AFC CHALLENGES
by the fact that there have been few prosecutions of straw donors , who will usually turn on the architects of the scheme to save themselves .
Others are individuals who may be coerced into participating . They may be part of a workforce employed by one of the architects who fear repercussions for declining , even without a word spoken by the boss .
Some straw donors are just extremely naïve and are clueless that a law even exists , easily cajoled into participating . Even those who may exhibit some ability to think critically regarding the legality or tax ramifications of their actions can easily be lied to or manipulated . Convincing someone that you have run out of checks but can supply them with the cash to deposit and write their own check is just one example .
The red flags
The media tends to focus on schemes involving prominent elected officials such as the recent indictment against New York City Mayor Eric Adams . While that is understandable , more of these schemes materialize in local elections and get little publicity .
One of the first red flags for FIs is noticing that donations are for the maximum amount allowed by law and are from multiple individuals , which is outside the norm for smaller contests . Ideally , more straw donors contributing smaller amounts would be less suspicious . The problem faced by the architect would be the need to recruit more people , which could be extremely difficult . The haste to get funds into the account and spent , plus the mindset of never getting caught , are the overriding factors for the architect making this decision .
A so-called “ six degrees of separation ” between the straw donors is another major red flag as they tend to be connected by a common denominator . It could be ethnicity , race , religion , employment , or members of a fraternity , sorority or civic association . They may also just be random friends and family of the architects . Individuals donating from distant parts of the country , having no apparent connection to the local election , is also a red flag .
Another red flag is the fact that many people who become involved in these schemes are not particularly politically motivated and have never before made a political contribution . It makes little sense that a person would wake up one morning and decide to write a check for thousands of dollars , especially for a low-profile election such as an obscure lower court judge ’ s race . A check with the state board of elections / FEC can provide the contribution history of anyone who has ever donated and will most likely confirm the above scenario .
Part of an AML investigation is determining the wealth profile of the subject . Depending on how extensively anti-financial crime ( AFC ) professionals investigate , you will find that these first-time donors hardly fit the profile of people who have disposable income for a large donation ― income that would be better served on a new roof or past-due debts .
The state board of elections / FEC have their own compliance and enforcement divisions that investigate campaign finance violations , but like any other white-collar crime , most of their activity is based on tips and complaints . A candidate ’ s opponent will often file a variety of complaints , with the motive of seeking a political advantage as opposed to being altruistic .
Finally , one major advantage an FI has in an investigation is that the straw donors may have their own personal account at the institution and make their donation from that account . This offers a great window of opportunity to determine if the withdrawal was immediately preceded by a deposit ( cash or check ) for the exact amount . If by check , the FI may have uncovered the proverbial smoking gun , to wit : the true donor .
The same red flags and investigation techniques apply to PACs . A PAC can bundle its straw donations and donate them to a candidate , giving the appearance of a one-time contribution .
It should also be noted that reimbursing someone for a donation is also against the law , as in the case of a straw donor fronting their own funds and being reimbursed later . Donations made after the election takes place are yet another attempt to obfuscate scrutiny , as interest in the election would have waned for the losing candidates and their supporters . The only way to detect this type of activity would be to monitor the donor ’ s account for a future dollar-to-dollar match of the donation .
Another trick of the scheme , which is becoming more popular , is to donate through a credit card . A credit card donation avoids the need to have funds available . Donating by credit card is similar to a straw donor fronting their own personal funds . Generally , people who front their own funds want to be reimbursed within a reasonable period of time , if not immediately . A credit card donation can be repaid and reimbursed through smaller monthly payments , making it difficult or nearly impossible to prove a straw donation .
Conclusion
Many individuals go into public service with good intentions . The lure to stay in office because of the power and prestige it brings , along with the salary and benefits that often enhance the politician ’ s lifestyle , especially on the local level , highlights the toxic mix of money and politics . Money is a major component of winning elections , and it often pushes even the most ethical among us to make decisions to betray the public trust . That is where the AFC professional makes the difference .
Charles Falciglia , former Rockland County , N . Y ., legislator and 2022 congressional candidate , charlesfalciglia @ yahoo . com
1
“ 2004 Corruption Perceptions Index ,” Transparency International , https :// www . transparency . org / en / cpi / 2024
32 acamstoday . org