Money, denials and stalling: How Trump, the Mercers and the GOP beat the FEC
Former U.S. President Donald Trump raises his fist after his speech during a rally at the Iowa States Fairgrounds in Des Moines, Iowa, October 9, 2021.
Rachel Mummey | Reuters
In August, the Federal Election Commission began winding down its investigation into the now-defunct data harvesting company Cambridge Analytica, the firm that worked for Donald Trump’s 2016 campaign, Republican Sen. Ted Cruz’s campaign for president and other GOP-run groups.
The FEC was investigating whether the company, originally headquartered in London, embedded foreign nationals into Republican campaigns during the 2014 and 2016 U.S. election cycles and whether those people made decisions for political organizations.
It is illegal for American campaigns to be run by foreigners or to accept campaign contributions from non-U.S. citizens, and doing so can result in fines or referrals to the Department of Justice.
The probe came after multiple complaints were filed to the FEC against Cambridge Analytica, including one from campaign watchdog Common Cause. Cambridge Analytica has been accused of illegally harvesting Facebook profile data, something the company has denied. Those accusations led to multiple federal inquiries, including one by the Federal Trade Commission, and the company announced it was shutting down in 2018.
The FEC has been criticized for years for not having enough funding, manpower and time to enforce election laws, and it appeared to have those same problems in this case.
“Having concluded the investigation, the record before the Commission does not sufficiently establish the extent of the potential violations to support further action, and the investigation is unlikely to uncover additional information without the expenditure of significant additional resources. Moreover, the violations appear to have expired under the five-year statute of limitations,” says the FEC general counsel’s second report, which was signed by officials in August.
Strong grounds to investigate
Records recently made public by the FEC that have gone unreported detail how the regulator that was meant to watch over the U.S. campaign finance system was outmaneuvered at every turn by high-powered lawyers, known to be some of the best in the business, who either simply denied their clients’ involvement with Cambridge Analytica or dismissed the claims made in the complaints.
The FEC was also stumped by potential witnesses who did not respond to voluntary requests for information or subpoenas.
The FEC general counsel’s first report, in late 2018, said the commission had strong grounds to investigate Cambridge Analytica, at least two company officials, and all the campaigns mentioned in the original complaints, including Trump’s, for campaign law violations.
The general counsel’s initial report specifically advised that the commission “find reason to believe” that those targeted in the first complaints may have broken the law, a recommendation to launch a larger probe into the alleged illegal behavior by Cambridge Analytica and the campaigns.
Shana Broussard and Ellen Weintraub, two Democratic FEC commissioners, said in a joint statement this month that the commission in 2019 voted only to move ahead with finding reason to believe that federal campaign finance laws were broken during the 2014 election cycle.
That let the Trump campaign, a Republican super PAC that backed him, and Texas Republican Sen. Ted Cruz’s campaign for president virtually off the hook.
The two commissioners took aim at the FEC after the general counsel recommended stopping the inquiry, saying the commission lacked urgency to stop foreigners from interfering in future elections.
“Once again, the Commission has failed to take meaningful enforcement action on complaints alleging serious violations of the foreign national ban,” Broussard and Weintraub said in early November. “Despite the Commission’s previous commitment to prioritizing foreign national matters, that commitment appears in retrospect to have been lip service as we continue to skirt our obligations to the American people.”
The FEC’s investigation into Cambridge Analytica was launched years after Trump’s campaign used the data in 2016 to help craft persuasive digital ads. Trump, who ran against Hillary Clinton, would go on to win the election. The wealthy, conservative Mercer family funded Cambridge Analytica, and Steve Bannon, Trump’s 2016 campaign chairman and a previous ally of the Mercers, served as vice president on the board.
Weintraub, in an interview with CNBC on Friday, said she was frustrated because the FEC at the time did not have enough commissioners to make up a quorum, which was required in order to proceed with a further investigation. The FEC regained its full quorum of six commissioners late last year after being without one since 2019.
