Politics & Government

Is Krystal Ball's PAC a fresh approach or a get-rich scheme?

Krystal Ball attends A Dinner for Innovators hosted by WIE and PUKU in New York in December 2013.
Krystal Ball attends A Dinner for Innovators hosted by WIE and PUKU in New York in December 2013. BFAnyc/Sipa USA

(This story has been updated to reflect the most recent filings with the Federal Election Commission.)

A new Democratic group — one with support from Democratic congressmen and three of the biggest names in the tech industry — is testing the boundary between a new approach to politics and a self-enriching scam.

When the People’s House Project launched last May, founder Krystal Ball billed it as an organization that would defy old conventions and show Democrats a new model for winning campaigns. The former MSNBC host said her political action committee would support longshot candidates who embraced economic populism and lacked a political background — the kind of office-seekers who normally don’t receive support from party leaders.

But thus far, nobody has benefited more financially from the group than Ball herself. Of the $445,000 Ball raised for the group, she paid herself more than a third of that — $174,000 — in salary, according to documents filed with the Federal Election Commission. The majority of her salary — $104,000 — came in the first three months of this year alone.

That’s nearly eight times more than the nearly $22,000 the PHP has used to support its dozen endorsed candidates, some of whom have received just a single $1,000 contribution.

Political groups with a glaring discrepancy between personal salaries and candidate contributions are often deemed so-called “Scam PACs,” a type of organization that enriches its founders while doing little to assist the cause or candidate they purportedly support. And indeed, when presented with the FEC data by McClatchy, several of PHP’s donors and supporters reacted with anger, going so far as to withdraw their endorsement and contributions.

“As a donor to the People's House Project and someone who had hoped it would make a positive impact in getting candidates elected, I am as disappointed as anyone that so little of the money raised has made its way to candidates,” Democratic Rep. Tim Ryan, one of the group’s most important early supporters, said in a statement to McClatchy. “I can no longer support this PAC.”

He’s not alone.

“I would hope at the very least that literally half of what I’m giving you is not going right into your pocket,” said Clay Aiken, the former “American Idol” contestant, onetime Democratic congressional candidate, and PHP donor. “You should have just written her a check, should have just bought her a house."

McClatchy reached out to more than 20 people involved with the PHP, including donors, its endorsed candidates, and early supporters. Many of them, including two congressmen and the group’s largest contributors in the tech industry, declined to comment.

Others, including some of her top donors, say she’s not only running a legitimate operation — she’s practically reinventing politics for a broken Democratic Party.

Her most ardent supporters are the campaigns that have received her group’s endorsement. In interviews, each described Ball and her group’s executive director, John Moffett, as invaluable allies in their uphill fights to win primaries.

“Without Krystal Ball and the People’s House Project, I would not be where I am in this campaign,” said Karen Mallard, a Democratic candidate in Virginia’s 2nd Congressional District. “I would not be a contender.”

At a time when Democrats are searching for a way to win elections again, and more open than ever to new tactics and strategies, PHP is a perplexing case of what constitutes a genuine effort to take a different approach and what is simply wasted money.

When first contacted, Ball said McClatchy’s questions were sexist and added that she was writing her own story about why male reporters were focusing on women’s salaries instead of men’s. Later, she said that although she continued to think the initial questions were sexist in origin, she said she welcomed the scrutiny of her group.

For her part, Ball vigorously disputes that she has done anything improper.

“This is my full-time work that I’ve put my heart and soul into and floated financially for a while,” she said in an interview. “I’m extremely proud of and committed to the candidates that we try to serve.”

Rise of 'pop-up' groups

Donald Trump’s election in 2016 left grassroots Democrats devastated — and angry at party leaders they blamed for letting it happen. By 2017, that rage had been funneled into the creation of hundreds of progressive “pop-up” groups, each with the intent of helping the party get back on its feet and reshape how it does business.

The groups would focus in on an area of need — such as organizing town hall protests or recruiting young Democrats to run for office — and dedicate themselves to the task. Many of them, such as Swing Left, Indivisible, and Run for Something, have become important allies of the Democratic Party.

PHP’s mission, at least, fits into this larger firmament. Ball designed it to recruit and support a different type of Democratic candidates. Instead of lawyers and members of the business elite, she’d look for teachers and plumbers — confident they held the key to a successful future for the party.

“It’s overwhelmingly clear that everyday working people — particularly in the Midwest and Appalachian states — feel the Democratic Party is not just out of touch, but openly scornful of their concerns and priorities,” reads the group’s investment proposal. “We believe the only way to return the Democratic Party to relevance among those voters is to nominate candidates who understand the challenges working people face by first-hand experience, not because they read about it in The New York Times. They’re union members, teachers, veterans, cops, nurses, pink-collar workers, and others who share experiences with and speak the language of those who feel unheard in our donor-driven political system.”

