Obama Ignores Credit Card Donation Fraud

Tuesday, October 21, 2008 10:01 PM

By: Kenneth R. Timmerman

What do Bart Simpson, Family Guy, Daffy Duck, King Kong, O.J. Simpson, and Raela Odinga have in common?

All are celebrities; and with the exception of Odinga and O.J. Simpson, they also are fictional characters. And yet, all of them gave money earlier this month to the campaign of Barack Obama, without any apparent effort by the campaign to screen them out as suspect donors.

The Obama fundraising machine may owe its sensational success in part to a relaxation of standard online merchant security practices, which has allowed illegal donations from foreign donors and from unknown individuals using anonymous “gift” cards, industry analysts and a confidential informant tell Newsmax.

An ongoing Newsmax investigation into the Obama campaign’s finance reports has exposed multiple instances of campaign finance violations and has been cited in a formal complaint to the Federal Election Commission filed by the Republican National Committee on Oct. 6.

Though many of the known violations include donations in excess of the $2,300 per election limit on individual contributions and contributions from foreign nationals, the extent of the amount of fraud is hidden because of a loophole in federal election law.

Campaigns are not required to disclose contributors who donate less than $200 — and Obama’s campaign refuses to release their names, addresses, and donation amounts. Obama has collected a staggering $603.2 million. Most of the money — $543.3 million — has come from individual contributors, half of it from “small” donors Obama won’t disclose.

The Obama campaign has turned a blind eye to the possibility of donor fraud. Reportedly, during the heated primary battle with Hillary Clinton, the Obama campaign “turned off” many of the security features on its online donor page, allowing any person with a valid credit card number to donate using any name or address.

Typically, card merchants require a cardholder’s name to match critical personal details, such as an address or, at the least, a ZIP code.

Though in recent months the Obama campaign has tightened up security and restored some of the security features used by merchants to weed out fraud, it still has left open easy ways for potential credit card fraud, including techniques similar to those employed by terrorists and drug traffickers to launder illicit funds.

For example, on Oct. 14, an individual using the name “O.J. Simpson” participated in Obama’s latest small-donor fundraising drive, making a $5 donation through the campaign’s Web site.

Giving a Los Angeles address, he listed his employer as the “State of Nevada” and his occupation as “convict.” The donor used a disposable “gift” credit card to make the donation.

The Obama campaign sent O.J. a thank-you note confirming his contribution, and gave him the name of another donor who had agreed to “match” his contribution.

Four minutes earlier, an individual using the name “Raela Odinga” also made a $5 contribution, using the same credit card.

The real Raela Odinga became prime minister of Kenya in April and has claimed to be a cousin of Obama’s through a maternal uncle.

Obama donor “Raela Odinga” listed his address as “2007 Stolen Election Passage” in “Nairobi, KY.” This credit card donation raised no alarm bells in the Obama campaign.

A few minutes earlier, “Daffy Duck” gave $5 to the Obama matching campaign, listing his address as “124 Wacky Way, Beverly Hills, Calif.”

But just as with Odinga’s address, the “Wacky Way” address failed to raise any alarm bells or security traps on the Obama Web site. Daffy Duck also used the same credit card.

Within the hour, three other new donors gave $5 to the Obama campaign. They were:

• Bart Simpson, of 333 Heavens Gate, Beverly Hills, Calif.
  
• Family Guy, of 128 KilltheJews Alley, Gaza, GA.
  
• King Kong, of 549 Quinn Street, Capitol Heights, Md.
  

Newsmax learned of these contributions, which were all made on a single $25 Visa gift card (oddly, the total was $30), from a source that requested anonymity.

Calling himself “Bart Simpson,” the tipster said he had been following the Newsmax investigation of Obama’s campaign finance irregularities “with great interest,” and believed that some of the small donations were coming from gift cards — “you know, the type of disposable debit card you can pick up at Rite-Aid or just about any supermarket.”

[Editor's Note: See "Obama Campaign Runs Afoul of Finance Rules ."]

“I tried it myself a few days ago,” he said. “I’m attaching for you proof of the contributions I made in the names of Daffy Duck, Bart Simpson, Raela Odinga, and Family Guy.

