CAMPAIGN FINANCE
DNC sought to hide details of Clinton funding deal
Leaked emails show officials tried to obscure fact that Clinton allowed states to keep only a tiny fraction of proceeds from joint fundraising.
By KENNETH P. VOGEL and ISAAC ARNSDORF 07/26/16 06:32 AM EDT
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The Hillary Victory Fund still had $42 million in the bank at the end of June, and it seems likely that more money will be moved to the state parties in the coming months. | Getty
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PHILADELPHIA — Leaked emails show the Democratic National Committee scrambled this spring to conceal the details of a joint fundraising arrangement with Hillary Clinton that funneled money through state Democratic parties.

But during the three-month period when the DNC was working to spin the situation, state parties kept less than one half of one percent of the $82 million raised through the arrangement — validating concerns raised by campaign finance watchdogs, state party allies and Bernie Sanders supporters.

The arrangement, called the Hillary Victory Fund, allowed the Clinton campaign to seek contributions of hundreds of thousands of dollars to attend extravagant fundraisers including a dinner at George Clooney’s house and a concert at Radio City Music Hall featuring Katy Perry and Elton John. That’s resulted in criticism for Clinton, who has made opposition to big money in politics a key plank in her campaign platform.

Clinton’s allies have responded publicly by arguing that the fund is raising big money to boost down-ballot Democratic candidates by helping the 40 state parties that are now participating in the fund.

But privately, officials at the DNC and on Clinton’s campaign worked to parry questions raised by reporters, as well as Sanders’ since-aborted campaign, about the distribution of the money, according to a cache of hacked emails made public late last week by WikiLeaks.

The emails, released the day before the opening of the Democratic National Convention here, exposed DNC staffers seemingly undermining Sanders’ insurgent campaign against Clinton. The leak hampered the convention’s mission of uniting the party by convincing fervent Sanders supporters to get behind Clinton. And the controversy forced the resignation of DNC chairwoman Debbie Wasserman Schultz, a close Clinton ally accused by Sanders backers of using the party apparatus to undermine them.

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The emails show the officials agreeing to withhold information from reporters about the Hillary Victory Fund’s allocation formula, working to align their stories about when — or if — the DNC had begun funding coordinated campaign committees with the states. They also show one official blaming Sanders for putting the DNC between “a real rock vs hard place” by forcing “a fight in the media with the party bosses over big money fundraising.”

The DNC’s deputy communications director Eric Walker in late April emailed a group of top officials asserting that the party shouldn’t “discuss funding allocations in the press for the RNC to see what we’re doing.” His boss Luis Miranda responded “There’s been no coverage that we’ve found, which is what we wanted.”

Miranda argued in the emails that the committee should try to shape any coverage by claiming that “while the funds are going to the DNC right now to build tools and capacity for the general election, there will be a point when the funds stay in the states to fund coordinated campaigns that are now beginning to get organized.” But in a subsequent email in early May he admitted he wasn’t sure if the coordinated campaigns with the state parties were already getting started “or does it start later in the summer?”

Wasserman Schultz responded: “It starts now.”

But a POLITICO analysis of Federal Election Commission records shows that very little money from the victory fund went to the states after that point.

Between the creation of the victory fund in September and the end of last month, the fund had brought in $142 million, the lion’s share of which — 44 percent — has wound up in the coffers of the DNC ($24.4 million) and Hillary for America ($37.6 million), according to a POLITICO analysis of FEC reports filed this month. By comparison, the analysis found that the state parties have kept less than $800,000 of all the cash brought in by the committee — or only 0.56 percent.

Officials from the DNC and the Clinton campaign did not respond to questions about why so little of the cash raised by the fund has gone to — and remained with — the participating state parties. But they have previously argued that, even when state parties aren’t receiving cash transfers, they are benefiting from the political infrastructure paid for by money raised by the fund.

The fund represents one of the most ambitious hard-dollar fundraising efforts in modern presidential politics. It was made possible by a 2014 Supreme Court decision in a case called McCutcheon v. Federal Election Commission that struck down aggregate limits on total giving to federal campaigns. They had capped donations to joint fundraising committees to $123,200 per person per year.

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Hillary Victory Fund, which now includes 40 state Democratic Party committee, theoretically could accept checks as large as $436,100 — based on the individual limits of $10,000 per state party, $33,400 for the DNC, and $2,700 for Clinton’s campaign.

