Hidden PAC money and failure to close a tax credit loophole.

This Web site is reporting the results of an extensive examination of the Federal Election Commission master data files containing campaign financing records for 2006. Primarily reports filed by Kevin Calvey, candidate for US Congress and the Club for Growth PAC. The Club for Growth PAC is an out of state special interest group lobbying for better tax treatment for wealthy investors.

A detailed examination of FEC master data files reveals Kevin Calvey reported as individual rather than PAC contributions $258,000 in direct funding Club for Growth PAC channeled to Calvey's campaign and $68,000 in independent expenditures Club for Growth spent on mail outs and advertising solely for the benefit of Calvey's campaign.

These contribution, from the Club for Growth PAC, came while Calvey as chairman of the Oklahoma House tax and revenue committee was creating an amendment to a bill that was claimed would close a tax credit loophole allowing certain unidentified investors to take $2 in tax credits for every $1 invested.

The Club for Growth PAC is an out of state special interest group lobbying for better tax treatment for wealthy investors. Many of Club for Growth PAC members are from the same class of wealthy investors eligible to use the loophole.

What is behind this?

We have been reporting on this Web site for well over a year that evidence has surfaced showing the loophole is still being used and has allowed another $1 billion to taken by unidentified groups since the governor and lawmakers claimed they closed the loophole. A close examination of the bill clearly shows tax the credit abuse loophole was not only never closed, it was, in fact, made more fraud friendly. This has been validated by information, shown elsewhere on this Web site, that is now being made available put numbers on the losses.

The original bill to close the loophole was introduced in the Senate, then languished in the House tax and revenue committee, chaired by Kevin Calvey, who at the time was running for US Congress. When Calvey finally released the bill on the last days of the session there was a 50 plus page amendment which Paul Doughty, president of Altus Ventures, the biggest known abusers of the loophole helped Calvey write according to an April 2006 Associated Press article. The press article revealed the he Altus Venture group delivered a bundled donation of $21,000 in the same time frame Calvey allowed Doughty's assistance. Now we learn that was only the tip of the iceberg.

In general why campaign financing reports are often confusing and meaningless.

See Apples to apples not oranges?

How does this particular disguise work?

A subtle discrepancy in a code, in Calvey's reports, intended for computer use and not displayed for human eyes resulted in FEC software counting $258,000 channeled through a PAC, as individual non-PAC contributions, matching what Calvey's Summary Details report shows. The other $68,000 was listed under an obscure category.

How can that be done?

The FEC maintains several files including

1) Large master data files containing all campaign finances reported by allcandidates and PACs for each election cycle.

2) Smaller files for each separate candidate and PAC.

It is between these two files that we found the most critical discrepancies. Differences in the transaction code the computer uses to determine how to count the contribution --- as PAC or non-PAC. The note describing the contribution as coming through a PAC remains the same. This tells the computer to show the site visitor one thing but treat the money another way. A site visitor only seeing a very small part of the total picture would not recognize a descrepancy.

We could not find it specified any place on the site, but based on typical useage of files of this nature, i.e., the size, structure and the content of the master files would require considerable computer processing time. And, would be restricted to use in off-line batch cross checking candidate and PAC reports to catch discrepancies.

Where the much smaller individual files would be used for a Web site displaying one candidate or PACs reports.