During the 2020 election cycle, Nevadan James Kyle Bell solicited over 42,000 individuals via email to contribute to political committees purportedly supporting Donald Trump and Joe Biden. According to the U.S. Department of Justice (DOJ) and recent legal filings, however, Bell’s political fundraising scheme was little more than a plan to enrich himself. While Bell’s May 17 guilty plea in federal court may be an interesting story in its own right, what many campaign finance practitioners are focusing on most is the content in the solicitations that caught DOJ’s attention.
As explained in the charging document filed by the U.S Attorney’s Office, called an Information, Bell’s Trump-related PAC solicitations were sent out nationwide with a promise that individual donations would be “5X matched” by the PAC. In reality, however, none of the donations were ever matched by Bell, the PAC, or anyone else. The DOJ labeled this claim a “material misrepresentation,” meaning that the unfulfilled financial promise was a key element of the criminal charge against Bell. Ultimately, Bell diverted the donor funds for personal use.
Adding another layer to his scheme, Bell also applied for over $1.6 million in loans from the U.S. Small Business Administration’s Paycheck Protection Program (PPP) on behalf of several shell companies, nearly all of which was commingled with funds from PAC donors into personal bank accounts. Bell’s PACs never made any contributions to candidates, political parties, or other committees. Bell’s plea agreement calls for an $862,000 money judgment against him.
With these types of matching programs becoming more popular in PAC solicitations, it is no surprise that DOJ is scrutinizing the solicitations more closely. PACs must be cautious in establishing contribution matching programs and should be especially vigilant to avoid making misrepresentations in donor solicitations. Please note that these concerns do not exist for corporate charitable matching programs for their connected federal PACs.