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Posted Jun 15, 2011, 10:54 am
Telecom executive Donald H. Gips raised a big bundle of cash to help finance his friend Barack Obama’s run for the presidency.
Gips, a vice president of Colorado-based Level 3 Communications LLC, delivered more than $500,000 in contributions for the Obama war chest, while two fellow senior company executives collected at least $150,000 more.
After the election, Gips was put in charge of hiring in the Obama White House, helping to place loyalists and fundraisers in many key positions. Then in mid-2009, the new president named him ambassador to South Africa. Level 3 Communications, in which Gips retained stock, meanwhile received millions of dollars of government stimulus contracts for broadband projects in six states—though Gips said he was "completely unaware" of the stimulus money.
More than two years after President Obama took office vowing to banish “special interests” from his administration, nearly 200 of his biggest donors have landed plum government jobs and advisory posts, won federal contracts worth millions of dollars for their business interests or attended numerous elite White House meetings and social events, an investigation by iWatch News has found.
These “bundlers” raised at least $50,000 and sometimes more than $500,000 in campaign donations for Obama’s campaign. Many of those in the “Class of 2008” are now being asked to bundle contributions for Obama’s re-election, an effort that could cost $1 billion.
Sharing the spoils of victory
As a candidate, Obama spoke passionately about diminishing the clout of moneyed interests and making the White House more accessible to everyday Americans. In kicking off his presidential run on Feb. 10, 2007, he blasted “the cynics, the lobbyists, the special interests,” who he said had “turned our government into a game only they can afford to play.”
“They write the checks and you get stuck with the bill, they get the access while you get to write a letter, they think they own this government, but we’re here today to take it back,” he said.
But just like other presidential aspirants, Obama relied heavily on mega-donors to propel his campaign across the finish line and many fundraisers have shared in the spoils of victory. Some took jobs in pivotal federal agencies such as the Department of Justice, Department of Energy and the Federal Communications Commission, while others have served on influential advisory commissions and boards that meet periodically to help formulate policy. Two dozen have been appointed ambassadors to foreign countries.
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The White House said its appointees were highly qualified. “In filling these posts, the administration looks for the most qualified candidates who represent Americans from all walks of life,” White House spokesman Eric Schultz said. “Being a donor does not get you a job in this administration, nor does it preclude you from getting one.”
The iWatch News investigation found:
Some bundlers trade on their campaign largesse for Obama to further career aspirations or business plans. Others, already successful, simply enjoy the exclusive stature bestowed by ties to the White House. Lena L. Kennedy, for instance, papers her Southern California consulting website with photographs of herself with Obama. She put out a press release announcing a June 13 fundraiser featuring Michelle Obama in Los Angeles; ticket prices ran from $1,000 to $10,000, the latter “allowing a photo opportunity and private time with the First Lady.” She declined to comment for this article.
“Some people just crave attention and some people just like getting the notoriety or attention of being a big player,” said Thomas M. McInerney, a San Francisco lawyer who bundled at least $100,000 for Obama. He said he didn’t ask for or get anything in return, though he knew others who did. “There was so much money this time, and there were so many people involved in raising the money, the number of people looking for something was exponentially more.”
Business as usual
While the Obama administration tightened restrictions on hiring lobbyists, the deference it has shown major donors contradicts its claims to have changed business as usual in Washington, critics said.
Others said Obama strains credulity in claiming to bring reform to Washington while carrying on the patronage practices of past administrations. They added that many big donors aren’t shy about asking for specific favors, which gives candidates of both parties little choice but to keep patronage alive.
“Any president who says he’s going to change this is either hopelessly naïve or polishing the reality to promise something other than can be delivered,” said Paul Light, a New York University professor and expert on presidential transitions. “At best it’s naïve and a little bit of a shell game.”
Many of the Obama bundlers said they did not seek or expect anything for themselves.
