The U.S. secretly traced a massive cyberespionage operation against the 2008 presidential campaigns of Barack Obama and John McCain to hacking  units backed by the People’s Republic of China, prompting  high level warnings to Chinese officials to stop such activities,  U.S. intelligence officials tell NBC News.

The disclosure on the eve of a two-day summit between the U.S. and Chinese presidents highlights what has become a persistent source of tension between the two global powers: Beijing’s aggressive, orchestrated campaign to pierce America’s national security armor at any weak point – in this case the computers and laptops of top campaign aides and advisers who received high-level briefings.

The goal of the campaign intrusion, according to the officials: to export massive amounts of internal data from both campaigns—including internal position papers and private emails of key advisers in both camps.

“Based on everything I know, this was a case of political cyberespionage by the Chinese government against the two American political parties,” said Dennis Blair, who served as President Obama’s director of national intelligence in 2009 and 2010. “They were looking for positions on China, surprises that might be rolled out by campaigns against China.”

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The intrusion into the campaigns’ computer networks and subsequent efforts to penetrate them were highly sophisticated and continued for months after they were first detected by the FBI in the summer of 2008, according to the officials and an Obama campaign security consultant hired to thwart them. The intrusions and some details of what was targeted have been previously reported, but not publicly attributed to government-backed Chinese hackers.

Obama publicly referred to the attacks -- in general terms -- at a May 29, 2009, White House event announcing a new cybersecurity policy. “Hackers gained access to emails and a range of campaign files, from policy position papers to travel plans,” he said then.

But neither the president nor his top aides publicly spoke about the identity of the hackers, or the depth and gravity of the attack.

Officials and former campaign officials now acknowledge to NBC News that the security breach was far more serious than has been publicly known, involving the potential compromise of a large number of internal files. And, in one case, it included the apparent theft of private correspondence from McCain to the president of Taiwan.

Cyberattacks by the Chinese are expected to be at the top of the president’s agenda this weekend. U.S. officials say that such intrusions – many of them traced to a unit of the People’s Republic of China in Shanghai – have gotten even more brazen since the 2008 campaign.

“There’s been successful exfiltration of data from government agencies (by the Chinese) up and down Pennsylvania Avenue,” said Shawn Henry, who headed up the FBI’s probe of the 2008 attacks as the bureau’s chief of cyberinvestigations. He is now president of Crowdstrike, a computer security firm.

David Plouffe, Obama campaign manager, vividly recalls getting a phone call from Josh Bolton, then President George W. Bush’s chief of staff, in the middle of August 2008 alerting him to the intrusion and that the FBI was investigating the attack. “He said we have reason to believe that your campaign system has been penetrated  by a foreign entity,” Plouffe said in an interview.

Within days, the campaign dispatched a computer security team from Kroll Advisory Solutions to Chicago to cleanse the campaign’s infected computers — including the laptops of senior staffers.   

In retrospect, the attack seems simple. It was delivered by a “phishing” email – outlining the “agenda” for an upcoming meeting — that circulated among top staffers and  contained a zip file attachment with “malware,” a hidden malicious virus.

But it was no ordinary virus, said Alan Brill, the senior managing director of Kroll Solutions. The malware was “as sophisticated as anything we had seen” and was part of what he called “an infection chain” that replicated itself throughout the Obama campaign’s computer system. It also was designed to stay buried in the computers for months, if not years, he said.

He and his consultants were unable to determine precisely what had been compromised, but Brill says the bombardment of viruses by the attackers continued for months.  “It was like a firefight,” Brill said. “This was starting every day knowing that you didn’t know what they were going to throw at you.” 

Trevor Potter, who served as general counsel to the McCain campaign, said he got a similar warning about the cyberintrusion during a briefing from U.S. law enforcement officials at campaign headquarters..  “They told us, ‘You've been compromised, your computers are under the control of someone else. You need to get off network’,” said Potter.

