What are straw donor schemes?

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A straw donor scheme is a term used to describe a scheme that a person or entity uses to evade campaign finance contribution limits. For example, the Federal Elections Commission (FEC) limits a partnership to contributing $2,700 per candidate. To avoid this limit, partnerships could ask individual partners to contribute to a candidate, and then the partnership would reimburse the partners in bonuses for such contributions. While states have found that this practice may not be a violation of state campaign finance law, the U.S. Department of Justice and the FEC have opened investigations to determine if such schemes include illegal campaign contributions. However, it is important to remember that concealing the true source of a contribution is illegal.  

Ohio law prohibits any person from making a contribution to a campaign committee, political action committee, political contributing entity, legislative campaign fund, political party, or person making disbursements to pay the direct cost of producing or airing electioneering communications in the name of another person. Unraveling or prosecuting a straw donor scheme is a difficult claim to prove unless there is evidence of a person or entity contributing to a candidate to avoid the campaign finance limits or, in other words, contributing in the name of another. Due to their complexity and difficulty to prove, many straw donor schemes are not found to be illegal or are not prosecuted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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