Ethan Wallison, a former Roll Call reporter, describes an astonishingly stupid move by Nancy Pelosi's political team when he covered her in Congress:
At one point, it seems to have occurred to Pelosi and her associates that she could double the amount of money she raised - and thus double the amount she gave - if she opened a second political action committee. It never seems to have occurred to the group that, as a matter of law, this was preposterous. If one could double-up by simply opening another committee, why not ten committees? Or one hundred? Pelosi appears not to have had anyone at the time who could point out the obvious to her. So her machine, based in San Francisco, went ahead with the plan, opening a second PAC that was identical to the first in all but name. And soon that committee was taking and giving money in the usual order. The treasurer of both, former California Lt. Gov. Leo McCarthy, told me he had phoned the Federal Elections Commission beforehand and was told there was nothing wrong with the arrangement - a dubious story, since not even the commissioners are permitted to provide legal guidance over the phone. The FEC eventually fined Pelosi's original PAC $24,000 for the screw-up. Her committee was also forced to retrieve all the illegal money that had been given to candidates and to reimburse its donors.
How could anyone possibly have thought that opening a second PAC would change the limits on giving? Here's the AP report on the fine (Pelosi's PAC was actually fined $21,000):
A fund-raising committee run by House Minority Leader Nancy Pelosi was fined $21,000 for improperly accepting donations over federal limits, according to records and interviews.
The political action committee, Team Majority, was one of two PACs Pelosi used to fund candidates during the 2002 campaign. She stopped raising and donating money through the committee more than a year ago, after complaints that she was improperly using the multiple PACs to exceed limits.
The fine, which was paid in October 2003, was reported in Team Majority's year-end campaign finance records, released this month. The case is still open and the Federal Election Commission declined comment, but Pelosi spokesman Brendan Daly said that the fine was connected to donations made to more than two dozen candidates from both of Pelosi's so-called leadership PACs — Team Majority and PAC to the Future — that together exceeded federal limits.
"We checked with the FEC, we thought this was OK, when we found out it wasn't we did everything aboveboard and we've been complying with them," Daly said.
Daly said Pelosi, a San Francisco Democrat and leading advocate of campaign finance reform, would dissolve Team Majority after the FEC case was concluded. Two Democrats — Maryland Rep. Chris Van Hollen and Julie Thomas, who ran unsuccessfully for Congress in Iowa — have been fined $2,500 each in connection with donations received from the committee. The agency was still negotiating with a third congressional committee before closing the case, according to a source who spoke on condition of anonymity.
Federal law dictates that if multiple PACs are under the control of the same person, they're considered affiliated and must adhere to limits as if they were one. Federal law limits PAC contributions to candidates to $5,000 per election. Donors to PACs can give $5,000 annually.
In the 2002 election cycle, Pelosi gave more than two dozen candidates the $5,000 maximum contribution from Team Majority as well as PAC to the Future, which is her main leadership PAC — thereby exceeding contribution limits.
Team Majority gave back more than $100,000 that was collected in excess of limits, records show. But it also collected more than $140,000 that Daly said was within the proper limits. That money was spent last year to support Pelosi's fund-raising activities — including money for salaries, legal fees and phone services, and $2,176 to entertain donors at a box at the Simon and Garfunkel Concert at the MCI Center in December, records show.
The fine was first reported Monday by Roll Call, the Capitol Hill newspaper.
The best part, though, is this quote from former California Lt. Gov. Leo McCarthy, her campaign treasurer:
"The main reason for the creation of the second PAC, frankly, was to give twice as much hard dollars," to candidates, McCarthy told Roll Call at the time. He was then treasurer of both committees.
And yes, Pelosi supports campaign finance reform such as Shays-Meehan.