Those recipients are unlikely to voluntarily return the funds. Unlike politicians, who could be attacked for keeping contributions from a disgraced donor, super-PACs face little political pressure, according to Charles Spies, who practices political law at Dickinson Wright.
“It’s a lot easier to return a symbolic $1,000 contribution than it is $1 million to a super PAC,” Spies said in an interview.
Representatives for the House Majority PAC, Senate Leadership Fund, GMI PAC, McConnell and McCarthy didn’t respond to requests for comment.
Campaign contributions have been clawed back by bankruptcy trustees before. In 2011, a district court judge ordered five party committees, including the Democratic National Committee and its Republican counterpart, to return donations totaling $1.6 million that they’d received between 2000 and 2008 from Allen Stanford, one of his top lieutenants and his Stanford Financial Group, which was part of a Ponzi scheme he operated until its collapse in 2009.
Though the party committees hadn’t known the money donated was part of the proceeds of a criminal fraud, they were ordered not only to refund the contributions but to also pay interest and the legal fees of the bankruptcy trustee. Dozens of campaign committees and political action committees that received smaller donations received letters requesting the money be returned. Of those, 43 disgorged donations totaling $162,250 while 39 held on to $117,700, according to a disclosure by the trustee.
“With contributions in the millions, the trustee has to pursue it,” said Kevin Sadler, an attorney with BakerBotts LLP. He sued the party committees on behalf of Stanford’s victims.
Going after the political donations is likely to be one of the final stages of FTX’s bankruptcy case, said Joseph Acosta, a bankruptcy partner at law firm Dorsey & Whitney LLP. It could be years away because of how incomplete the books and records for the company are, he said.
This article was provided by Bloomberg News.