Atlantic Umpire: Is Edwards A Campaign Finance Hypocrite?

In a blistering memorandum sent to reporters on Saturday, Barack Obama’s campaign manager accused John Edwards of sanctioning an effort by his former campaign manager to surreptitiously spend millions worth of unregulated contributions on Edwards’s behalf.

“John Edwards, who is running in large part on a recently adopted campaign platform of taking on the big corporate interests in Washington, is relying on a former aide to run an unregulated 527 operating outside campaign finance limits to support his candidacy,” manager David Plouffe writes.

“Even as he was decrying such influence last week, his former campaign manager was spending $750,000 on television ads in Iowa. If Edwards can’t stand up to his own former aides how can stand up to the special interests in Washington?”

The Politics

That the campaign would issue a memo in Plouffe’s name suggests a degree of frustration, be it with the press for not covering the issue sufficiently or a general sense of anxiety about the atmosphere in Iowa. That Plouffe would descend into the weeds with Edwards over a 527 is suggests that the Obama campaign really wants to have this debate, and have it publicly, right now, five days before the Iowa caucuses. Indeed, for days, Obama himself has been flaying Edwards for hypocrisy, often by name.

On Sunday, Obama told Kay Henderson:

The main concern is that if you have undisclosed donors, people writing half-million dollar checks to finance your campaign, then you're basically circumventing the campaign finance laws and that's not the way we're going to bring change in Washington. You know, you can't on one hand argue that you're going to go after the fat cats and then we have hundreds of thousands of dollars coming in from who knows who and it means that there's less accountability, less disclosure, and if that's the game that we play then there's nothing to prevent those same corporate lobbyists that John Edwards decries from doing the exact same thing to us so there's just go to be some consistency and, you know, straightforwardness in how we approach these issues."

The implication is that Edwards is coordinating with this 527, the Alliance for a New America (AFNA), and is slyly sanctioning their efforts. Obama even claims that someone is writing "half million dollar" checks to Edwards's campaign.

Are these charges true? Is Edwards guilty of hypocrisy? Is he acting in bad faith?

The charges and evidence, after the jump.

Charge One: Edwards hasn't asked Nick Baldick to shut down the group.

Facts: Edwards has repudiated the efforts of 527 groups in general. But he has not called his former campaign manager, Nick Baldick and asked him to shut down the Alliance for a New America, which has spent more than $700,000 on positive pro-Edwards television ads in Iowa.

Edwards campaign aides insist that, if in doing so, Edwards would violate a legal prohibition against coordination if he directly intervenes in the internal operations of an outside group.
But campaign finance lawyers do not agree with that interpretation of the law. There’s nothing in the law that would prevent Edwards from calling Baldick and chewing him out, or from asking him to cease operations.

Were Edwards to make suggestions about how Baldick and the SEIU unions should spend their resources --- well, that’s another story. But if Edwards wants to call Baldick, he can.

Charge Two -- Edwards coordinated with the 527.

Facts: Obama aides suspect that Edwards’s campaign knew that Baldick and the SEIU would fund a 527 effort on their behalf and budgeted accordingly, a charge the Edwards campaign has repeatedly and vociferously denied.

In his memo, Plouffe implies that the Edwards campaign illegally coordinated with the SEIU unions who joined Baldick’s alliance, writing that, “according to the New York Times, this group was started after consultations with Edwards’ campaign manager and other senior members of the campaign.”

But IRS filings show that the Alliance was incorporated well before the “consultations” in question – an October 8 meeting referenced in an e-mail obtained by the New York Times.

Dave Regan, the president of an AFNA member, SEIU Local 1199 in Ohio, said in a statement that

"[w]hile we did not create the Alliance for a New America, the SEIU local unions that have contributed to the Alliance have done so because it shares our goal of raising key issues for working people, such as quality, affordable health care and economic equality and opportunity. As we have said previously, our support for the Alliance has been given in full accordance with both the spirit and letter of the laws governing 527 political organizations. There has been no coordination or discussion of our support for the organization’s work with any individual candidate or campaign at any time."

To be clear: the e-mail foreshadows a 527; the SEIU affiliates later joined an existing group -- a group that existed well before the SEIU contemplated a 527. So it's hard to argue that AFNA was set up exclusively to husband SEIU soft money on Edwards's behalf.