In one incident that caused concern among U.S. intelligence officials, the Chinese hackers appeared to have gotten access to private correspondence between McCain, then the GOP presidential candidate, and Ma Ying-jeou, the newly elected president of Taiwan. On July 25, 2008, McCain had signed a personal letter — drafted on campaign computers — pledging his support for the U.S. –Taiwanese relationship and Ma’s efforts to modernize the country’s military. A copy of the letter has been obtained by NBC News. 

But before the letter had even been delivered, a top McCain foreign policy adviser got a phone call from a senior Chinese diplomat in Washington complaining about the correspondence. “He was putting me on notice that they knew this was going on,” said Randall Schriver, a former State Department official who was serving as a top McCain adviser on Asian policy. “It certainly struck me as odd that they would be so well-informed.”

A spokesman for the Chinese Embassy said officials were unavailable for comment because they were busy preparing for this weekend’s summit between President Obama and Chinese President Xi Jinping in California. But in recent weeks, Chinese officials have denied any role in cyberattacks against the U.S. government and private enterprise. “China opposes all forms of cyberattacks,” Zheng Zeguang, assistant Chinese foreign minister, said in a press briefing in Beijing last week.

When the summit does take place this weekend,  hacking  by the Chinese is expected to be at the top of the president’s agenda.

U.S. officials say that Chinese  intrusions have escalated in the years since, involving repeated attacks on U.S. government agencies, political campaigns, corporations, law firms, and defense contractors — including the theft of national security secrets and hundreds of billions of dollars in intellectual property.

A recent report from a U.S. commission chaired by former Intelligence Director Blair and former U.S. Ambassador to China Jon Huntsman Jr., estimated that the theft of intellectual property – mostly from China – was costing the U.S. $300 billion a year.

“It’s stealing of information and there should be outrage,” said Henry, the former FBI executive assistant director.  

Previous warnings to the  Chinese about cyberattacks have been brushed off. The 2008 attacks, for example, prompted U.S. intelligence officials to sternly warn the Chinese that they had “crossed the line,” says one former senior U.S. official who was directly involved in the investigation.

“We told them we knew what they were up to – and that this had gone too far,” said the former official.  Chinese officials listened politely and denied they had anything to do with the attacks on the campaign, the former official said.

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Federal officials filed charges Friday against Jesse Jackson Jr. after the former congressman reportedly signed a plea deal for allegedly improperly spending hundreds of thousands in campaign funds.

The paperwork was filed at the U.S District Courthouse in Washington. Jackson, who left the public eye last summer for treatment of bi-polar disorder and resigned from office in November, is not expected to make an appearance, but he offered a response in his first statement to the public in months.

Read the full indictment here in PDF

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“Over the course of my life I have come to realize that none of us are immune from our share of shortcomings and human frailties," Jackson said in the statement released by the attorneys representing him in the federal probe.

"Still I offer no excuses for my conduct and I fully accept my responsibility for the improper decisions and mistakes I have made," he said. "To that end I want to offer my sincerest apologies to my family, my friends and all of my supporters for my errors in judgment and while my journey is not yet complete, it is my hope that I am remembered for the things that I did right.”

Among the items that Jackson is accused of purchasing with campaign funds: 

• $10,000 worth of Bruce Lee Memorabilia. 
• More than $20,000 in Michael Jackson memborabilia. 
• Martin Luther King Memorabilia. 
• Fur coats and capes and more. 

NBCChicago reported last week that Jackson will plead guilty as part of his plea deal, and jail time would be in the hands of a federal judge who has not yet been assigned. Converting campaign contributions for personal use is strictly prohibited by federal law and opens Jackson up to “not more than 5 years” in prison. 

Prosecutors will recommend a prison sentence for between 46 and 57 months plus fines, according to reports.

Jackson's wife, former Chicago Ald. Sandi Jackson, has also been charged with falsifying her tax returns and reporting less income than she made.

Read the Sandi Jackson indictment here in PDF

Sandi Jackson has pleaded guilty to the tax offense, according to her attorney Tom Kirsch. The single charge carries a maximum prison sentence of 3 years, but Kirsh said the plea agreement calls for significantly less time. 

