“Is it a grift? Yeah, it’s a grift. But is a grift always illegal? Not necessarily,” said Paul Pelletier, a former federal prosecutor who previously led the Justice Department’s fraud section.
One state attorney general, New York’s Letitia James, has already said she will investigate the committee’s allegations of fraud and potential misconduct. “The new details revealed tonight related to January 6 are disturbing,” James tweeted hours after the committee’s findings were made public this week. “It’s my duty to investigate allegations of fraud or potential misconduct in New York. This incident is no exception.”
During its hearing on Monday, the committee outlined a startling set of financial figures, alleging Trump had raised $250 million off false claims that the election was stolen. Much of that money was raised through dozens of daily email blasts sent between the election and January 6, 2021, with many donations coming in amounts of $20 or less, the committee said.
Donors were encouraged to contribute to a so-called “Official Election Defense Fund,” which did not exist and was simply a term used for marketing, the committee said. Most of the money ultimately went toward a PAC, called Save America, formed less than a week after the election, that distributed it to other political ventures. Some of the funds landed with the company that organized the January 6 rally and even to the Trump family business, the committee said.
“The big lie was also a big ripoff,” said Rep. Zoe Lofgren of California, one of the Democrats on the panel.
Rep. Bennie Thompson, a Mississippi Democrat who’s the committee’s chair, told CNN on Tuesday that there was still a question as to whether Trump and his family were themselves trying to benefit from the fundraising.
“Obviously, quite a bit of the money went to the Trump Hotel. It went to non-profits associated with people who work for the President. And obviously, this was not the intent that a lot of the fundraising emails were being sent. So clearly, they were misled at best. And in some instances, they were just patently untrue,” Thompson said.
Attorney General Merrick Garland has already promised, in a speech marking the one-year anniversary of the attack on the Capitol, that the Justice Department will examine the financing behind the insurrection.
A high bar to clear
Yet if the federal prosecutors were to pursue a case, they’d need to answer many unknowns that the House left unanswered in its short presentation on Monday — and think through the implications of charging a fundraising operation for a sitting president running for reelection.
“In a normal situation, could you get people charged criminally? Of course,” said Adav Noti, legal director of the Campaign Legal Center, a non-profit government watchdog. “This is not a normal situation. We’re talking, at the time, the sitting president of the United States. That’s not a run-of-the-mill decision for the Department of Justice to make.”
“Did people who gave that money think they were putting it into a perpetual account that could be drawn on by the campaign organizers for whatever they wanted? Maybe the donor wouldn’t care about that, but the law cares,” said Noti.
As in all investigations, any potential criminal case would turn on the evidence, former prosecutors say.
“There are two big complications off the bat” with bringing a criminal case based on the fundraising emails, said Elie Honig, a former federal and state prosecutor who’s a CNN senior legal analyst. “What does the fine print say, and you have to tie the fraud specifically to whoever you want to charge.” In the case of Trump, he could be layers removed from the person who wrote and sent the fundraising email, Honig said.
Prosecutors would also face questions of whether there are victims willing to be witnesses in the case, and who, if anyone, intended to use the fundraising effort as a bait and switch.
A fine-print disclosure on Trump’s fundraising blasts stating that the money may go to a “recount account” only if a donation reached nearly $10,000 could further complicate a possible case.
Other former public integrity prosecutors and white-collar attorneys agreed the possibility of a wire fraud criminal investigation looks clear — but bringing a case may not be as simple as it seems.
“I think the legal jeopardy for Trump world is pretty clear,” Daniel Goldman, a lawyer who worked on the case against Trump during his impeachment proceedings related to January 6, said on CNN on Tuesday. “Presumably Donald Trump didn’t know that he was getting $250 million on a bogus claim. But it’s harder to prove that with actual evidence than it is just to assert that.”
Goldman outlined how prosecutors would need to find donors and nail down that they had intended to donate to a legal defense fund, and that they had been victimized by having their money sent toward an unadvertised purpose.
“You’d show the legal defense fund doesn’t exist. And you basically got a criminal case. It’s a pretty textbook case of wire fraud,” Goldman said. “The more difficult thing is to attach this to Donald Trump.”
State prosecutors could be a likely route
If the Justice Department ultimately didn’t pursue the accusations, state-level law enforcement may be interested in them. James, in New York, who has built her political persona around conducting a years-long investigation into the Trump Organization, is already signaling that route.
State attorneys general have consumer protection law they could deploy to investigate whether any donors were misled by the campaign solicitations, and they have recently focused on fundraising tactics involving the Trump campaign.
In an important test case of the scope of state attorneys general’s power to investigate federal fundraising practices, four states, including New York, won a key ruling earlier this year related to WinRed, a company that processes online donations.
Four attorneys general — from New York, Connecticut, Maryland and Minnesota — opened investigations into WinRed after The New York Times published an article detailing how the Trump campaign and WinRed used pre-checked boxes to sign donors up to make repeated contributions.
The states sent subpoenas for records seeking information about clients who used the pre-checked boxes, complaints from donors and refunds that had been provided. WinRed sued to block the subpoenas, arguing that state consumer protection laws were preempted by the Federal Election Campaign Act. The Trump campaign refunded some of the donors.
Earlier this year, a federal judge sided with the attorneys general and dismissed the lawsuit, saying they had the power to investigate federal campaigns.
Justice Department investigation thus far
So far, there has been no public indication that federal prosecutors are scrutinizing the broader post-election fundraising that largely went to the political action committee Trump controls.
But the inquiry is wide, according to grand jury requests shared with CNN. The Justice Department’s January 6 grand jury investigation has sought information about Trump rally organizing and the campaign’s use of Trump electors in battleground states where he lost the popular vote.
Several months ago, the Justice Department also was looking into fundraising conducted for a different fund, Defending the Republic, which was promoted by the conservative attorney Sidney Powell, who was involved in Trump’s legal challenges after the election. While Powell’s attorney told CNN in January that she was cooperating with the inquiry, it’s unclear where that investigation now stands.
Historically, the Justice Department has used its public corruption prosecutors to bring cases against political fundraising scams, including in the border wall charity investigation where Steve Bannon was indicted. Trump pardoned Bannon at the end of his presidency.
In the We Build the Wall case the alleged deception was explicit and the men took steps to try to conceal their wrongdoing, according to the indictment.
Prosecutors allege the men falsely told the public in donor solicitations, public statements and on social media that “100% of the funds raised” would be used for construction of the wall and not a “penny” would be used to compensate Brian Kolfage, a US veteran working with Bannon on the wall effort. Instead, prosecutors alleged, Kolfage and Bannon used shell companies to route hundreds of thousands of dollars to themselves, which were used to cover personal expenses. Kolfage pleaded guilty in April and is awaiting sentencing.
The Manhattan District Attorney’s Office is investigating Bannon and whether he violated state laws with his role in the fundraising effort, CNN has reported. Recently, several people in Bannon’s “immediate circle” were subpoenaed to appear before a state grand jury, sources told CNN.
Asked previously about the grand jury subpoenas, Bannon’s attorney Robert Costello told CNN: “I am unaware of these matters.”
In other schemes, sometimes known as “scam PACs,” prosecutors say the misdirection is often brazen. In one, a Maryland political consultant took in donations for specific purposes to support candidates. Yet he never intended to spend the money on what was advertised, and instead put donations toward asking for more donations. He received a prison sentence of three years.
In another case announced last year, three men associated with PACs were accused of soliciting donations for 2016 presidential candidates, but the money went to benefit them personally. One of the three men has pleaded guilty.