With Roger Sollenberger, Political Reporter

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The Big Dig this week… How One of the GOP’s Top Hopes for Retaking the Senate Is Pushing the Bounds of Election Law.

If one thing was clear from Connecticut hedge fund manager David McCormick’s brief run during the 2022 Pennsylvania Republican Senate primary, it’s that his campaign had a practically bottomless built-in fundraising base—in the form of the candidate himself.

But while McCormick, who boasts a net worth in the hundreds of millions, likely won’t have trouble scrounging up the cash for his newly minted 2024 Senate bid, his financial maneuvering this time around has already drawn scrutiny among legal experts. And those experts told The Daily Beast that McCormick appears to be testing the limits of “testing the waters”—exploiting a loophole in campaign finance law to build out his operation while keeping those moves off the books.

Everything that rises must converge

McCormick, husband of former Donald Trump administration official Dina Powell—and until 2022, the head of the world’s largest hedge fund, Bridgewater Associates—is one of the GOP’s top 2024 recruits. He’s also likely the Republican Party’s best bet to unseat longtime Democratic incumbent Sen. Bob Casey. In 2022, McCormick conceded the GOP primary in a nailbiter to fellow wealthy non-Pennsylvanian Dr. Mehmet Oz, but for the last several months, he’s been setting the stage for a second act.

But The Daily Beast’s review of the PAC’s disclosures, together with a raft of reporting on McCormick’s backstage moves over that same timeline, suggest that the investment manager may have dual purposes in mind.

Since March of this year, McCormick has quietly operated a state-level PAC in Pennsylvania, called “Pennsylvania Rising.” In six months, Pennsylvania Rising has managed to raise roughly $1.2 million—in an off-election year for the state. That includes a $1 million contribution in June from the state’s wealthiest denizen, GOP megadonor Jeff Yass. At the same time, the PAC has put most of that money not towards its stated purpose of boosting state GOP candidates, instead spending more than $400,000 on firms and consultants who either worked for McCormick’s 2022 campaign or have joined his current operation.

Creative accounting

McCormick appears to be “flagrantly bending the rules,” according to Dan Weiner, a former Federal Election Commission attorney and current director of elections and government at the Brennan Center for Justice.

“This is ostensibly a state PAC that seems more obviously like a federal PAC,” Weiner said. “These are the sort of moves that have become common, the creative allocation of money. But if you’re assembling an entire apparatus, there’s no way to square that with saying you’re not sure you’re running.”

Testing the limits

Candidates considering a campaign for federal office may enjoy a “testing the waters” grace period, where they can raise and spend money for services that help inform their decision. But if a candidate does opt to run, they must retroactively disclose that financial activity—and it must comply with the rules that apply to any federal campaign.

This grace period was once a rarity, Weiner explained. But more and more candidates—like Trump and Ron DeSantis—have been treating it as a black box, he said, “as a way to forestall disclosure and undermine campaign transparency, a fundamental building block of campaign finance law, and it has far outstripped anything it was originally supposed to be.”

“It’s a culture of impunity, and that’s the kind of thinking that gets you to a place where a sitting member of Congress is charged with stealing a donor’s credit card,” Weiner said.

Shadow boxing

Pennsylvania Rising, however, is a glaring flag. Its activity raises the specter of a low-profile shadow operation to help McCormick get a jump on his all-but-inevitable plunge into 2024. And that activity, experts said, pushes and might even exceed the limits of the law.

Saurav Ghosh, director of federal reform at nonprofit advocacy group Campaign Legal Center, reviewed Pennsylvania Rising’s filings, telling The Daily Beast that McCormick “will need to answer” for the group’s activity.

“The idea of using a state PAC that’s stated purpose is to advance other GOP candidates in Pennsylvania is, just by following the money, clearly not the majority of what it’s doing,” Ghosh said. “The majority of its money is being spent on consultants and other strategists, and that’s an important question that he will need to answer.”

Because McCormick filed his candidacy the day after the third quarter reporting period ended, any possible “testing the waters” campaign activity won’t be disclosed until the next round of reports are due in January.

Read the full story here.

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From Roger’s Notebook...

In his own words. Rep. George Santos (R-NY) posted an enigmatic but fatalistic tweet on Wednesday, as the election of a new House speaker sharply increased the odds of his expulsion from Congress.

“Everything has an end in this life,” Santos posted late on Wednesday, seemingly oblivious to the nightmarish larger context of the mass shooting in Lewiston, Maine.

(New York Republicans took the extraordinary step Thursday evening to start the clock on a vote to expel Santos from Congress.)

But it was Santos’ other recent words, spoken to The New York Times that caught my eye. According to the Times, Santos personally confirmed my reporting that while his initial $500,000 campaign loan was fake, the money eventually was real—even specifying as we had that the money came through “in September and October 2022.” Notably, this interview actually occurred before my report, though the Times for unknown reasons held the story until after my reporting. (I’m comfortable disclosing here that my sourcing was emphatically not George Santos.)