"Today, Sandi Jackson reached an agreement with the U.S. Attorney’s Office to plead guilty to one count of tax fraud," reads a statement from her attorneys. "Ms. Jackson has accepted responsibility for her conduct, is deeply sorry for her actions, and looks forward to putting this matter behind her and her family. She is thankful for the support of her family and friends during this very difficult time."

Per the reported plea deal for Jackson Jr., he must repay the government hundreds of thousands of dollars for items such as a $40,000 Rolex watch, travel expenses for a woman he described as a “social acquaintance” and furniture purchased for his home.

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Sandi Jackson resigned last month from her elected position as Chicago’s 7th Ward alderman. For years she received a $5,000 a month check from her husband as his political consultant.

Jackson Jr., the son of famous civil rights leader Rev. Jesse Jackson, has been the subject of a federal investigation into potential misuse of campaign funds since around the time he left office to seek medical treatment on June 10, 2012.

 

President Barack Obama’s presidential campaign has turned over its most valuable asset — a massive computer database containing personal data on millions of American voters — to a new advocacy group created to advance the White House agenda on issues ranging from gun control to immigration reform. 

Organizing For Action (OFA), the advocacy group set up in recent weeks by the president’s top political aides, has already acquired access to the database under a leasing agreement with the Obama campaign, Katie Hogan, a former Obama campaign aide who is now serving as spokeswoman for the lobbying group, told NBC News. The information will be used to unleash an “army of the door knockers” to back the president’s legislative agenda as well as raise money for “issue ads” – particularly in crucial congressional districts, she said.  

As an opening salvo, the group on Friday urged the president’s supporters to call members of Congress in support of Obama’s gun control proposals, even offering a sample script of what they should say.

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The creation of OFA, which is being chaired by former Obama campaign manager Jim Messina, is stirring controversy – both among public interest groups over the group’s plans to accept unlimited corporate donations, and among privacy advocates over the transfer of the database.

“It’s extremely worrisome,” said Lillie Coney, associate director of the Electronic Privacy Information Center, noting that Obama campaign supporters likely have no idea that personal data they voluntarily shared with the campaign has now been transferred and is being used for purposes beyond the election.

Dubbed the “nuclear codes” by campaign aides, the Obama campaign database is widely described as one of the most powerful tools ever developed in American politics. According to published reports, it contains the names of at least 4 million Obama donors – as well as millions of others (the campaign has consistently refused to say how many) compiled from voter registration rolls and other public databases. In addition, the campaign used sophisticated computer programs — with code names like “Narwhal” — to collect information through social media: Anybody who contacted the campaign through Facebook had their friends and “likes” downloaded. If they contacted  the campaign website through mobile apps, cellphone numbers and address books were downloaded. Computer “cookies” captured Web browsing and online spending habits.

“I can’t think of anything that rivals this data,” said Coney, noting that much of the data was voluntarily supplied by voters, something that consumers are often reluctant to do when dealing with commercial companies. “The private sector would love to be able to do what the (Obama) campaign was able to do.”  

OFA spokeswoman Hogan said that Obama supporters have the option in emails they receive of opting out — or unsubscribing — from the list, as required by federal law. But critics say that is not necessarily an option for information collected about voters through other means (such as public databases) and note that many on the list likely don’t notice the “unsubscribe” fine print on the emails.

At the same time, OFA’s plans for corporate-backed lobbying of Congress have spurred sharp criticism from campaign reformers — a cause the president once championed. Fred Wertheimer, president of Democracy 21, a leading reform group, called OFA “dangerous and unprecedented,” noting that it has been set up under the same section of the tax code used by controversial GOP advocacy groups, such as Karl Rove’s Crossroads GPS (as a 501(c)(4) “social welfare” nonprofit organization). This will allow the group to accept unlimited donations from wealthy individuals and corporations.

