Meg McLaughlin/The Dispatch-The Rock Island Argus via AP
Democratic presidential candidate and mayor of South Bend, Indiana, Pete Buttigieg speaks during a campaign stop at the Danceland Ballroom, December 7, 2019, in Davenport, Iowa.
South Bend Mayor Pete Buttigieg has stuck with a more traditional fundraising structure in his presidential bid than rivals like Bernie Sanders and Elizabeth Warren. He accepts small donations and individual donations, but he also has high-dollar fundraisers, uses fundraising bundlers who package campaign contributions from their contacts, and accepts money from super PACs. Joe Biden and now-withdrawn Kamala Harris had similar fundraising structures, relying on the largesse of the wealthy and well-connected.
It was one of these high-dollar fundraisers that raised eyebrows in Providence, Rhode Island, last month. The Providence Journal reported that on November 10, Buttigieg was holding a fundraiser at the Veterans Memorial Auditorium in Providence. The newspaper also reported, as did several other outlets, that Buttigieg was attending “a smaller private fundraiser at Nicks on Westminster,” a local restaurant.
Calling the venue “intimate,” the Journal reported that the event “immediately drew criticism” from members of the Providence chapter of the Democratic Socialists of America, who allege that the Buttigieg campaign engaged in improper behavior, possibly violating campaign finance laws.
In a public statement, DSA alleges that Joseph Paolino Jr., managing partner of Paolino Properties and a former mayor of Providence, provided services to the Buttigieg campaign free of charge—something that should be considered an in-kind donation or charged to the campaign at a fair market price. Because Paolino has already donated the maximum individual contribution of $2,800 to the Buttigieg campaign, any additional contributions would violate campaign finance law.
Providence DSA has endorsed Bernie Sanders for president.
Paolino denies these allegations, and told Uprise Rhode Island that he is acting as a vendor. There are no campaign finance violations, he told reporter Julia Rock, adding, “Any expenses that are incurred will be reimbursed by the campaign.” The Buttigieg campaign also insisted to the Prospect that the event complied with all relevant laws. But the campaign has yet to indicate receipts for the event, and has not provided the Prospect with copies of the receipts.
“While there are many excellent elements of local Rhode Island culture for him to sample during his visit, we believe that our state’s penchant for political corruption was not the best part of Rhode Island culture for Mr. Buttigieg to choose to participate in,” DSA adds in their statement.
Rhode Island’s reputation for corruption in politics seems to color DSA’s allegations. Paolino replaced Buddy Cianci as mayor of Providence, after Cianci was jailed for racketeering and it became clear that he had kidnapped and put out a cigarette in the eye of his wife’s former lover. Cianci had run for mayor on an “anti-corruption” platform.
Paolino’s company is a major developer in the city’s downtown area, and he was a major backer of President Bill Clinton, serving as an ambassador to Malta during the Clinton administration. (Ironically, Buttigieg is Maltese.) Paolino also served as one of Rhode Island’s two representatives on the Democratic National Committee. Paolino’s son is now the DNC’s Northeast deputy finance director.
In the fundraiser invitation, Paolino says that free parking would be provided in the parking garage of 100 Westminster, the same building in which the fundraiser was held. The building is owned by Paolino Properties. DSA notes that free parking in downtown Providence “can be an expensive affair,” especially for multiple people. A Buttigieg campaign aide told the Prospect that parking was not provided for the event nor implied in communications to attendees, but that doesn’t square with the free parking claim on Paolino’s invitation.
The invitation to attend—and by extension donate—arrived in Paolino’s name, on Paolino Properties company letterhead, using a company email address. DSA alleges that using the letterhead and email means “Paolino Properties corporation is directly coordinating with the Buttigieg campaign, utilizing corporate resources for fundraising.”
Finally, the solicitation invites interested attendees to RSVP to a company employee. DSA says that this alone “raise[s] far more serious questions. It is a severe violation of fundamental workers’ freedoms for a business executive to mandate that an employee participate in campaign activity for a corporate candidate that the worker may not necessarily support.” And, DSA points out, given workplace power dynamics, it can be difficult for an employee to say no to the managing partner of Paolino Properties.
The phone number for invitees to RSVP to the fundraiser is the same number as the one listed on Paolino Properties’ company website as their contact number. When I called the number, the company’s secretary—the same person named in the invitation—picked up the phone.
Erin Chlopak, director of finance strategy of the Campaign Legal Center, explained that if a company employee is spending time on campaign work, there are some factual questions about how much of his or her time was spent on the campaign, but if the corporation is “paying that employee’s salary and that time is being used on the campaign then it would be a corporate contribution and not lawful.” Chlopak added, “If the employee was doing it on their lunch break, that would be different.”
