‘Little goofy’: Loopholes allow millions to flow around Missouri campaign donation limits

After years of no-limit spending on Missouri politics, voters had enough in 2016.

That year, as candidates raked in $65.5 million in donations larger than $100,000, Missourians overwhelmingly adopted a constitutional amendment capping donations to candidates, outlawing direct contributions from corporations and labor unions and banning efforts to conceal where money is coming from.

The motivation, which the amendment embedded in the constitution, was that “excessive campaign contributions to political candidates create the potential for corruption and the appearance of corruption.”

Passage spurred a lawsuit and a rush to grab big donations before the limits took effect. But it didn’t take long for crafty consultants to find ways around contribution limits, forging a trail to unlimited giving by having candidates set up affiliated committees alongside their campaign committees.

The arrangement can make it difficult — or impossible — for voters to figure out where the money is really coming from.

Throughout the 2024 campaign, The Independent has monitored campaign reports and how donation limits and other campaign finance laws are enforced.

Some of the findings:

In the 2019-20 election cycle, there were 70 donations of $100,000 or more to PACs dedicated to a single candidate, according to Missouri Ethics Commission records. The total was $32 million.For this year’s elections, there were 106 donations of $100,000 or more since the start of 2023 to PACs backing single candidates. The total is $36.3 million.Some lobbying groups have multiple PACs, allowing a single donor to avoid the limits by obscuring the original source of the funds to the campaign.

The winners of every statewide race this year had an affiliated PAC, as did the winners in every hotly contested state Senate race. Candidates can help these committees raise money, but have no say in how the money is used. It is illegal to coordinate campaign efforts.

The biggest spender was American Dream PAC, which spent $15.5 million over the past two years to help Lt. Gov. Mike Kehoe’s campaign for governor. Kehoe’s candidate committee spent $5.4 million in the same period.

The largest donor of any type to a candidate PAC was the Concord Fund, which donated $6 million in the failed effort to nominate Will Scharf as the Republican candidate for attorney general.

The largest individual contributor was Rex Sinquefield, who donated $3.7 million in amounts of $100,000 or more to American Dream PAC and Liberty and Justice PAC, the committee affiliated with Andrew Bailey’s campaign for attorney general.

“The current system is objectively a little goofy,” said Sean Nicholson, who managed a 2018 campaign called Clean Missouri that included a provision lowering donation limits for legislative candidates.

Candidates agree.

State Rep. Brad Hudson of Cape Fair, who won the Republican primary in the 33rd Senate District and was unopposed Nov. 5, said the lack of control over how money is used can be embarrassing.

“Oftentimes, the candidate is judged by the message that the PAC puts forth,” Hudson said, “and the candidate may or may not be OK with that message.”

A six-PAC, or more

The 2016 initiative and subsequent changes are Missouri’s second attempt to limit campaign donations. There were also caps from 1995 to 2008, and then, as now, paths were found around the caps.

For this year’s elections, the maximum contribution to a statewide candidate was $2,825. State Senate candidate committees could accept $2,400 and Missouri House candidates could accept up to $2,000.

The primary and the general election are separate elections. No donation can be accepted for the general election until after the primary and any donor who gave the maximum for the primary can give that amount again for the general election.

One method around the limits is to have multiple PACs funded by a single or limited group of donors.

Each PAC is allowed to donate the maximum, even if it has only a single donor.

In 2017, the Missouri Health Care Association — the lobbying arm of the nursing home industry — stopped putting money into the Missouri Health Care Association PAC and instead began giving to two new entities, DSV PAC and RQC PAC.

Since Jan. 1, 2023, the association has donated more than $410,000 to the two PACs, and they, in turn, have made $360,000 in donations to candidates and other PACs.

“Those were formed in 2017 and no one seems to remember what those letters stood for when they created them, but we contribute to them,” said Meghan Henderson, executive director of the association.

The committees have the same treasurer and on four occasions, wrote checks at or near the maximum on both accounts to the same candidate. The campaigns reported the checks as originating with RQC or DSV PAC, with no mention of the Health Care Association as the original source of the money.

Senate Minority Leader Doug Beck, an Affton Democrat, is one of the candidates who received donations from both PACs, two checks for $2,400 on Sept. 20.

“They must be operating within the rules,” Beck said, “because I don’t know that they’ve stopped and said, ‘hey, you’ve got too many checks. You need to refund the money or whatever.’”

The association’s attorney has checked the legality of two PACs, Henderson said.

“My understanding is that we do comply with all of Missouri’s campaign finance laws,” Henderson said.

Strategic Capitol Consulting, the lobbying firm founded by former Missouri House Speaker Steve Tilley, maintains six PACs. Each received identical donations from five of Tilley’s clients at various points in the year.

The two biggest donors are Torch Electronics, owner of “gray market” games found in convenience stores and other locations that offer cash prizes to players, and Warrenton Oil, a convenience store company that joined Torch in a lawsuit seeking to stop law enforcement from seizing the games as illegal gambling devices.

Torch donated $330,000 to the six PACs in June and Warrenton Oil gave $240,000 in July.

Together, the six PACs have donated a total of $1.5 million since the start of 2023.

An analysis by The Independent found that when three or more of the Tilley lobbying PACs give to the same candidate at the same time, the amount traceable to each donor would exceed the amount that donor could give directly.

For example, Hudson received maximum donations of $2,400 each from the six Tilley lobbying PACs on Aug. 12. The $14,400 is vastly more than Tilley’s firm or any donor could have contributed individually.

He also received more than the maximum amount from three of the five donors.

Hudson, who won his seat in the House in 2018, did not violate any campaign finance law by accepting the donations. His campaign reported them as required. He said efforts to limit donations don’t make it easier for the public to follow campaign finances.