“I just want to see somebody do a good job,” said Stewart Bainum, a Chevy Chase, Md., hotel chain CEO who with his wife, Sandy, raised $500,000 for Obama in 2008. He is listed in White House logs as a guest at a St. Patrick’s Day party last year. “The dividend is decent government and a strong leader with values similar to your own,” Bainum said.
Sacramento jeweler Jon Merksamer, a first-time bundler who collected more than $200,000 for the Obama campaign, said some fundraisers are “people with various political agendas,” and “having access to power is part of their agenda. That was never part of mine.” Some bundlers “make it clear what they are looking for,” said Merksamer.
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Chicago CPA Harvey S. Wineberg , who raised at least $100,000 and is Obama’s personal accountant, said his fundraising had “nothing to do” with his appointment to the President’s Advisory Council on Financial Capability in December 2010. Wineberg said he called a White House staffer, who he declined to name, to ask about serving on the council. “I thought I’d be good,” he said. He has since resigned.
Getting around contribution limits
Bundling is controversial because it permits campaigns to skirt individual contribution limits of $2,500 in federal elections. Bundlers pool donations from fundraising networks and as a result “play an enormous role in determining the success of political campaigns,” according to Public Citizen. The group has tracked bundlers on a website www.whitehouseforsale.org in the belief that they are “apt to receive preferential treatment if their candidate wins.”
Under pressure from watchdog groups, Obama disclosed the names of hundreds of bundlers during the 2008 campaign, listing them by ranges starting with at least $50,000, then $100,000, $200,000 and more than $500,000. The campaign identified the bundlers by name, state of residence, and in some cases, their employers.
When the new administration set up shop in the White House on Jan. 20, 2009, the money raisers quickly followed.
White House visitor logs show about 800 bundler visits during the formative early months of the administration, and overall the top-tier bundlers tended to show up far more often than those at the bottom rung.
Bundlers have been guests at concerts, state dinners and informal parties, such as the first family’s Super Bowl parties, or in a few cases to bowling outings and other special events to which they brought along spouses and family members.
Some are longtime friends of the first family, such as Chicagoans Cindy Moelis and her husband Robert Rivkin, who as a couple bundled at least $200,000. Obama appointed Moelis in April 2009 to direct the Presidential Commission on White House Fellows. Her husband was appointed general counsel of the Department of Transportation and special adviser to Transportation Secretary Ray LaHood. Rivkin once served as general counsel to the Chicago Transit Authority. The couple and their children were among the guests at the Obamas’ 101-guest Super Bowl party in early February 2010.
Moelis told iWatch News that she and her husband were “highly qualified” for their jobs and that they “took pay cuts and made considerable sacrifice” to enter public service. “We truly believe in it,” she said.
While open government advocates have criticized the White House visitors’ logs for leaving out the names of many people who enter the complex, as well as the reasons for the visits, the logs consistently list bundler visits.
The bundlers often arrived to see David C. Jacobson, then a special assistant for presidential personnel in the White House. The Chicago lawyer, himself an Obama bundler, served as the 2008 campaign deputy finance director. Jacobson, who departed in September 2009 to become ambassador to Canada, scheduled about 90 meetings with bundlers, according to an iWatch News analysis. Two-thirds of them had each raised at least $200,000.
Gips, who served as White House director of presidential personnel before taking the post in South Africa, saw more than a dozen bundlers. Other inner-circle White House officials, such as presidential adviser Valerie Jarrett, also a bundler, met with more than 50 bundlers, mostly the heavy hitters.
Obama met with at least two dozen bundlers either privately or with another person, according to the visitor logs.
Landing a position
Ambassadorships have been the classic payoff for big bundlers. But it’s not just the posts in foreign capitals that are attractive. Light, the NYU expert on presidential transitions, said that in recent years many have sought jobs with deep reach into the federal bureaucracy — and found a receptive ear in the White House.
“When they get a resume from a bundler, that is a real signal of seriousness,” Light said. “It’s also a thinly veiled quid pro quo,” and it “goes without saying they will get considered.”
