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Virginia Democratic State Sen. Creigh Deeds, left, listens as Democratic U.S. Senate candidate Jim Webb, right, speaks to supporters during a November campaign rally. In his losing run, Deeds was on the wrong side of an avalance of campaign cash.

KAI RYSSDAL: By way of introducing this next story...we direct your attention to Title 2 of the United States Code. Also, titles 26, 18, 36, and 47. United States Code is the fancy way of saying the law of the land. The final versions of bills that Congress passes and the president signs. Each title is as thick as a telephone book, or thicker.

The ones I mentioned are the ones that address, in some way, election law. The campaigning and the financing. Rules for candidates running for federal office are notoriously opaque.

Marketplace's Steve Henn reports that in some states like Virginia it's an entirely different story.


STEVE HENN: The federal campaign finance system comes complete with complicated giving limits, spending limits, outside expenditures, independent advocacy groups, and thousands of lawyers who make a living finding loopholes.
RAY ALLEN: The federal system is so convoluted that I haven't met a reporter in 10 years that understood the law.

Ray Allen is a Republican political consultant based in Richmond, Va.

ALLEN: The reformers have not chased the money out of politics at the federal level, they have just chased it into different avenues and made it harder to track.

Allen says in Virginia state campaigns are different. If you want to give $10 million to your best friend to pay for his or her entire campaign, that's cool. It's more than cool — it's legal. In Virginia, there are no limits on what a company, a union, or a rich friend can give to a politician running for a state office. There is just one, hard, fast rule: All that money has to be made public.

ALLEN: It creates a rough justice. If you are taking money, then the people know you're taking it.

Allen says this system lets voters sort what money is good and what just doesn't pass their sniff test. The consultant remembers when one of his client candidates got burned.

ALLEN: We took a $100,000 check from Pat Robertson. It took about three days for our opponents to be up on television tellin you to hide your children and batten down the hatches because we were going to impose a theocracy.

But in Washington, D.C., lawyers and political consultants have spent years figuring out new and ingenius ways to funnel huge amounts of money into national politics — often obscuring where the money actually comes from. And these groups have begun to move into Virginia state politics.

In 2005 a federally registered nonprofit called the Republican State Leadership committee took sides in the state's race for attorney general. At the time no one knew anything about where the group was getting its money. Democrat Creigh Deeds was the candidate on the wrong side of an avalanche of cash.

CREIGH DEEDS: In the last month of that campaign — last five weeks — when that money was coming in at chunk after chunk, the media buys were just more than what I could keep up with.

In just over a month the group dumped more than $2 million into Deeds' opponents campaign.

Deeds feels it cost him the election.

DEEDS: I'm awfully proud of the effort we made in light of the bombardment we were under. But the only thing that matters is at the end of the day I lost.

By 360 votes. The Virginia Assembly has tried to shut down that kind of shadowy fundraising. But already new cracks are beginning to show. Politicians in Virginia have started forming federal nonprofits that accept unlimited donations and don't reveal their donors.

And Virginia delegate Brian Moran recently pushed a law through the Assembly that would keep outsiders from raising money inside Virginia as a way to skirt their own states' laws. But Moran says . . .

BRIAN MORAN: You try to close one loophole and another loophole is created. It's kind of a lawyers relief bill. Smart people figure out a way.

So for now, Virginians who believe in the commonwealth's wide-open system of campaign fundraising, will have to work to make sure it stays transparent.

And with an army of lawyers just across the Potomac, they have their work cut out for them.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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