Powerful Pro-School-Voucher Group May Have Violated State Law [Updated]

PAC with ties to Jeffrey Yass connected to John McDaniel's case.

Students First PAC, a pro-school-voucher group backed by three managers of Bala Cynwyd-based Susquehanna International Group, may have violated state election law. Susquehanna’s Jeffrey Yass, an ardent charter and voucher advocate, and two like-minded associates, first got into the political game in 2010, pouring an unprecedented $5 million from Students First into State Senator Anthony Williams’ campaign for governor. Yass and his family have continued to push for vouchers since then. The possible violation is related to a Students First* campaign donation funneled to a Philadelphia state senate candidate last spring with the help of embattled former city employee John McDaniel.

On Monday, the city reached a settlement with McDaniel, who recently pleaded guilty to ethics violations committed while he was Blondell Reynolds Brown’s campaign manager. Amid his accepted penalties: a $300 fine for using his Progressive Agenda PAC as a conduit for Students First. From the settlement:

According to McDaniel, Students First made the contribution to Progressive Agenda with the understanding that Progressive Agenda would make a contribution to Friends of Fatimah, the committee of a candidate for state office. According to McDaniel, the contribution was arranged this way so Students First would not be directly connected with Friends of Fatimah. On April 4, 2012,  McDaniel made out and delivered to Friends of Fatimah a check for $5,900. According to McDaniel, Progressive Agenda kept $100 of the Students First contribution to cover what he called administrative costs.

While Students First PAC directly donated $25,000 to the campaign of the state senate candidate (Fatimah Loren Muhammad), McDaniel’s claim that he donated money to Friends of Fatimah on behalf of Students First could be interpreted as a violation of Section 1634 (25 P.S. § 3254) of the state campaign finance reporting law, which bars people from using middlemen to make contributions.

“If they are giving other [people] funds and designating whom they are to be given to, I think they are possibly in violation of the law,” says Barry Kauffman, executive director of Common Cause Pennsylvania.

If someone from Students First were to be found guilty, he or she could be fined or imprisoned up to two years. The man who ran the PAC at the time was Joe Watkins, a Republican political analyst for MSNBC, and the state-appointed receiver of Chester Upland Schools District. (A message to Watkins’s press agent wasn’t returned.)

McDaniel’s claim could also lead to other PACs being scrutinized. According to information compiled by City Paper and West Philly Local last spring, no fewer than four other groups appear to have made similar conduit donations to Friends of Fatimah on behalf of Students First PAC.

Why Students First PAC using conduits when they didn’t have to is anyone’s guess; there are no limits to how much money PACs can give to candidates in Pennsylvania. (Maybe it looks better if a candidate gets donations from several groups, rather than just one?)

Students First PAC has not responded to several requests for comment.

*Correction: This post originally stated that Students First PAC was affiliated with Michelle Rhee. Her organization is StudentsFirst.