Pablo Martinez Monsivais/AP Images
Rep. Alexandria Ocasio-Cortez and her chief of staff Saikat Chakrabarti
- Rep. Alexandria Ocasio-Cortez and her congressional campaign are facing scrutiny over allegations that they violated campaign finance laws.
- In an FEC complaint, a conservative group alleged that Ocasio-Cortez's team funneled PAC money through a corporation to evade campaign finance laws.
- Most election law experts say there's no evidence that Ocasio-Cortez or Chakrabarti committed serious campaign finance violations, but there may be cause for further investigation.
Rep. Alexandria Ocasio-Cortez and her congressional campaign are facing scrutiny after a conservative group filed a Federal Elections Commission complaint alleging that they committed significant campaign finance law violations.
While Ocasio-Cortez's team has denied all wrongdoing, legal experts tell INSIDER that while there's no clear evidence of serious legal violations, there could be reason to investigate.
Allegations of campaign finance violations
The conservative National Legal and Policy Center filed an FEC complaint this week alleging that Ocasio-Cortez's team used two affiliated political action committees to funnel hundreds of thousands of dollars into a limited-liability company to evade campaign finance laws.
The two PACs ultimately paid the LLC almost $1 million during the 2018 cycle for campaign services. Meanwhile, Ocasio-Cortez's campaign directly paid the LLC just under $19,000 for services.
The complaint says that the Brand New Congress and Justice Democrats PACs described all of the LLC's services as "strategic consulting," rather than the fundraising, phone-banking, and other activities it potentially conducted.
Another conservative group, the Coolidge-Reagan Foundation, alleged in a separate complaint that Ocasio-Cortez illegally paid her boyfriend, digital marketing consultant Riley Roberts, through the PACs and the LLC. Experts have largely dismissed these allegations because they provide no evidence that Ocasio-Cortez either overpaid Roberts or that he didn't do the work he was compensated for.
What AOC's team says
Saikat Chakrabarti, Ocasio-Cortez's chief of staff and a former tech entrepreneur, established two political action committees, Brand New Congress PAC and Justice Democrats PAC, in the months following the 2016 presidential election. Chakrabarti and his colleagues had worked for Sen. Bernie Sanders' presidential campaign and wanted to channel that energy into a new movement to elect a diverse array of progressive candidates to Congress.
The PACs' goals were to recruit candidates and raise money.
The LLC's purpose was to be a central organization that would serve as a "campaign in a box, a one-stop vendor for communications, field, online organizing, fundraising and the like," David Mitrani, the attorney for both PACs, the LLC, and Ocasio-Cortez's campaign, said in a statement. The LLC, also set up by Chakrabarti, would act as a vendor that campaigns and PACs could hire for campaign-related services.
The team detailed its reasoning for the somewhat unusual, and potentially confusing, set-up in a May 2018 explanation on the Justice Democrats website. Because PACs are not permitted to use more than half of their business to sell services to campaigns, the team created an LLC, which is considered a vendor and would be able to spend the majority of its resources on "fee-for-service" campaign aid.
In the explanation, the group made clear that it was aware of the legal requirement to charge fair market rates for its campaign services.
"We had in our operating agreement that the goal of the LLC was not to make a profit, and as such, we made our prices as low as possible while still satisfying the FEC's requirement that we are charging something reasonable because, again, if we weren't we would essentially be doing heavily discounted work for candidates and that is illegal," the explanation read.
The group said Chakrabarti did not take any salary from any of the groups and lived off the income from his personal side business.
Mitrani denied all the allegations of wrongdoing in a Tuesday statement, and said that all four groups complied with the law and met high ethical standards.
Ocasio-Cortez denied that there was any violation in a comment to Fox News on Tuesday morning.
Melina Mara/The Washington Post via Getty Images
Rep. Alexandria Ocasio-Cortez walks onto the Senate floor on January 24, 2019.
What the experts say
While legal experts say there's no evidence that the team committed serious campaign finance violations, some say there may be cause for further investigation.
Bradley Smith, a Republican former chairman of the Federal Election Commission, said the biggest issue is that the PACs and the LLC didn't adequately disclose what they spent money on.
Smith argued there's a possibility that the LLC sold its services to Ocasio-Cortez's campaign at below-market rates and was then reimbursed by the PACs. And this, he said, would amount to an independent expenditure on behalf of the campaign, or an in-kind contribution, that exceeded legal limits.
"Somehow they've got to account for that," Smith told INSIDER. "It looks like large contributions in excess of the legal limits to the Ocasio-Cortez campaign and other campaigns."
But other experts, including Brendan Fischer of the Campaign Legal Center, say the allegations are "speculative" and that there's no evidence that the PACs improperly subsidized work for the campaign.
He and other election law experts say the lack of disclosure by Ocasio-Cortez's team is the fault of relatively lax laws governing reporting on payments to so-called sub-vendors.
Because the FEC doesn't require it, the LLC didn't have to list how it used the money paid to it by the PACs.
"More transparency when a campaign pays a consulting firm for work would be a great thing," Paul Ryan, a campaign finance expert at the nonpartisan watchdog group Common Cause, told INSIDER. But he added, "We don't have that information, as the public, because the law doesn't require it. It's not the case that we lack that information because these particular political players failed to comply with disclosure requirements."
Mitrani wrote in his statement, "if the PACs and campaigns were required to provide additional information on sub-vendor payments made by Brand New Congress LLC, it would have done so."
What does need to be disclosed is what PACs and campaigns hire vendors for - labeling what specific work the LLC was paif for as a vendor for the two PACs and Ocasio-Cortez's campaign.
Fischer and Ryan say that if Ocasio-Cortez and her team did, in fact, mislabel payments (that were not "strategic consulting"), the FEC would consider that to be a minor violation that could result in a fine - not jail time.
"There are phrases on the FEC's approved list of phrases that should be used to describe fundraising activities and phone-banking activities. 'Strategic consulting' is not some magic phrase that covers everything," Ryan said. "But in the grand scheme of things, the FEC would consider such an inaccurate description of the purpose of a disbursement as a very minor violation."
During her campaign and while in Congress, Ocasio-Cortez raised awareness about the corrupting influence of money in
"There are certainly ways that Brand New Congress could have structured this to be more transparent," Fischer said, adding that the set-up "put them in the situation where they could come close to skirting the line."
While Smith said he's confident the FEC will pursue an investigation, Ryan said he doesn't believe the complaint contains sufficient evidence to satisfy the legal standard for a probe.
"Most lawyers would agree that in a complaint you have to show some evidence that the law was violated," Ryan said.