Bringing in a lot of cash to the campaign, Light added, “seems to be well established as a signaling device for getting into key jobs running the government. It’s become more significant and nobody seems to have much outrage about it.”
Public Citizen in 2008 found that George W. Bush had appointed about 200 bundlers to administration posts over his eight years in office. That is roughly the same number Obama has appointed in little more than two years, the iWatch News analysis showed.
Some bundlers said in interviews that they called the White House to ask for a position, while others said they were called and asked to serve.
Ted Hosp, an Alabama lawyer who delivered more than $200,000 for Obama, said he had no expectation of a job when he signed on to the campaign finance committee. But he did ask to be considered and said he met with then-White House Counsel Gregory Craig, also a bundler, to discuss a position at the Justice Department. “I was interested in exploring (a job),” Hosp said. “I would have been interested in helping him (Obama) if the right opportunity arose.”
The cluster of appointments among top bundlers suggests that the size of the donation may have been a factor at least in getting a foot in the door. Less than one in five at the $50,000 level got an administration position. Half of $200,000 bundlers were picked for some post; 80 percent of the $500,000 bundlers were appointed. (Some have since left the administration while others remain in their posts.)
Michael Caplin, a Virginia consultant who assists nonprofit businesses, raised $200,000 for Obama and was appointed to the Commission on Presidential Scholars, a board that selects and honors promising high school students. He said he was contacted by a White House staffer asking him if he wanted to serve, though he saw plenty of other big donors angling for jobs and positions.
“Clearly if someone raised a million dollars for your campaign, you tend to get a phone call returned,” Caplin said. But he also believes that many big donors who took positions were well qualified. “If that person is truly excellent, but also raised money for your campaign, should that disallow you to serve? … I didn’t feel like they were putting coin collectors in charge of Homeland Security. I haven’t seen one appointment yet where I thought, ‘Man this is embarrassing.’”
Seeding the departments with bundlers
The appointment of George Washington University law professor Spencer Overton illustrates how the administration has quietly rewarded many top fundraisers.
Overton wrote in 2003 that the influence big donors wield in elections means that an “overwhelming majority of citizens are effectively excluded from an important stage of the political process.” Yet Overton bundled at least $500,000 for Obama. He was named to the Obama transition team and in February 2009 was appointed principal deputy attorney general in the Department of Justice’s Office of Legal Policy. The office helps select nominees for federal judgeships and acts as the Justice Department’s “think tank” by helping “to shape the terms of national debate on a wide range of forthcoming legal policy questions,” according to its website.
Overton visited the White House more than 80 times from January 2009 through the end of last year for events ranging from small meetings with high-level staffers to social and entertainment events, sometimes with his wife, records show. Overton resigned the $180,000-a-year job in July 2010. He declined to comment.
Overton is one of seven campaign bundlers who took jobs at Justice, including Attorney General Eric Holder, who was a $50,000 bundler.
Two others are Thomas J. Perrelli, a Harvard law school chum of Obama’s who holds the No. 3 policy job there, and Karol Mason, a bond lawyer from Georgia formerly with the politically active law firm of Alston and Bird. She is a deputy associate attorney general. Asked about the number of bundlers at Justice, spokesman Matt Miller said, “I don’t think we have any comment on that.”
At the Department of Energy, four bundlers who together raised a minimum of $1.6 million have held staff jobs or advisory posts.
Steven J. Spinner, a Silicon Valley entrepreneur and venture capital adviser, took over responsibility at Energy for parceling out more than $100 billion worth of stimulus grants and other energy-related loans. Spinner also has been a frequent White House guest, listed more than 40 times for events ranging from bowling to holiday receptions. The White House logs don’t give an explanation for most of the visits.
Several other bundlers appointed to federal government jobs also have been frequent White House visitors.
In March 2009, Obama appointed $500,000 bundler and law school pal Julius Genachowski to chair the FCC, an independent agency. He served as chief counsel at the FCC in the 1990s. Two other bundlers at the FCC are chief of staff Edward Lazarus, a former federal prosecutor, and William T. Lake, chief of the media bureau.