“It was extremely frustrating to me. The allegations seemed pretty serious,” Weintraub told CNBC. “I think a lot of lawyers in this area were advising their clients that, ‘Hey, the FEC can’t do anything to you right now because they don’t have a quorum.’ We saw it in this case. We saw it in other cases.”
The Cambridge Analytica case illustrates how the FEC struggles to enforce the laws, Weintraub said.
“You need to have at least four commissioners who are committed to enforcing the law. I don’t think we’ve had that for a very long time,” she said.
The FEC did not respond to a follow-up request for comment before publication.
Christopher Wylie, a whistleblower who formerly worked with Cambridge Analytica, speaks during an interview on CNBC on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 9, 2019.
Brendan McDermid | Reuters
In the buildup to Cambridge Analytica shutting down, Christopher Wylie — a former employee at the data firm’s parent company, SCL Group — became a whistleblower against the firm. He left SCL in summer 2014 and started speaking out against it before it shut down.
Yet, the complaints against Cambridge Analytica allege that he too may have violated campaign finance laws. Wylie is originally from Canada. Wylie told NBC News he worked on all of SCL’s U.S. political campaigns before he left the organization in 2014.
Despite Wylie’s comments, the FEC struggled to find a correct address for Wylie so it could subpoena him for documents and information, and when it did issue a subpoena, it never received a response.
“Because we lacked an address for Wylie, we sent the subpoena to him through both his reported employer at the time, multinational clothing retailer Hennes & Mauritz (H&M), as well as through Verbena Ltd., a London-based company that Wylie had reportedly formed to hold the copyright to a forthcoming book he wrote about his time working at Cambridge,” the FEC’s second general counsel report says.
“However, Wylie never responded to the Commission’s subpoena, and it is unclear whether he received it,” the report adds.
Robert Mercer and Rebekah Mercer attend the 2017 TIME 100 Gala at Jazz at Lincoln Center on April 25, 2017 in New York City.
Patrick McMullan | Getty Images
GOP financier Rebekah Mercer and her father, hedge-fund executive Robert Mercer, funded Cambridge Analytica and spent millions backing Trump in 2016.
The FEC did not say in its general counsel reports that it had reason to believe Rebekah Mercer did anything wrong.
In 2018, her attorney Mark Hansen, a partner at legal juggernaut Kellogg Hansen Todd, wrote to the FEC in response to the allegations in the complaints filed with the agency. Hansen, according to his own bio, previously represented a multitude of high-end clients, including the governments of the United States and Saudi Arabia, and major corporations such as AT&T, Morgan Stanley, General Electric and Verizon.
The firm has ties to a number of Trump appointees, including Supreme Court Justice Neil Gorsuch, who was once a partner at the firm. FEC records show that between 2018 and 2019, the Republican National Committee paid the firm more than $300,000 for what was defined on the disclosure as “legal and compliance services.”
Hansen’s letter in defense of Mercer notes that she was not heavily featured in the complaints against Cambridge Analytica and denies she ever broke campaign finance laws.
Yet, the letter also reveals certain elements of her investment in the company and how she deferred to other senior leaders, such as Bannon, to run the organization.
Hansen told the FEC that Mercer had approximately $6 million in investments and loans in Cambridge Analytica. The lawyer also admitted that Mercer was interested in the company for political reasons.
“She [Mercer] was concerned that groups on the left-leaning end of the spectrum, and even commercial ventures such as Google and Facebook, were using data analytics to ‘micro-target’ voters to the benefit of liberal candidates for office,” Hansen wrote.
Though Hansen wrote that it was CEO Alexander Nix and Bannon, not Mercer, who ran Cambridge Analytica, he still said his client was involved with the company at a “high level.”
“She made introductions to some of her friends and acquaintances, whom she believed to be potentially interested in the data analytic capabilities CA could offer, and she discussed with Mr. Nix strategic business considerations regarding clients and potential clients,” Hansen said.
