Campaign finance

These Congressmembers Turned Campaign Contributions Into Luxury Travel – and Somehow, it's Not Illegal

Ted Cruz, Rand Paul, Seth Moulton Among the Biggest Offenders on Watchdogs’ New Leadership PAC Naughty List

UPDATE 10/8/21: Campaign Legal Center has requested an official congressional ethics investigation into three of the representatives highlighted in this story. Read details here.

Congressman Mike Kelly (R-Pa.) is no stranger to the St. Regis Deer Valley resort, making regular visits to the five-star property in Park City, Utah, according to his campaign finance disclosures. Those trips — at least five of them since 2018 — were funded by corporate contributions through his political action committee, Keep America Rolling.

Although election law strictly prohibits using political funds for personal use, and the St. Regis touts its “unmatched luxury” — including nightly champagne sabering — it’s not illegal for Kelly to have used $64,000 in contributions to pay for the trips, because they were identified on his campaign disclosures as fundraising travel.  

However, those same PAC filings show virtually no money was raised for the committee within weeks of each Deer Valley trip.

A new report from nonpartisan watchdogs Issue One and Campaign Legal Center (CLC) cites Kelly as just one of dozens of members of Congress exploiting leadership PAC loopholes to turn corporate contributions into luxury travel and personal indulgences, from golf trips to beach vacations to tabs at exclusive social clubs — all under the amorphous umbrella of fundraising.

That included:

  • Sen. Rand Paul (R-Ky.), who reported just 12% of his million-dollar leadership PAC haul during the 2019-2020 election cycle going to other candidates and political groups, but spending tens of thousands of dollars on airfare, expensive meals, and trips to luxury hotels;
  • Sen. Ted Cruz (R-Texas), who reported just 18% of his $2.2 million leadership PAC cash going to other candidates and groups, but spent hundreds of thousands of dollars on consultants, roughly $59,000 on airfare, and $20,000 at high-end hotels and resorts;
  • Rep. Seth Moulton (D-Mass.), who reported just 8% of his $1.7 million in expenditures across his two leadership PACs going to other candidates and groups, with a majority of his spending going to consultants, travel, administrative expenses, and other overhead.

The report, “All Expenses Paid,” identifies nearly 40 other members of Congress — from both parties (see below) — who spent more of their leadership PAC funds on travel and overhead than they did on the PAC’s intended purpose: supporting other members of Congress with donations.

“These things are slush funds for politicians to take money from lobbyists and then to go lead lavish lifestyles with that money,” said Nick Penniman, founder and CEO of Issue One, a “crosspartisan political reform group” that highlights the damaging effects of money in politics.

Issue One and CLC found 92% of Congressmembers now raise funds through leadership PACs, with a small percentage of members — about 1-in-10 — spending more on travel and overhead than they do on actual political contributions.

Penniman says the loose regulations regarding leadership PACs can end up silencing voters’ priorities and could potentially feed corruption, when members of Congress are enjoying getaways and expensive meals funded by the very industries they are in charge of governing.

“Imagine if a judge set up a bank account for people coming before his court...then used that money to go golfing and stay in thousand-dollar-night hotels,” Penniman said. “If that was occurring with 70% of judges across America, it would be a global corruption scandal. And yet, for some reason, because they're politicians, we make this exemption for them.”

Why You Should Care

Created in the late 70’s to help members of Congress raise money for their colleagues, leadership PACs are seen as a mechanism for politicians to boost their chances at landing leadership positions.  It’s a second pot of money - in addition to their primary campaign war chests — for them to collect checks. 

There’s concern among watchdogs that, when used as-intended, leadership PACs can create a system of indebtedness among lawmakers, with younger lawmakers owing political debt to more senior members who help finance their re-election campaigns.

But when used for more creative — and ethically-ambiguous ways - as Issue One and CLC detailed, leadership PACs can create congressional indebtedness to lobbyists and special interests, who cut five- and six-figure checks that wind up subsidizing politicians’ lifestyles.

“We're human beings; when someone does something for you, you're expected to reciprocate,” said Congressman Dean Phillips (D-Minn.), one of the few members of the House without a PAC of his own.  

“Leadership PACs, in my estimation, are analogous to the dressing on the salad of corruption...it's like organized crime, except it's legalized organized crime and that's what I'm trying to call attention to. We have legalized corruption in this country.”

Phillips points out how many of the regulations and limits that apply to principal campaign committees don’t apply to PACs, which has afforded some of his colleagues the opportunity to exploit the system for personal gain, often at the expense of constituents’ priorities.

“This is not unique to one party or the other,” Phillips said. “It's institutional, it's systemic, and it's got to change.”

Watchdogs say money, by nature, has a corrupting influence on politics.