Clinton’s GOP rival Donald Trump started a joint committee called Trump Victory with the Republican National Committee and 11 state parties. By including various sub-funds within the RNC, it can accept donations as large as $449,400. But Trump has not shown an ability to raise big checks, and Trump Victory and another Trump joint committee had raised only $32.4 million combined through the end of last month, FEC filings show.

The Hillary Victory Fund still had $42 million in the bank at the end of June, and it seems likely that more money will be moved to the state parties in the coming months. Typically, though, national parties steer disproportionate resources to the handful of states that are legitimately competitive in presidential years, often leaving the party committees in other states grumbling.

But what happens to the cash in the Hillary Victory Fund after its initial distribution is left almost entirely to the discretion of the Clinton campaign’s chief operating officer, Beth Jones, who serves as the treasurer of the victory fund.

FEC filings show that, since the inception of the Hillary Victory Fund, participating state parties have received $7.7 million in transfers, but within a few days of most transfers, almost all of the cash — $6.9 million — was transferred to the DNC.

The only date on which most state parties received money from the victory fund and didn’t pass any of it on to the DNC was May 2, the same day that POLITICO published an article exposing the arrangement. But those deposits were token by comparison: each state received $10,000, compared with transfers that were passed on to the DNC as large as $300,000, FEC records show.

Beyond the transfers, much of the fund’s $42 million in direct spending also appears to have been done to directly benefit the Clinton campaign, as opposed to the state parties.

The fund has paid $4.1 million to the Clinton campaign for “salary and overhead expenses” to reimburse it for fundraising efforts. And it has directed $38 million to vendors such as direct marketing company Chapman Cubine Adams + Hussey and digital consultant Bully Pulpit Interactive — both of which also serve the Clinton campaign — for mailings and online ads that sometimes closely resemble Clinton campaign materials.

Campaign finance watchdogs and the Sanders campaign had argued that the arrangement represented a circumvention of campaign contribution limits by a national party apparatus intent on skewing the process to help Clinton defeat Sanders, and then win the White House.

And some participating state party officials and their allies grumble privately that Clinton is merely using the state parties to subsidize her own operation, contending that her allies overstate the fund’s support for their parties.

The fund is a bad deal for state parties, said one operative who works with state party committees. State party officials have been buzzing about the WikiLeak emails, said the operative, arguing they show that “the extent to which the game has been rigged goes much deeper at the DNC than what many of us expected.”

In April, when POLITICO began asking state parties about why they weren’t keeping the money being transferred to them from the fund, officials looped the DNC and urged the states to stonewall, according to the leaked emails.

“There is no reason to share that level of strategic information with a reporter,” wrote Ohio Democratic Party communications director Kirstin Alvanitakis.

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But the emails show that officials and lawyers at the DNC and the Clinton campaign became frantic after POLITICO’s May 2 story, which led to substantial follow-up coverage that put the Clinton campaign and the DNC on the defensive. It led the Sanders campaign to accuse the Clinton campaign of “money laundering” and prompted Politifact to downgrade its rating — from “mostly true” to “half true” — of the claim that the bulk of the money collected by the victory fund would go to down-ballot Democrats.

“The DNC should push back DIRECTLY at Sanders and say that what he is saying is false and harmful to the Democratic party,” Marc Elias, an attorney who advises the DNC and the Clinton campaign, wrote in an email to DNC officials.

CEO Amy Dacey responded “I do think there is too much of this narrative out there — I also worry since they are emailing to their list (which has overlap with ours!)”

In another email, Miranda, the communications director, suggested that the campaign tell other journalists seeking to follow POLITICO’s story that “Politico got it wrong.” But the rest of his email failed to indicate any errors in POLITICO’s story, nor did the DNC or the Clinton campaign seek a correction.

Miranda did not respond to a request for comment.

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Hillary Clinton’s historic acceptance speech – at least on television – looked like it was delivered to a unified crowd. | Getty
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PHILADELPHIA — Hillary Clinton sat in a locker room in the bowels of the Wells Fargo Center on Wednesday night, watching President Barack Obama make the case for passing her the baton.

With her longtime aides Huma Abedin and Capricia Marshall by her side, she grew emotional watching her onetime rival bring down the hall — at one point placing her hand over her chest as she watched.

