How Shell Corporations Hide Political Contributions — and What to Do about It

The Panama Papers revealed how Mossack Fonseca used shell corporations all over the world to hide the wealth of the global elite. In the United States, those same tactics are being used to disguise political contributions and funnel corporate money directly into campaigns.

The 2010 Citizens United decision allows corporations to donate directly to outside groups, such as Super PACs. Some donors are now using shell corporations, which have no visible assets or internal operations, as intermediaries for their political donations — allowing these donors to completely mask their identities.

The LLC loophole effectively allows any individual, corporation, entity or even foreign government to dump unlimited money into our elections while keeping their identity a secret. That’s a terrifying reality, which is made even scarier by the FEC’s inaction.

As the Washington Post’s Matea Gold reported earlier this year:

“The individuals behind the ‘ghost corporations’ appear to face little risk of reprisal from a deeply polarized Federal Election Commission, which recently deadlocked on whether to even investigate such cases.”

Since then, the Federal Election Commission has indicated they may direct increased scrutiny toward LLCs contributing to political organizations — but that any LLC that acted before April 2016 is off the hook.

One group in particular appears to be flagrantly violating the law without any concern for the consequences.

In June 2015, a limited liability corporation called Children of Israel LLC was created in California. In July and November of 2015, it made two contributions totaling $150,000 to Pursuing America’s Greatness, a Super PAC supporting former Gov. Mike Huckabee. In December 2015, it donated the maximum of $33,400 to the Republican National Committee. In January and March 2016, it made two contributions totaling $400,000 to Stand For Truth, a Super PAC supporting Sen. Ted Cruz.

Children of Israel LLC’s business filing, first uncovered by the End Citizens United research team, inadvertently reveals the truth behind the LLC shell game. The corporation’s Statement of Information (shown below) classifies its type of business as “donations.”

(Children of Israel LLC’s Statement of Information, filed in California)

We believe this is an explicit violation of a federal law that forbids political donors from hiding their identities — and we’ve put our money where our mouth is by filing a complaint with the Federal Election Commission.

Even as scrutiny of the LLC problem increases, dark money donors are already looking for new loopholes to exploit. Until we overturn Citizens United, billionaires and special interests will continue to find ways to hide their identities while influencing our elections with unlimited money.

At End Citizens United, we’re working every day to build the political movement we need to enact strong campaign finance reform. So far, more than 1.5 million people have joined our efforts — and we’re growing every day.

Polling has consistently shown that Americans loathe what Citizens United has done to our political process and want reform. But public support alone isn’t enough. We need to elect leaders who will fight for that reform.

So before you vote, please check our list of endorsed candidates — and read their answers to our questionnaire. We can overturn Citizens United, but it will take all of us electing leaders who will stand up to the corrupt system.