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Romney making the most out of campaign funding rules

By Donovan Slack

The Boston Globe

Published: Thursday, April 14 2011 11:55 p.m. MDT

WASHINGTON — Mitt Romney kicked off his presidential exploratory committee this week in an enviable position.

Since his defeat in the 2008 GOP presidential primary, a few political friends have given generously to Romney's political operation, providing him a financial and organizational edge as the 2012 campaign gets underway.

But donors' generosity is not the only reason Romney's bottom line is strong.

The former Massachusetts governor has become a master of a controversial but legal fund-raising technique that relies on a network of loosely regulated state political action committees to collect those funds.

Consider the gifts to Romney from Donna G. Marriott - the wife of Marriott chairman J.W. Marriott Jr. — and J.W.'s brother, Richard E. They wrote checks totaling $215,000 to Romney's state political committees, according to public records reviewed by the Globe.

Contributions of that size are not permitted to be given to federal political committees under rules intended to limit the influence of individual supporters on candidates. But Romney, more fully exploiting the system he employed in the 2008 election cycle, got around those restrictions by taking in contributions through political committees set up under the rules of individual states.

Most of the money was then transferred to Romney's federal political action committee, Free and Strong America, and used to pay the salaries of top aides, political consultants, and traveling expenses.

The same system is used by other candidates, but on a much smaller scale. Romney raised more than $1.5 million from just 38 individuals in 2009 and 2010, more than double the combined donations of the rest of the prospective GOP field. Under federal limits, it would take 300 contributors to accumulate that much money.

Critics say Romney and the other contenders are using state loopholes to circumvent the spirit of federal limits. Romney's team said the system is proper and open for public inspection.

"Free and Strong America PAC follows both the letter and spirit of the law," said Andrea Saul, who was spokeswoman for the committees and is now working for Romney's exploratory committee. "Our PAC operations have always been totally transparent — our donors and expenses are all disclosed regularly."

Federal law limits an individual's donation to $5,000 a year for the sort of federal political committee Romney was operating — called a "leadership PAC" in beltway jargon. By setting up the series of state leadership PACs — several of which operate with no limits - Romney was able to solicit the larger contributions.

Such committees are typically set up as a way for national figures to support candidates and causes within a particular state.

The website for Romney's committees declared such a purpose, saying the "Free and Strong America PAC supports officeholders and candidates who are dedicated to advancing social, fiscal, and foreign policies that will strengthen America at this critical time in the nation's history." But only a fraction of what the state committees raised — 13 percent — was contributed to state candidates or causes.

Four of Romney's five state political committees — in Alabama, New Hampshire, Iowa, South Carolina, and Michigan — shared an address in Lexington, Mass. Contributions to them flowed through accounts at the same Bank of America branch in Washington, a block from the White House. Most then went to another account at the same bank — the one for Romney's federal committee - to pay overhead.

Parts of the overhead costs incurred by Romney's national political operation were reported as individual state committee expenses through complex accounting on campaign finance reports. Even individual Starbucks purchases by members of his political staff have been divided up to the penny and apportioned across the array of Romney committees.

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