Cigars, Escorts Tab Picked Up by Politician’s Fundraising Scam

Donors to Russell Taub’s political action committee were under the impression they were helping Republican candidates. Instead, most of their contributions went to finance Taub’s high-flying lifestyle, including cigars, escort services and adult entertainment.

Taub, a Rhode Island political fundraiser who ran unsuccessfully for Congress in 2016, pleaded guilty Thursday to operating the latest in what has become a series of fake fundraising operations called scam PACs.

He told donors they could give unlimited amounts to the PACs, and 100 percent of their money would go to support GOP candidates. In fact, about $1 million of the total $1.6 million raised was converted to personal use by Taub, he admitted.

That included more than $715,000 transferred directly to his personal checking account and another $200,000 used directly to pay for “air travel, hotels, restaurants, clothing, cigars, adult entertainment and escort services,” according to a charging document.

Among Taub’s victims were a wealthy married couple in Ohio who were cheated out of $1.275 million, prosecutors said.

Expanding Exponentially

Taub entered the plea in federal district court in Providence and awaits sentencing in July. His lawyer, Jeff Pine, said in a phone interview that Taub accepted responsibility for his crimes. The million-dollar couple weren’t named in court; they were designated as Donors A and B.

Super political action committees can collect unlimited amounts to support candidates. Scam PACs pretend to support candidates while personally benefiting their operators. Taub collected big donations for his fake PACs, called Keeping America in Republican Control and Keeping Ohio Under Republican Control.

“Scam PACs have been expanding exponentially in tandem with the proliferation of Super PACs,” election lawyer Brett Kappel said in an email. He said individuals sanctioned by state officials for running charity scams have often turned to scam PACs in the past due to a perception that they were less stringently regulated by federal authorities.

Recent Justice Department prosecutions of scam PAC operators “are long overdue and hopefully will help restore confidence in the donor community that the contributions they make will be used for their intended purpose,” Kappel added.

Clear Warning

Taub pleaded guilty just days after another scam PAC operator, William Tierney, was sentenced in federal court in New York to two years in prison and ordered to pay $1.5 million in forfeiture, restitution and fines. Tierney pleaded guilty last year to conspiring to commit wire fraud by collecting donations to six political action committees he established and operated, the Justice Department announced.

Guilty Plea in First Federal Prosecution of `Scam PAC’

The first-ever jail sentence in this type of case will send “a clear warning to anyone engaged in fraudulent political fundraising: Scam PACs are a crime and those perpetrating them will go to prison,” U.S. Attorney Geoffrey S. Berman of the Southern District of New York said in a statement.

Tierney’s operation was a more traditional scam than Taub’s. He admitted collecting money from tens of thousands of donors who responded to mailings and other solicitations asking for support of causes ranging from autism awareness and law enforcement to pro-life causes.

Donors were promised their money would support education, advocacy campaigns and investments in “the big races to come.” Virtually all of it was either paid to Tierney or used to perpetuate the fraud through additional telemarketing, fundraising, and overhead expenditures. Less than 1 percent was contributed to candidates for office, DOJ said.

Tierney operated his scam in Arizona but asked for money from donors nationwide, including Manhattan, Berman’s jurisdiction. Berman’s office announced on Tuesday prosecution of another alleged scam PAC operator arrested in Arizona, John Pierre Dupont.

Sanders Scam

Dupont operated multiple PACs claiming to be raising money to support Sen. Bernie Sanders(I-Vt.) and other Democrats. Thousands of donors gave but the alleged scam PACs had no operations beyond the fundraising itself, and no money was used to support candidates, Berman said in a separate statement.

The U.S. attorney said his office would “continue to ensure that fraudulent fundraising does not pay – indeed, will result in criminal prosecution – by rooting out scam PACs wherever we find them.”

Prosecutors have been aided in pursuing these cases partly because of severe penalties – up to 20 years in prison — involved for those who falsify financial records, according to Kappel. But, he noted that the strategy could be jeopardized by a defendant in yet another ongoing alleged federal scam PAC case brought in Texas.

Defendant Kyle Prall, who pleaded not guilty, challenged the application of these penalties in cases involving campaign finance. A motion filed this month in Prall’s case in federal court in Austin sought to dismiss financial fraud charges, arguing they are “pre-empted and unconstitutional” because federal campaign fundraising is covered only by less-draconian campaign finance laws designed to protect First Amendment rights.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bgov.com

To contact the editors responsible for this story: Bennett Roth at broth@bgov.com; Jodie Morris at jmorris@bgov.com