Gone from the convention floor were the pro-Bernie Sanders protesters who had disrupted speakers on the opening day of the convention. The “Not For Sale!” chants were replaced with exclamations of “We Love You;” the anti-TPP signs overwhelmed in a sea of “Yes We Can” posters distributed to delegates on the floor — Obama’s famous 2008 rallying cry, now printed in the Clinton campaign’s official font, a customized version of Sharp Sans entitled, appropriately, “Unity.”

But the picture of an optimistic, unified party didn’t just happen on its own. Sure, by Day 4, the Democratic National Convention would look smooth, expertly choreographed and far more effectively produced than the Republican programming a week earlier. But that was the result of days of negotiating and wrangling with Bernie Sanders, adjusting the schedule and creating opportunities to publicly make peace between the party’s rival factions.

It wasn’t easy to do.

***

The Clinton campaign began planning for the convention in April after winning the New York primary. They hired Ricky Kirschner, a nine-time Emmy Award-winning producer whose credits include the 2013 Super Bowl halftime show starring Beyoncé, the 2015 Super Bowl halftime show starring Katy Perry, as well as Obama’s 2012 convention. The campaign’s top consultants, Jim Margolis, Mandy Grunwald and Joel Benenson, all experienced at running conventions, were tasked with the run of show, intro videos and speaker lineup.

The Sanders campaign was in a convention state of mind early, too. In March, Sanders adviser Mark Longabaugh told convention CEO Leah Daughtry the senator’s team would want a boiler room, the nerve center from which the nominee’s staff would traditionally oversee the show. Daughtry didn’t understand the request: The nominee’s team would be in charge, she said. Longabaugh’s response was unsettling for Democrats: What if there’s a contested convention, he asked.

The message was quickly conveyed to Brooklyn.

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Clinton’s chief administration officer, Charlie Baker, reached out to Longabaugh. Brooklyn wasn’t going to fight. Instead, Clinton’s team offered Sanders shared access to the boiler room. The Clinton team had realized it would have to accommodate more demands from the Sanders camp than it had bargained for if it wanted the certainty of a smooth program.

As Baker worked out the logistics with the Sanders campaign, three separate teams inside Clinton’s Brooklyn headquarters were crafting suggested themes for the convention. Independently, each settled on the same one — “Stronger Together.” It was an odd moment of consensus for a campaign that spends hours debating issues large and small. So when the three teams dialed into a conference call to discuss the convention message, it was a short discussion; team members joked that they didn’t know what to do when they agree.

After the California primary on June 7, the Clinton campaign team began convention planning in earnest. They intended to create two plans. One assumed Sanders would endorse Clinton before the convention and be awarded a major speaking role on opening night. That was Plan A.

Plan B would be one that Brooklyn would activate if Sanders didn’t endorse. “We never really got to Plan B,” admitted a campaign source involved with the planning.

***

When the two teams arrived in Philadelphia the Friday before the convention, the Clinton team already knew it would have problems with Sanders’ supporters. And that was even before news broke that Democratic National Committee Chairwoman Debbie Wasserman Schultz had been working against the senator from Vermont.

Clinton’s convention planners met with the Sanders team at the Sonesta Hotel, and they found his aides willing to help quell the expected floor insurgency. Together, they created a joint whip operation to keep the floor under control — each state delegation was assigned a Sanders official and a Clinton official to talk down dissenters. Sanders’ former Iowa state director, Robert Becker, was the main point person on the floor to explain to angry protesters why Sanders had chosen to back Clinton.

But they weren’t as quick to find consensus on Sanders’ speaking slot. The Clinton campaign had scheduled Sanders to take the stage at 9 p.m. — not only before the coveted 10 p.m. hour but as a warm-up act for Elizabeth Warren and Michelle Obama, and even Paul Simon.

Sanders wasn’t having it, according to sources inside his camp. Sure, Paul Simon was alright — it was Simon’s idea to have “Bridge Over Troubled Waters” play as Sanders wrapped— but after giving a full-throated endorsement of a rival he knew had the unfair advantage of a party establishment working the levers in her favor, he wanted the primo speaking slot.

When the teams met again on Sunday night at the Wells Fargo Center, Clinton’s aides agreed to give Sanders what he wanted. And they made another concession: After originally cutting former NAACP president Ben Jealous, a vocal Sanders surrogate, from the main stage, Clinton’s team bowed to Sanders’ demand that he be added back to the program.

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There was one Sanders surrogate who wouldn’t get past Clinton’s convention gatekeepers, though — former Ohio state Sen. Nina Turner, who has been highly critical of Clinton throughout the campaign after initially endorsing her. Clinton’s team denied Sanders’ request that Turner nominate him on Tuesday.

