Wisconsin Sen. Ron Johnson was in the news last year for an alleged breach of Federal Election Commission reporting laws dating back to his 2010 Senate race. However, the complaint is no run-of-the-mill allegation. Rather, it suggests that Johnson knowingly took undisclosed campaign contributions from his former employer, while attempting to disguise the contributions as legal donations.
This brings up an issue that can at times be convoluted. What, exactly, is an undisclosed campaign contribution? Common sense tells us it's any contribution from a corporate entity that isn't on the books. After all, federal law prohibits corporations from making any contribution in connection with a federal election. Along those lines, it also explicitly states that a candidate is prohibited from accepting an illegal corporate contribution.
How, then, does Johnson have a defense against the allegations, made by the state's Democratic party leaders? According to Johnson's party, it's merely a smearing act coming from 2016 Senate race Democrat challenger Russ Feingold. The Democrats, on the other hand, argue there is a clear disregard for FEC reporting rules that should lead to fines or penalties.
The complaint
The FEC received the complaint from the American Democracy Legal Fund, which alleges that Johnson, his campaign and its treasurer James Malczewski and Johnson's former employer PACUR worked together to pass nearly $10 million in undisclosed corporate campaign contributions to Johnson in the 2010 race.
FEC records show that Johnson funded a large majority of this campaign with his own money – about $9 million to be exact. However, here's where things get a little murky. As the former CEO of PACUR, was this $9 million truly his own funds, which he would have been free to spend on his election as he pleased, as he contends, or was it the corporation's money? If it were the latter, it would certainly be labeled as an undisclosed corporate donation, since it was initially filed as Johnson's own funds.
In the complaint, the American Democracy Legal Fund alleges that the $10 million Johnson received in compensation for his time as the CEO of PACUR, a plastics company in Oshkosh, WI, should be considered a campaign contribution.
"If any candidate is planning to fund their own campaigns, this disclosure must be made clear."
According to Roll Call, when the payments from PACUR were first made public, Johnson said the late payment was an "agreed-upon amount," and that during his time with the company, he never took a salary as the CEO. Still today, all groups contend that the money that was given to Johnson shortly before he was sworn in as Senator was for the work he put in since buying the company in 1997.
One spokeswoman from the Johnson camp even stated that the payment was by the books using executive compensation models created by the IRS, and all of the funds were disclosed per FEC reporting regulations.
"The campaign has hardly started and already Sen. Feingold is using an outside group to attack Ron," Johnson campaign spokeswoman Betsy Ankney told CQ Roll Call. "After over two decades in Washington, Feingold has become everything he once said he was against."
While the FEC has yet to weigh in on the matter, the takeaway should be that if any candidate is planning to fund their own campaign, this disclosure must be made clear. Currently, it's he-said-he-said, with Johnson's party claiming the payouts were completely independent of the election, and the American Democracy Legal Fund arguing there was no clear delineation to be able to make that point.
This is further proof of the need for strong recordkeeping and a team of highly organized campaign managers that are well-versed in campaign finance compliance.
Broader issues
The case tangentially brings up larger issues that many groups allege have had a corrosive effect on the democratic process – legal undisclosed contributions. According to one report on the 2012 election cycle from Demos, there was about $300 million donated by organizations that did not disclose their donors, which under current law, is perfectly legal. Groups like 501(c)(4) nonprofits, which are not required to disclose their donors, are often used to this end.
The 2012 figure was double the amount of undisclosed money that was reportedly spent in the 2010 mid-terms.
This, of course, isn't true of PACs and super PACs as all names of donors to these organizations must be disclosed. Short of a law change in the near future, as some lawmakers have called for, the campaign funding process will remain blurry for some.