“It seems like we’ve got a situation where we’ve got just as much, if not more, money in politics,” Hudson said. “It’s just harder to trace.”

Brittany Robins, spokeswoman for Strategic Capitol Consulting, didn’t clarify why the firm needs six political action committees, saying only that no laws were broken.

“Our firm ensures that all activities related to the PACs we advise are conducted ethically and in full compliance with Missouri’s campaign finance laws,” Robbins said. “This includes ensuring the treasurers and governing boards reporting and financial activities are compliant.”

Other lobbying groups also have multiple PACs.

The Missouri Bankers Association since 2000 has operated with a statewide PAC and seven PACs tagged with names like MBA Pony Express Region or MBA Mark Twain Region. In 2012, the association created a PAC for young bankers. None have a single dominant donor, instead receiving modest contributions from bankers and banks in the defined region.

Together, the PACs made almost $320,000 in campaign contributions since the start of 2023. Twelve candidate committees received donations from more than one PAC that would have exceeded the limits for their race if the MBA ran all its contributions through a single PAC.

The regional PACs allow full representation for the association’s diverse membership, spokeswoman Lori Bruce said.

“Each MBA PAC is governed by a separate committee made up of MBA members selected to represent their region, and each PAC complies with state laws and the guidelines set forth by the Missouri Ethics Commission,” Bruce said. “Maintaining regional PACs allows our members to retain local control over their political contributions to support the candidates of their choosing. Each committee member has an equal vote on which candidates receive contributions from their PAC.”

Another company that gives to multiple PACs is J&J Ventures, an Illinois firm that operates regulated video lottery games. J&J Ventures contributed to PACs maintained by the three lobbying firms it employs, which in turn donated to candidates and their affiliated PACs.

J&J gave $347,000 to Another Viceroy PAC, operated by Viceroy Government Relations, which made $315,319 in contributions.J&J gave $471,000 to Paladin PAC, operated by Arnold and Associates, which made $465,125 in campaign contributions. Paladin received $20,000 from other donors.J&J gave $126,900 to Rowdy PAC, operated by the Rowden Group lobbying firm, which made $98,300 in contributions. Rowdy PAC received $12,200 from other donors.

The PACs contributed to 80 candidate committees. Eight candidates received amounts that would have exceeded the limits if all J&J donations flowed through a single PAC.

J&J gives to candidates and elected officials who support the company’s position that all gambling should be regulated by statute, said Matt Hortenstine, the company’s general counsel. That puts it in opposition to Torch Electronics.

The money is distributed to its contract lobbyists to make donations based on their evaluations of which legislators and candidates agree with its positions, Hortenstine said.

“We’re not doing anything illegal, and we’re not doing anything out of custom or practice in Missouri politics,” Hortenstine said.

Debate over limits

Missouri’s current contribution limits are part of the state Constitution and only be changed — or repealed — by a statewide vote.

But that doesn’t quiet the debate over whether limits help or hurt the public. The only messages under the control of candidates are those paid for by campaign funds.

“This is a classic example of something that sounds like a good idea — put limits on, make them strict — but the application of the good idea has been really bad for Missouri voters,” said John Hancock, a Republican consultant.

With unlimited funds, and no responsibility to the candidate for the message, the PACs drown out the voice of the campaign committees, Hancock said.

“The system we now have in place is anything but transparent, and it’s not beneficial to the candidate,” he said. “It’s not beneficial to a campaign trying to deliver a message.”

Nicholson, who led the campaign that lowered caps for legislative candidates, said massive donations directly to candidates doesn’t necessarily promote transparency.

“There was nothing about the old regime that was particularly delightful, which is why voters were very fed up and willing to try something new in 2016,” Nicholson said.

But instead of throwing out contribution limits, Nicholson said the law should make sure it is clear where money is coming from.

“The goal of campaign finance laws is for voters to know who’s trying to influence the election and to make sure that corporate special interests don’t have outsized influence over the people who are making a decision about their district and who represents them,” Nicholson said. “I think limits and transparency are both important.”

Hudson, who will begin his first term in the Senate in January, said unlimited donations would promote transparency.

“If an individual could donate to a candidate committee the amount of money that they wanted to and then the candidate had to report that, then the candidate would have control over how that money was spent,” Hudson said.

If he could design a campaign finance system, Beck said, it wouldn’t look like it does now.

“I’m playing within the rules in the system the way they are,” Beck said. “And if they change the rules of the system, I’ll play by those rules. That’s where I’m at. I don’t know what else to do.”

Enforcement

For three months this year, the six-member Missouri Ethics Commission couldn’t meet because only three seats were filled. A fourth was appointed by Gov. Mike Parson in June, but a quorum couldn’t be convened immediately due to illness of one member.

During the time the commission was unable to meet, 24 complaints were closed with no action due to the lack of a quorum.

At a public meeting of the commission on Oct. 16, Chair Robin Wheeler Sanders declined to discuss the commission’s enforcement actions or whether she feels it has enough authority to do its job effectively.

Almost all actions of the commission must be initiated with a complaint. It has no independent authority to investigate actions that may violate the laws it polices for campaign finance activities and lobbying.

Enforcement is only as good as the laws regulators are given to work with, Nicholson said.

“I would not describe it as particularly robust,” he said.

The issue isn’t enforcement power but creating a system that doesn’t encourage anything but direct contributions to candidates with full openness, Hancock said.

“The thing about ethics reforms is they generally force otherwise ethical people to jump through ridiculous hoops” Hancock said. “If we just had a system that was transparent, they wouldn’t have to deal with it. Ethics come from the inside out.”