Complaint: Extensive Campaign Finance Violations by Clinton-Tied Data Firm

Democratic firm Catalist may have facilitated illegal coordination by Dems, outside groups

February 20, 2015

A Democratic data firm run by supporters of a Hillary Clinton presidential campaign may be illegally supporting and coordinating with the Democratic Party and the offices of senior members of Congress, according to a legal complaint filed on Friday.

Democrat data giant Catalist is providing below-market services for its ideological and partisan allies and providing a forum for those allies—which include political and policy groups that are legally required to operate independently—to coordinate their electoral and advocacy efforts.

The allegations are spelled out in a complaint filed with the Federal Election Commission on Friday by a new conservative ethics watchdog called the Foundation for Accountability and Civic Trust.

The FEC complaint names as respondents the Democratic National Committee, dozens of members of Congress, the Clinton presidential campaign, and top contributors to and supporters of that campaign.

According to the complaint, Catalist, a limited liability corporation, operates as a de facto political group. According to news reports, it is less concerned with turning a profit than with providing data services to Democrats at favorable rates.

However, political entities that receive services at below-market rates are required to disclose those services as in-kind contributions. FACT alleges that scores of Democratic politicians and political groups have failed to do so.

"Since Catalist’s rates appear not to be the ‘usual and normal’ charge for these services, the Commission should investigate whether this constitutes an excessive, prohibited, and unreported contribution from Catalist to its federal campaign and party clients," FACT wrote.

Catalist’s clients include members of Congress, Democratic Party organs, and independent expenditure groups that are legally prohibited from coordinating with political campaigns. Citing statements by Catalist clients, FACT argues that the firm has served as a means to coordinate all of their efforts behind the scenes.

Its independent expenditure clients "have access to the Democratic political party and federal candidate client lists and voter files through the ‘seamless links across the activist left’ created by Catalist," FACT notes.

"Accordingly, the Commission should determine if the ‘independent expenditures’ made by these soft-money outside groups satisfy" requirements that they operate independently of political parties and campaigns.

Allegations in the complaint also raise questions about Catalist’s origins. Its founder and president, Harold Ickes, currently sits on the DNC’s Rules and Bylaws Committee, which Ickes said in 2013 is "the most important committee at the DNC because of its role in shaping the nomination process."

"The Commission should investigate the relationship" between Catalist and the DNC to determine if the firm is "financed, maintained, or controlled by the DNC and is, therefore, subject to the soft money ban," FACT wrote.

The Ickes connection could also draw Clinton’s expected presidential campaign into the controversy. "When I saw Harold reappointed to the DNC [in 2013], he surely, in my judgment, symbolizes the return of the Clintons," said Donna Brazile, another member of the committee.

Ickes, who served as Bill Clinton’s deputy chief of staff, founded Catalist in 2005 after John Kerry’s failure to unseat President George W. Bush. It quickly began laying the groundwork for Clinton’s failed 2008 presidential run.

Shortly before returning to the DNC, Ickes took a position on the board of Ready for Hillary, a Super PAC pushing her candidacy. Ickes has donated to the group, as has Janice Enright, his partner in the eponymous Democratic consultancy Ickes and Enright.

Catalist derives revenue from its paying clients, many of which are named as respondents to FACT’s complaint. Listed clients include 382 Democratic congressional campaign committees, the DNC, its House and Senate campaign arms, the Clinton presidential campaign, the Obama reelection campaign, and eight state Democratic Parties.

The firm also gets money from numerous donors. Chief among them is liberal billionaire George Soros, who gave the group $2.5 million in 2013.

Soros is one of the top political financiers associated with the Democracy Alliance, a shadowy network of liberal and Democratic donors that has funneled hundreds of millions of dollars to leading left-wing political and policy groups.

Catalist is one of 21 organizations that benefit from the lion’s share of DA support. Because it is a private company and not subject to political disclosure requirements, it is difficult to know which DA partners contributed to the firm.

Other internal Democracy Alliance documents lend credence to FACT’s allegations. A PowerPoint presentation at the group’s November donor conference in Washington, D.C., suggested private data firms could be used as a means to circumvent legal prohibitions on coordination between various political entities.

One slide in that presentation described the "legal firewall" between independent expenditure groups and political parties and campaigns. But it noted that that political vendors that focus on "data, analytics, and research" can work with all categories of groups.

It illustrated the point with arrows between groups that cannot legally cooperate traversing the firewall.

Catalist recently teamed up with another Democratic technology firm, NGP VAN, which controls the DNC’s voter database and counts virtually every federal Democrat as a client.

FACT alleges that cooperation between the two firms is an effort "to create a seamless mechanism for the Democratic Party’s federal candidates and political party committees to join with liberal outside groups" in sharing voter data.

"This collaboration has provided an opportunity for Democratic federal campaigns, Democratic Party committees and liberal outside groups to use the advantages of a common vendor to ensure that their voter contact efforts are complementary," FACT says.

That was the explicit purpose of creating a central Democratic data hub, according to news reports cited in the complaint.

The 2008 Obama campaign, which bought data from Catalist, looked to "create seamless links across the activist left, including outside groups with whom candidates were legally prohibited from coordinating directly," according to Sasha Issenberg’s 2013 book The Victory Lab.

Catalist itself admitted that its work with various clients that could not legally coordinate served all of their interests. "Results suggest that targeting differences between federal and independent groups, and their new, sophisticated data, were complimentary," the firm said after the 2008 election.

The complaint against Catalist is FACT’s first salvo as a newly formed conservative ethics watchdog group. The 501(c)(3) nonprofit is run by Matthew Whitaker, a former U.S. Attorney and an unsuccessful candidate for the Republican nomination for U.S. Senate in Iowa.

FACT’s formation comes shortly after groups with ties to the Clintons and the Democratic Party have stepped up their use of official legal complaints to ding ideological and partisan opponents.

The network of groups run by Clinton supporter David Brock recently absorbed Citizens for Responsibly and Ethics in Washington, the left-leaning watchdog group that has recently played a role in efforts by Democratic operatives to stoke ethics controversy over the personal finances of a member of House Republican leadership.

Brock’s network also includes the American Democracy Legal Fund, which exists to lodge legal complaints against Republicans. The ADLF is run by Brad Woodhouse, the president of pro-Clinton Super PAC American Bridge.

"We are dedicated to exposing unethical behavior and making sure it receives the attention it deserves," FACT says on its website. "The mission of FACT is simple: To strengthen our democracy by demanding the truth."