“You have to be worried, when (politicians) have to make decisions about how to vote in Congress...will do what's in the best interests of their donors, instead of what’s in the best interests of their constituents,” said Adav Noti, Campaign Legal Center’s Senior Director and Chief of Staff. “When money is being used for the politicians' own personal gain, rather than for just political purposes, that risk of corruption gets higher.”

Outliers

Rep. George Holding (R-N.C.) 2% spent on political contributions

No member of Congress spent a smaller percentage of his or her leadership PAC revenue on political donations during the 2019-2020 election cycle than retiring Rep. George Holding, according to the Issue One/CLC report.

Most of Holding’s spending went toward travel, restaurants, car services, and exclusive members-only clubs both in the United States and abroad.  That included nearly $11,000 to the East Indian Club, an all-men’s club in London that touts itself as “a home from home for dynamic, sociable and hardworking gentlemen.”  

Holding, who took a job in London with Blackstone shortly after leaving Congress, did not respond to requests for comment.

Rep. Gwen Moore (D-Wisc.) — 12% spent on political contributions

According to Issue One and CLC, Moore spent just 12% of her $320,000 leadership PAC haul to help other candidates and political groups, but significantly more on travel, including $29,000 on hotel stays and $32,000 on meals and catering.  At least $5,000 of that went toward meal-delivery services like Uber Eats and Grubhub, with another $7,400 at high-end steakhouses.

Moore’s leadership PAC also spent $9,000 for event tickets through LiveNation, StubHub, and Ticketmaster.

Moore declined NBCLX’ interview requests but provided a statement that read, "PACs must fund their hosted fundraising events and overall fundraising efforts – GWEN PAC is no exception. When it comes to events, throughout 2019 and early 2020, we hosted lunches, dinners and ticketed events both in D.C. and Wisconsin.

“If you look at our general overall expenses for GWEN PAC, you’ll notice how the expenditures in the final 8 months of the cycle were greatly reduced due to the pandemic. Expenditures were much greater in 2019 and early 2020 than they were once COVID-19 changed the general landscape."

Rep. Josh Gottheimer (D-N.J.) — 17% spent on political contributions

Most of Gottheimer’s $590,000 in leadership PAC spending from 2019-2020 went toward consultants, salaries, and other overhead, rather than other candidates. But Issue One and CLC also pointed out how spending at restaurants like District Taco ($1,600), the Santa Rosa Taqueria ($770), and the Capital Grille ($820) added up.

A campaign spokesperson told NBCLX, "Josh and the Jersey Values PAC team raised and contributed more than $3.3 million to Democratic candidates in New Jersey and nationwide during the last campaign cycle, helping elect and re-elect scores of Democrats." 

The $3.3 million sum could not be verified through campaign finance reports, and the spokesperson would not provide any more detail on the claim.

Rep. Mike Kelly (R-Pa.) — 22% spent on political contributions

Sitting on the powerful Ways & Means committee, Kelly has been able to rake in cash from big-name influence groups. But approximately half of his $205,000 in 2019-2020 leadership PAC expenditures went toward travel, while just 22% went toward other candidates and political committees.  

His spending included $52,000 for lodging, catering, and meals during several trips to the five-star St. Regis Deer Valley resort in Park City, Utah.  Kelly also reported another trip to Deer Valley in early 2021, but his PAC did not report a single dollar raised within a month of the trip.

When asked about the travel before a recent Ways & Means hearing, Kelly laughed and told NBCLX, “have a good day.”  Neither his committee nor his congressional office responded to subsequent questions.

Rep. Seth Moulton (D-Mass.) — 8% spent on political contributions

Issue One and CLC noted Moulton’s large spending on consultants, salaries, and administrative expenses, as well as “sizable bills for transportation, lodging, and meals.”  His two leadership PACs raised a total of $1.7 million last cycle, but sent just 8% to other candidates, committees, and political groups.

A spokesperson for Moulton’s Serve America PAC told NBCLX in a statement, its 2020 focus “was on driving our network of donors directly to candidates. That shows up as operating expenses for the PAC because it takes a team and travel and events to do it, but the results do not flow through our accounts. In a digital and COVID era, this was particularly important.

“Using this new strategy, our network raised more than $980,000, including more than $450,000 directly for President Biden and more than $200,000 for the Georgia Senate candidates, all while Serve America served as a destination for donors who wanted to invest in the most important races and highest-quality candidates in Congress."

Sen. Rand Paul (R-Ky.) 12% spent on political contributions

According to Issue One and CLC, Paul spent a smaller percentage of his leadership PAC collections on his fellow colleagues than any other senator that did not retire in 2020.  That included $14,000 at high-end hotels, $18,000 on Uber rides, and $23,000 on airfare.

