This past Thursday, TheBlaze teased a potential scandal surrounding President Obama's donors. Now, we might know what that scandal is. According to a report by the conservative nonprofit Government Accountability Institute (GAI), and an explosive series of stories on Breitbart.com and the Daily Caller, the Obama campaign website appears to be built with an uncharacteristic lack of security where foreign donations are concerned.
Despite donations from foreign sources being illegal under Federal law, all campaigns, whether at the congressional level or the presidential level, have insufficient security to prevent these donations, according to the GAI Report. The problem afflicts an alarming number of politicians, across all parties.
However, for reasons that remain unclear, the Obama campaign stands apart from its peers in its lack of security preventing these donations. The most dangerous vulnerabilities for the campaign appear to lie in two separate channels - specifically, the website Obama.com, and the lack of a requirement that users input CCV codes when donating online through their credit cards.
To begin with, Obama.com is owned by Shanghai executive and former Chicago resident Robert Roche, a powerful Obama bundler with enough financial clout to break bread with the President, Secretary of State Hillary Clinton, and even Chinese President Hu Jintao, at the same time. Breitbart elaborates on Roche:
In 2011, Mr. Roche obtained one of the most sought-after pieces of real estate in Washington, DC: a seat at the head table for President Obama’s State Dinner for Chinese President Hu Jintao. How Roche—a man whose infomercial company hawks fitness equipment, cell phones, and breast enhancement products—landed a seat alongside Secretary of State Hillary Clinton, former President Bill Clinton, Sen. John Kerry, former President Jimmy Carter, and Chinese President Hu Jintao remains unclear.
Since 2009, White House Visitor Logs list the name Robert Roche at least 19 times, despite the fact Mr. Roche’s primary residence is in China.
Mr. Roche, who is originally from Chicago, is a co-chair of the Technology Initiative for the Obama campaign.
According to Acorn International’s prospectus, the success of Mr. Roche’s company hinges on maintaining access to state-run media and “preferential tax treatments and subsidies” doled out by the People’s Republic of China (PRC).
That a powerful bundler owns the Obama.com website is unsurprising, given that the site redirects to the fundraising page for the Obama campaign. However, the fact that it is Mr. Roche specifically may strike some as dangerous, especially given that Roche lives in a foreign country, and thus might find it easy to fundraise off of foreign business connections. Indeed, this concern is even more potent, given that 68% of the traffic to Obama.com comes from foreign sources, according to the report.
Nevertheless, these details could be considered less damning if the report didn't also find a level of credit card security within the Obama fundraising apparatus that is below even industry standard. Why? Because unlike most web merchants, the Obama campaign does not require those making a donation to enter their CCV code - a 3-4 digit code that appears on the back of most credit cards, and that indicates the location of the cardholder. This particular omission is not only problematic from the perspective of campaign security, but also economically irrational, according to the Daily Caller's Matthew Boyle:
Obama for America does not require online credit card donors to input Card Verification Value data to confirm that a political donor is legally authorized to charge contributions to a given credit card. GAI said CVV data consists of “a three or four digit number generally imprinted on the back of the card” in order “to verify that the person executing the purchase physically possesses the card.”
GAI notes that the Obama campaign’s failure to use such security measures in its online donation system likely costs it “millions of dollars in additional fees” because “card processors charge higher transaction fees for campaigns that fail to use the CVV.”
The group estimates that Obama’s 2008 campaign, which raised over $500 million, likely “paid at least an additional $7.25 million in fees to the banks that it could have avoided if it were to have used the CVV,” assuming the campaign paid typical rates for processing credit card transactions.
Nor is this oversight accidental. Breitbart's Mike Flynn explains that the campaign chose to use this apparently irrational system:
Why would they do this?
The clear implication is that they will reap more money without these security procedures than they would with them.
Granted, this implication is just that - an implication. However, given that the cost of $500 million in donations is a mere $7.25 million, it is easy to envision a calculation whereby the money that is accessible because of this lack of security vastly outstrips the money that is lost from ignoring the CCV codes.
This concern over foreign donations cuts across party lines. During the 2010 elections, Democrats alleged that the US Chamber of Commerce was supported by foreign money. A report by ABC News at the time found little evidence to support the claims, but nevertheless, the issue remains a touchy one for a candidate.
Basic consistency would seem to demand that this particular instance of this charge be answered and corrected.
UPDATE: The Daily Beast has published a story highlighting even more problems with campaign financing from illegal donors. It describes problems that extend beyond mere foreign donations and into the realm of fraudulent donations, both of which are not protected against by the Obama campaign. They also add more details on Robert Roche. The relevant sections are below:
Further complicating the issue are websites like Obama.com—which is owned not by the Obama campaign but by Robert Roche, an American businessman and Obama fundraiser who lives in Shanghai. Roche’s China-based media company, Acorn International, runs infomercials on Chinese state television. Obama.com redirects to a specific donation page on BarackObama.com, the official campaign website. Unlike BarackObama.com, Obama.com’s traffic is 68 percent foreign, according to markosweb.com, a traffic analysis website. According to French-based web analytics site Mustat.com, Obama.com receives over 2,000 visitors every day.
The name Robert W. Roche appears 11 times in the White House visitors log during the Obama administration. Roche also sits on the Obama administration’s Advisory Committee for Trade Policy and Negotiations, and is a co-chair of Technology for Obama, a fundraising effort. (In an email exchange, Roche declined to discuss his website, or his support for the Obama re-election effort, referring the inquiries to the Obama campaign team. The Obama campaign, in turn, says it has no control over Roche’s website; it also says only two percent of the donations associated withObama.com come from overseas.)But it isn’t just foreign donations that are a concern. So are fraudulent donations. In the age of digital contributions, fraudsters can deploy so-called “robo-donations,” computer programs that use false names to spew hundreds of donations a day in small increments, in order to evade reporting requirements. According to an October 2008 Washington Post article, Mary Biskup of Missouri appeared to give more than $170,000 in small donations to the 2008 Obama campaign. Yet Biskup said she never gave any money to the campaign. Some other contributor gave the donations using her name, without her knowledge. (The Obama campaign explained to the Post that it caught the donations and returned them.)
This makes it all the more surprising that the Obama campaign does not use a standard security tool, the Card Verification Value (CVV) system—the three- or four-digit number generally imprinted on the back of a credit card, whose purpose is to verify that the person executing the purchase (or, in this case, donation) physically possesses the card. The Romney campaign, by contrast, does use the CVV—as has almost every other candidate who has run for president in recent years, from Hillary Clinton in 2008 to Ron Paul this year.