According to a complaint filed by government watchdog group National Legal and Policy Center, Saikat Chakrabarti set up his two private companies for the sole purpose of hiding how the donations were used.
Washingtonexaminer.com reports: The arrangement skirted reporting requirements and may have violated the $5,000 limit on contributions from federal PACs to candidates, according to the complaint filed by the National Legal and Policy Center, a government watchdog group.
Campaign finance attorneys described the arrangement as “really weird” and an indication “there’s something amiss.” They said there was no way of telling where the political donations went — meaning they could have been pocketed or used by the company to pay for off-the-books campaign operations.
PACs are required to disclose how and when funds are spent, including for expenditures such as advertisements, fundraising emails, donations to candidates, and payments for events and to vendors.
The private companies to which Chakrabarti transferred the money from the PACs are not subject to these requirements.
The complaint names Ocasio-Cortez and Chakrabarti as respondents. It asks the FEC to investigate and audit the two PACs, saying they were engaged in an “an elaborate scheme to avoid proper disclosure of campaign expenditures.”
Tom Anderson, director of the National Legal and Policy Center’s Government Integrity Project, said: “It appears Alexandria Ocasio-Cortez and her associates ran an off-the-books operation to the tune of hundreds of thousands of dollars, thus violating the foundation of all campaign finance laws: transparency.”
Chakrabarti, 33, is a Harvard graduate and technology entrepreneur who became an organizer for Bernie Sanders during the socialist’s 2016 presidential campaign.
He founded a PAC called Brand New Congress in 2016 and another called Justice Democrats in 2017, with the stated goal of helping elect progressive candidates to Congress. One of those candidates was Ocasio-Cortez, who, last November, age 29, became the youngest woman ever elected to Congress.
According to the Brand New Congress website, the PAC would build a “unified campaign” infrastructure including fundraising, organizing, rallies, and advertising progressive congressional candidates across the country could “plug into,” saving the individual campaigns time and money.
“Our idea is really to run a single unified presidential-style campaign that is going to look a lot like the Bernie Sanders campaign,” said Chakrabarti in an interview with MSNBC’s Rachel Maddow in May 2016. “The campaign infrastructure and fundraising is set aside from the campaigning.”
In 2016 and 2017, Chakrabarti’s PACs raised about $3.3 million for the project, primarily from small donors. During this time, the committees transferred over $1 million to two shell companies controlled by Chakrabarti with names similar to one of the PACs, Brand New Campaign LLC and Brand New Congress LLC, according to federal election filings.
A few weeks after starting the Brand New Congress PAC, Chakrabarti formed one of the companies, Brand New Campaign LLC, in Delaware, using a registered agent service and mailbox-only address.
Over the next seven months, as small-dollar political donations poured into the PAC from progressives across the country, the committee transferred over $200,000, 82 percent of the contributions, to the company Brand New Campaign LLC. The payments were for “strategic consulting,” according to federal election filings. They were sent to an apartment address listed for Chakrabarti in the Greenwich Village area of Manhattan.
In 2017, Brand New Congress PAC transferred another $240,000 to Brand New Congress LLC, also for “strategic consulting.” Another PAC co-founded by Chakrabarti that year, Justice Democrats, transferred an additional $605,000 to Brand New Congress LLC in 2017.
Brand New Congress LLC does not appear to be registered in any state, according to state government records available online. It is unclear where or when it was incorporated.
Adav Noti, the senior director of the Campaign Legal Center and a former FEC lawyer, said the arrangement was highly unusual and seemed intended to obscure the destination of the funds.
“None of that makes any sense,” said Noti. “I can’t even begin to disentangle that. They’re either confused or they’re trying to conceal something.”
Noti said it would be simpler to set up a consulting company and work directly with campaigns to provide services for a fee rather than creating a federal PAC and sending the money to a company controlled by the same person.
“It does seem like there’s something amiss. I can only think of really two likely possibilities for this sort of pattern of disbursements,” said Noti. “One is the scam PAC possibility — they’re really just paying themselves and they’re concealing it by using the LLC. The other is that there’s actually another recipient, that the money is going to the LLC and then being disbursed in some other way that they want to conceal.”
Bradley A. Smith, a former chairman of the FEC, said he has never seen such an arrangement. “It’s a really weird situation,” he said. “I see almost no way that you can do that without it being at least a reporting violation, quite likely a violation of the contribution limits. You might say from a campaign finance angle that the LLC was essentially operating as an unregistered committee.”
Chakrabarti declined to comment on the FEC complaint or provide details about his companies’ financial activities. Corbin Trent, a spokesman for Ocasio-Cortez, declined to comment.
Zeynab Day, communications director for the Brand New Congress PAC, said Chakrabarti was not currently affiliated with the group and that it recently went through a “transition period.” She referred questions about the LLC to Chakrabarti. “I’m unable to answer any questions about the LLC … I am not informed about them. We are not an affiliated group,” she said.
A spokesperson for Justice Democrats said he did not know why the PAC paid so much money to Chakrabarti’s LLCs. When asked what the Justice Democrats PAC does on a daily basis, he said, “It’s very clear what we do,” but declined to elaborate.
Chakrabarti founded Brand New Congress PAC, in April 2016. According to a statement released by Justice Democrats PAC last May, Chakrabarti “was the only controlling member” of the company Brand New Congress LLC and “took no salary.” The statement added: “Saikat is lucky to have a small side business that generates him enough income that he is able to do all of this work as a volunteer.”