Trump campaign accused of using 'pass-through' vendors to obscure $170 million in payments
An ethics watchdog group has accused President Donald Trump's reelection campaign of obscuring nearly $170 million worth of campaign spending through so-called "pass-through" vendors linked to campaign leadership instead of disclosing the true recipients of the funds.
In an FEC complaint filed on Tuesday, the Washington-based nonpartisan group Campaign Legal Center said American Made Media Consultants and Parscale Strategy, two companies set up and by run by campaign leadership, including former campaign manager Brad Parscale, have been disguised as providing a variety of services to the campaign, when in reality they have essentially served as "clearing house" firms that dole out contracts and payments to various subcontractors and vendors without revealing the ultimate recipients of the donor money.
Since 2019, the Trump campaign and Trump Make American Great Again committee, a joint fundraising committee with the Republican Party, have reported paying American Made Media Consultants and Parscale Strategy nearly $170 million for services such as fundraising, digital consulting, print and online advertising, video production, list rental, software and subscriptions -- much of which, according to public records and media reports, appears to be subcontracted out to other companies that have not been reported in disclosure records as being paid by the campaign.
The lack of disclosure of the campaign's payments to subcontractors, Campaign Legal Center wrote in the complaint, is a violation of the Federal Election Commission rule that requires campaigns to itemize disbursements to its ultimate vendors.
"By failing to report payments to the campaign's true vendors and employees, the Trump campaign and Trump Make America Great Again Committee have violated, and continue to violate, federal law's transparency requirements and undermine the vital public information role that reporting is intended to serve," the Campaign Legal Center wrote in the complaint.
"The campaign's failure to itemize disbursements to its ultimate vendors means that the public is left in the dark about the entities working for the Trump campaign, the nature of their services, and the full amount they are paid," the complaint continued.
"This is just political theater 100 days out" from the election, Parscale, now a senior campaign adviser, told ABC News.
"AMMC is a campaign vendor responsible for arranging and executing media buys and related services at fair market value," Trump campaign Communications Director Tim Murtaugh said in a statement to ABC News when asked about American Made Media's role in the campaign and the payments. "AMMC does not earn any commissions or fees. It builds efficiencies and saves the campaign money by providing these in-house services that otherwise would be done by outside vendors. The campaign reports all payments to AMMC as required by the FEC. The campaign complies with all campaign finance laws and FEC regulations."
The Campaign Legal Center complaint comes on the heels of a Business Insider report that the Trump campaign is conducting an "internal review" of its spending over the years following Parscale's departure as a campaign manager. Jeff DeWit, who recently joined the Trump campaign as its chief operating officer after stepping down as NASA's chief financial officer, told Business Insider that it's a review of all campaign contracts and spending, and not focused on Parscale. ABC News has not independently verified the Business Insider report and the Trump campaign did not immediately respond to ABC News' inquiry about the reported review.
Parscale has varying interests in companies that do campaign work, but details about his compensation from those firms is unclear because they're privately held.
Parscale's digital firm, Parscale Strategy, which has received more than $2.5 million from the campaign and the TMAGA committee just in the 2020 cycle, has played the role of a conduit vendor by paying the salaries of several top Trump campaign aides, according to the Campaign Legal Center and multiple media reports cited in the complaint.
Parscale Strategy has been paid more than $35 million in total by the Trump campaign, the Republican National Committee and the president's various fundraising vehicles since 2017, FEC data shows.
The Wall Street Journal reported last year that Parscale also was involved in the creation of American Made Media Consultants, but he tweeted in February last year that he does not own the company and receives "no percentage of any ad buys from the campaign."
So far in the 2020 election cycle, American Made Media has been paid $167 million by the Trump campaign and its joint fundraising committee, with more than half of that going to "placed media" and online advertising, campaign disclosures show. Other payments to the company cover various digital consulting, software and web services.
According to the complaint, among the subcontractors known to have provided services to the Trump campaign but not reported as being paid by the campaign is the software company Phunware.
Various media reports and releases from the company itself show that the Austin, Texas-based firm was contracted by American Made Media to create an app -- launched in April -- that helps the president's supporters engage with the campaign through a mobile platform that includes a news and social feed, volunteer signup, local event scheduling and mobile ticketing for in-person events.
Financial disclosure reports filed with the Securities and Exchange Commission show that American Made Media paid or owed Phunware about $3 million in 2019 and that in the first quarter of 2020, American Made Media was the company's top client. Phunware did not immediately respond to ABC News' request for comment.
Parscale has repeatedly touted the campaign's direct involvement in creating and launching the app, including a move to focus on its potential role as a substitute for in-person rallies during the coronavirus pandemic.
Another sub-vendor that the complaint says is being paid through American Made Media is Harris Sikes Media, which is listed as a television ad placement agent for the Trump campaign, according to ad-buy records filed with the Federal Communications Commission. Two firms run by the Trump campaign digital director Gary Coby -- Realtime Media, which places campaign ads on Snap, and Opn Sesame, which provides peer-to-peer texting services -- are also among undisclosed subcontractors for American Made Media, according to the complaint. Harris Sikes Media and Opn Sesame did not immediately respond to ABC News' request for comment. The Trump campaign hasn't responded to ABC News questions about those companies.
Campaign Legal Center's federal reforms director, Brendan Fischer, told ABC News it's not uncommon for campaigns to have sub-vendors that are not itemized, and that's not unreasonable under some circumstances. One such example, Fischer said, would be if a campaign is contracting with a media consulting firm to produce its TV ads and the media consulting firm subcontracts with a videographer. But it becomes a potential issue when the failure to disclose the ultimate recipient of the money is done in an intentional or substantial manner, Fischer said.
In 2017, Campaign Legal Center filed a similar FEC complaint against Hillary Clinton's campaign and the Democratic National Committee for its failure during the 2016 election to properly disclose an opposition research contract with Fusion GPS, which produced the now-infamous Trump-Russia dossier, by listing it under regular legal and consulting services by its law firm, Perkins Coie. It's not yet known how much the Fusion GPS contract was, but the Clinton campaign paid the law firm a total of $5.6 million during the 2016 election cycle, and the DNC paid the firm a total of $6.7 million, including $66,500 for "research consulting."
The scale and the scope of the Trump campaign's opaque spending through American Made Media and Parscale Strategy is unprecedented, Fischer said.
"This $170 million scheme means that voters are left in the dark about a huge amount of money that's being spent by the Trump campaign," Fischer said. "The voters don't know which individuals or entities are being paid by the campaign, how much they're being paid and what and for what purpose they're being paid."
