Thompson Uses Loophole to Avoid Reporting Fundraising

July 15, 2007 — -- Former Sen. Fred Thompson, R-Tenn., has avoided revealing his fundraising figures by exploiting a legal loophole whereby he says he is simply "testing the waters" for a campaign — even as his supporters build an infrastructure for his all-but-official run.

But supporters of campaign finance reform, as well as Thompson's opponents, say that he is violating at least the spirit of the law, despite his past support for openness in government and the McCain-Feingold campaign finance reform law.

With the help of a former FEC chairman on Thompson's payroll, the ex-Tennessee senator is evading, at least for now, the requirements of the campaign finance system that he helped reform. In the words of an attorney associated with another campaign, Thompson is "playing footsie" with the campaign rules.

Federal election law allows prospective clients to raise limited funds to test the waters and determine whether they will be viable candidates without declaring their candidacy or being required to disclose their contributors and expenditures.

However, the statute provides that a candidate is no longer "testing the waters" if he raises funds in excess of amounts reasonably required for exploratory activity, or amasses funds to be used after candidacy is established.

The "testing the waters" funds must be limited to those amounts needed to determine whether to make a run, such as conducting public opinion polls, traveling and making phone calls.

If a candidate raises more than $5,000, "once the individual decides to run for office," the candidate is no longer "testing the waters" and must file with the FEC to declare himself a candidate.

In short, once you have decided to make a run and begin building a campaign operation, you are no longer testing.

Thompson appears to have gone well beyond the limits imposed by federal law.  His supporters boast that he is raising millions of dollars and has hired a campaign manager and staff in national and regional positions.

His campaign operatives have explained his delayed entry into the race by telling the press that additional time is needed to gear up their operations and meet the high expectations about his candidacy. For example, Bob Novak reported that Thompson sources stated "they want to put all arrangements in place before formally announcing his candidacy."