Last month the FEC wrote to Mercer and the others named in the probe that it had “closed the file in these matters” in September.
U.S. President Donald Trump gestures while campaigning for Republican Senator Kelly Loeffler on the eve of the run-off election to decide both of Georgia’s Senate seats, in Dalton, Georgia, U.S., January 4, 2021.
Brian Snyder | Reuters
Jones Day, a law firm with extensive ties to the Republican Party, represented Trump’s political operation, according to its letter in response to the FEC.
The May 2018 letter named partner Stewart Crosland, whose bio says he specializes in taking on the FEC for his clients, as counsel for the campaign.
Crosland said in his correspondence that no one at Cambridge Analytica ever ran or managed elements of the former president’s 2016 campaign and that the campaign did not rely on the company’s data to make decisions.
Crosland’s letter also took aim at Nix, claiming that the former CEO exaggerated the role Cambridge Analytica played in the 2016 campaign. “We did all the research, all the data, all the analytics, all the targeting,” Nix said in a video previously obtained by the UK’s Channel 4. “We ran all the digital campaign, the television campaign, and our data informed all the strategy.”
“His statements reflect nothing but an overblown sales pitch aimed at landing a new client from a foreign country whom Mr. Nix likely believed never could fact-check his disingenuous assertions,” Crosland wrote. “Unfounded puffery does not justify a wasteful investigation.”
Trump’s campaign paid Jones Day over $13 million, from the 2016 election through Trump’s failed bid for reelection in 2020, according to the nonpartisan Center for Responsive Politics. During the 2020 cycle alone, the firm was paid just under $20 million for legal services to GOP campaign organizations, including Trump’s and the RNC.
Cambridge Analytics CEO, Alexander Nix
Joshua Bright | The Washington Post | Getty Images
Nix denied that he had any direct involvement with political campaigns, according to a statement attached to a 2018 letter his attorney Kory Langhofer wrote to the FEC.
Nix also said that to his knowledge Cambridge Analytica’s “strategic or decision-making roles” were made by U.S. nationals, “with non-US staff only working in support or functionary roles.”
His denials played a role in the FEC’s general counsel moving to end the larger probe.
“Nevertheless, despite the weaknesses in the Nix’s arguments, given the lack of additional specific information regarding Cambridge’s activities and Nix’s role in managing or directing those activities, the overall record appears insufficient to substantiate the extent of Nix’s violation,” the second general counsel report says.
Still, among Nix’s answers to the FEC following the original 2018 complaint is a letter sent to Cruz’s presidential campaign before it employed the firm.
It’s dated December 2014, a year before Cruz announced his run for president. In it, Nix says that both Bannon and Mercer spoke to the Cruz campaign about the firm’s services and that many of the ideas brought up during that conversation representing possible FEC violations.
“The deal that was tabled, following your initial discussions with Steve and Rebekah is riddled with potential FEC violations and exposes Cambridge Analytica to possible negative action,” Nix’s letter to Cruz’s campaign says.
It’s unclear what exactly those possible violations could have been. Later in the letter, however, Nix proposes that Cruz’s campaign use his firm to help raise cash and specifically mentions fees that the firm will make up until the Texas Republican wins the primary or when the data company recovers its fixed costs. Cruz ended up losing the primary to Donald Trump.
The letter suggests a “25% fee on all small donations raised by CA though digital / email / direct mail or any other channel (including known and unknown donors) up until the first of the following Cambridge Analytica recoups its fixed costs; STC wins the Primary nomination. Thereafter and for the rest of the campaign (Primary or Presidential) CA to reduce the donation raising success fee to 12.5% of funds raised.”
Cruz’s campaign ended up paying Cambridge Analytica more than $5 million for its services, data from the Center for Responsive Politics says.
The attorneys mentioned in this story did not respond to requests for comment before publication.
Wylie did not respond to a Twitter message seeking comment.