Using company letterhead to send a fundraiser invite, Chlopak added, raises questions about whether that has the appearance of the company supporting the campaign.
Given that Paolino has maxed out to the Buttigieg campaign, any disbursements made for the fundraiser would have to show up as spending. Campaigns have ten days to report the receipt of a contribution or a bill. But there’s no particular time frame for when campaigns have to pay that bill. The Buttigieg campaign claims to have reimbursed the vendor for all expenses, but there are no receipts confirming that.
According to Chlopak, if the goods and services provided to the campaign were free to the campaign or less than the usual charge, that is considered an in-kind contribution. If the donors have maxed out to the campaign, then the donors must charge the full cost of these goods and services to the campaign.
“If it’s a corporation, it’s illegal no matter how much it is,” Chlopak says. “If [a company is] charging the campaign a discounted price for business contributions, that would be an illegal contribution. I certainly hope that’s not happening on an ordinary basis. That would be an awful thing to do.”
BUTTIGIEG’S FUNDRAISING HAS been criticized for a lack of transparency. Only on Monday did he promise to release the names of his bundlers, and in a recent invitation to a fundraiser next week in West Hollywood, California, obtained by the Prospect, he did not mention the names of the hosts—something that’s usually included.
Jeff Hauser, executive director of the Revolving Door Project, told me that there has been “a little bit of backsliding” this election cycle when it comes to transparency among those candidates who have used a traditional fundraising structure. Candidates like Bernie Sanders and Elizabeth Warren don’t use bundlers and haven’t had to worry about this kind of transparency.
“If you go back to 2007, most candidates provided significant bundler information to the public,” Hauser said. Democrats Barack Obama and Hillary Clinton provided this information, as did Republicans Rudy Giuliani, Mitt Romney, and Fred Thompson. Up until she dropped out of the race, Kamala Harris was providing information on her bundlers—but she was the only candidate this cycle using a traditional fundraising structure to do so. Amy Klobuchar, for example, has never named any of her bundlers. Joe Biden’s fundraisers have been open to pool reporters, but even this level of transparency still obscures who’s in the room, who’s giving money, and who’s organizing those donations.
Releasing the names of bundlers is not required by law, but since 2007 and 2008 it has been a standard practice, starting with Obama. “This was a spasm of voluntary transparency which obviously didn’t continue—which shows why you can’t rely on voluntary practices,” Hauser said.
Buttigieg provided information on his bundlers in Quarter 1, when he raised $7 million, but, as Hauser points out, that’s only about 11 percent of what he’s raised as of the end of September. Buttigieg continues to rise in the polls, and his fundraising has more or less followed. But the next Federal Election Commission deadline for campaigns is December 31, so we won’t know how much he’s raised in this most recent quarter until after then.
Buttigieg’s rivals have also pushed the mayor on campaign finance transparency. Last week, Warren called on Buttigieg to open his private fundraisers to reporters, an attack that contrasts with her previous reluctance to criticize opponents by name. “No one should be left to wonder what kind of promises are being made to the people that then pony up big bucks to be in the room,” Warren said in Boston. In Providence, neither the high-dollar intimate fundraiser at the Nicks nor the low-dollar fundraiser with more than a 1,000 attendees were open to the media. On Monday, Buttigieg’s campaign vowed to open future fundraisers to press and release lists of people who fundraise for the mayor.
Before that announcement, with a blunt “no” to a rally attendee, Buttigieg was shown in a video telling the attendee that he won’t stop closed-door fundraisers with billionaires.
Lis Smith, Buttigieg’s communications mastermind, said that the campaign would be transparent going forward. “This is, to me, a hugely broken promise,” Hauser said. “Transparency on bundlers doesn’t prevent the possibility of deal-making, but at least it shines a light on who are the people we need to check up on.” Right now, it’s only apparent who has given the maximum $2,800 donation to Buttigieg, but in the grand scheme of things, Hauser says that’s not a big piece of evidence for who is asking what from Buttigieg.
Hauser explained that in order for campaign finance law to work, you need serious enforcement. But the FEC, he says, “is basically feckless” because it can’t inflict the “draconian punishments” Hauser says are needed to deter campaigns from smudging the details and finding loopholes in the law. The FEC does not have the needed quorum to enforce the laws, but even if it did, the commission is structured to have three Democrats and three Republicans, and predictably it frequently deadlocks on matters involving party politicians and campaigns.
Enforcing the fair market price on goods and services when campaigns buy from a favorable vendor, the issue in the Buttigieg fundraiser in Rhode Island, is virtually impossible to prove. In addition, many in-kind donations will just remain unfound. Instead, it depends on opposition research and open-source investigating from journalists. “You’re basically relying on the public to piece things together,” Hauser says.
This piece has been updated.
