Santos' Alleged Scheme 'As Dumb as It Gets'

He could've raised funds for personal use with existing loopholes but didn't: David Firestone
By Arden Dier,  Newser Staff
Posted May 11, 2023 10:30 AM CDT
Santos' Alleged Scheme 'As Dumb as It Gets'
US Rep. George Santos is surrounded by media as he leaves the federal courthouse in Central Islip, New York, on Wednesday.   (AP Photo/Stefan Jeremiah)

Irksome as they may be, there are existing loopholes allowing politicians to raise money for personal expenses, like fancy clothes. But George Santos didn't take advantage of them. Instead, he allegedly chose a route "so flagrant, so spectacularly dumb in both conception and execution" that federal law enforcement, too often forced to ignore abuses that "are either technically legal or occur in a gray area," decided they had an open-and-shut case, writes David Firestone of the New York Times' editorial board. Santos is accused of soliciting donations to a business he created, apparently called RedStone Strategies, while falsely telling donors that it was a tax-exempt social welfare organization, namely a 501(c)(4), that would buy TV ads for his campaign.

As Firestone explains, political operatives have long used 501(c)(4) organizations to legally "introduce dark money into politics." These groups "constitute one of the greatest abuses of the tax code and the campaign finance system, because they allow donors to give large amounts anonymously." They were "never supposed to be used for political purposes," but the IRS has allowed the practice, so long as politics isn't the group's main activity. Plenty of politicians get away with dubious spending by establishing a 501(c)(4) group, Firestone notes. They're not technically permitted to solicit money for the organization, but "the lack of federal enforcement means that candidates get away with solicitation all the time," he adds. Santos could have done the same.

He did not. "Nor did he use his so-called leadership PAC to raise money for personal expenses, which more sophisticated politicians do all the time to buy expensive clothes, luxury vacations, and country club memberships," Firestone writes. Instead, Santos allegedly called for donations to his business, then wired the contributions to his personal bank account. Or as Firestone puts it, "he just took the cash with all the finesse of a Long Island pump-and-dump operation, leaving a pathetically obvious paper trail for federal investigators to follow." UCLA law professor and campaign finance expert Rick Hasen puts it to Firestone this way: "What Santos [allegedly] did is as dumb as it gets." Firestone's full essay here. (More George Santos stories.)

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