Even if one were to believe erstwhile candidate Chris McDaniel’s incomplete, conflicting, shifting accounting of hundreds of thousands in secretive campaign donations, it still begs the question: Where did the $15,000 go?
It also begs the question: Why is Attorney General Lynn Fitch overlooking what appear to be flagrant violations of campaign finance law by McDaniel, instead only going after his out-of-state campaign finance chairman and less-clear allegations?
Longtime state Sen. Chris McDaniel’s failed run for lieutenant governor is one for the record books. Primarily, it saw record amounts of out-of-state, secretly sourced campaign money pumped into his campaign and related state PACs. It also saw allegations of flagrant violations of state campaign finance laws and reporting requirements, and has led to calls for reform by multiple statewide elected officials.
Mississippi law says a candidate or state political action committee can accept no more than $1,000 a year from a corporation.
McDaniel, running for lieutenant governor this year, created a state PAC that accepted $475,000 from a mysterious Virginia-based dark-money corporation, the American Exceptionalism Institute.
McDaniel’s PAC then funneled $460,000 of that money to his campaign. It made up the vast bulk of his bankroll as he kicked off his campaign early this year.
But his initial PAC reports appeared to obfuscate this. For starters, he reported the PAC had collected hundreds of thousands of dollars the year before it was legally created, with no sources listed for the donations. After multiple revised reports, it became clear the PAC had received $475,000 from AEI.
Eventually, after questions from Mississippi Today and complaints to the attorney general by his opponent incumbent Lt. Gov. Delbert Hosemann, McDaniel said he was returning the money to AEI.
Problem is, by McDaniel’s own accounting, his PAC only returned $460,000 to the corporation.
What happened to the other $15,000?
Mississippi voters will likely never know. His final “termination-amended” report for his PAC gave no accounting. And Fitch appears to have closed the book on that complaint.
And despite laws that require candidates to divulge the sources of campaign donations, they’ll likely never know the original source of the $475,000 from the American Exceptionalism Institute, which has pumped millions of secretly sourced dollars into campaigns across the country.
They’ll also likely never know all the sources of the total of nearly $1 million more pumped into a separate PAC that McDaniel’s Wisconsin-based treasurer created in the eleventh hour of the 2023 race to run TV attack ads on Hosemann.
McDaniel has said he knows very little about the finances of his PAC or campaign, and as he faced questions about them over months, he often chalked problems up to “clerical errors” and provided few other comments.
But in a statement for this article, he refuted that $15,000 remains unaccounted for.
“As a candidate, I have no involvement in the financial operations of any committee or PAC,” McDaniel said. “But I’ve been advised that all the money from the (American Exceptionalism Institute) was refunded.”
McDaniel has refused to answer what he knows about AEI or why it would pump nearly half a million dollars into Mississippi’s lieutenant governor’s race. Little information on AEI is available online, and efforts by Mississippi Today — and several other media outlets over years — to contact the organization or find more details have been fruitless.
When he announced he was returning the money, McDaniel said he believes Mississippi’s corporate donation limit laws are unconstitutional and would fall to a legal challenge. But he said he did not have time or resources for such a challenge, so he was giving it back.
McDaniel has referred to the landmark U.S. Supreme Court Citizen’s United ruling in 2010. It held corporations and PACs can spend unlimited amounts on broadcasts and communications related to an election, provided they act independently of any candidate.
But courts have also upheld state limits or bans on corporate donations to campaigns or state PACs. Only five states allow unlimited corporate campaign donations, while 23 ban them. The other 22 set some restrictions on corporate donations.
Mississippi’s campaign finance laws are seldom enforced, and allegations of violations seldom investigated. The state’s laws regulating a politician’s campaign cash and reporting appear to fall under a special Oops Doctrine. If a campaign accepts an illegal contribution or makes a glaring omission or mistake on a report, it can typically avoid investigation or prosecution by giving the money back, amending reports or filing them later. Few other laws offer this escape.
But typically, these appear to be legitimate mistakes and oversights by large campaigns for far smaller donations. They are typically flagged by the campaigns themselves, the money returned promptly and the transactions duly noted on finance reports.
McDaniel’s PAC and campaign appear to have held onto AEI over-the-limit money for months, and its reporting was confounding. At one point, McDaniel’s PAC reported it returned $460,000 to AEI on the same day it received $237,500 from the corporation. His many amended reports have been difficult to follow.
Mississippi Today first raised questions about McDaniel’s campaign finances in February, and Hosemann filed his first legal complaint with the attorney general’s office in March. For months, AG Fitch’s office’s only response was, “We are looking into it.” This prompted calls for investigation and enforcement. Secretary of State Michael Watson at the Neshoba County Fair called for lawmakers to give his office campaign enforcement authority. He said, “When people do not do their jobs, I will stand in the gap for Mississippians” — a clear dig at Fitch.
Amid this pressure, just days before the primary election, Fitch announced she was investigating the separate PAC run by McDaniel’s campaign treasurer. The Invest in Mississippi political action committee was created in July by Wisconsin political operative Thomas Datwyler, who McDaniel also listed as his campaign’s treasurer. Datwyler has a history of running afoul of Federal Election Commission campaign finance rules with several congressional campaigns.
Datwyler’s PAC ran ads against Hosemann late in the race, fueled by at least $885,000 in donations from out of state super PACs. Hosemann’s campaign had filed another complaint late in the race that the PAC-to-PAC donations were an attempt to dodge the $1,000 corporate donation limit, and that the PAC cannot claim it is independent of McDaniel because it’s run by his campaign treasurer.
In a statement announcing the investigation, Fitch said, “The people of Mississippi should be able to expect that those who participate in our electoral process will not seek to exploit this careful balance and step over that line, and in this instance, there is evidence to suggest that has occurred here.”
Fitch did not mention McDaniel in her announcement of the investigation, but a spokeswoman for her office later indicated the office was also investigating another complaint raised by Hosemann.
But the spokeswoman also said another earlier complaint had been looked into and closed. This, the Hosemann campaign confirmed, was the original complaint about McDaniel’s PAC, the campaign and the $475,000 AEI donation.
Fitch’s office has declined comment on why it would not pursue the original complaint, including where the unaccounted-for $15,000 went. McDaniel appears to have acknowledged violation of the campaign donation limit laws, saying repeatedly he would likely win a legal challenge of the law.
Many political observers have surmised Republican Fitch is loathe to go after complaints about McDaniel for fear of angering his conservative base in the state GOP. Fitch’s office has faced some complaints of failing to fulfill responsibilities of the office, instead focusing on big headline-grabbing national issues and cases.
In a statement, Hosemann spokeswoman Leah Smith said: “When our opponent received $475,000 from the corporation and returned only $460,000, we contend a violation of the campaign finance laws occurred. It was impossible to determine what happened with those funds because accounting was so poor throughout, in addition to all of the other violations. We anticipate a number of legislators will be enthusiastically interested in reform this year and our office is, too.”
McDaniel, who after his defeat for lieutenant governor will be vacating his state Senate office in January after 16 years, was once himself a vocal champion for campaign finance reform and more transparency for voters of the source of politicians’ money. His latest campaign’s legacy, it appears, may be an invigorated push for reform.
In his victory speech on primary election night, Hosemann said: “When you have this much dark money pumped into a race — almost $1 million in the last week — it screams for reform. We are going to listen to those screams.”