Former U.S. President Donald Trump raises his fist after his speech during a rally at the Iowa States Fairgrounds in Des Moines, Iowa, October 9, 2021.
Rachel Mummey | Reuters
The Federal Election Commission in August started to move ahead with halting its investigation into the now defunct data harvesting company Cambridge Analytica, the firm that worked for Donald Trump’s 2016 campaign, Republican Sen. Ted Cruz’s campaign for president and other GOP run groups.
The FEC was investigating whether Cambridge Analytica embedded foreign nationals into Republican campaigns during the 2014 and 2016 U.S. election cycles, and if those people made decisions for various political organizations, which is against the law. The company was originally headquartered in London.
The probe came after multiple complaints were filed to the FEC against Cambridge Analytica, including one from campaign watchdog Common Cause. Cambridge Analytica has been accused of illegally harvesting Facebook profile data, something the company has denied. Those accusations led to multiple federal inquiries, including one by the Federal Trade Commission, and the company announced it was shutting down in 2018.
The FEC has been criticized for years for not having enough funding, manpower and time to enforce election laws and it appeared to have those same problems in this case.
“Having concluded the investigation, the record before the Commission does not sufficiently establish the extent of the potential violations to support further action, and the investigation is unlikely to uncover additional information without the expenditure of significant additional resources. Moreover, the violations appear to have expired under the five-year statute of limitations,” the FEC general counsel’s second report says, which was signed by officials in August.
Strong grounds to investigate
Records recently made public by the FEC that have gone unreported detail how the the regulator meant to watch over the U.S. campaign finance system was outmaneuvered at every turn by high powered legal representatives, known to be some of the best in the business, who either simply denied their clients involvement with Cambridge Analytica or dismissed the claims made in the complaints.
The FEC was also stumped by other potential witnesses who did not respond to voluntary requests for information or subpoenas.
The FEC general counsel’s first report in late 2018 recommended that the commission would have strong grounds to investigate Cambridge Analytica, at least two company officials, and all of the campaigns mentioned in the original complaints, including Trump’s, for campaign law violations. It is illegal for American campaigns to be run by foreigners or accept campaign contributions from non U.S. citizens, and doing so can result in fines or referrals to the Department of Justice.
The initial report specifically advised the commission to “find reason to believe” that those targeted in the first complaints may have broken the law.
Still, despite that initial recommendation by the general counsel to launch a larger probe into the alleged illegal behavior by Cambridge Analytica and the GOP campaigns, Shana Broussard and Ellen Weintraub, two Democratic FEC commissioners, said in a joint statement this month that the commission itself in 2019 voted only to move ahead with finding reason to believe that federal campaign finance laws were broken during the 2014 election cycle. That allowed the Trump campaign, a Republican super PAC that backed the former commander in chief, and Texas Republican Sen. Ted Cruz’s campaign for president virtually off the hook.
The two commissioners took aim at the FEC after the general counsel recommend stopping the inquiry, noting it was a result of the commission’s lack of urgency to stop foreigners from interfering in future elections.
“Once again, the Commission has failed to take meaningful enforcement action on complaints alleging serious violations of the foreign national ban,” the two FEC leaders said earlier in November. “Despite the Commission’s previous commitment to prioritizing foreign national matters, that commitment appears in retrospect to have been lip service as we continue to skirt our obligations to the American people.”
The FEC’s investigation into Cambridge Analytica was launched years after Trump’s campaign used the data in 2016 to help craft persuadable digital ads. Trump would go on to win the election over Hillary Clinton. Cambridge Analytica was funded by the wealthy conservative Mercer family. Steve Bannon, Trump’s 2016 campaign chairman and a previous ally of the Mercer’s, served as vice president on the board.
Weintraub, in an interview with CNBC on Friday, said she was frustrated because the FEC at the time did not have enough of a quorum in order to proceed with a further investigation. The FEC just regained their full quorum of six commissioners late last year after being without a full set of leaders to help govern the agency since 2019.
“It was extremely frustrating to me. The allegations seemed pretty serious,” Weintraub told CNBC. “I think a lot of lawyers in this area were advising their clients that ‘hey the FEC can’t do anything to you right now because they don’t have a quorum.’ We saw it in this case. We saw it in other cases,” she added.
