Rory Reid’s lawyer defends legality of contributions

By Jon Ralston

Friday, March 11, 2011 | 2:01 a.m.

It was an unfortunate comparison, but all too apt.

In arguing the legality of an outrageous scheme to allow Rory Reid’s gubernatorial campaign to take a de facto $750,000 contribution from one source, his law partner said this week: “The (state’s) campaign practices act is not unlike the federal money laundering law.”

What Paul Larsen meant, as he soon added, was that Gaming Regulation 6A was adopted here as an analogue to federal laws to track cash in casinos, but, like the campaign finance statute, is more “designed to gather information, not really designed to prohibit transactions.”

That is, so long as everything is disclosed, in either case, it’s kosher. Or, at least, legal.

But the comparison to money laundering is more telling than he probably thought because that is exactly what will be sanctioned if Secretary of State Ross Miller agrees with Larsen’s legal analysis. Money from one political action committee (the Economic Leadership PAC) — and a lot of it — was washed through sham PACs and funneled to Reid’s campaign, creating a mechanism that makes a mockery of the spirit and intent, if not the letter, of the law.

“My job is to tell people what the law says,” Larsen insisted. “Then they determine what to do.”

Indeed, little — if any — of this can be laid at Larsen’s feet, although his legal advice can and will be second-guessed. He was simply doing what Reid wanted him to do, which is give legal cover, if it existed, for a highly questionable endeavor.

To his credit, Larsen, like Reid, submitted to an interview to answer questions, rebuffing some because of attorney-client privilege but making his case for his advice to campaign manager David Cohen that he was “comfortable” that forming multiple PACs is legal.

Cohen, a top adviser to state Senate Majority Leader Steven Horsford, repeatedly has refused to answer basic questions about the campaign money laundering effort. If it’s so transparent and legal, as Reid insisted, why would Cohen be ducking questions as to why they did this in a way no one ever has (why not just do an independent expenditure unless it was all about control?) and whether they set up separate bank accounts for all 91 shell PACs to at least give the ruse a patina of legitimacy?

I asked Larsen whether each of the PACs — he was the resident agent — had an individual account, so the cash from the Economic Leadership PAC at least could have actually resided somewhere else (besides on paper) before being given to its intended recipient from the moment it left the master PAC: Rory Reid.

“I can’t tell you one way or another,” Larsen told me, citing attorney-client privilege. “If I knew, I couldn’t tell you.”

(I have also reached out to Joanna Paul, a Reid campaign operative involved in the scheme whose address was used for the faux PACs and who is listed as treasurer. So far, no luck.)

Larsen’s legal argument is fairly simple: He points out that the campaign practices act has a provision that defines a “person” as all manner of things, including inanimate objects such as political action committees. So a PAC can contribute what a person can, which is up to $10,000. And because all the money was disclosed, there is nothing to investigate, Larsen argued, because the secretary of state cannot prohibit transactions within limits — here’s the analogy to the money laundering law — that are reported. Q.E.D. Of course, Miller is probing whether these are “conduit contributions,” — that is, contributions by one “person” given in the name of another. I’m no lawyer, but if a contribution to Rory Reid came from Las Vegas-based PACs with misleading names such as Carson City Committee for Change and Elko County Freedom PAC, and the money actually was from the Economic Leadership PAC and intended all along to be transferred to the candidate after a brief stay in the dozens of laundry rooms, those sound like conduit contributions to me.

Larsen says conduit contributions were “not the purpose of my inquiry,” and he added, perhaps knowingly, “In a theoretical universe, if each PAC had a bank account, each is a person under the law and each could contribute to a candidate.”

I don’t envy Miller, who will face immense political pressure and is inhibited by a patchwork of loophole-rich laws. But shouldn’t this be illegal?

Not if you think California entrepreneur Steve Bing should be able to give $200,000 to Rory Reid’s campaign or if you believe gaming companies and unions should be able to give well over the statutory limit to a candidate. That’s what happened.

And it’s now exposed because these conspirators used a fig leaf to conceal a massive political money laundering operation.