Federal prosecutors want six and a half years in prison for a Republican political operative whose consulting firm siphoned millions of dollars from donors who were duped into thinking they were supporting Republican candidates and conservative causes.
The Justice Department asked a federal judge in Virginia this week to sentence Kelley Rogers to 78 months behind bars for what they describe as a brazen and thoroughly corrupt effort to line his and his associates’ pockets with bogus fundraising appeals. Rogers pleaded guilty to one felony fraud count. A business associate, Scott Mackenzie, also pleaded guilty to one felony count of submitting false statements in a related case. He faces as much as five years in prison and is scheduled to be sentenced next month.
Both cases center on a digital and direct-mail consulting firm called Strategic Campaign Group and a number of PACs that paid the firm for extensive—and, in many cases, fraudulent—fundraising campaigns. Between Mackenzie and Rogers, the episode was already among the most significant prosecutions of fraudulent political fundraising to date.
But it appears prosecutors aren’t yet finished. Federal court records indicate that a third person involved in running SCG, Chip O’Neil, will move to plead guilty next week in a separate criminal case. The same judge who is presiding over the Mackenzie and Rogers cases is set to hammer out that plea agreement.
O’Neil did not respond to requests for comment. His lawyer, Steven McCool, told PAY DIRT in an emailed statement, “Chip is a decent young man who is prepared to accept responsibility for mistakes he made several years ago.” McCool declined to go into detail about the plea agreement or the charge or charges his client faces.
A guilty plea in O’Neil’s case would represent new fruits of a federal investigation into the seedy underbelly of Washington’s political money industry that has shed new light on how some of the nation’s top political consultants weaponize partisanship—often to their own benefit.
Rogers founded SCG, then called Political Solutions Inc., back in 2000, and it did millions of dollars of business with Republican political candidates at both the state and federal levels. Its clients also included a handful of PACs that Rogers was directly involved in administering. And that’s where its legal troubles would eventually emerge.
In 2017, the FBI raided SCG’s Annapolis, Maryland, headquarters and hauled off documents and digital files. What, exactly, the agents were looking for remained largely unknown until last year, when the Department of Justice charged Rogers with using SCG and a network of PACs that he controlled to bilk donors out of money they thought would be spent on actual political activity.
Here’s how the scam worked, according to prosecutors and Rogers’ admission of guilt: The PACs he controlled—groups with names like Conservative StrikeForce, Conservative Majority Fund, and Tea Party Majority Fund—would rent email lists of known Republican donors controlled by other groups. Such lists are widely available on the open market. The PACs would send urgent-sounding fundraising pleas to the people on the lists, begging for desperately needed donations to advance some conservative cause or political candidate. If a recipient clicked through and donated, his or her name would then be added to SCG’s own internal list of donors.
Donors’ money wouldn’t actually go toward the political purposes promised in the solicitations. Instead, it would be used to rent even more email lists in order to harvest more names for SCG’s database, known as its “house file.” That house file was SCG’s primary asset: The more names it added, the more it could charge actual clients—as opposed to groups controlled by the firm’s executives—for future fundraising drives.
“Between the years 2011 and 2018, the defendant’s PACs raised $20,872,497 from donors,” federal prosecutors wrote in their sentencing memo this week. “Only $269,376—approximately 1.3% of the money raised—was spent on direct contributions to political candidates. In contrast, the defendant gave as much as $13,724,032 of these donations to his ‘preferred vendors’ to pay their fees, raise more money for the defendant’s PACs, add new donors to the defendant’s donor lists, and, in the defendant’s own words, simply keep the churn going.”
Groups engaged in this sort of practice have come to be known as scam PACs. Unlike charities and nonprofit advocacy groups, political action committees are largely unregulated when it comes to the percentages of money they donate to fundraising, overhead, and activities ostensibly within their mission. As a result, scammers have found that political donations can be far more lucrative than charitable donations as a means to line one’s pockets.
A hallmark of the scam PAC is the urgent-sounding and grandiose fundraising appeal. And the email solicitations at issue in the Rogers case are textbook. Prosecutors homed in on its work in 2013, as SCG and its affiliated PACs worked to monetize the hotly contested races for governor, lieutenant governor, and attorney general in Virginia.
“Conservative superstar Ken Cuccinelli is in real trouble in his race to be Virginia’s governor,” declared one Conservative StrikeForce email solicitation. This conservative hero needs you NOW!” That email, its emphasis in the original, asked donors to help fund “phone banks, get-out-the-vote programs, mailings, rallies—whatever it takes.” A message at the bottom pledged, “All contributions will be used by StrikeForce for direct candidate contributions, independent expenditures and Get Out the Vote activities.”
That was fairly typical of emails from CSF. But almost none of the money it raised would actually go toward any political activity. Despite constant pledges to the contrary, none of the SCG PACs ever mounted any voter-mobilization efforts. They never purchased any ads on behalf of Cuccinelli or any other candidate in Virginia’s 2013 general election. And when CSF finally did make some perfunctory contributions to Cuccinelli and attorney general candidate Mark Obenshain, they did so only begrudgingly, and in a manner that attempted to conceal how the groups were knowingly lying to their donors.