“What this means is that the Obama campaign does no verification of the name of the contributor. With a normal credit card, this wouldn’t wor[k], but with these disposable debit cards, no problem!

“This needs to be exposed,” he said.

The tipster attached the confirmation pages from the Obama Web site showing the names of the donors, and in some cases, the names of other Obama donors who had agreed to “match” their contributions.

None of the matching donors’ names appears in the Obama campaign’s public disclosures to the FEC.

Other donors with clearly fictitious names revealed previously by Newsmax, The Los Angeles Times, and blogger Pamela Geller (Atlas Shrugs) include “Dertey Poiiuy,” “Mong Kong,” “Fornari USA,” and “jkbkj Hbkjb.”

Five major companies process the bulk of all credit card transactions made in the United States, industry insiders tell Newsmax. The Obama campaign paid one of them, Chase Paymentech, just over $2 million to process its online transactions.

“We never discuss our relationships with any of our merchants, or customers we work with,” James Wester, a spokesman for Chase Paymentech, told Newsmax.

Newsmax asked whether Chase Paymentech had any security feature that would allow it to identify individuals making contributions using gift cards, but Wester declined to comment.

But other industry analysts, who asked not to be identified by name because of the sensitive nature of the issue, told Newsmax that processors could track gift cards and debit cards “only by the numbers on the cards.”

“There are no names associated with these cards, so as a processor, you have no way of knowing who made the transaction,” one industry analyst said.

Anyone can go into a supermarket or a Rite-Aid and buy a batch of these cards with cash, so there is no trace of the transaction, he added.

“It’s like walk-around money. They could be handing these things out as perks” to newly registered voters or others, “and there’s no way of tracing who is using them.”

Ken Boehm, a lawyer with 30 years of experience in campaign finance law, said that such contributions were clearly illegal.

“Making a contribution in the name of another person is the only part of federal election law that actually carries a criminal penalty,” he told Newsmax. Boehm is the CEO of the National Legal and Policy Center, a conservative think tank in Washington, D.C.

The Obama campaign has paid Synetech Group Inc. of Charlottesville, Va., close to $2 million to compile all of the campaign contribution data from online contributors, bundlers, telemarketers, campaign events, and direct-mail campaigns, and process it for submission to the FEC.

The sheer scope of the Obama fundraising juggernaut was “never contemplated by the FEC,” a company official told Newsmax, asking not to be quoted by name.

“It’s a lot of data. You’re talking 7 million contributions,” he said.

The campaign itself is responsible for screening out fraudulent donors, not Synetech, he said. “I’ve been doing this for 30 years, and this is as well-managed as any [campaign]. It’s just huge. When it’s this big, any little thing becomes something more than it is.”

One of the biggest problems the campaign faces is fraud, he said. “It’s a colossal problem. They’re paying the campaign with other people’s money.”

Individuals such as “Doodad Pro” and “Good Will” who made hundreds of contributions to the campaign in excess of the legal limits were not working for the campaign, but for themselves, he insisted.

“It’s all fraud. They do it for kicks. Or they’re testing the cards. The campaign doesn’t want this. Why on earth do they want to have all these messy little transactions? It’s a colossal pain.”

However, the campaign itself has solicited these “messy little transactions” in numerous e-mails to supporters.

For instance, just days before the Democratic National Convention in Denver, campaign manager David Plouffe sent an e-mail to supporters, asking them to “make a donation of $5 or more before midnight this Thursday, July 31st, and you could go backstage with Barack.”

Since them, the campaign has run several small donation drives, claiming to “match” donations of $5, $10, or $25 with an equal amount for a previous donor.

Newsmax put a series of questions to the Obama campaign more than a week ago in preparation for this article, such as whether its Internet contribution system automatically matches donors' names and addresses to their credit card numbers, as is common industry practice with online stores.

Newsmax also asked if the campaign uses a similar security screen to match a donor’s name and address to the card number when the donor uses a debit card or a gift card.

Despite multiple requests from Newsmax, the Obama campaign declined to comment for this story.

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