A network of political groups tied to Donald Trumps chief strategist may have dodged corporate taxes and shielded information about its executives by using Delaware shell companies to surreptitiously conduct business in another state.
The allegations involve a constellation of groups financed by the wealthy Trump-backing Mercer family: a super PAC called Make America Number 1 and two Delaware-incorporated political vendors, film production company Glittering Steel, and data firm Cambridge Analytica.
The super PAC has steered large sums to the two companies, which have in turn paid consulting fees to chief White House strategist Steve Bannon. The payments to and from Cambridge Analytica and Glittering Steel were sent to a single Beverly Hills address.
That indicates that the companies were engaged in intrastate commerce in California, according to a complaint filed with the states attorney general and secretary of State on Wednesday by the Campaign Legal Center, a legal watchdog group.
Out-of-state companies engaged in intrastate business in California must register as foreign corporations with the secretary of State, but that office has no incorporation records on file for either company.
Foreign corporate registration in California is designed to ensure that companies doing business in the state pay taxes on the income they earn there and disclose specific information about their corporate structures.
By failing to register with the California secretary of State, Cambridge Analytica and Glittering Steel may have escaped taxes on income derived in California and disclosure requirements that are far greater than those levied on corporations in Delaware, a state known for its corporate friendly business climate.
Out-of-state corporations and limited liability companies in California are required to disclose the names of their officers or managers. In Delaware, according to the Financial Transparency Coalition, you need to provide more identification to obtain a library card than you do to create a company.
Cambridge Analyticas and Glittering Steels incorporation in Delaware adds another layer of opacity to the operations of a network of advocacy groups and political vendors backed by hedge fund magnate Robert Mercer and his daughter Rebekah that helped propel Trump to victory last year.
That opacity persists despite extensive business activities in Californiaactivities that should, CLC says, force more information about the Mercer political network into public view.
Cambridge Analytica did not respond to questions about its corporate structure. Efforts to reach a representative for Glittering Steel were not successful. Bannon and his private spokesperson also did not respond to multiple requests for comment.
Bannon has been deeply involved with both companies, according to recently released financial disclosure filings. Until August 2016, when he signed on as the Trump campaigns chief executive, he was Glittering Steels chairman and Cambridge Analyticas vice president and secretary.
As of January, Bannon had significant financial stakes in both companies. He reported holdings of as much as $5 million and $250,000 in Cambridge Analytica and Glittering Steel, respectively. Together, the two companies paid him nearly $300,000 in consulting fees last year.
The companies monthly payments to Bannon came by way of Bannon Strategic Advisors, a registered California corporation.
That corporation was headquartered at 8383 Wilshire Boulevard, Suite 1000, in Beverly Hills until late last year. Make America Number 1s FEC filings show more than $2.1 million in payments to Glittering Steel and Cambridge Analytica sent to the same address.
CLC says that is evidence of a commercial domicile in the state.
On the same day that CLC filed a legal complaint last year alleging that the super PACs payments to the two companies were in effect illegal disbursements to the Trump campaigns top operative, Bannon Strategic Advisors quietly filed amended incorporation documents (PDF) changing its address to a mailbox at a nearby UPS Store.
Make America Number 1s FEC filings indicate that Cambridge Analytica and Glittering Steel maintained physical presences in California. Their payments to Bannon Strategic Advisors, which is incorporated in the state, may therefore have constituted intrastate commerce and required that both firms register with Californias secretary of State.
CLCs complaint focused solely on Glittering Steel, but the same circumstances also apply to Cambridge Analytica, which shares the same incorporation structure and Beverly Hills address in FEC filings.
Public records indicate that in addition to their failure to register with the California secretary of State, both companies may have also improperly failed to file tax returns in the state.
Payments to the companies at their California address and their disbursements to Bannons consulting company both exceed the thresholds for officially doing business in California, a designation that requires out-of-state companies to file California tax returns.
CLC is asking state authorities to investigate the matter. It also pointed to additional information on Bannons relationship with both companies, revealed by his financial disclosure statement last month, to supplement an FEC complaint alleging that Make America Number 1 violated federal election laws by steering money to entities in which Bannon was invested while he ran the Trump campaign.
Information gleaned from incorporation documents in California would shed additional light on those alleged violations, according to Brendan Fischer, the director of CLCs FEC reform program.
Bannons company appears to have dodged the California disclosure requirements that would provide more public information that could inform whether it broke federal campaign finance law, Fischer said in a statement.