A conservative group filed an FEC complaint on Tuesday, alleging violations. Here's what's behind it.
Rep. Alexandria Ocasio-Cortez's congressional campaign has come under scrutiny in recent days for what a conservative group has alleged is a massive violation of campaign finance law.
The National Legal and Policy Center filed a complaint with the Federal Elections Commission on Tuesday, alleging that the New York Democrat and her allies used a corporation to skirt campaign finance reporting laws. The complaint comes after a number of conservative-leaning outlets said Ocasio-Cortez broke campaign finance laws when she hired her boyfriend for marketing work.
David Mitrani, an attorney representing Ocasio-Cortez's campaign and the related organizations named in the FEC complaint, pushed back strongly on the reports in a statement Wednesday, saying that the entities "have at all times been conducted fully in compliance with federal campaign finance laws."
Ocasio-Cortez herself denied the allegation on Tuesday to Fox News: "There is no violation."
Campaign finance experts, meanwhile, told NBC News that while the payment structure might be confusing, there's no evidence some kind of million-dollar scam as has been alleged in news reports.
Here are the facts behind the complaint — and the one thing experts say might merit a real investigation.
What's in the FEC complaint?
The complaint, filed by conservative group National Legal and Policy Center, alleges that Ocasio-Cortez and her allies violated the law by funneling political action committee (PAC) donations into a limited liability company (LLC) during her campaign for Congress.
The complaint called it an "extensive off-the-books operation to make hundreds of thousands of dollars of expenditures in support of multiple candidates for federal office," and said Ocasio-Cortez and her allies "were aware, or should have been aware, of the sweeping and apparently illegal nature of the enterprise."
One conservative outlet suggested the freshman representative and her top aide, Saikat Chakrabarti, could facejail time over it.
In 2016, a group of progressive activists who were energized by Sen. Bernie Sanders' bid for the Democratic presidential nomination set about trying to build an organization to recruit, support and campaign for congressional candidates who might not otherwise run for office. They wanted a central team to do "the annoying work of keeping the actual campaign logistics running," Justice Democrats wrote in a May 2018 explanation of why the Brand New Congress LLC shows up in their finance reports so much published on their website.
The activists eventually founded three entities to meet their goal: two PACS — Brand New Congress PAC and Justice Democrats, which would raise money, identify, and train candidates for office — and Brand New Congress LLC, a business that would be a vendor where staff could do things like fundraising and field work. Through this structure, both the PACs and candidate campaigns paid the LLC for various services.
"We had in our operating agreement that the goal of the LLC was not to make a profit, and as such, we made our prices as low as possible while still satisfying the FEC's requirement that we are charging something reasonable because, again, if we weren't we would essentially be doing heavily discounted work for candidates and that is illegal," the Justice Democrats explanation continued, later adding that this structure was later abandoned as the work the PACs did changed.
The LLC was created by Chakrabarti, who was also involved in the founding and first year of the PACs. He went on to manage Ocasio-Cortez's bid to represent New York's 14th District in February 2018, but did not take a salary from any of these organizations or her campaign, according to his attorney.
The two PACs eventually paid Brand New Congress LLCnearly a million dollars total during the 2018 campaign cycle. Justice Democrats, which paid the LLC the bulk of that money, would take credit for electing seven new members to Congress, including Ocasio-Cortez. Her campaign paid the LLC $18,880.
The structure is not particularly news to close followers of Ocasio-Cortez's campaign — Chakrabarti went on MSNBC's The Rachel Maddow Showto talk about the work in May 2016 — but it's certainly confusing.
So, did her team do anything wrong?
There's no evidence of self-dealing or any kind of elaborate scam, two experts told NBC News, which is often the major concern with LLCs and PACs run by the same people.
Brendan Fischer, a director at the Campaign Legal Center, said "scam PACs" typically pay their staff huge salaries without doing much campaigning work other than fundraising, which doesn't appear to be the case here. He said he hasn't seen evidence of wrongdoing that would suggest any laws were broken.
According to Paul S. Ryan, a campaign finance expert who currently works at the nonprofit government watchdog Common Cause, FEC laws don't require transparency from vendors and sub-vendors hired by campaigns or PACs.
But the PACs and campaigns are supposed to note what the vendors are hired and paid for, and that's where Ocasio-Cortez and her allies may have run afoul of the law.
The FEC complaint highlighted the large payments made from Ocasio-Cortez's campaign and the PACs to the LLC for "strategic consulting," and questioned whether all that work was actually strategic consulting or if other types of campaign activities were involved and should have been specified.
"In fact, Saikat Chakrabarti stated on national television on May 19th 2016 that Brand New Congress LLLC created the campaign infrastructure and ran all of the fundraising and volunteering operations for the campaigns," the complaint reads.
Ryan said that particular issue could merit an FEC investigation.
"Describing a disbursement for strategy consulting is permissible, but only if that's what the disbursement was actually for. There may be a violation here," Ryan said. "However, the FEC would likely treat this violation as very minor, particularly if the rest of the information provided for that transaction was accurate."
Ryan said a small fine could result from such a violation, not jail time.