Obama's fundraising prowess exposes flaws in law

Obama's fundraising prowess exposes flaws in law

As the Democratic candidate sets records for donations, his efforts have come under increased scrutiny.

By Dan Morain and Doug Smith, Los Angeles Times Staff Writers
11:19 PM PDT, October 8, 2008

Barack Obama's money machine is fueled by the likes of Martha Murphy, a grandmother who has donated 104 times for a total of $2,475.34.

Murphy has used her credit card to donate in amounts as small as $10. "It is amazing how it adds up," she said.


Obama has revolutionized campaign fundraising, employing the Internet to tap into more donors than any candidate in history. The campaign has reported $160 million in contributions from donors of $200 or less, more than a third of the $458 million raised. But as Obama sets records, his fundraising has come under increased scrutiny.

The Democratic candidate's donors also include "Derty Poiiuy," an individual with a scatological sense of humor who has given $950. "Mong Kong" has contributed $1,065 and lists an address in a nonexistent city. "Fornari USA" gave $800 and listed the address of an apparel store of that name near San Francisco.

The Republican National Committee filed a federal complaint this week, alleging that some of Obama's small donations are illegal because they come from foreign nationals or exceed the limit.Obama's contributions have also exposed a loophole in the law, which does not require disclosure of the identities of donors who give $200 or less, making it impossible to determine whether they are legitimate without a federal audit.

Lawrence Norton, a former Federal Election Commission general counsel, noted that the law was written when "no one conceived that a candidate could raise millions" in such small amounts. "It certainly is a case where the 1970s law is not in step with current campaign fundraising practices," he said.

Exactly why a donor would use a name like Derty Poiiuy is not clear. "It's part of phenomenon that we've never seen before," FEC spokesman Bob Biersack said. People who make up names when donating to federal candidates violate laws against making false statements, but Biersack could not recall anyone being prosecuted for such a crime.

Biersack said the FEC cannot conduct an audit unless there are significant questions about a candidate's fundraising. "Odd names by themselves aren't enough. A lot of people have odd names," Biersack said. "I have certain sympathy for that."

Obama has returned money to Poiiuy, Fornari and many others. It will return Kong's donation after The Times brought the name to the campaign's attention.

"Every campaign faces the challenge of screening and reviewing its contributions," Obama spokesman Ben LaBolt said in a statement. "We have been aggressive about taking every available step to make sure our contributions are appropriate."

LaBolt noted that John McCain has taken bogus donations too, including some from people who list their addresses, cities and state -- required information -- as "anonymous."

Obama's campaign has set up screens to try to ensure donors are U.S. citizens. People living abroad must provide a U.S. passport number.

But the RNC, in its complaint to the FEC, charged that the campaign has "knowingly accepted excessive contributions and donations from foreign nationals" and called it "a wide-scale problem."

Obama has received about $3.2 million in donations of more than $200 from overseas. Nearly $600,000 of that sum came from U.S. military addresses or U.S. territories, such as Puerto Rico and Guam, a Times analysis of FEC data found.

Throughout the campaign, Obama has touted his small donors as a sign of his wide appeal. Obama's donors number more than 2.5 million, far more than any previous candidate. Obama estimates the average donation is $84, far below the maximum $2,300 that an individual can give both for the primary and for the general election. However, that average is artificially lowered by supporters who contribute multiple times. The Times found that more than 20,000 donors gave at least 10 times, adding up to more than $200. At least 22 gave more than 100 times. More than 8,600 have donated $1,000 or more by giving repeatedly during the course of the campaign.

Most serial donors are like Murphy, the Syracuse, N.Y., grandmother, who proudly gives her name. She has been an Obama fan since she watched his widely acclaimed 2004 convention speech. "Something clicked, not in my head but in my gut," she said.

Now, when she has spare money, she clicks her mouse and sends some to Obama. Sometimes $10; sometimes $30. She gives when he says something she particularly likes, or when McCain irritates her.

In interviews, donors told of getting caught up in the psychology of the campaign's online fundraising operation, which encourages donors to match one another.

Kristen A. Roberts, an oyster bartender from Harpswell, Maine, is among the donors who match donations. She has given at least 119 times, adding up to $1,747.

"People send out e-mails to their friends and relatives and try to get them to donate to their fundraising page," Roberts said. "They're very crafty, the way they set it up."

Donna Skinner of Upper Marlboro, Md., communicates over Obama's website via "O-mail." "We have what we call money bombs. We make donations to each other's fundraisers," Skinner said. She has given at least 258 times and recently the campaign told her she had hit the limit.

Another donor who exceeded the maximum is "Good Will," who contributed $8,500 and provided an address at a Goodwill store in Austin, Texas. The campaign has returned his money.

dan.morain@latimes.com



Times researcher Maloy Moore contributed to this report.