Paul also sent $600 to a golf instructor, $620 for registration fees at the Kelly Plantation Golf Club in Florida, and $680 in expenditures over multiple trips to the Trump National Golf Club in Virginia.

Paul did not respond to NBCLX’ requests for comment.

Sen. Ted Cruz (R-TX) — 18% spent on political contributions

Sen. Cruz’ leadership PAC fundraising was among the most prolific in Congress, bringing in $2.2 million during the 2020 cycle.  But most of the spending went to digital advertising expenses and consultants, according to his public disclosures.  He also spent roughly $59,000 on airfare and $20,000 on hotels, including several five-star resorts in Georgia and Florida.

A Cruz spokesperson wrote NBCLX, “Senator Cruz is committed to getting our country back on track, which means electing solid conservatives up and down the ballot across the country and winning the battle of ideas in the public square. Therefore, in addition to making direct contributions to candidates, his strong fundraising has permitted Jobs, Freedom & Security PAC to go above and beyond the typical Leadership PAC by investing heavily in advertisements and messaging that empower and help give voice to the conservative movement.”

Why is there such a huge leadership PAC loophole?

The Federal Election Commission (FEC) prohibits PAC spending on entertainment unless “the entertainment is part of a specific officeholder or campaign activity.” 

But that’s opened a loophole for politicians to use political donations in virtually any way they want, as long as it’s under the guise of a fundraising or business expense.

And the notoriously-gridlocked FEC has been unable to agree on how to enforce its rules, leaving them largely unenforced — much to the chagrin of its moderate and progressive commissioners.

“I want to see the law more vigorously enforced,” said FEC Commissioner Ellen Weintraub.  “Why would you want to allow the insiders to be able to dip into the funds and use it for their own purposes?”

But for all the partisan disagreements within the FEC, all six commissioners agreed to ask Congress this year to extend the ban on personal use of campaign funds to all PAC funds, and provide clarity on how the commission should regulate committees, like leadership PACs.

“Some members of Congress feel like they can get away with a little bit more,” Noti said, regarding PAC spending.  “If there were a clarification to the law...then presumably members of Congress would stop pushing that boundary.”

The FEC didn’t even ask former Rep. Dan Lipinski (D-IL) why he used his leadership PAC to pay the membership fee for the congressional gym at the House of Representatives, or why Sen. Mitt Romney (R-UT) used leadership PAC funds to go shopping at The Men’s Warehouse.  Neither lawmaker responded to requests for comment.

“You could have a major reform by just saying no personal use of leadership PACs — that's pretty simple,” said former Congressman Chris Shays (R-Conn.). “I don't think anyone in the public could argue that they should have personal use of leadership PACs...so it wouldn't take a lot of (Congressmembers), just a few, to be very courageous and willing to live with the consequences on the short term.”

The Common-Sense PAC Reform Most Democrats Won’t Even Back

But for all the incentives to update leadership PAC laws, even the most reform-minded Democrats have largely avoided addressing the abuses.  

Most Democratic members now operate a leadership PAC, and benefit from other members’ PACs as well.

“When I worry about the corrupting influence of money in politics, my biggest concerns go to members who are afraid to do the right thing in Congress because they're worried that it will affect their fundraising,” Weintraub said.

Phillips sponsored a 2019 bill that would prohibit personal use of leadership PAC funds, along with six fellow House members from all across the political spectrum: Mike Gallagher (R-Wisc.), John Katko (R-N.Y.), Derek Kilmer (D-Wash.), Ed Case (D-Hawaii), Kathleen Rice (D-N.Y.), and Greg Steube (R-Fla.).

The bill did not get a hearing in the Democratically-controlled House.

“I will never say that this is a political issue,” Phillips said. “This is a systemic issue. Democrats are just as guilty as Republicans. 

“Money is the fuel of politics. And just like we have to wean this economy and move to a green energy future, I think we have to do the same in politics, wean ourselves from this historically corrupting fuel and into something much more liberating and unifying and elevating.”

“Asking politicians to clean this up themselves is a little bit like asking coke addicts to stop snorting,” Penniman added.  “There are some principled members...they should be championed (and) we should be looking to them for guidance and they should be held up as being ethical and good public servants.”

You can read Issue One and CLC’s index of which members of Congress have leadership PACs, and how much of each went toward other candidates & committees in their report, “All Expenses Paid.”

This article has been updated to include a statement from Rep. Moulton’s PAC.

Noah Pransky is NBCLX’s National Political Editor. He covers Washington and state politics for NBCLX, and his investigative work has been honored with national Murrow, Polk, duPont, and Cronkite awards. You can contact him confidentially at noah.pransky@nbcuni.com or on Facebook, Instagram, or Twitter.