A top aide to influential freshman New York Democratic Rep. Alexandria Ocasio-Cortez has drawn attention this week for some money moves involving his political action committees.
It’s a potentially significant case, though some of the furor is overheated, according to Adav Noti, an attorney with the Campaign Legal Center, an ethics and campaign-finance watchdog.
“A consensus is probably coalescing around the idea that the underlying activity was weird — and hard to understand why they did it — but probably not unlawful,” Noti told MarketWatch. “I don’t think anybody can say with certainty, based on the record as it stands right now, one way or the other.”
A limited liability company owned by aide Saikat Chakrabarti, who is now Ocasio-Cortez’s chief of staff, received more than $1 million from two PACs that he co-founded, according to federal campaign finance documents detailing spending from 2016 and 2017.
A lack of details on how the $1 million was spent has attracted scrutiny, with a conservative nonprofit, the National Legal and Policy Center, filing a complaint about the moves with the Federal Election Commission. It accuses Chakrabarti, Ocasio-Cortez, the company, the PACs and other individuals of an “extensive off-the-books operation” and efforts to “hide the true destination of money disbursed to influence federal elections.” The allegations stand in sharp contrast to the congresswoman’s criticism of the “dark money” that influences Washington.
David Mitrani, an attorney representing Chakrabarti’s company, Brand New Congress LLC, and the two PACs — Brand New Congress and Justice Democrats as well as Ocasio-Cortez’s — said in a statement that the PACs did not disclose details about the ultimate recipients of the funds because that wasn’t required by the FEC.
But Noti, who worked as an FEC attorney for a decade, said the real issue has been whether the PACs were making large payments to a connected entity in order to hide something.
“Their public statements and explanations have been pretty consistent in saying, ‘No, that’s not what it was,’ and I’m not aware of any reason to doubt that aspect of the explanation,” he said. However, “taking political contributions into the PAC, and then reporting that you spent them by transferring them to your affiliated company, that is going to raise concerns every time,” the expert added.
“There’s a reason that you don’t see that model very often or at all,” Noti also said. “There’s nothing inherently wrong with it, but it raises all these transparency issues that could easily be avoided.”
The FEC could end up tightening its guidance to say that PACs need to provide more details about what their affiliated companies do with disbursements, according to the Campaign Legal Center attorney. “You could imagine this as pretty low-hanging fruit for a new crop of commissioners. This exact story shows how the laxity in these rules doesn’t benefit anybody,” he said.
Chakrabarti said in a Twitter post on Monday that he and his colleagues “were doing something totally new, which meant a new setup. So, we were transparent about it from the start.” His tweet included a link to a Justice Democrats statement last year that talked about supporting many candidates and said “the ONLY way to do work for multiple candidates legally at this scale is to create an LLC and act as a vendor.”
Chakrabarti did not receive any compensation from the PACs, the LLC or Ocasio-Cortez’s campaign, said the statement from Mitrani, the attorney representing the those entities.
The campaign provided MarketWatch with a January 2017 contract that said the Justice Democrats PAC would pay the LLC a monthly retainer fee of $60,000 a month for work such as recruiting candidates, researching incumbents and organizing volunteers. The LLC’s primary consultants for that work were Chakrabarti; Corbin Trent, who is now Ocasio-Cortez’s press secretary; and Nasim Thompson, who was an executive director for the two PACs at that time, according to her LinkedIn profile.
“The implications in recent press accounts that these entities in any way operated with less than full transparency or in some way to skirt to law, are absolutely and unequivocally false,” Mitrani also said.
