Triangle congressional race turns on super PAC spending

With new rules, candidate’s family now can ante up

cjarvis@newsobserver.comApril 15, 2012 

  • Frank B. Holding $100,000

    Ella Ann Lee Holding $100,000

    Carmen Holding Ames $100,000

    Carolyn Holding $100,000

    C. David Johnson Jr. $25,000

    Frank B. Holding Jr. $20,000

    Fairley Bell Cook $17,000

    John McNair Bell $17,000

    Victor Bell III $17,000

    Frank R. Holding $10,000

    David Ward Jr. $5,000

    Elbert Boyd Jr. $2,000

    Robert Newcomb $750

    Lonnie Poole Jr. $500

  • What is it? A type of political action committee created after the outcome of a 2010 federal court case.

    How does it work? Super PACs can raise unlimited dollars with no restrictions on donors, meaning corporations, special interests and individuals can give money. The super PAC can spend unlimited amounts to advocate for or against candidates but cannot coordinate their efforts with candidates. Unlike a traditional PAC, these entities cannot donate directly to candidates.

    Disclosure: Super PACs must disclose contributions and expenditures on a monthly or quarterly basis.

    Political action committee

    What is it? A political committee representing a special interest, whether business or ideological. They have been around since 1944.

    How does it work? A PAC can solicit donations up to $5,000 from any individual, political action committee or party committee each calendar year. It can give $5,000 to a candidate per election and $15,000 annually to a national party committee.

    Disclosure: A PAC must disclose all contributions received and expenditures made on a regular basis.

    Leadership PAC

    What is it? A committee formed by an elected official, often to help other politicians. Politicians make donations to members of their party to gain clout, boost bids for committee chairmanships and other leadership roles. This money is separate from the politician’s own campaign. The money raised cannot support the election of the politician who organized the PAC, but it can provide indirect support by paying for travel, dining, polling and other expenses.

    How does it work? May solicit donations from anyone and may receive up to $5,000 from an individual, other PAC or party committee each calendar year. Can give $5,000 to a candidate committee per election cycle. Can also give up to $15,000 each year to any national party committee and $5,000 annually to any other PAC.

    Disclosure: Must regularly disclose expenses and receipts, including names, address and occupations of donors who give more than $200. Can choose to file reports with the FEC either monthly or quarterly. John Frank

One of the most passionately fought campaigns of this year’s primary season is the slugfest between former federal prosecutor George Holding and Wake County Commissioner Paul Coble, who are vying for a seat in Congress. Both have hurled vehement accusations against the other as they stake out ground as the most conservative Republican in the race.

But on the airwaves, Holding’s message is drowning out Coble’s, thanks to a massive infusion of money that’s new for this election cycle.

Campaign financing has changed dramatically since the Federal Election Commission in 2010 created what has come to be known as the super PAC, a new kind of political animal that can raise and spend an unlimited amount of money to elect or defeat candidates for federal office. They are supposed to operate independently of the candidates they support, without coordinating strategy.

Now North Carolina has its first super PAC, formed to boost Holding’s campaign for Congress in the 13th district, which encompasses parts of Wake and surrounding counties. And like other super PACs in this new world, how The American Foundations Committee is permitted to operate is somewhat controversial and sometimes unclear.

Nationally, the big money is being spent on the presidential candidates. But American Foundations is one of the most active super PACs in the country. The $366,715 it has spent so far puts it in the top 10 in expenditures for or against candidates running for the U.S. House of Representatives, FEC records show. It is in the top 20 among all the 421 super PACs in the country, according to the Center for Responsive Politics.

Its organizers have raised more than half a million dollars, nearly all of it from nine people related to the candidate, members of the very private Holding family of Raleigh and Smithfield that has run First Citizens Bank for three generations. Frank B. Holding and his wife, Ella, have each contributed $100,000. They are the candidate’s aunt and uncle.

Two cousins of the candidate also wrote checks for $100,000 each, and three other cousins each decided to chip in $17,000. Only five contributors are not in the family, and one of them, David Ward Jr., is general counsel for the bank’s holding company.

American Foundations’ money has been paying only for ads critical of Holding’s main opponent, Coble, who complains the lopsided fundraising puts him at a disadvantage.

“It would put any campaign at a disadvantage when one individual can afford to buy an election,” Coble said in a recent interview.

In 2011, Holding’s campaign raised nearly half a million dollars and burned through most of it by the end of the year. Much of it was spent on advertising, which began last summer.

