Obama's Fundraising Fraud

John McCain's got a problem.

Democratic nominee Barack Obama has raised more than $600 million in his presidential campaign so far. In September alone, Obama raised $150 million, and his organization's fundraising machine continues to pump out pleas for cash, including an appeal for small $10 contributions sent before the "deadline," so backers won't miss out on a nifty "Obama-Biden Car Magnet!"

All of this might sound impressive -- a sign that citizen participation is thriving in 2008 -- except that the McCain campaign is locked away in the public financing dungeon, unable to compete in this year's private-money extravaganza. Earlier this year, worried about cash shortfalls, the GOP nominee accepted $85 million in public funding from the Federal Election Commission. In a normal year, say, like 2004, when both George W. Bush and John Kerry financed their campaigns with $75 million from the FEC, public funding for the fall campaign was highly anticipated. Freed from the onerous job of cold-calling donors, party nominees could hit the hustings amid a level playing-field. But this year's different, way different. Now more than ever, the post-Watergate presidential funding system has completely collapsed.

The irony of it all -- which brings us back to McCain's problem -- is that the maverick Arizona senator made his own bed. In 2002, working with Democratic Senator Russell Feingold, McCain helped push through "bipartisan" campaign finance reform in Congress. The key element of the legislation was a ban on "soft money" contributions to the national party organizations. These unregulated donations to the parties totaled $263 million in 1996 and $410 million in 2000. As any good party insider will tell you, soft money is a bonanza for presidential campaigns. Completely unlimited, soft money receipts allow presidential candidates to evade the financial restrictions under the FEC's "hard-money" limits. With no ceiling on what donors could give, and no limits on party spending on generic "uncoordinated" issue advertisements on behalf of the standard-bearer, a new model of private funding emerged to blow the lid off both the intent and spirit of the 1970s-era reforms.

No one took better advantage of this than President Bill Clinton in his 1996 reelection campaign. Clinton's political position was precarious after the GOP takeover of Congress in 1994. In early summer 1995, hoping to continue the effective Democratic advertising strategy on the administration's proposed assault weapons ban, the president's strategists sought to continue the ad blitz to boost Clinton's popularity heading into the 1996 Democratic primaries. Running up against hard money limits, the Clinton camp turned to the DNC, which began airing an unprecedented "issue advocacy" campaign on behalf of the Democratic policy agenda. In all, the Democrats spent $34 million in pro-Clinton soft money spots, in twelve key general election battleground states, before a single primary was held in January 1996.

This Clinton-Democratic model of campaign spending triggered a new wave of public backlash against money in politics. In response, Senator McCain's 2002 legislation banned unlimited soft money contributions to the national parties, while increasing individual hard money contribution limits. The maximum amount under current law is $2,300 per candidate per election, up to $47,500 annually.

The impact of the law was to unleash records sums of political giving in the 2008 election cycle. Noting Hillary Clinton's record financial haul in the primaries, Obama saw the phenomenal potential for record contributions at his campaign's website. Unlike any candidate in history, the Obama campaign has successful married web fundraising to the hunger for political change that has animated Democratic constituencies all year.

Yet, the Illinois senator's success is tarnished by a dark undercurrent of deception.

It turns out that half of Obama's haul in 2008 has come in contributions of $200 dollars or less. These small donations do not require public disclosure under FEC guidelines, and the Obama campaign refuses to make public its list of contributors. Obama earlier announced he'd accept public financing if the GOP nominee did the same (and then, of course, broke his pledge in June after realizing he'd far surpass previous fundraising records). So there's a pattern. By keeping his donor list secret now, the Illinois senator has heightened speculation of financial impropriety. Not only can Obama's inside operatives organize massive bundling operations outside the law, there are no safeguards against the new "fat cat" contributors who bundle their own cash. Hillary Clinton's Norman Hsu scandal from late-2007 points to the kind of abuses possible under the current regime. A more serious breach of faith may be taking place right now in the Obama camp.

As Scott Mirengoff at Powerline reported on Thursday, the Obama campaign refuses to screen credit card contributions for potential fraudulent transactions, and thus any individual could make unlimited contributions using infinite aliases.

It turns out, for example, that credit card companies deploy a variety of security measures to guarantee the processing of electronic transactions. For campaign giving, the key safeguards are vendor address verification, country of residence, and proof of citizenship. We now know that Obama operatives at the campaign's website have disabled the security settings on vendor identity to expedite online donations, gifts that then speed through to fund election activities that would be flagged as illegal under normal FEC reporting standards.

Allapundit at Hot Air has shown that, as the news of Obama's open-access credit card procedures went viral across the conservative blogosphere, readers conducted dozens of "experiments" to see if the Obama campaign would accept their money. In no time, the Obama campaign was accepting money from the likes of "JarackBoe BOamabiden" and "Nodda Realperson." It's unlikely that these donations will be flagged as fraudulent once the original credit card transactions clear. Thus, while amassing its illegal campaign-contributions war chest, the Obama campaign brazenly flouts the federal election regulations enacted during an earlier reform era of "hope and change." Meanwhile, the pro-Obama liberal press looks the other way, partnering with the very corruption and duplicity the media industry has attacked during eight years of Republican power in Washington.

Make no mistake, the Democratic nominee may now be running the biggest underground finance operation since President Nixon deployed the "plumbers" as his key operatives for CREEP in 1972.

This is Barack Obama's new model of soft-money presidential finance. This is hardly the outcome Senator McCain anticipated when he sought to clean up politics in recent years. The Democrats, on the other hand, have climbed aboard McCain's "Straight Talk Express," and taken the GOP for a ride.