Of course, that doesn’t get Santos off the hook—even though he told the Times it did, blaming his treasurer at the time, Nancy Marks. The interview took place before Marks was indicted for conspiring with Santos to fudge that loan, lying to both the FEC and National Republican Congressional Committee. That indictment blamed Santos as well, alleging that he Marks had “agreed to falsely represent” the loan to the NRCC and the FEC, quoting text messages from Santos personally promising the NRCC that loan was coming.

As campaign finance attorney Brendan Fischer pointed out in response to the Times story, “it isn’t just a matter of WHEN Santos put $500K into his campaign—the biggest question is HOW he scraped up the money.” We’ve published some ideas about that.

Original Sinema. The FEC on Wednesday flagged the campaign for Sen. Krysten Sinema (I-AZ) for apparent violations, including multiple allegedly illegal contributions from a PAC belonging to a troubled Christian-focused financial services company that settled a securities malpractice case in 2020.

The company, Thrivent Investment Management, agreed to pay $400,000 to settle the matter with the Illinois Securities Department, without expressly admitting guilt. It was just one of a number of issues that have plagued the company, with one veteran South Dakota broker resigning earlier this year after an internal investigation. (He died a few months later.)

The company’s PAC began giving to the Sinema campaign three months after it settled the Illinois matter, FEC records show, cracking the ceiling on contributions to her 2024 bid with a donation in September. About two dozen other donors were flagged for excessive donations in the FEC note, though the list of individual donors also somehow included the federally recognized indigenous Pascua Yaqui Tribe.

Monument to me. The old campaign committee for former Sen. Richard Shelby (R-AL) terminated this month, disclosing a number of parting gifts, including a total $150,000 to the University of Alabama, where a number of buildings bear his name. In April, Shelby—who retired in 2021 and literally has a monument to himself in the state—gave the school $5,000,000 of his donors’ money, along with a corresponding $4,000,000 to Georgetown University, where his wife was the first tenured professor at its business school. Those gifts were part of a Raw Story original investigation this June, which documented the self-interested largesse from “zombie” campaign committees.

Disappearing act. Failed House Speaker candidate Rep. Jim Jordan (R-OH) appears to have returned a $20,000 donation from a Bronx-based maintenance worker without disclosing that the campaign ever received it. The FEC caught the discrepancy and flagged it in a letter to campaign treasurer Tom Datwyler this week.

The refund came on July 27, according to campaign filings. The donor’s name appeared in a 1994 New York Times report titled, “Minority Students Languish in Special Education System,” identifying him as a struggling high school student at the time. His LinkedIn page says he currently handles maintenance for AHRC New York City, a group that apparently held on to its legacy initials despite their origins as the “Association for the Help of Retarded Children.” (They’ve since reappropriated the acronym for “Advocacy, Humanity, Reimagination, Change.”)

The Daily Beast asked a Jordan spokesperson why the donation wasn’t initially reported, but did not immediately receive a response.

Audition. The FEC released the conclusions of two audits this week, revealing fines against the campaign of Rep. James Clyburn (D-SC) and the MAGA-aligned Latinos for America First PAC.

According to the Clyburn campaign’s settlement agreement, the campaign was fined $3,500 for reporting errors incurred in 2022 while its longtime treasurer was grievously ill, a fact that the campaign mentioned in a prior letter to the agency. The treasurer later died, the letter noted. The FEC proceeded with the punishment anyway.

For its part, Latinos for America First was fined $9,600, with violations that included understating its receipts by more than $300,000, according to its settlement agreement. originally called Latinos for Trump, until the campaign sent the group a cease-and-desist order in 2019. Its former chair, Proud Boy leader Enrique Tarrio, was sentenced to 22 years in prison last month following his conviction on seditious conspiracy charges for his role in orchestrating the Jan. 6 attack. Another PAC official, Bianca Gracia, was interviewed by the Jan. 6 select committee and is currently on her second bid for state office in Texas, having lost in 2022. She’s running to the right of die-hard conservative incumbent Briscoe Cain, one of the Republican managers of the state senate’s failed impeachment trial against attorney general Ken Paxton.

More From The Beast’s Politics Desk

What a week. Among the top political news, House Republicans finally elected a new speaker after three weeks of internal chaos and knife-fights. Sam Brodey and newly minted political reporter Riley Rogerson delivered an exclusive from the Democratic perspective, reporting that Dems feel they have “no choice” but to work with Rep. Mike Johnson (R-LA)—one of the architects of the plot to throw the 2020 election to Trump.

When Jose Pagliery tells you Tump is about to be “shredded” in court, believe him. That was Jose’s exclusive this week, and it came to pass, with Trump being publicly reprimanded, gagged, fined, and threatened with imprisonment if he continues to try to intimidate other parties involved in his ongoing New York fraud trial. Read Jose’s original exclusive reporting and the affirming follow-up coverage.

After indicted Sen. Bob Menendez (D-NJ) went to bat for a billion-dollar Apache helicopter sale—a discussion with an Egyptian official included in his superseding indictment—the chopper’s manufacturer, Boeing, gave its first-ever maximum contribution to Menendez’s leadership PAC. Check out the scoop from Will Bredderman, whose prior reporting on Menendez just netted him an award.

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