“With his decision to allow corporations to fund the new organizations that will operate as an arm of his presidency, President Obama has ‘given a green light to a new stampede of special interest money,’” said Wertheimer in a statement that quoted Obama’s own words two years ago to denounce the Citizens United Supreme Court decision striking down  many campaign finance limits. “This would take President Obama about as far away as he could possibly get from the goal he set in 2008 to change the way business is done in Washington.” 

Related: Nonprofit spends big on politics despite IRS limitation

In response to a request for comment, a White House spokesman emailed recent comments by top Obama political adviser David Plouffe to ABC’s George Stephanopoulos: “Yes, we will voluntarily disclose all of our donors,” Plouffe said. “And we're very excited. The people who actually made the president's campaign in both '08 and '12, our great grassroots volunteers, were pretty clear after the election they wanted to stay with it and they want to be out there organizing, driving message, holding people accountable on issues like immigration, you know, the deficit and jobs, gun safety.”

But how much the group will disclose about the source of its money is still unclear. There is no legal requirement for a 501(c)(4) group like OFA to do so. Hogan, the OFA spokeswoman, declined to say how often the group will make disclosures or whether it will report amounts that donors give or simply provide a list of contributors. (Such a list -- without amounts detailed -- was recently released by the Presidential Inaugural Committee.) “That’s still being worked out,” she said.

As if to underscore the role of major corporations in helping to underwrite OFA, the unveiling of the group came at a special invitation-only event on inaugural weekend at the Newseum, sponsored by Business Forward, a corporate-backed trade group close to the White House, according to a Politico account. Business Forward -- whose charter members include Citi, Dow Chemical, Duke Energy, Ford, Google and Comcast, majority-owner of NBCUniversal, parent company of NBC News -- had lobbied for the White House-backed fiscal cliff deal, specifically touting its tax breaks for businesses, such as write-offs for new capital investment and research and development credits, according to a statement on the group’s website.

“We need you. This president needs you,” Messina said at the launch event, according to the Politico account, adding that the national advisory board of OFA will be “filled with people in this room.”  

One corporate executive who attended the event told NBC News the roll out -- which featured a spirited talk by former President Bill Clinton on gun control -- drew numerous major Obama campaign bundlers and fundraisers, such as Obama campaign finance chairman Mathew Barzun (now reportedly a front-runner to be tapped for ambassador to the Court of St. James) and finance director Rufus Gifford.

“My takeaway from this was that they set this up to take advantage of the Citizens United decision and operate this outside the Democratic National Committee so they won’t have to file (election) reports,” said the executive, who asked not to be identified.

Hogan, the OFA spokeswoman, said that OFA will not run campaign ads — only “issue” ads that do not fall under the election laws.

But the underlying political purpose of the group is not disputed. “The way it’s organized, we legally can’t participate in elections,” Stephanie Cutter, a top Obama campaign official who now serves on the board of OFA, said at a recent Politico-sponsored inaugural event. “But that doesn’t mean the issues we’re organizing around won’t mobilize the American people to vote for things — to vote for that economy we’ve been working for, to vote for immigration reform, to vote for common sense gun reforms. I think we can affect elections, we just can’t legally be involved in them — for this particular organization.”

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Despite outraising its Democratic counterpart by a 2-to-1 margin, the Republican Governors Association won only four of 11 races in the 2012 election, a far cry from the success it enjoyed two years ago.

The Washington D.C.-based political organization raised almost $100 million, according to recently released Internal Revenue Service data. The group targeted six states it considered winnable, losing five of them. Democrats won seven of the 11 contests, but the GOP managed to pick up one seat in North Carolina, long held by Democrats.

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The top donors to the so-called “527” organization, which can accept unlimited contributions from billionaires, corporations and unions, are familiar Republican Party patrons — No. 1 is Bob Perry, a Texas homebuilder and perennial RGA supporter, who gave $3.25 million. That’s a little more than half of what he gave in 2010.

Billionaire casino magnate Sheldon Adelson is No. 2, with $3 million in donations between him and his wife. According to the latest Federal Election Commission reports, Adelson is the top donor to super PACs in 2012, doling out more than $93 million along with his family.

