These odd donations were first spotted by End Citizens United, a political action committee founded by former Democratic operatives to challenge dark money in politics, as part of its ongoing Project Bright Light research project.
“Our campaign finance system now has loopholes big enough to drive a truck through, and anonymous donors are taking full advantage,” says Richard Carbo, a spokesman for the group. “Donations through shell corporations are an easy way for these wealthy individuals to shield their identities and agendas from the public.”
Paul Lindsay, a spokesman for Right to Rise, declined to explain these two contributions, citing a policy of not discussing donors.
Since the Supreme Court’s Citizens United decision in 2010, corporations can legally donate unlimited amounts of money to a super-PAC. They don’t have to identify the original source of the money, but the name of the company contributing the cash must be disclosed. Although a corporation can give money to a super-PAC, federal law prohibits a donor from using another identity to make a contribution [2].
“If there is a human behind Heather Oaks LLC, and that human simply routed $100,000 through Heather Oaks to Right to Rise, because the human didn’t want his identity known, that’s illegal,” says Paul Ryan, deputy executive director of the Campaign Legal Center. “But if it’s sitting on real estate or other assets or cash—$100,000 or more in cash—and the directors of this LLC decided they want to support Right to Rise, that’s not necessarily illegal.”
Both Heather Oaks and TH Holdings appear to be classic shell companies—business entities that often have no assets or business operations of their own and exist solely as a conduit for transactions by other companies or individuals.
The people or person behind TH Holdings provided scant information when they incorporated the LLC in New York on June 9, 2010. They listed no registered agent and no information about the number or value of shares in the company. The forms did include a mailing address, which belongs to the office of Paul Freedman, a Manhattan accountant. Freedman did not respond to a request for comment.
Heather Oaks LLC was incorporated in April 1994 [3] to manage an apartment complex called Heather Oaks Apartments in Jasper, Alabama. Ronald Brown, one of the two men who incorporated Heather Oaks LLC, said the outfit is a distant memory: “It was sold to a group there in Jasper, Alabama.” Brown said he didn’t recall who had bought the company in 2004, other than that it was some type of real estate company.
When it recently donated Right to Rise, Heather Oaks listed an address that corresponds to a shopping mall in Birmingham, Alabama. But the address does not specify a particular shop or office at the mall. A spokesman for Bayer Properties, the mall’s owner, says the company has no information about the donation or Heather Oaks. “We are neither familiar with this donation nor do we know where it originated,” he says. “The address is on a property we own and manage; however, there are many tenants from which the donation may or may not have originated.”
The cases of TH Holdings and Heather Oaks bear some similarities to a handful of mysterious donations made during the last presidential election cycle to the pro-Mitt Romney super-PAC, Restore Our Future. For example, in 2011, a shell corporation called W Spann LLC was founded, donated $1 million to Restore Our Future, and then dissolved, without ever showing any sign of business activity [4]. Several watchdog groups, including the Campaign Legal Center, filed complaints with the Federal Election Commission and the Department of Justice. Following the public scrutiny, the true donor, a former Bain Capital executive, came forward and acknowledged [5] making the donation.
Election watchdogs, including Ryan’s Campaign Legal Center, also filed complaints in 2011 against two other shadowy corporations, F8 LLC and Eli Publishing, that donated to the Romney super-PAC. Eventually, both companies were traced to the founder of the Utah-based multilevel marketing firm Nu-Skin [6]. More than five years later, the complaints against W Spann, F8 LLC, and Eli Publishing have yet to be resolved. As of this summer, all three complaints appeared to still be pending before the FEC [7].