Throughout the week, Margolis and Grunwald reviewed every word entered into the teleprompter from their small room in the basement of the arena. They were also on ego patrol, balancing the needs of politicians and Hollywood stars, paring down the speeches to make sure the convention stayed on schedule — and on message.

Team Sanders, meanwhile, was managing its own delegates, texting them to be respectful with a message from campaign manager Jeff Weaver after they revolted against Sanders in a Monday morning event.

On Monday night, however, the Clinton camp’s careful control over the program hit a road bump. Sanders’ operatives wouldn’t hand over his speech, which they said he was still writing until the last moment. Weaver and Longabaugh tried to calm them down. “You will like the speech,” they promised.

***

Hillary Clinton’s acceptance speech at the 2016 DNC
Hillary Clinton accepted the nomination for the candidate for the Democratic party on Thursday at the 2016 Democratic National Convention.

Clinton’s aides had nothing to worry about. At least not from Sanders.

“I am proud to stand with her,” he told the crowd.

He backed up his loyalty by making the rounds to state delegation breakfasts the next day with an unequivocal message to his holdout supporters: “It’s easy to boo, but it’s harder to look at your kids in the face, who would be living under a Donald Trump presidency.”

But it was Day 2, and Sanders’ supporters weren’t giving up.

Press secretary Brian Fallon was booed while speaking at a breakfast for Maine, New Hampshire and Vermont delegates. Then, during a question-and-answer period, he was peppered with concerns about outgoing Democratic National Committee Chairwoman Wasserman Schultz’s new role as a volunteer coordinator on the Clinton campaign and how that would make their jobs that much more difficult in recruiting volunteers and generating excitement for the Democratic ticket against Donald Trump.

Indeed, the Clinton campaign realized quickly on Tuesday that Monday’s moment of unity, courtesy of Sanders, hadn’t satisfied the nominee’s detractors. Now, the campaign needed to make sure protesters wouldn’t disrupt the historic roll call that would officially make Clinton the first woman in history to be nominated to the top of a major party’s ticket.

The campaign blasted out an email to its delegates, urging them to take the SEPTA train to the Wells Fargo Center and pack the stands by 2 p.m.

Meanwhile, Robby Mook and Charlie Baker sat down with Jeff Weaver and other Sanders operatives, eager to find a way for Sanders to again play peacemaker. Sanders seemed willing.

He agreed to offer an acclamation speech, taking the mic during roll call to ask that the rules be suspended and Clinton named nominee. But he wanted to do it on the main stage.

Clinton’s campaign said no. He had been given his due on Monday and Tuesday was meant to mark a pivot to Clinton and her record.

Sanders didn’t push it. Indeed, Clinton’s aides said he did “everything we asked of him.”

***

It wouldn’t be the end of the disruptions.

After the roll call, the protests moved outside the hall. One of Clinton’s most aggressive surrogates, super PAC maestro David Brock, was chased through the halls of the Wells Fargo Center by two Sanders delegates after Bill Clinton’s Tuesday night speech, according to a Democrat who witnessed the spectacle. “They were yelling ‘you f—g jerk,’” said the Democrat.

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And on Wednesday, Sanders protesters stormed the media tents to express their outrage that Turner had been denied a spot on the debate stage.

But what had been a raging boil on Monday was by Thursday morning just a simmer.

Clinton’s historic acceptance speech — at least on television — looked like it was delivered to a unified crowd. Sanders’ campaign had sent delegates text messages urging them to respect her, just as her supporters respected him. And throughout the speech, Becker worked the convention floor, leading a whip team to calm restive Bernie or Busters. The few remaining hecklers, stationed here and there, mostly in the upper decks of the arena, were drowned out repeatedly by chants of “Hillary.”

Gone on Day 4 were the handmade anti-TPP banners and the Bernie-or-Bust T-shirts. The room instead was flooded with American flags and the delegates on cue waved the signs passed to them by convention volunteers to create a uniform look for a television audience.

All the delegates, that is, except one. In the section closest to the Democratic nominee, a red sign with black lettering was lifted high into the air where it stayed stationed all night above all of the “Stronger Together” placards Clinton’s team had dreamed up before they even knew Sanders would still be hanging on into convention week.

It read: “Keep your promises.”

Darren Samuelsohn and Kenneth P. Vogel contributed to this report.

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