Internal communications revealed in the Rogers case show just how brazen the scheme was. In June 2013, Rogers spelled out his plan for the cycle in an email to Mackenzie. “We need to refresh and rebuild our list for next year so here is what we are going to do,” Rogers said. “Starting July 1st we are going to use 100% of all net revenue that comes in for list building.”
In other words, the plan from the outset was to reserve exactly none of the money raised for actual political activity. It would all go toward building SCG’s house file headed into a midterm election year that was sure to be a cash cow for firms that could mount effective fundraising campaigns.
Rogers clearly knew how the plan would look from the outside, because he added that the “only exception to this may be Oct. of 2013 where we may need to use 25% of net just for that month because of the VA elections but I’ll get back to everyone on that as we get closer to that day.” As it turned out, a $10,000 contribution to Cuccinelli’s campaign was all they could muster.
The duplicity of the scheme was apparent in discussions of how much to donate to Obenshain’s campaign after it went into a post-election recount. It appears Rogers and his team only considered a donation to that effort after the Obenshain campaign reached out wondering why CSF and other PACs were raising money in the candidate’s name but doing nothing to actually support him.
“Unless your group plans to make a contribution to [Obenshain] directly, you are sending an unethical email and one that misleads the donor,” the campaign warned in an email.
Rogers fumed that he was “not going to let the tone of this little witch’s email go unanswered.” He relented, but began plotting ways to make it look like his PACs had been running legitimate pro-Obenshain fundraising drives the whole time. “Let’s send an odd number like 4755 or something so it looks like we contributed what came in,” he proposed. He only ever sent $3,000.
“The defendant’s crimes are not victimless,” prosecutors wrote in their sentencing memo. “They involved thousands of victims and millions of dollars that the victims intended to spend on the political process in an exercise of their right to free speech, which is something so fundamentally important that it is protected by the First Amendment to the Constitution.”
Rogers is asking the court to sentence him to two years in prison, far less than the six and a half that prosecutors are requesting. “He has led an exemplary life and has demonstrated extraordinary kindness and support to family members, friends, and the community at large,” his lawyer told the court this week.
The filing is full of perfunctory apologies and expressions of remorse. But it also attempts to downplay the conduct to which Rogers has admitted, explain it away in terms common among scam PACs and their defenders, and even, in one case, attempt to pin some responsibility on a big name in Republican politics.
“Mr. Rogers was asked to assist the Cuccinelli Campaign by Charlie Black, a well-known political consultant. Mr. Rogers began a phone solicitation and marketing effort to assist the campaign,” his lawyer writes. “Unfortunately, as detailed in the statement of facts, Mr. Rogers did so by overpromising what he would be doing to assist the campaign and not using the raised funds for the stated purpose.”
That makes it sound like Black recruited Rogers and SCG to run the very fundraising drives at issue in the case. But that gets it precisely backward, according to Black, a veteran Republican operative who is chairman of the Prime Policy Group, a prominent lobbying firm.
“Cuccinelli, a friend, asked me to raise some money,” Black told PAY DIRT in an email. “I knew Kelley was raising money through the mail to spend on Ken’s behalf, so I asked him to have the committee contribute.” In other words, Rogers did not engage in the fraudulent practices at issue at Black’s request, as his lawyer suggests; Black says he simply reached out to request that Rogers contribute some of the money he was raising to Cuccinelli’s campaign. “I had received their solicitations first,” he wrote, “or would not have thought to ask.”
Black nonetheless submitted a letter to the court attesting to Rogers’ character and urging the judge in the case to be lenient in sentencing him. “These fundraising campaigns are expensive to run and maintain but they do have value beyond the contributions,” Black wrote to the court.
“There are multiple collateral benefits to a campaign from programs like this in terms of name identification, issue awareness, and building enthusiasm.”
This is a common scam PAC defense, and one that Rogers makes explicitly: Simply by virtue of extolling a candidate’s benefits in a fundraising appeal, a group is helping to elect that candidate, regardless of whether it spends any money directly supporting him or her. “Mr. Cuccinelli’s campaign benefitted from Mr. Rogers sending positive messages about the campaign to those his representatives contacted,” Rogers’ lawyer wrote. “Indeed, thousands of phone calls, emails, and letters were sent endorsing and reflecting positively on Candidate Cuccinelli.”
This is the essence of the scam PAC. Federal regulators have been wary of inveighing against groups that appear to do little but fundraise in the name of a popular political cause or candidate precisely because those groups argue that the mere fact that they’re invoking those candidates and causes constitutes legitimate political activity. The result is effectively a license to operate a money-churning machine under the guise of political advocacy.
Such arguments found a sympathetic voice at the Federal Election Commission in 2017, when then-FEC Chairman Lee Goodman pondered the unsung virtues of political fundraising campaigns that devoted something in the neighborhood of 10 percent of money raised to actual political activity.
“Now, the way I see many of those solicitations is, they are 90 percent advocacy,” Goodman said in remarks highlighted by Rogers’ attorney in his court filing this week. “In other words, the solicitation letter does engage in advocacy and fulfill the commitment to people that we are engaging in advocacy.”
Goodman received wholehearted words of agreement from the person testifying before the committee that day. That person was Scott Mackenzie, the Rogers associate who pleaded guilty to a federal criminal charge late last year.