Weintraub also agreed that the Cambridge Analytica case was an example of how the FEC struggles to enforce the laws.
“You need to have at least four commissioners who are committed to enforcing the law. I don’t think we’ve had that for a very long time,” she said.
The FEC did not return a follow up request for comment before publication.
Christopher Wylie, a whistleblower who formerly worked with Cambridge Analytica, speaks during an interview on CNBC on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 9, 2019.
Brendan McDermid | Reuters
In the buildup to Cambridge Analytica shutting down, Christopher Wylie, who was a former employee at the data firm’s parent company, became a whistleblower against the firm. He left the parent company, SCL Group, in the summer of 2014 and started speaking out against the firm before the business shutdown.
Yet, the complaints against Cambridge Analytica allege that he too may have violated campaign finance laws. Wylie was an employee of SCL Group and was originally from Canada. Wylie told NBC News he worked on all the company’s U.S. political campaigns before he left the organization in 2014.
Despite Wylie’s comments, the FEC struggled to find a correct address to file a subpoena to him and, when they did send out the demand for documents and information, they never received a response.
“Because we lacked an address for Wylie, we sent the subpoena to him through both his reported employer at the time, multinational clothing retailer Hennes & Mauritz (H&M), as well as through Verbena Ltd., a London-based company that Wylie had reportedly formed to hold the copyright to a forthcoming book he wrote about his time working at Cambridge,” the FEC’s second general counsel report says.
“However, Wylie never responded to the Commission’s subpoena, and it is unclear whether he received it,” the report adds.
Robert Mercer and Rebekah Mercer attend the 2017 TIME 100 Gala at Jazz at Lincoln Center on April 25, 2017 in New York City.
Patrick McMullan | Getty Images
After the initial wave of complaints were filed by groups like Common Cause against Cambridge Analytica, those mentioned within them were given a chance by the FEC to respond to the allegations. The FEC did not say in their general counsel reports that they had reason to believe Mercer did anything wrong.
For Rebekah Mercer, the GOP financier and daughter of the wealthy conservative hedge fund executive Robert Mercer, her attorney wrote back to the FEC in 2018. The letter lists Mark Hansen, a partner at legal juggernaut, Kellogg Hansen Todd, as Mercer’s legal representative. Rebekah Mercer and her father, Robert Mercer, spent millions backing Trump in 2016.
Hansen, according to his own bio, previously represented a multitude of high end clients including the governments of the United States, the Kingdom of Saudi Arabia, and major corporations such as AT&T, Morgan Stanley, General Electric and Verizon.
The firm has ties to a number of Trump appointees, including Neil Gorsuch, who once worked as a partner and was later elevated by the president to the Supreme Court. Federal Election Commission records show that between 2018 and 2019, the Republican National Committee paid the firm over $300,000 for what was defined on the disclosure as “legal and compliance services.”
Hansen’s letter in defense of Mercer notes that she was not heavily featured in the complaints against Cambridge Analytica and denied she ever broke campaign finance laws.
Yet, the letter also reveals certain elements of her investment into the company and how she deferred to other senior leaders, such as Bannon, to run the organization.
Hansen told the FEC that Mercer did have approximately $6 million in investments and loans in Cambridge Analytica. The lawyer also admitted that the reason Mercer was interested in the company was because she was concerned that tech giants such as Google and Facebook, as well as unnamed progressive groups, were using data analytics to micro-target voters and assist liberal candidates for office.
“She [Mercer] was concerned that groups on the left-leaning end of the spectrum, and even commercial ventures such as Google and Facebook, were using data analytics to ‘micro-target’ voters to the benefit of liberal candidates for office,” Hansen writes.
Though Hansen went on to note that it was CEO Alexander Nix and Bannon who ran the company, and not Mercer, the letter still says his client was involved with Cambridge Analytica at a “high level.”
“She made introductions to some of her friends and acquaintances, whom she believed to be potentially interested in the data analytic capabilities CA could offer, and she discussed with Mr. Nix strategic business considerations regarding clients and potential clients,” Hansen said.