Ok -- so who was present at the meeting referenced in the email?

The writer of the e-mail, David Rolf, writes that he planned to "visit the Edwards Iowa operation." According to three sources, he met with several campaign officials, including Jennifer Dillon O'Malley, Edwards Iowa campaign manager, and had subsequent conversations with Edwards's political adviser Chris Chafe.

The subject of discussions, according to three independents sources, was the scope of the member-to-member efforts that the SEIU would engage in on behalf of the Edwards campaign in the event of an endorsement.

Edwards campaign officials say that they routinely briefed SEIU and other unions as part of the competition to recieve the endorsement; many union members wanted to compare the campaigns' political and financial viability. Indeed, Obama's campaign held several dozen similar meetings with prospective labor allies.

An Edwards aide speaking for O'Malley and Chafe says that the subject of a 527 group came up only in the sense that there was a universal acknowledgment that if one were to be created, a firewall would have to be set up between the 527 and the SEIU member-to-member efforts.

Baldick had nothing to do with the meetings and did not know they were happening, a source with knowledge of AFNA's activities said. Baldick referred all requests for comment about AFNA to the SEIU.

Charge Three -- Edwards recruited Baldick to run the 527 effort.

IRS forms show Katherine Buchanan, a former Edwards adviser and fundraiser now based in Virginia, chartered AFNA in July. Baldick joined a month later, according to someone familiar with AFNA's activities. Later, he was approached by the SEIU, and not the other way around – and then the SEIU joined an already-existing alliance Baldick put together.

Did Baldick at any time participate in discussions about Edwards' possible application for matching funds?

When Baldick last consulted for the campaign – February or March – the campaign was saying that they would not apply for matching funds. But campaign sources say that the decision to apply for federal matching funds was made well after Baldick left – and that it was made in late September, well after Baldick joined the 527. AFNA, according to the IRS, filed a declaration of organization in July.

In his memo, Plouffe calls into question a large donation the AFNA received – $495,000 from the heiress Rachel “Bunny” Mellon and a corporate trust she controls.

According to the available records, which go back to 1980, she has never donated to a political candidate until a contribution was made in her name to John Edwards this year. Mellon's involvement in the decision to donate to the Edwards campaign is unknown. The Washington Post reported yesterday that Alexander Forger, who has power for attorney for Mrs. Mellon, is a major supporter of John Edwards’ candidacy. Crain's Business Journal reported in February that Forger and "a group of prominent New York lawyers" hosted a fund-raiser for Edwards at Essex House -- the Central Park South address where his office is located. Forger has also personally donated $4,600 to Edwards' campaign, according to FEC records. This is not the first time Forger has used Oak Springs Farms to support Edwards; in 2006, he made a $250,000 contribution to Edwards’ One America 527 group.

Who approached Forger to solicit the Mellon money, and when?

According to a source directly familiar with the matter, it was Mellon – known to her friends as “Bunny”, who contacted AFNA directly and asked to make a donation. According to this source, Mellon instructed Forger to tap into an investment trust that she had set up. And Mellon has told at least one person connected with AFNA that she resents what she sees as the Obama campaign’s implication that her age and gender disqualified her from having made the donation.

Forger was traveling and could not be reached for comment.

The source familiar with the matter said that Forger and Mellon are content to letter the controversy die down so as not to draw unwanted attention and hurt Edwards.

A Coda

Baldick’s advocacy on behalf of issues identified with Edwards is not unprecedented.

Edwards’s deputy campaign manager, Jonathan Prince, ran an outside 527 to Edwards’s benefit in 2004. And in late 2003, a few weeks after he quit John Kerry’s presidential campaign, Robert Gibbs, who is now Obama’s communications director, became the spokesman for a 527 funded by wealthy Kerry and Gephardt donors; in one of its ads, a picture of Osama Bin Laden was displayed while a narrator intoned that Howard Dean was unqualified to be president.

A difference: the AFNA ads don’t mention other candidates and are positive. The anti-Dean ad was widely considered to be one of the harshest of the cycle.

Both Plouffe and David Axelrod, Obama's chief strategist have worked for 527s in past campaigns.