FCC chair Genachowski has turned up so often at 1600 Pennsylvania Avenue that Republicans in Congress in March demanded an accounting of who he has met with and what was discussed.
White House logs list Genachowski and his wife, filmmaker Rachel Goslins, whom Obama appointed in August 2009 to serve as executive director of the President’s Committee on Arts and Humanities, for more than 100 visits from early 2009 through March of this year.
Bundlers get coveted ambassadorships
Some of the biggest fundraisers end up serving in foreign capitals. Obama made a nod to this long practice in a pre-inauguration news conference, saying, “It would be disingenuous for me to suggest that there are not going to be some excellent public servants but who haven’t come through the ranks of the civil service.”
About a third of Obama's ambassadors have been political appointments as opposed to career foreign service officers—about the same as recent presidents. However, Obama has nominated 24 bundlers to ambassadorships to date. Of those, 14 each raised at least a half million dollars. Six others raised $200,000 or more. Jacobson, now the ambassador to Canada, is the only one listed at the $50,000 minimum and he played a pivotal finance role in the campaign.
The Obama record has disappointed the American Foreign Service Association, which believes these appointments should go mostly to career diplomats. The organization cites the 1980 Foreign Service Act, which states that appointees should have a “useful knowledge of the language … and understanding of the history, the culture, the economic and political institutions and the interests of that country.”
How many political appointees fit the bill is debatable. Gips, for instance, testified during his Senate confirmation hearing of his extensive private sector and government experience. He said he had “visited South Africa over a decade ago,” adding, “I fell in love with its people, its story, and its beauty.”
The 1980 federal law also states that political contributions “should not be a factor” in picking ambassadors, though presidents of both parties have all but ignored that.
Passing over career diplomats in favor of mega-donors amounts to “selling ambassadorships,” said Susan Johnson , president of the American Foreign Service Association. She said it runs contrary to the law and is unethical, yet, “That hasn’t stopped anybody.”
Thomas Pickering, who served as ambassador to Russia and several other countries during a diplomatic career spanning four decades, said turning to bundlers adds a “new dimension” to what he termed “buying offices” through aggressive fundraising. “An individual can multiply their chances by going out and soliciting a lot of contributions other than just their own,” said Pickering, who chairs the American Academy of Diplomacy.
The White House pointed out that some ambassadorships went to non-civil service people who did not bundle for Obama but were uniquely qualified for the posts. One example is former Utah Gov. Jon Huntsman, a Republican.
Evolution from telecom exec to ambassador
Few stories illustrate how friendship, fundraising, business and politics can intertwine at the White House more vividly than that of Gips, Obama’s choice for ambassador to South Africa.
In 1998, Gips left government work, where he had supervised wireless spectrum issues for the FCC and served as Vice President Al Gore's chief domestic policy adviser. He joined a budding telecom company — Level 3 Communications in Colorado — which has obtained more than $100 million in federal contracts over the past decade.
At a 2004 fundraiser, he met Obama, who was then running in Illinois for the U.S. Senate. The two grew close — Obama asked Gips to help edit his campaign book, "The Audacity of Hope" — and Obama acknowledged his friend’s counsel in the book.
Gips collected more than $500,000 for Obama. James Crowe, chairman of the Level 3 board, was an Obama bundler, too, raising at least $100,000. So was the firm’s vice chairman, Charles Miller III, who bundled more than $50,000.
At the White House, Gips was a powerful force to decide who got coveted jobs. Obama appointed Level 3 executive Crowe in October 2010 to chair the presidential advisory committee on telecommunications and wireless issues.
And Level 3 was awarded some $13.8 million in federal stimulus contracts, to extend broadband connections in rural areas of states where it had networks.
In an email sent to iWatch News through the White House, Gips said that he had not been involved in “any matter involving Level 3” since joining the administration. Gips also said he didn’t know the company had received stimulus contracts and played no role in Crowe’s selection to the telecommunications panel.