Mercer, like the others who saw outreach from the FEC, was sent a letter last month from the election agency noting that they had “closed the file in these matters” in September.
U.S. President Donald Trump gestures while campaigning for Republican Senator Kelly Loeffler on the eve of the run-off election to decide both of Georgia’s Senate seats, in Dalton, Georgia, U.S., January 4, 2021.
Brian Snyder | Reuters
Jones Day was representing Trump’s political operation, according to its letter in response to the FEC. The firm has extensive ties to the Republican Party.
The letter, which is dated in May 2018, shows that the campaign at the time was getting counsel from Stewart Crosland, a partner at Jones Day, who specializes in taking on the FEC for his clients, according to his bio.
Crosland argued in his correspondence that no one at Cambridge Analytica ever ran or managed elements of the former president’s 2016 campaign, and, he says, the campaign did not rely on the company’s data to make decisions.
Crosland’s letter also took aim at Nix, claiming that he exaggerated the role Cambridge Analytica played in the 2016 campaign. “We did all the research, all the data, all the analytics, all the targeting,” Nix said in a video previously obtained by the UK’s Channel 4. “We ran all the digital campaign, the television campaign, and our data informed all the strategy.”
“His statements reflect nothing but an overblown sales pitch aimed at landing a new client from a foreign country whom Mr. Nix likely believed never could fact-check his disingenuous assertions. Unfounded puffery does not justify a wasteful investigation,” Crosland says.
Jones Day was paid over $13 million between the 2016 election through Trump’s failed bid for reelection in 2020 by the former president’s campaign, according to the nonpartisan Center for Responsive Politics. During the 2020 cycle alone, the firm was paid just under $20 million for legal services to a wide variety of GOP campaigns, including Trump’s and the RNC.
Cambridge Analytics CEO, Alexander Nix
Joshua Bright | The Washington Post | Getty Images
Nix, Cambridge Analytica’s former CEO, denied in statements sent by his attorney to the FEC that he had any direct involvement with political campaigns, according to the 2018 letter reviewed by CNBC.
As for U.S. campaigns, Nix also said that to his knowledge Cambridge Analytica’s “strategic or decision-making roles” were made by U.S. nationals, “with non-US staff only working in support or functionary roles.”
Nix’s denials played a role in the FEC’s general counsel moving to end the larger probe, even though, they say his arguments were weak.
“Nevertheless, despite the weaknesses in the Nix’s arguments, given the lack of additional specific information regarding Cambridge’s activities and Nix’s role in managing or directing those activities, the overall record appears insufficient to substantiate the extent of Nix’s violation,” the second general counsel report says.
Still, among Nix’s answers to the FEC following the original 2018 complaint is a letter sent to Cruz’s presidential campaign before they employed the firm.
It’s dated December 2014, a year before Cruz announced his run for president. In it, Nix says that both Steve Bannon and Rebekah Mercer spoke to the Cruz campaign about the firm’s services, with many of the ideas brought up during that conversation representing potential FEC violations.
“The deal that was tabled, following your initial discussions with Steve and Rebekah is riddled with potential FEC violations and exposes Cambridge Analytica to possible negative action,” Nix’s letter to Cruz’s campaign says.
It’s unclear what exactly those possible FEC violations could have been but later in the letter Nix proposes Cruz’s campaign use his firm to help raise campaign cash and specifically mentions fees that the firm will make up until the the Texas Republican wins the primary or when the data company recovers their fixed costs. Cruz ended up losing the primary to Donald Trump.
“25% fee on all small donations raised by CA though digital / email / direct mail or any other channel (including known and unknown donors) up until the first of the following Cambridge Analytica recoups its fixed costs; STC wins the Primary nomination. Thereafter and for the rest of the campaign (Primary or Presidential) CA to reduce the donation raising success fee to 12.5% of funds raised,” the letter says
Cruz’s campaign ended up paying Cambridge Analytica over $5 million for their services, Center for Responsive Politics data says.
The attorneys mentioned in this story did not return a request for comment before publication. Wylie did not return a Twitter message seeking comment.