But early on in its existence, and unlike many of these other grassroots groups, PHP began to receive major support from top Democratic officials. It had the backing, for instance, of three Democratic congressmen — John Yarmuth of Kentucky, Dan Kildee of Michigan, and Tim Ryan of Ohio — who gave the group legitimacy.

Ryan’s PAC donated $2,000, Yarmuth personally contributed $5,000, and all three praised the group publicly, attended its events, or worked with its endorsed candidates in some way.

PHP initially struggled to raise serious money. But Ball would eventually gain access to some financial muscle — in the tech industry. In December, Ball’s group received a $50,000 contribution from Chris Hughes, the Facebook co-founder and former owner of The New Republic. At the time, his contribution amounted to about a third of the group’s total take.

By rule, PACs are not allowed to accept contributions larger than $5,000. But Ball tweaked the group to become a so-called “Carey” committee (also known as a “Hybrid PAC”), which meant it would also raise contributions in uncapped amounts as long as it didn’t spend that money directly coordinating with campaigns.

That change paved the way for the group’s largest contribution to date, a $250,000 donation in February from Reid Hoffman, the billionaire co-founder of LinkedIn. His donation was quickly followed by another $10,000 contribution that month from tech entrepreneur Sam Altman.

At the end of March, the trio of donations accounted for almost 70 percent of PHP’s $445,000 in total contributions.

Through an assistant, Hoffman declined to comment. Attempts to reach Hughes and Altman were also unsuccessful.

Ball did would not speak directly to why the tech trio contributed to her group but said her group appeals to people distressed about the economy.

“In general, there are some in the tech community that realize the direction the country is going in from an economic standpoint and from a democratic standpoint is not going to work out well for them or anyone else,” she said. “And so, I don’t know if this was part of the pitch that resonated or not, but one thing I talk about a lot is how I believe the central challenge for our time is to create an economy that works for everybody.”

Not all of her core supporters, however, are happy with their investment. There may have been no more important figure for PHP — other than Ball herself — than Tim Ryan, the Ohio congressman who attracted attention for his unsuccessful bid to unseat Nancy Pelosi as House Democratic leader in 2016. Donors and PHP’s candidates described him as an important part of why they became interested in the group in the first place, and recounted meeting and talking with him at the PAC’s events. He was described as very supportive of the event — Ball even shared a text message she said was from the congressman in April that said she was doing a “phenomenal job.”

Through a spokesman, Ryan declined to talk more about PHP. Ball said she has not been able to talk with Ryan since the congressman told McClatchy he no longer supported the PAC.

Spokespeople for Kildee and Yarmuth both declined to comment.

Candidate praise

There’s no doubt that Ball and Moffett, the group’s executive director, actually help the candidates they endorse. They’ve just backed a very different kind of candidates, and unlike most groups, they’ve prioritized political advice over direct financial assistance.

Mallard, for example, is a teacher, a first-time candidate, and is running in a district President Donald Trump won in 2016. She is also an underdog in her own primary, where she’s raised nearly $60,000, which is less than three other Democratic candidates seeking the nomination.

People following the upcoming midterm elections might recognize a few of the names who have received PHP’s support, including Randy Bryce in Wisconsin’s 1st Congressional District and Richard Ojeda in West Virginia’s 3rd Congressional Candidate.

(Ojeda, along with another candidates endorsed by PHP, D.D. Adams in North Carolina’s 5th Congressional District, both won their primaries Tuesday.)

One man who received PHP’s support — Scott Sykes in Kentucky’s 1st Congressional District — had not filed a report with the FEC for the last quarter. Another, Alonzo Pennington, did file a report in the first quarter but, according to an FEC spokesman who reviewed his filing, had not yet filed a statement of candidacy. The FEC spokesman added that because Pennington had raised less than $5,000 in the year’s first quarter, he was also not yet considered a candidate in the eyes of the law.

Another candidate, Trent Nesmith, raised $12,000 in the year’s first three months.

(Pennington’s first-quarter fundraising report was not listed on his candidate page — a spokesman for the FEC says the website does not update when the most recent filing shows a low amount of money raised. A filing under “Trent Nesmith” reported the candidate has not filed reports with the FEC. He had filed under the name “Michael Nesmith.”)

Seven of the dozen candidates endorsed by the PHP are running in districts not included on the Democratic Congressional Campaign Committee’s list of 101 target districts.

