felt that PACs had misrepresented themselves to raise money using their names. Ravel and Weintraub suggested in 2016 that the FEC should display campaign finance data in more useful ways to help root out scam PACs, and they recommended that Congress expand campaign finance laws to include new anti-fraud and “anti-self-dealing” provisions.
“It’s easier for a scam PAC than it is for a charity,” Ravel, who left the commission in 2017, told POLITICO. The commission, she said, has “come to the conclusion that [it] didn’t have authority to actually go after the PACs that are essentially paying their administrators.”
The seven new PACs identified by POLITICO don’t reference specific candidates, instead embracing popular-sounding causes: Americans for Police and Trooper Safety; Americans for the Cure of Breast Cancer; Association for Emergency Responders and Firefighters PAC, Inc.; Cops and Kids Together; National Assistance Committee; Standing by Veterans PAC, Inc.; and US Veterans Assistance Foundation.
Dierks and officers for the two PACs registered by him — Americans for Police and Trooper Safety and Cops and Kids Together — did not respond to requests for comment for this story. When POLITICO called Americans for Police and Trooper Safety’s listed phone number, the person who answered said she represented multiple companies but declined to identify them.
Representatives of National Assistance Committee, whose website says it does business under other names, including the National Veterans Committee and the National Firefighters Committee, also did not respond to multiple requests for comment.
In an interview, Piaro said the high fundraising costs will help his PACs get off the ground.
Piaro said his PACs will “support legislation on these causes by helping them with contributions for mailers, billboards, or anything like that,” and he plans to start spending $200,000 to $300,000 on political activity once the groups have raised sufficient funds and do a “sustained push” during the 2020 election.
Most of the PACs have already burned through far more money.
Altogether, the seven PACs spent nearly 85 percent of the $5.9 million they raised through March. All but one of the PACs, National Assistance Committee, sent at least 84 percent of its spending to businesses at 1835 E. Charleston Blvd.
One of the groups’ expensive fundraising practices caught the attention of Montana Attorney General Tim Fox, who received a call in January from Americans for Police and Trooper Safety, asking for donations to help police. When Fox asked the caller to send him literature about making a donation in the mail, the representative instead repeatedly pressed for his credit card information, Fox said.
“Any legitimate charity would take your address, and they would send you the literature,” Fox told POLITICO. “The person that I talked to made no mention of this being a political organization or any kind of advocacy organization that was going to spend money on politics or policy. I understood it was going to spend money to help police.”
When it became clear that Fox wasn’t going to make a donation, the caller eventually told him to have a nice day and hung up the phone. Fox said his office has received several complaints about the group and has opened an investigation.
It’s not the first time a David Dierks group has caught the eye of a state attorney general.
Beginning in 1990, according to court records, Dierks and another individual, named Phil LeConte, ran several charities, with names including the American Association of Police Officers Inc., Veteran Police Association Inc., Police Protective Fund Inc. and Junior Police Academy. The charities claimed to help police and run educational programs.
But the California attorney general sued the charities, Dierks and LeConte in 2009, alleging, among other things, that donors were told their contributions would benefit their local police departments when they did not, and that potential donors were led to believe they were being solicited by current or retired police officers calling from inside their state, when that was not the case.
The complaint also alleged that Dierks and LeConte had filed inaccurate registration and IRS forms that made it appear they spent more money than they did on programming expenses to help police officers.
The case eventually reached a settlement in which Dierks and LeConte did not admit any wrongdoing. But they did agree to terms including “ceas[ing] all current and future solicitation” in California and paying $60,000 to the state.
Dierks received $8,000 for “research consulting” from the two PACs he formed — Americans for Police and Trooper Safety and Cops and Kids Together — in the first three months of 2018. A further $12,500 went to Phillip LeConte Photography for “internet consulting,” according to FEC records.
Yet more money flowed to another company with a connection to Dierks. The two groups also paid $102,900 to Button Pusher Productions, a Southern California company, for “management” and “media” consulting. Button Pusher Productions’ address on one disclosure form is the same one listed as Dierks’ address. Another disclosure locates Button Pusher Productions at the home of Jacob Parsons, who bought a house in Palm Springs from Dierks, according to LexisNexis property records.
Most of the money from Dierks PACs’, though, flowed through the Charleston Boulevard building. The two groups spent 90 percent of their funds, nearly $1.7 million, with three businesses there: American Technology Service, Compliance Consultants LLC and Unified Data Services LLC. FEC records say the spending went toward technical/computer support, compliance services and database services.
National Assistance Committee has paid $370,000 to businesses at Charleston Boulevard for services related to IT, compliance consulting and data.
The same address houses Donor Relations LLC, the fundraising firm used by the four PACs registered by Piaro. There is no record of Donor Relations or any other business at that address doing federal political work before 2017, according to the FEC. But Donor Relations and its president, Richard Zeitlin, were already under investigation for actions while fundraising for charities.
The FTC has been investigating Donor Relations LLC, Zeitlin and a related company at Charleston Boulevard called Courtesy Call LLC, which shut down operations in May 2017, court records show. The FTC was probing whether telemarketers made “false or deceptive representations” during fundraising calls, and whether the telemarketers illegally used prerecorded “soundboarding” calls to solicit funds.
In February, the FTC asked the U.S. district court in Nevada to force Donor Relations LLC and Zeitlin to cooperate with its civil investigation, after the parties failed to comply with some deadlines, according to court records.
Zeitlin’s attorney declined to comment on the FTC action.
It is not the first time one of Zeitlin’s companies has come under regulatory scrutiny: In California, Courtesy Call was part of a 2009 lawsuit alleging misleading charitable fundraising practices. Courtesy Call eventually reached a settlement agreement with the state, including a $30,000 fine.
Piaro’s PACs — Americans for the Cure of Breast Cancer, Association for Emergency Responders and Firefighters, Standing by Veterans PAC, Inc. and US Veterans Assistance Foundation — raised $2.6 million during the first three months of the year and spent $2.1 million. They paid the vast majority of that money, $1.9 million, to Donor Relations for fundraising expenses.
The biggest of Piaro’s PACs, US Veterans Assistance Foundation, bears an almost identical name to the charity that Piaro co-founded in 1994 and later left. The charity, the Veterans Assistance Foundation, for years provided housing and other programs for homeless veterans in Wisconsin. But it was criticized in 2013 for spending a low percentage of its proceeds on services for veterans in a Tampa Bay Times investigation of the “Worst Charities in America.”
The Veterans Assistance Foundation leased a Veterans Affairs dormitory to house homeless veterans in Tomah, Wisconsin. But in 2016, the federal government terminated the lease, part of an effort to clean up troubled veterans services in the area, after a woman was found dead in one of the dorms at the facility.
“With our homeless veterans, a lot of them have drug and alcohol issues. We lost that grant unfortunately,” current Veterans Assistance Foundation President Christopher Hanson said in an interview.
Piaro said he left that charity when it lost its contract with the federal government.
The nearly identical-sounding PAC started by Piaro has been “a real headache for the organization,” Hanson said.
The charity has lodged complaints about the PAC with the Better Business Bureau, Hanson said, but other than that, “there’s nothing we can do.”