U.S. authorities unlikely to stop 2016 election fundraising free-for-all

By Michelle Conlin and Emily Flitter NEW YORK (Reuters) - White House hopefuls raking in record amounts of money in the 2016 U.S. presidential race are already being accused by watchdog groups of breaking campaign fundraising laws. But the U.S. Department of Justice is unlikely to prosecute possible violations and halt the funding free-for-all, say current and former department officials. With deadlock in the campaign finance regulator, the Federal Election Commission, watchdog groups are calling on the Justice Department to investigate contenders such as Republican Jeb Bush, who they say has conducted a charade of "non candidacy" to skirt federal election fundraising laws. Bush's campaign said on Thursday he would announce his White House bid on June 15. Interviews with 11 current and former Justice Department officials indicate the department is unlikely to enforce rules before the November 2016 election, or even after. That means the election could unfold with record money - predictions are for overall campaign chests of more than $5 billion, double the cost of the 2012 election - but little regulation, they said. The FEC, a six-person commission made up of three Democrats and three Republicans, has become paralyzed because, for the most part, partisan disputes have prevented the commissioners from opening new investigations. "The fact that the FEC is neutered is not going to motivate the DOJ to go out on a limb and do a bunch of these cases," said former federal prosecutor Jonathan Biran, who started his 17-year career at the Justice Department in the criminal division's public integrity section, which traditionally prosecutes campaign finance crimes. Biran is now in private practice. All of the people interviewed said the department would be reluctant to do anything during election season out of concern it would appear politically motivated. They also noted that, even after the election, campaign finance cases would be extremely difficult to bring, especially since the department has been spooked by some high-profile failures in recent years. There's also the fact that campaign finance is supposed to be policed by the FEC, not the Justice Department. The Justice Department declined comment. FEC Democratic Commissioner Ellen Weintraub says the agency is "broken" and "beyond dysfunctional." Republican Commissioner Lee Goodman counters that the FEC is succeeding in achieving more compliance. (For a graphic on FEC fines, see http://reut.rs/1Jo19IN) NEW FUNDRAISING CLIMATE The Supreme Court's 2010 Citizens United decision allowed corporations and individuals to spend unlimited amounts of money to advocate for and against candidates through independent political action committees so long as they did so without coordinating with candidates. The ruling, former and current Justice Department officials say, has muddied the area and made it harder to ascertain what is and is not legal. At the same time, the ruling has ushered in an era of fundraising experimentation, with the chief innovator being former Florida Governor Bush, who has headlined dozens of political fundraisers on behalf of his outside spending group, the Right to Rise Super PAC. Before Thursday's announcement, some in Bush's camp had suggested he might wait until July to launch his campaign so that he could raise more money for his Super PAC. [ID: nL5N0YQ27A] Campaign finance laws bar declared candidates from maintaining such a close relationship with an independent PAC. But Bush is not subject to such a bar since he has still not officially declared his candidacy - even though he effectively launched his campaign months ago. "We are fully complying with the law in all activities Governor Bush is engaging in on the political front, and will continue to do so," Bush spokeswoman Kristy Campbell said in response to questions about his fundraising activities. MISSION TO AVOID POLITICS Late last month, two groups, the Campaign Legal Center and Democracy 21, wrote to Attorney General Loretta Lynch urging her to appoint a special independent counsel to investigate Bush. In an editorial this week, The New York Times echoed their call. Yet even the most cleancut cases involving election law violations are perilous for federal prosecutors. As it turns out, one of the Justice Department's missions is to avoid getting involved in politics in the first place. "Anyone hoping the DOJ will suddenly become an aggressive campaign finance police force will quickly be disappointed," said Michael Johnston, a professor of political science at Colgate University. Johnston said corruption charges filed this year against several New York state politicians, including former New York State Assembly Speaker Sheldon Silver and former New York State Senate Majority Leader Dean Skelos, who had been in office for decades and had allegedly broken the law for many years before being charged, were examples of how slow the Justice Department typically is in bringing public corruption cases. Both men have pleaded not guilty to the charges. A little-noticed passage of the official manual that guides federal prosecutors specifically warns against interfering in elections. And two Justice Department officials speaking on the condition of anonymity said U.S. prosecutors are instructed to be cautious when contemplating bringing cases against politicians. DISAPPOINTING SETBACKS Many criminal cases take longer to build than even the lengthy U.S. election season. When fundraiser Diana Durand was arrested in January 2014 for illegally funneling money to two congressional campaigns, the charges she faced were for crimes she committed in 2009 and 2010, two election cycles earlier. She pleaded guilty and was sentenced in March to three months in prison. Additionally, those interviewed say the Justice Department has been unnerved by recent disappointments in what were considered slam-dunk cases. Those include a 2008 conviction against former Alaska Senator Ted Stevens for illegal kickbacks that was later thrown out after a judge determined prosecutors had hidden exculpatory evidence in the case. Another high-profile embarrassment was the Justice Department's case against former Democratic presidential contender John Edwards, who was charged with using $1 million in political donations to hide his mistress and love child. In 2012, Edwards was partially acquitted. The remaining charges were dropped. SMOKING-GUN CASES That's not to say campaign insiders couldn't come forward -brandishing smoking-gun documents - that would incriminate politicians and their staffers. With such blatant evidence of a crime, prosecutors could be forced to act, but even then, insiders say, they would not rush to make a case. In February, prosecutors brought their first-ever "coordination case" against a campaign manager, Tyler Harber, for illegally working with an outside spending group. The case's best evidence came from a whistleblower who passed on documents showing Harber had used an alias in his dealings with the outside group to avoid getting caught. Harber pleaded guilty to breaking the law while working for a candidate in a 2012 congressional race. But those interviewed by Reuters said the Harber case could hardly be seen as a harbinger for cases in the presidential race. White House contenders, they pointed out, have armies of well-seasoned campaign finance lawyers whose job it is to build legal insulation around their candidates.