In March, Holding told a group of potential supporters in Garner it takes a daunting amount of money to advertise. Holding said he had to start advertising early because polling showed primary voters didn’t know who he was, even though as the U.S. Attorney for the Eastern District of N.C. he managed several high-profile public corruption investigations, including those of former Gov. Mike Easley and former Sen. John Edwards, both Democrats.

That’s where the super PAC helps out. In late February, American Foundations was formed and within a week began buying ads at about $58,000 each to run for about a week on the Triangle’s main TV stations. That’s far more than what Holding’s own campaign was able to spend on advertising.

Last week, American Foundations ramped up its efforts by dropping another $152,000 on an anti-Coble ad.

A change in plans

Coble and the third candidate in the race, Bill Randall of Wake Forest, have pointed out that Holding has previously denounced special interest political action committee contributions for their “corrupting influence.”

“After saying that, taking such a strong position, his campaign needed money and suddenly his friends go out and form a super PAC?” Coble said. “The question is really, ‘OK, what is different about your special interest super PAC? Why is yours not corrupt and another one is?’ ”

Randall says he doesn’t object to super PAC support for candidates, but he questions Holding’s seeming flip-flop. “It just makes you scratch your head,” Randall said.

There’s a big difference, Holding’s supporters say. This super PAC is composed of his family and friends and not some faceless corporate interests from out of state.

“How does that constitute a traditional special interest group?” asks Carter Wrenn, who is a strategist for Holding’s campaign. “That’s really a pretty big fact twist.”

The American Foundations Committee was formed by three North Carolina lawyers: Palmer Sugg, Joe Knott and Boyd Sturges III, all of whom have longtime ties to Holding’s family. The organizers have been prompt in disclosing their donors, as is required, and also open about their relationships to each other.

Although the super PAC was officially formed to support or oppose more than just a single candidate, and its website sets out broad goals of restoring “the foundations of American exceptionalism” without mentioning any candidates, Sugg candidly says its purpose is to help elect Holding.

“What’s a special interest?” Sugg said. “Our interest is in helping George. Special interests from people wanting this issue or that issue – that’s a different animal.”

Sugg says the super PAC simply took a look at who had maxed out their contributions to Holding last year – individual donations to federal candidates are limited to $2,500 in each of the primary and general elections – and provided a way for them to give more money.

Paul Ryan of the nonpartisan Campaign Legal Center in Washington, D.C., said that’s typical of how super PACs are being funded across the country. And that’s part of the problem, as far as his organization is concerned.

“The notion that a big contribution to a candidate could corrupt and therefore be limited, but an equally sized or larger contribution is somehow washed of any corrupting influence because it’s made to a super PAC, is really Alice in Wonderland,” he said.

Close ties to campaign

Coble and others have questioned other aspects that might suggest improper coordination:

• Co-founder Knott’s son, Tucker Knott, is working for Holding’s campaign.

• Holding’s campaign cut back on its advertising just as the super PAC started airing its first ads.

• The super PAC has advertised only on broadcast TV stations, while the Holding committee has limited its ads to cable and radio.

• The campaign’s ads and the committee’s ads have shared variations of the phrase “cut spending, cut spending and cut more spending.”

Sugg and Wrenn deny coordinating their ad campaigns. Wrenn points out that super PACs can afford the more expensive ads on broadcast television, while campaign committees often can’t. He said it’s also typical of super PACs to schedule advertising around times campaigns have purchased, since that information is publicly available.

A campaign slogan that is already in the public domain, such as the repeated phrase “cut spending,” is also fair game for super PACs to repeat without it being considered coordination, legal experts say. It’s also OK for relatives to work on the campaign and for a super PAC.

Wrenn said there’s nothing wrong with him talking to the super PAC organizers, some of whom he has known for years, nor with Holding’s relatives who have contributed to the PAC. The advice he has been operating on, he said, is “You can’t tell them what to run and where to run it.”

Sugg said the super PAC is paying a Washington, D.C., law firm to make sure it handles everything above-board. “You’ve got to build a really special firewall to do this,” he said.

In fact, the firewall has to be a written policy that no one associated with a super PAC can share information with a campaign.

Super PAC opponents such as Ryan say the restrictions are too loose.

“The legal underpinnings of super PACs are that they will operate completely independent of candidates,” Ryan said. “In fact, the law accommodates very close relationships. In our view, that poses precisely the threat of corruption that a big contribution to the candidate would pose. These candidate-specific super PACs should not be permitted.”

Jarvis: 919-829-4576

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