Conservative billionaire David Koch — who has not made any contributions to super PACs — was the organization’s third-highest donor, writing two checks totaling $2 million. Koch is co-owner of the second-largest privately held company in America, Koch Industries, an energy conglomerate.

Seven of the RGA’s top 10 donors are corporate executives who gave at least $1 million. Two of them, Paul Singer and Kenneth Griffin, are hedge fund managers.

Six of the Democratic Governors Association's top donors were unions. The American Federation of State County and Municipal Employees topped the DGA donors list, giving about $1.3 million. The Service Employees International Union gave about $1.1 million, while the American Federation of Teachers gave at least $772,000.

Top corporate donors to the DGA included pharmaceutical giants Pfizer, which gave almost $700,000, and AstraZeneca, which contributed nearly $600,000. The companies also gave comparable sums to the RGA. The DGA also got corporate support from health insurer United Healthcare Services Inc., and AT&T.

The DGA raised nearly $50 million, the organization's "strongest fundraising year ever," according to spokeswoman Kate Hansen. 

'Enormous impact on state elections'
The DGA and RGA have devised national strategies for collecting unlimited funds from unions, corporations, and wealthy individuals, and funneling the money into state races. Both have used networks of state-based PACs to maneuver around various state limits on campaign giving.

“They’ve had an enormous impact on state elections across the nation,” said Ciara Torres-Spelliscy, an election law expert at Stetson Law School. “In many states they were consistently a top spender.”

The circuitous methods used by both organizations to inject corporate and union cash into state races and mask the identity of its donors have raised legal questions, prompted lawsuits, and tested the capacity of state election boards to enforce limits on outside spending.

Both organizations have told the Center for Public Integrity that they fully comply with campaign finance laws, and that they report their donors and spending to the IRS.

The RGA set up a federal super PAC called RGA Right Direction, and fed it with $9.8 million in contributions. The super PAC — another type of organization that can accept unlimited donations from individuals and corporations — then made a large contribution to Indiana Republican candidate Mike Pence, and bought ads in tight state races in Montana, Washington, New Hampshire, and West Virginia.

Super PACs are normally used to spend money on federal campaigns. By passing the funds through the super PAC, which reported its sole donor as the RGA, the association effectively shielded the identities of the donors who paid for ads in the state races.

In North Carolina, the RGA spent millions of dollars, directly from corporate treasuries to win in a state long led by Democratic governors. The unlimited contributions from dozens of corporations across the country went toward ads supporting Republican candidate Pat McCrory, who won convincingly over Democratic Lt. Gov. Walter Dalton.

The DGA, too, used a network of state-affiliated PACs, to fund ad campaigns in battleground states like Montana and North Carolina. It was the primary funder of a PAC called North Carolina Citizens for Progress, which purchased ads attacking McCrory.

While America’s wealthiest corporate executives tend to prefer the RGA, and unions give almost exclusively to the DGA, some donors played both sides this election.

Agricultural giant Monsanto, credit card company Visa and health insurance company Humana were large donors to both the RGA and DGA — each giving about $100,000 to both groups.

Despite the Republicans' win-loss record, RGA spokesman Michael Schrimpf called 2012 "a successful year by any standard" with Republicans now in control of governorships in 30 states. Most of those gains, however, came in 2010. The North Carolina win and the failed effort to recall Scott Walker, Wisconsin's Republican governor, in June, were high points for the GOP this year.

In addition, in five states targeted by the RGA where it lost, the Democrats held advantages unrelated to fundraising. 

Missouri and West Virginia featured Democratic incumbents. Three other states — Montana, Washington and New Hampshire — had open seats where a Democrat had previously been in power.

The two organizations will put their fundraising powers to the test again in 2013, when Virginia and New Jersey choose their next governors.

Michael Beckel contributed to this report.

The Center for Public Integrity is a non-profit independent investigative news outlet.  For more of its stories go to publicintegrity.org

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Updated 5:20 p.m. ET -- The biggest corporate contributor in the 2012 election so far doesn’t appear to make anything — other than very large contributions to a conservative super PAC.