Some Democrats will question the efficacy of backing longshot candidates, especially in a year when the party is hell-bent on winning the 23 seats it needs for a House majority. But helping unconventional candidates is an idea that has support from many Democrats, especially progressive leaders who think the party is too enamored with office-seekers with access to money.

“These folks have everything going for them in terms of ability to message, ties into the community, and the power and authenticity of who they are as individuals,” Ball said. “But they don’t have connections into those networks of power. We tried to help on that front.”

Candidates and campaign officials say Ball — herself a former congressional candidate in 2010 — was a go-to adviser for all manner of problems and questions. Her help was especially valuable, they added, because most of them couldn’t afford the kind of high-priced consultants who usually guide campaigns, especially for first-time candidates.

Mallard said Ball, for instance, helped arrange for an appearance on MSNBC. Ojeda said she set up events for him to meet with potential supporters in San Francisco and Washington. Michael Rosenow, campaign manager for a Democratic candidate in Minnesota, said he would check in with Ball twice a week in preparation for the campaign’s April convention. (Rosenow’s candidate, Jeff Erdmann, lost.)

Most said Ball had visited their district at least once and pointed to work the group did on their behalf through social media, such as setting up Facebook Live events.

“At the end of the day, they did a lot more than I’ve seen other PACs do,” Rosenow said.

Each the campaigns reached for this story said they are happy to have received any help from Ball at all. None saw a problem with her salary.

“It’s not just compensation for what she’s doing now,” said Eric Allen, Pennington’s campaign manager. “It’s compensation for leaving a career. It’s compensation for starting an organization.”

PHP is, without question, set up differently from most political groups. Many PACs are set up to deliver every last cent of their contributions directly to candidates. Men and women who run super PACs, on the other hand, do sometimes draw large salaries: Roll Call reported in 2012, for instance, that the head of the GOP outside group American Crossroads earned a $1.1 million salary. (Ball referenced the Roll Call story in an email to McClatchy.)

His group, however, spent about $325 million on elections that year.

PHP instead appears to function — in intent, at least — more like EMILY’s List, a group that backs female Democratic candidates who support abortion rights. EMILY’s List does more than just spend money on campaigns, including recruiting, training, and advising the dozens of candidates it endorses every election cycle.

EMILY’s List, of course, does also spend heavily: Its affiliated Super PAC, Women Vote!, made more than $33 million in independent expenditures during the 2016 election, according to Open Secrets.

“That is not how we operate,” Ball said. “We are definitely not just a clearinghouse for contributions to candidates.”

Running PHP was Ball’s sole occupation until this month, she said, when she will begin hosting a morning show with The Hill newspaper.

Ball also paid her own salary in fits and starts, something she says happened because of the group’s early uneven fundraising. When she received Hughes’s $50,000 contribution on December 21st, for example, she paid herself $25,000 the same day.

On a single day this year, March 1, she received $61,000 total in salary, according to FEC reports.

Ball said her annual salary should be $15,000 a month (or $180,000 annually) and that the extra money she made in the first three months of this year was back pay for last year’s efforts. (Her executive director, Moffett, should make a salary of $120,000 annually, she said.)

Pressed why her group hasn’t paid more money directly to candidates, she said PHP plans to eventually maximize a $5,000 contribution to all of its endorsed candidates. She said the group will “probably” also begin an independent expenditure campaign to help some of its candidates.

The PAC did increase its rate of contributions in the year’s first three months, contributing more than $18,000 to campaigns (through direct donations and in-kind contributions) after giving just $3,000 last year.

Asked if the group could do more to help candidates if she and Moffett took a lesser salary, Ball demurred.

“I guess I would go back to asking the candidates about the value we provide,” Ball said.

'A little different animal'

Ball says she tells her donors exactly how their money will be spent when they contribute, informing them that her group’s approach is “unconventional.” And at least for some of them, that appears to be the case.

“This is a little different animal,” said Harrison Wellford, founder and CEO of the clean-energy group Wellford Energy. “But I wouldn’t be involved in it if it weren’t. I don’t have time for a lot of the conventional DNC stuff. I just don’t have time for it.”

Not every donor, of course, thinks Ball was up front with how the group planned to spend its money.

Aiken said he was drawn to the group because of his own House 2014 campaign, in a deep-red North Carolina district. He wanted to support something that would help candidacies like his, which received very little material support from national Democrats.

He was audibly angry when told how most of the money had been spent.

“Are you doing this because you want to improve the ability of Democratic candidates to win, or are you doing it because you want to make money?” he asked.

A representative for Aiken later said the singer has requested a refund for his donation.

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