Rory Reid’s house of cards crumbles

By Jon Ralston

Sunday, March 6, 2011 | 2 a.m.

Rory Reid kept using the word “transparent” last week to describe an elaborate ruse so he could accept a $750,000 contribution from a single political action committee — 75 times the legal limit.

He’s right. It was transparent. But not in the way he means it.

This was a transparent attempt to find a loophole in the campaign contribution laws by a gubernatorial candidate apparently desperate for money to try to revive his moribund campaign. And it was specifically designed to be opaque — a master PAC created with a name that belied its true purpose and 91 phony entities with names concocted to mislead.

Whether what Reid did was legal — or should be legal — will be determined later. But this was nothing short of a conspiracy to commit the equivalent of money laundering in a political campaign, where Reid solicited contributions in large amounts for a PAC ($850,000 during one reporting period) and then the money was washed through sham entities in smaller amounts ($10,000 increments) to appear in the candidate’s war chest.

Reid was abetted in this task by at least three people — his campaign manager, David Cohen, now a top aide to state Senate Majority Leader Steven Horsford, who put his name on the umbrella PAC; Joanna Paul, who was on his campaign finance staff (in charge of compliance!) and whose name is on the phony PACs and whose home address was used for all 91; and Paul Larsen, his law partner who advised the candidate his scheme was legal.

Reid’s reaction to the scandal was the height of chutzpah, not only insisting on the transparency of the ploy, but to declare, “If this is a statement on anything, it is a statement on the failures of the campaign laws … If someone thinks it’s inappropriate, change the law.”

If anyone out there besides Team Reid thinks this is appropriate, please raise your hand.

Reid the Younger’s either real or practiced denial of responsibility for this highly dubious tactic reflects what was going on last summer in his campaign, a quixotic effort that never had much chance. Despite polls showing he was losing to Brian Sandoval by double-digit margins, Reid was confident he could win. His internal polls showed he was within single digits.

But he had a problem. Despite his prolific fundraising — he eventually would raise $2 million more than Sandoval — Reid knew he would need more for the home stretch. But rather than having a “let’s be transparent” meeting at his headquarters, as he would tell it, what ensued was more of a “how do we get more money and get around the laws” confab. What happened next is telling.

The man who insisted during the campaign “we need to build a foundation of trust in Nevada,” the man who claimed to have cleaned up the ethical morass left at the Clark County Commission by G-Sting, the man who assailed his opponent for being controlled by special-interest money, began a subterfuge that required cunning deception, murky ethics and special-interest cash.

Whenever you are holier than thou, sooner or later thou will not seem so holy.

Many questions remain.

Is it kosher to file legal documents with the state that purposely mislead as to a PAC’s true intention?

Why did Larsen give the secretary of state’s office an incomplete description of what the campaign was about to do — did he not know or was he not told? (He isn’t talking.)

If the secretary of state’s office says what Reid did was engage in “conduit contributions … expressly prohibited under Nevada’s election law,” was this indeed illegal? There is a law (Nevada Revised Statutes 294A.112) that bans giving or receiving a contribution in the name of another, but lawyers may disagree on whether it applies.

(More, including some documents, on my blog on the Sun’s website.)

The thorniest question: Did the campaign create separate accounts for each sham PAC, so the individual $10,000 contributions actually went somewhere else before going directly into Reid’s campaign account? If so, that is a whole other can of worms.

I have little doubt Secretary of State Ross Miller, who is in a political vise with Republicans ready to pummel him if he doesn’t act, will give this a thorough vetting. He has not shied away from tough calls. And this one will require a massive probe, including whether any of the donors knew what was afoot (I doubt it.).

The sad truth is Nevada’s campaign finance laws are a hodgepodge of illogical statutes, a porous amalgamation that allows schemers to find gaps. But if Reid continues to insist this was standard operating procedure, if Miller doesn’t fully expose what occurred here and if state lawmakers don’t use this as a catalyst for reform, that will be … transparent.

[email protected] / 870-7997