Democratic Party of Oregon Will Return Illegal $500K FTX Contribution


The Democratic Party of Oregon said Friday it will return the illegal $500,000 campaign contribution it received last October from an executive at FTX, the bankrupted cryptocurrency exchange, by tapping into contributions from some of the state’s most powerful Democrats.

The party said in a news release Friday that it would disgorge the $500,000 to the U.S. Marshal’s Service, as requested on April 13 in a letter from the U.S. Justice Department, which said it intended to use the funds to compensate victims of the FTX fraud.

The DPO received the contribution last fall from FTX executive Nishad Singh, but at his request, party officials misattributed it to Prime Trust, a crypto payment processor. Singh pled guilty to fraud and other charges in February. The Oregon Secretary of State’s election division subsequently investigated the party’s handling of the contribution, and fined it $15,000 last month.

The Oregon Department of Justice is also reviewing whether to open a criminal investigation into whether the DPO violated a state law against accepting campaign contributions under a false name.

The party said Friday that it is is also complying with an additional request to return $7,100 out of a $10,000 contribution that former FTX Chief Executive Sam Bankman-Fried made to the Oregon Victory Fund last year and was later transferred to the DPO. Bankman-Fried faces a slew of criminal charges tied FTX’s collapse.

The party’s state account, where the $500,000 was deposited in October and quickly spent on the gubernatorial and other campaigns in last November’s election, has a balance of only $32,000, according to state campaign finance filings. But in Friday’s news release, a party official credited the ability to repay the money to contributions from the campaign accounts of Gov. Tina Kotek, U.S. Sens. Ron Wyden and Jeff Merkley, and U.S. Reps. Earl Blumenauer, Suzanne Bonamici and Val Hoyle.

Kotek’s campaign filings showed a $100,000 contribution Friday to the party.

“The party has been working together to resolve this issue since Nishad Singh’s guilty plea to federal charges,” Dr. Rosa Colquitt, chair of the DPO, said in a statement. “This resolution will fully account for these donations by ensuring the funds go where they belong — to federal law enforcement officials working to achieve justice in this case.”

In fact, the party was already caught in a controversy of its own making over the historically large contribution from a company that had little to gain by influencing Oregon’s state politics, but would certainly want to curry favor with members of Congress in a position to influence cryptocurrency regulation.

Democrats’ heavy hitters like Kotek and Wyden are likely hoping the repayment will get an embarrassing albatross off their backs.

Hank Stern, a spokesperson for Wyden, said via email that Wyden had separately returned to the U.S. Marshal’s Service the $2,900 portion of Bankman-Fried’s $10,000 contribution to the Oregon Victory Fund that went to his campaign fund. While the fundraiser who helped arrange the larger contribution to the party is one who has worked for Wyden for years, Stern said his office had no role in brokering the contribution to the state party, which came as Republican gubernatorial candidate Christine Drazan appeared to be surging in the polls.

The party had little choice but to repay the funds, according to Brett Kappel, a Washington D.C., campaign finance lawyer who represents nonprofits and political campaigns. He said that precedent was well established when bankruptcy receivers went after recipients of campaign contributions after the bankruptcies of Enron in 2001 and Stanford Financial Group in 2009.

Recipients of contribution in both those cases argued they couldn’t be required to return the money because they’d already spent it. That’s didn’t fly in court, Kappel said, which determined the contributions were fraudulent transfers.

“If you get a court order that these are fraudulent conveyances, it becomes a debt that they have to continue reporting on (campaign finance reports) until its paid off,” he said. “You can’t escape the bankruptcy court.”