Sen. Chris McDaniel’s first financial reports for his lieutenant governor campaign and a political action committee he runs leave voters in the dark about where hundreds of thousands of dollars came from and raise questions about whether some donations violated campaign finance law.
McDaniel’s PAC reported it raised nearly $474,000 before it was officially created, failed to list the source of that money, and accepted $237,500 from what’s been described as a “dark money” nonprofit corporation that dumps millions of anonymously sourced funds into campaigns nationwide.
McDaniel’s opponent, incumbent Republican Lt. Gov. Delbert Hosemann, on Thursday called for McDaniel, who in the past has called for campaign finance reform and transparency, to “practice transparency as he preaches and release his PAC donor list today.”
“My opponent’s PAC failed to disclose from whom he received more than $473,000,” Hosemann said. “He did disclose that he raised $237,500 from a Washington nonprofit corporation.”
McDaniel this week, the day after announcing his Republican primary run against Hosemann, reported having raised $710,000 last year and having $713,000 cash on hand for his 2023 campaign.
McDaniel’s largest donor to his campaign was the PAC he created in June 2022 called Hold the Line. It contributed $465,000 to McDaniel’s campaign.
McDaniel and Dan Carr, a pastor and political consultant from Gulfport, filed paperwork with the secretary of state’s office in June of 2022 creating the Hold the Line PAC. PACs are required to file organization papers with the secretary of state within 48 hours after they raise or spend more than $200.
Candidates and PACs were required by Tuesday to file their annual finance reports showing donations and expenditures from calendar year 2022.
But despite having been created only in June of 2022, McDaniel’s PAC in the report it filed this week showed a prior year’s balance of $473,962.38. There was no accounting of where this money came from nor an explanation of how the PAC raised money before it was created.
Hold the Line reported that it then raised $244,310 for 2022, and that its largest contribution was $237,500 in August from a nonprofit called American Exceptionalism Institute. The PAC report showed no contributions to account for the nearly $474,000 balance for the prior period.
American Exceptionalism Institute, based in Alexandria, Va., is a nonprofit corporation that says its mission is educating people about national security, the protection of life and tax and spending issues. It’s been described as a “dark money” nonprofit that dumps millions in anonymously sourced funds into campaigns nationwide, often through other nonprofits or PACs.
Mississippi limits corporate donations — including those from nonprofit corporations such as AEI — to candidates or PACs that donate to candidates to $1,000 per calendar year. Individuals, limited liability corporations and PACs can give unlimited contributions to Mississippi candidates.
Speaking generally about campaign laws and not McDaniel’s reports, Secretary of State Michael Watson said on Thursday his office has frequently fielded questions like, “Can you give corporate money to a PAC, and that PAC turn around and give the money to a candidate?”
Citing a 1990s state attorney general’s opinion, Watson said, “I think that would be a violation in my mind,” if a corporation gave more than $1,000 to a PAC, then the PAC gave more than $1,000 to a candidate. He said using a PAC simply to dodge corporation donation limits would possibly be a criminal violation. He said most such enforcement would be up to the attorney general’s office or local district attorneys.
McDaniel on Thursday told Mississippi Today he knows scant details about the finances of his PAC or his campaign.
“I can’t even write a check out of my account,” McDaniel said. “That’s just for safety reasons and so no one can ever question anything.”
McDaniel deferred any questions about Hold the Line PAC finances to Carr. Reached by phone on Thursday, Carr gave confusing answers.
“We registered (the PAC) in June, then some money came in in August, then we filed a report January 1. Correct, January 31. I’ll have to get back with you on that (the prior balance of $474,000). We had a clerical error,” Carr told Mississippi Today.
Carr said the report “clearly states” where the prior balance came from. But when challenged that the report does not list where the $474,000 came from, and asked for details of the clerical error, Carr referred further questions about the PAC to a man named Thomas Datwyler. Carr said Datwyler “filled out the report for me,” despite Carr’s electronic signature being on the PAC report filed to the secretary of state.
McDaniel also deferred questions about his campaign account to Datwyler, despite McDaniel’s signature being on the report and another person listed as the contact.
No one answered calls or responded to a message left at the number Carr gave for Datwyler.
A Thomas Datwyler, a national Republican operative and campaign finance consultant, has recently been in the news. After U.S. Rep. George Santos’ campaign treasurer resigned amid the candidate’s campaign finance problems, Santos said Datwyler would be taking over as treasurer. Datwyler’s attorney countered that he told Santos he would not be taking the post.
Also this week, Carr sent out an email fundraising solicitation for McDaniel titled “I AM ALL IN.” It is a letter from McDaniel asking voters to click links to donate $25, $50 or $100 to help him in his race for lieutenant governor. The solicitation, sent from firstname.lastname@example.org, says it is “paid for by Committee to Elect Chris McDaniel.”
But no such committee has been registered with the Mississippi secretary of state’s office.
Besides his PAC, McDaniel is one of the largest donors to his own campaign, having contributed $53,000.
Hosemann this week reported having raised $1.33 million for the period, and having $3.5 million in his campaign account.
Editor’s note 2/3/23 : An updated response from an officer with McDaniel’s PAC is posted below, as well as a statement from McDaniel. After this story published, Carr provided another statement Thursday night “after speaking with our compliance folks.” Hold the Line PAC appears to have filed two amended annual reports on Friday, each showing prior year balances for a PAC that didn’t exist during that time, and not explaining the source of hundreds of thousands of dollars.
Carr said: “We have discovered a clerical error that occurred when initially filing the PAC. We should have submitted a 1/1/22-6/30/22 report which would have been zero and pulled through a zero in the previous period section instead of the total amount raised all time for the PAC as of Jan. 31. This is causing the confusion of the $400k as the additional $200k we discussed didn’t come in until after 12/31. Because of that we are currently working with the SOS’ office to update and amend the report by tomorrow.”
McDaniel issued a statement Friday, and referred to past news articles about Hosemann having an inaugural nonprofit, as other top Mississippi elected officials have done, raising hundreds of thousands of dollars with no accounting of the donations. Mississippi, unlike many other states, has no regulations about elected officials raising or spending inauguration money.
Neither McDaniel nor Carr have fully explained what the “clerical error” in the PAC reporting was, or the source of the large amount of unaccounted for donations to Hold the Line.
McDaniel said: “This is why good people are afraid to get involved with politics. Dan Carr is one of the finest Christian men I’ve ever known, and he’s being drug through the mud by Delbert Hosemann and the political establishment because he made a simple clerical error. It’s wrong to treat people that way.
“Delbert is just trying to distract from his Democrat record, but it’s not going to work this time.
“Based on the U.S. Supreme Court’s rulings in Citizens United v. FEC and Americans for Prosperity Foundation v. Bonta in addition to other clearly established precedents, it’s clear that a 501(c)4 has the same legal rights as an individual under campaign finance laws and therefore is not subject to Mississippi’s campaign finance limits for corporations. It’s a First Amendment right recognized by the Supreme Court. Limits on campaign contributions and expenditures implicate the 501(c)4’s rights of political expression and association, according to the court.
“All parties were fully transparent and are working to correct the clerical error.”