Conservative political fundraiser pleads guilty to felony

Introduction

One of Washington’s most controversial political fundraisers today pleaded guilty to one count of making a false statement to the Federal Election Commission.

Scott B. Mackenzie “caused the submission of a number of materially false, fictitious and fraudulent statements and representations” to the FEC from 2011 to 2018 on behalf of two political action committees: Conservative StrikeForce and Conservative Majority Fund.

Mackenzie, who lives in Arlington, Virginia, was arraigned in the U.S. District Court for the Eastern District of Virginia in Alexandria. He faces a maximum of five years in prison, a fine of $250,000 and restitution of $172,200, according to court documents. He is scheduled to be sentenced on Feb. 21. His lawyer could not immediately be reached for comment.

Mackenzie has for years served as treasurer of more than 50 political action committees — about a dozen of which purport to raise money for political and social causes, but spend most of the money they raise from donors on fundraising, salaries and overhead. 

Mackenzie’s political action committees — the Conservative Majority Fund, the Tea Party Majority Fund, the Virgin Islands GOP political action committee and the committees of long shot Republican candidates among them — are part of a growing trend in politics. 

During the last two decades, the United States saw a significant spike in the number of PACs that raise most of their money from small-dollar donors before plowing much of it back into salaries, administrative costs and raising more cash, according to a Center for Public Integrity analysis of more than 68.7 million campaign finance records compiled by the Center for Responsive Politics.

During the early 2000s, there were seven PACs in operation that raised money in small increments and spent most of it on fundraising, wages and administration. Now, there are 61 — more than half of which became active in 2017 or 2018, according to Public Integrity’s analysis. Those 61 PACs collected $101 million in 2017 and 2018.

Mackenzie was among the first to run PACs that were fundraising- and overhead-intensive — and he’s remained prolific well into this year.

Of the dozens of PACs for which Mackenzie serves as treasurer, 12 raised the majority of funds from individuals giving less than $200 and spent most of that money on fundraising, wages and administration. Those 12 PACs raised and spent $46 million from 2002 to 2018. About 68 percent went to fundraising, wages or administration.

Mackenzie has ties to direct mail companies that have raked in cash from donors. Since 2004, those companies collected millions from political committees for which Mackenzie served as treasurer.

He was an employee of BMW Direct Inc., and one of its spinoffs, Base Connect Inc. Mackenzie is not listed as an employee of Base Connect’s spinoff, Forthright Strategies.

According to his biography on the archived website for Base Connect, Mackenzie is an Army veteran who got his professional start with an accounting firm. He joined Ronald Reagan’s presidential campaign in Los Angeles in 1979 as deputy treasurer, and he moved to Washington, D.C., in 1980. He remained active in Republican politics.

Over the years, the FEC has repeatedly cited Mackenzie and PACs he’s worked with for violating federal campaign finance laws. Penalties typically came in the form of modest civil fines.

For example, Mackenzie and the Conservative Majority Fund in 2016 agreed to pay a $3,500 fine stemming from various campaign money disclosure errors. 

Also in 2016, Afghanistan and Iraq Veterans for Congress PAC agreed to pay a $5,850 fine for failing to file accurate campaign finance disclosures. Mackenzie served as the PAC’s treasurer when the FEC first began investigating the group.

But most recently, in August, Mackenzie and the Tea Party Majority Fund agreed to pay a much larger penalty — a $100,000 fine — for numerous campaign finance reporting errors and failures that violated federal law. (It paid its first of four installments on Sept. 20.)

The Tea Party Majority Fund has spent millions of dollars on services from telemarketer InfoCision, which itself has run afoul of federal regulators, paying a $250,000 fine from the Federal Trade Commission in 2018. 

Mackenzie also served for a time as treasurer for a PAC and super PAC formed in 2013 by former National Security Adviser John Bolton, which later faced questions for its work with disgraced data company Cambridge Analytica.

Some conservatives have long criticized Mackenzie and his political practices, among them Ken Cuccinelli, the former Virginia gubernatorial candidate who today serves as President Donald Trump’s acting director of U.S. Citizenship and Immigration Services.

In 2014, Cuccinelli’s gubernatorial campaign sued Mackenzie, some of his associates and the Conservative StrikeForce PAC for propagating a “national fundraising scam,” eventually reaching a $85,000 settlement. Last month, one of Conservative StrikeForce’s leaders, Kelley Rogers, pleaded guilty to wire fraud in connection with his work with the PAC.    

Former Interior Secretary Ryan Zinke came under fire in 2017 for directing money to companies associated with Mackenzie. 

Campaign finance experts described Mackenzie’s arrest as significant.

“For many folks I wouldn’t opine quite this specifically, but I’ll say for Mackenzie the publicly available evidence shows that he has been at the heart of many of the worst scam PACs for a very long period of time,” said Adav Noti, a senior director at the nonpartisan watchdog Campaign Legal Center and a former associate general counsel for the FEC. 

The deterrent effect of Mackenzie’s arrest “should be particularly significant,” Noti said. 

Brett Kappel, a campaign finance lawyer at the law firm Akerman, said it’s significant — and rare — to see charges against a treasurer of political committees. 

“It should be a reality check for anyone who is doing this on a professional basis. They can be held accountable and they have to exercise due diligence in representing their clients,” he said.

But the hurdles are high. PACs like some of Mackenzie’s — which raise most of their money from small-dollar donors and spent the majority on fundraising, wages and administration — raised $349.3 million and spent $344.3 million since 2001, according to Public Integrity’s analysis. They spent most heavily on fundraising, including telemarketing and direct mail.

More than 71 percent of the total spent, or $245.7 million, went to fundraising, wages and administration.

The Department of Justice, which may criminally prosecute people who run PACs, is becoming somewhat more aggressive, especially when it comes to investigating political action committees that allegedly mislead donors.

On Friday, the DOJ requested a prison sentence of 33 months for Kyle Prall, an Austin man who created websites in 2015 and 2016 ostensibly supporting Trump, Hillary Clinton and Bernie Sanders, as they ran for president, according to court filings. 

He raised more than $548,000 from 400 donors across the country and kept more than $200,000 for himself. 

In another case, H. Russell Taub, a 30-year-old Rhode Island man, was recently sentenced to 36 months in jail and will have to repay $1.1 million in restitution to the people who donated to his fraudulent political action committees.

In November 2018, Geoffrey S. Berman, the U.S. Attorney for the Southern District of New York proclaimed: “This is the first-ever federal prosecution of fraudulent scam PACs, but it won’t be the last.”

The FEC, which is charged with civil enforcement of campaign finance laws, has been unable to enforce such laws since Sept. 1 because it does not have enough commissioners to conduct high-level business.