The allegations of fraud felt like a given. Ever since Sam Bankman-Fried’s downfall last month — and it was only last month — it seemed pretty clear that he’d face financial crime charges like the ones the United States Attorney for the Southern District of New York announced a week ago. But there was another count unsealed in the December 13 indictment that wasn’t necessarily related to the disgraced crypto king’s business practices: SBF, the SDNY alleged, had “caused contributions to be reported in the names of co-conspirators rather than in the name of the true source of the funds.” A violation of campaign finance law, allegedly committed with the assistance of “others known and unknown.”
Who else participated in SBF’s alleged straw donor scheme? That’s not yet clear, but a separately unfolding scandal is raising some eyebrows. In New York magazine Tuesday, David Freedlander reported that Sean McElwee — the bombastic, well-connected Democratic activist, ousted Data for Progress founder, and SBF ally — had pushed an employee to donate substantially in the 2022 midterm cycle. On Wednesday, political analyst Ethan Winter, was identified by CNBC as the employee who had donated nearly $31,000 to candidates this election; he has since resigned from Data for Progress, sources told the outlet. Winter confirmed his resignation to Politico on Thursday, but apparently did not answer any questions about the alleged straw donor scheme. (He denied the allegation to Freedlander.) “I believed, and continue to believe, in the mission of Data for Progress,” Winter said. “I wish it nothing but the best.”
According to a Politico source, the $31,000 Winter reportedly donated to candidates in 2022 would have constituted about a quarter of his salary. And, as the outlet notes, he’s not the only McElwee subordinate to have contributed unusually large amounts to 2022 candidates. That’s put McElwee, who has been forced out of the progressive think tank he founded in 2018, under even more intense scrutiny than he was already facing, including for gambling on the elections his polling organization was forecasting.
“Sean McElwee was dismissed as a result of allegations of misconduct and we are launching a full independent review of that conduct,” Data for Progress told Politico in a statement. “We will continue to work alongside our talented team of policy experts and data scientists to provide polling that pushes the progressive movement forward.”
A lawyer for McElwee told Freedlander that the straw donor allegation was “categorically false.” But he has reportedly expressed distaste for campaign finance rules in the past. According to Politico, McElwee told a friend at a party over the summer that donation restrictions were “dumb.” “Why can’t I give more than $2,200 to someone?” he asked, while reportedly playing Super Smash Bros. “His view was that those campaign finance rules violated his First Amendment rights,” a McElwee friend told Playbook.
The alleged scandal at Data for Progress is notable, given McElwee’s alliance with Bankman-Fried, who was arrested in the Bahamas on December 12 and extradited to the U.S. on Wednesday, the same day two associates — Caroline Ellison and Gary Wang — pleaded guilty to fraud charges. Before the implosion of Bankman-Fried’s crypto exchange, McElwee acted as an adviser to the FTX founder, who had promised to give a billion dollars to Democrats ahead of the 2024 election. (Bankman-Fried, who claimed to be an adherent of “effective altruism,” was the second-biggest individual donor to Democratic causes in the 2022 cycle, but told Tiffany Fong in an interview after his fall from grace that he had donated roughly the same amount to Republicans — in dark money.) Winter, McElwee, and Gabe Bankman-Fried, the FTX founder’s brother, gave extensively to Democratic candidates, many of whom also happened to be regarded as friendly to crypto, as McElwee’s critics have pointed out.
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As Puck reported in November, McElwee’s exit from Data for Progress was prompted, in part, by his alliance with Bankman-Fried. But the collateral damage from SBF’s downfall could be greater if it turns out that McElwee is tied up in this straw donor scheme. Not only could it ensnare the activist, who rose to prominence with the hashtag #AbolishICE during Donald Trump’s presidency. It could also be another headache for Democrats: Already trying to figure out what to do with the money they received from SBF, they may have to reckon with the fall of McElwee, a deeply-entrenched figure in Democratic politics, whose former organization’s influence extends to the White House. McElwee attorney Matt Levine told Politico that he did not pressure anyone to take part in a straw donor scheme and said he had “no reason to believe” the campaign finance charge against Bankman-Fried has “anything to do with” McElwee. Asked by the outlet if he had been contacted by the Department of Justice, Levine responded: “We have no further comment at this time.”
Eric Lutz
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