The iWatch News investigation confirmed that at least 18 other bundlers have ties to businesses poised to profit from the president’s political agenda, through stimulus money, government contracts, or other spending to promote clean energy technology or green development.
Oklahoma billionaire investor George Kaiser is one. A longtime Democratic donor, he is a big financial backer of a company that in March of 2009 won a $535 million loan guarantee from DOE for a solar plant in Silicon Valley. He had multiple visits to the White House in the months before he was awarded the contract. Kaiser has not responded to interview requests from iWatch News.
Steven Westly, a green energy entrepreneur who raised at least $500,000 for Obama, has seen four companies in his venture firm’s portfolio receive more than a half billion dollars in loans, grants or stimulus money from the Obama Energy Department, iWatch Newsand ABC reported in March.
Bundlers win commission posts across government
Some bundlers limit their role in the administration to serving on commissions to support their pet causes and hobnob with celebrities.
Obama has appointed 22 bundlers to the President’s Committee on Arts and the Humanities or to the board of the John F. Kennedy Center for the Performing Arts.
Four of the nine members of the U.S. Holocaust Memorial Council appointed by Obama in September 2010 were bundlers, including its chairman Tom Bernstein. He is a New York City developer and sports entrepreneur who raised at least $200,000 for the Obama presidential campaign.
This is Bernstein’s second appointment to the Holocaust Memorial Council. Bush appointed him to the same board in 2002 after Bernstein raised at least $100,000 for the 2000 Bush campaign. A former Yale classmate of Bush and fellow owner of the Texas Rangers baseball team, Bernstein switched allegiances to bundle for the Obama campaign.
Others have served on advisory groups which make recommendations to the president on critical matters ranging from the economic stimulus to policies to spur job growth.
Hyatt hotels heiress Penny Pritzker, Wall Street titan Robert Wolf and financier Mark Gallogly, for instance, all served on the President’s Economic Recovery Advisory Commission. Though the commission was headed by former Federal Reserve chairman Paul Volcker, Pritzker at least twice emerged from the White House and faced media cameras on days the commission met.
In late February, in creating a new commission to take on the task of creating jobs, Obama again appointed the three businesspeople. Transcripts of the recovery board meetings show that commission members are free to press for an agenda that could significantly benefit their business interests.
Pritzker, one of America’s richest women and a key fundraiser and adviser in the early days of the Obama campaign, has logged more than 50 visits to the White House, either alone or with family members. Obama also appointed Pritzker to the Kennedy Center board and her husband, Chicago ophthalmologist Bryan Traubert, to the President’s Commission on White House Fellowships.
Pritzker suggested she had clout in a May 2009 CNBC television interview on the White House lawn, saying: “I have no trouble having a spirited dialogue with the president, and that’s something that we do on a regular basis.”
When the reporter asked, “Do you get anywhere?” Pritzker replied: “Absolutely. The president is extremely open to hearing what people on his economic board have to say. And I think it’s absolutely informing some of his decisions.”
Schultz, the White House spokesman, said the administration recruited job candidates from all walks of life. “The people mentioned in this article have sterling academic credentials, years of public service and private sector experience that make them eminently qualified for the positions to which they were appointed.”
The bundling merry-go-round is cranking up for its second act: Obama’s re-election campaign.
Bainum, the Maryland businessman, said he expects it to be rougher going than in 2008. The campaign will be more expensive, and top bundlers are being asked to bring in $350,000 for the president’s campaign and another $350,000 for the DNC.
“These amounts seem to go up every year faster than rate of inflation,” he said. “I haven’t tested the waters yet.”
With an eye toward the re-election campaign, the White House peppered the guest list for the June 7 state dinner honoring German Chancellor Angela Merkel with bundlers. Among the 200 guests at the Rose Garden event were a dozen bundlers, most with their spouses, including the Bainums.
Reprinted by permission of The Center for Public Integrity.