Edwards’ legal troubles have nothing to do with 527’s innovative secrecy move.
The accelerating collapse of the campaign finance system has some worried that the next step will be totally secret contributions. Already, some groups use non-profit 501©4 groups to conceal donations — but they face other scrutiny from the Internal Revenue Service, and must make public their spending.
But two campaign finance pioneers, groups supporting John Edwards in 2008 and Mitt Romney today, have already found a wide loophole through the tattered, existing laws.
The fundraising part of the loophole has been in the news lately: Some donors to Romney’s SuperPAC simply set up shell corporations and gave through the corporations, whose ownership is opaque. Their identities, so long as they don’t inadvertently disclose them, will remain secret.
But a SuperPAC supporting John Edwards, and playing a supporting role in his trial, has already experimented with using shell corporations on the other end of the equation: spending.
And while Edwards is now in legal trouble, this gimmick has gone unquestioned by the authorities.
As POLITICO reported the Alliance for New America — a 527 committee supporting Edwards — directed much of its spending to the Alliance for a New America LLC, which in turn reimbursed actual vendors.
The net result: To turn these committees into black boxes, which report to the Federal Election Committee the total amounts raised and spent, and nothing else.