A Matter of Public Trust: AOC Should Fire Chief of Staff Who Ran Deceptive Campaign Finance Scheme
The Washington Post has picked up a story that had thus far been predominantly limited to conservative outlets: it appears that Saikat Chakrabarti, the Chief of Staff to Congresswoman Alexandria Ocasio-Cortez (AOC), treated AOC’s campaign as well as complicit progressive groups like the Justice Democrats as a corporate slush fund for a limited liability corporation he owns.
The reason the Washington Post picked up the story, I suspect, is that filings from the two PACs involved appear to back up the case that Chakrabarti - no relations that I’m aware of - ran a deceptive money moving scheme during the 2018 election cycle and may have violated campaign finance laws.
It turns out that two PACs that supported Ocasio-Cortez, Justice Democrats (JD) and Brand New Congress (BNC) paid more than $1 million for “strategic consulting” to a limited liability corporation associated with Brand New Congress, Brand New Congress LLC (BNC LLC). It would be bad enough that PACs were passing money back and forth basically amongst themselves, but things get really interesting when you find out who owns BNC LLC: you guessed it, Saikat Chakrabarti. Since Saikat Chakrabarti is also a founder of both Justice Democrats and the Brand New Congress PAC, it looks like two fundraising operations he had huge influence over were feeding cash to his LLC.
In the 2018 campaign cycle alone, BNC funneled $261,000, or 75% of its non-staff non-administrative expense, to the LLC. Justice Democrats transferred $606,000 to the LLC, almost half of its total expenditures outside of salaries and administration.
Aside from the $1 million it got from PACs, Ocasio-Cortez’s campaign also paid Chakrabarti’s LLC $19,000 in 2017. Suddenly following that, Chakrabarti “volunteered” to manage AOC’s congressional campaign.
Justice Democrats, Brand New Congress, and Chakrabarti all insisted that, of course, this is much ado about nothing, and nothing is amiss in this apparent scheme. In fact, in a tweet responding to the story, Chakrabarti pointed to an exoneration by always Russia-friendly The Intercept’s Ryan Grim, who in turn pointed to the a long explanation Justice Democrats had written up to try to make this scheme not look like a scheme.
Essentially, Justice Democrats explained that some of their founders (*ahem* Saikat Chakrabarti *ahem*) who set up Brand New Congress wanted it to be a PAC that ran a central campaign to do all the logistical work for their candidates, but that their lawyer explained to them that as a Political Action Committee, not so much of their business could be made up of fee-for-service for campaigns, and of course, PACs are limited to a direct contribution (in-kind or otherwise) of no more than $5,000 per campaign. So, the BNC folks had no choice but to set up an LLC to do all the servicing, while the PACs act as a vendor to that LLC, purchasing its services.
Which, of course, does not explain why a PAC needed to exist at all. An LLC can do all the things a PAC can do as a for-profit operation and it could do all the fee-for-service stuff it wanted to for campaigns. Perhaps the problem was that it’s a little hard to ask for donations as a corporation - though it’s completely legal - to influence politics when your whole shtick is to pretend you want corporate money out of politics. So why not just set up the PAC as the front operation and use it as a conduit to funnel money to the private fee-for-service corporation?
The point is, the Brand New Congress PAC almost entirely, and the Justice Democrats PAC in very large part became just conduits to funnel money to an LLC owned by the same guy who founded the PACs. It’s hard to tell whether that’s legal - very little is illegal in today’s world of campaign finance - but that scheme is shady as all get out. What Chakrabarti did was to set up a legal scheme to channel money from political action committees he influenced to a vendor he owns.
Contrary to the the Justice Democrats statement, the LLC also does not appear to have been an afterthought. It was incorporated in Delaware on May 11, 2016, within a month of the launch of the BNC PAC. The first payment was made to it the same month.
In the Justice Democrats’ explanation, they also tell us that they really wanted the LLC not to turn a profit, but the FEC forces them to charge a reasonable price, which causes them to turn one anyway. Bad, bad FEC! We do find this rather interesting nugget: you see, Saint Saikat did this all for free!
we also made sure that Saikat Chakrabarti was the only controlling member of the LLC, and that he took no salary (either from the LLC, from Justice Democrats, or from Brand New Congress the PAC). 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.
How nice. We of course don’t know whether this is actually true that Chakrabarti takes no salary or other compensations or reimbursements from the LLC, because the LLC’s finances and tax returns are not public. Also notice the crafty use of the term ‘salary’. LLCs could guarantee loans, buy property, or generate pass-through incomes for their … let’s say ‘controlling members’, which technically is not a ‘salary.’
Also, in the early days of this scheme, when the LLC used was the Brand New Campaign LLC, the payments from the PAC to the LLC went to a Manhattan zip code according to the PAC’s FEC filings. The PAC is based in North Carolina, and the old LLC is incorporated in Delaware. So who was in Manhattan? Saikat was.
Inquiring minds also wish to know what this little side business of Saint Saikat involves, and whether it derives any income from any of these three entities.
We are not likely to find out.
It appears that under the guise of paying all her staff a minimum wage of $52,000 a year, AOC has also capped her staff salaries at $80,000 (which means that’s the maximum Chakrabarti may be making on staff), which isn’t just below the $154,000 an experienced chief of staff makes, but well below the roughly $126,000 threshold which kicks in asset and income reporting requirements for Congressional staff.
One individual Chakrabarti’s LLC - and BNC PAC - did pay was Riley Roberts, AOC’s boyfriend. Roberts was paid $3,000 by the PAC on August 9, 2017. AOC’s campaign then paid the same PAC $6,191 on August 27, and the LLC paid Roberts another $3,000 on September 29. For those keeping count, Brand New Congress’ PAC and LLC paid AOC’s boyfriend $6,000, almost exactly the amount her campaign paid the PAC. Although this reporting comes from the conservative Washington Times, neither AOC nor Chakrabarti has disputed the accuracy of the numbers, and we know neither one of them is shy about sticking it to right wing outlets.
At the very least, there is too much left for the imagination. There is too much money in the dark, and there is at least the apparent reality of one man using his control over political organization to make bank for his corporation. And that man is the Chief of Staff to the most prominent freshman member of Congress.
This stinks. This corrodes the public trust. This undermines AOC’s credibility as an advocate for campaign finance reform and an opponent of using public service for personal enrichment.
Either the LLC should open up all its books for public disclosure and inspection and Chakrabarti should disclose all of his incomes and assets for the past five years, or Congresswoman Ocasio Cortez should fire him.
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