Democratic convention used corporate cash, despite pledge to only use funds from individuals

Published October 18, 2012

| Associated Press

The Democratic National Convention relied on at least $5 million in corporate donations, despite repeated pledges by top party officials only to use money raised from individuals.

Reports filed Wednesday with the Federal Election Commission show the convention's host committee, Charlotte in 2012, raised $24 million, well short of its $36.7 million fundraising goal.

To help make up for the shortfall, committee officials spent $5 million raised directly from corporations to rent the cavernous basketball arena used as the convention hall. They spent nearly $8 million more from a line of credit provided by Charlotte-based Duke Energy, the nation's largest electricity provider.

Top Democrats, including Democratic Chairwoman Debbie Wasserman Schultz, had pledged prior to the 2012 convention not to raise money from special interests and to cap individual donations at $100,000.

"This convention will be different," Wasserman Schultz said last year at the convention kickoff event in Charlotte. "We will make this the first convention in history that does not accept any funds from lobbyists, corporations or political action committees. This will be the first modern political convention funded by the grassroots, funded by the people."

In addition to spending cash from corporate sponsors on direct convention expenses, records show much off the $24 million billed as being raised from individual donors came from special interest groups that employ lobbyists, corporate-funded foundations and the very wealthy.

Democratic National Committee spokeswoman Melanie Roussell said Wednesday it is not illegal for convention host committees to raise unlimited corporate money and that the party had placed the fundraising restrictions on itself.

Republicans made no secret of raising unlimited corporate money for their convention in Tampa, Fla., which took in a reported $55.8 million.

The core convention events in the Time Warner Cable Arena and Bank of America Stadium were overseen by the Democratic National Convention Committee Inc., a Washington-based nonprofit corporation affiliated with the Democratic Party.

The DNCC's operations were funded with $18 million provided by American taxpayers who check the $3 political donation box on their federal tax returns. Security for the convention was funded by a $50-million grant from the Homeland Security Department. The Republican convention received identical government grants.

To raise money for costs beyond what taxpayers provided, the DNCC contracted with Charlotte in 2012, a North Carolina-based nonprofit corporation.

The $5 million used to rent Time Warner Arena for the convention was raised from corporate donors by New American City, a separate nonprofit corporation set up by top officials at Charlotte in 2012. The rest of the $18.8 million in corporate money raised by the entity was used to support functions organizers considered to not be in direct support of the convention, such as the salaries of the 41 full-time host committee employees and their health insurance.

As for the money raised directly by Charlotte in 2012, the Democrat's contract with the city's host committee exempted millions in donations from unions and such in-kind corporate donations as office space, computers and furniture from the self-imposed limits.

Still, many of the donors listed as giving to the Democratic host committee could hardly be classified as hailing from the grassroots.

All told, more than $7.2 million came from individual donors giving $100,000 or more, according to an Associated Press analysis of the disclosure report.

According to the disclosure report, Thomas Steyer, the president of the San Francisco-based hedge fund Farallon Capital Management, gave $500,000 -- five times the committee's professed limit on contributions.

Constance Milstein, principal and co-founder of Ogden CAP Properties, gave $300,000, according to the report. Ogden's website describes Milstein's firm as "New York City's premier residential real estate owners."

Paul Egerman, CEO and co-founder of medical software company eScription, gave $200,000, according to the report.

Roussell said the reported donations in excess of $100,000 were reporting errors and that the money came from the personal foundations of the listed individuals. Donations from charitable groups were not subject to the $100,000 cap, she said.

"There are several errors in the report and we are working with the host committee to clarify and fix them," Roussell said.

Donations were also accepted from foundations supported by corporations. For example, Xerox Foundation, which shares the same Connecticut address as the headquarters of the Fortune 500 copier maker, is listed as giving $100,000.

The Eastern Band of Cherokee Indians gave $100,000, as did the Chickasaw Nation, the Muckleshoot tribe and the Sycuan Band of the Kumeyaay Nation. All four tribes operate large casinos.

Also not subject to the Democrats' ban on corporate donations were law firms, such as the $100,000 donated by McGuire Woods LLP. In addition to being one of the South's largest law firms, McGuire's consulting subsidiary employs dozens of registered state and federal lobbyists.

More modest checks came from the American Financial Services Association, which represents credit card and financial companies, and the senior group AARP. Both are registered as entities that lobby the federal government.

As for the $7.9 million borrowed from the line of credit guaranteed by Duke Energy, the company's agreement with the host committee calls for that money to be repaid by Feb. 28.

Duke spokesman Tom Williams said the company also provided a total of $5.7 million in cash and in-kind contributions to Charlotte in 2012 and New American City, including providing the joint offices occupied by both entities. He said the company will work with committee organizers to help retire the $7.9 million debt by the deadline.

Roussell ruled out that the debt would be paid by the DNC or Obama campaign. She touted the roughly 32,000 donors listed in Charlotte host committee's disclosure report, up from just 450 donors for the Democrats' 2008 soiree in Denver.

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