Specialty Group Inc., of Knoxville, Tenn., donated nearly $5.3 million between Oct. 1 and Oct. 11 to FreedomWorks for America, which is affiliated with former GOP House Majority Leader Dick Armey.

FreedomWorks’ super PAC has spent more than $19 million on political advertising, including $1.7 million on Oct. 29 opposing Tammy Duckworth, a Democrat running for Congress in Illinois against Tea Party favorite Joe Walsh, a first-term incumbent.

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The buy was more than four times greater than the group’s previous largest single expenditure.

Specialty was formed only a month ago. Its “principal office” is a private home in Knoxville. It has no website. And the only name associated with it is that of its registered agent, William S. Rose Jr., a lawyer whose phone number, listed in a legal directory, is disconnected.

Rose released a press release Monday saying the company was created to "buy, sell, develop and invest in a variety of real estate ventures and investments." 

In the six-page statement, Rose said he was a "disappointed, yet staunchly patriotic, baby boomer" with concerns about the administration's handling of the terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, as well as the Department of Justice's botched "Operation Fast and Furious" gun-walking program. 

Specialty is the biggest and most mysterious corporate donor to super PACs, but it is not unique.

A new analysis by the Center for Public Integrity and the Center for Responsive Politics shows that companies have contributed roughly $75 million to super PACs in the 2012 election cycle.

Super PACs, which were created in the wake of the controversial U.S. Supreme Court’s Citizens United decision in 2010, can accept donations of unlimited size from corporations, unions and individuals. They spend the funds mostly on negative advertising.

The centers’ analysis found that 85 percent of money from companies flowed to GOP-aligned groups, 11 percent went to Democratic groups and the remainder went to organizations not aligned with either party.

First Read: Full coverage on the campaign trail

Prior to Citizens United, corporate spending on candidate advertising was not allowed. The decision raised fears that massive donations from corporate treasuries would flood the election in 2012.

In fact, the largest amounts have come from wealthy businessmen. However, about 11 percent of the $660 million raised by all super PACs through mid-October has come from company treasuries — mostly privately held businesses, sometimes organized as limited partnerships or limited liability companies.

High-profile donors
Yet a few high-profile companies haven’t been afraid to jump into the partisan fray.

In mid-October, oil and gas giant Chevron donated $2.5 million to a super PAC close to House Speaker John Boehner, R-Ohio, called the Congressional Leadership Fund, which has aired a bevy of ads attacking Democratic House candidates.

Oxbow Carbon, the energy company owned by billionaire William Koch, the lesser-known brother of conservative industrialists David and Charles Koch, and Contran Corp., the business of Republican super donor Harold Simmons of Texas, have both steered significant sums to the coffers of super PACs.

Oxbow Carbon has donated $4.25 million to GOP super PACs, making it the No. 2 corporate donor to super PACs, while Contran, No. 3, has donated more than $3 million to Republican-aligned groups.

Another top corporate donor is a retirement community in central Florida known as The Villages — a Republican stronghold where Paul Ryan held his first campaign rally the day after GOP presidential nominee Mitt Romney named him as his running mate.

Developer H. Gary Morse created The Villages more than 50 years ago, and this election cycle, more than a dozen companies connected to Morse and The Villages have collectively steered $1.6 million to GOP super PACs. That’s in addition to the $450,000 that Morse and his wife, Renee, have donated from their personal funds.

Notably, Morse is also the Florida co-chairman of the Romney campaign, and during the Republican National Convention, Morse’s Cayman Island-flagged yacht, named “Cracker Bay,” was the site of a soiree for some of Romney’s top donors and fundraisers.

Other high-profile corporate donors include:

• The Apollo Group, a for-profit education company, which gave $75,000 to the pro-Romney Restore Our Future and another $5,000 to JAN PAC, the super PAC of Arizona’s Republican Gov. Jan Brewer;
• Convenience store giant 7-Eleven, which donated $25,000 to Hoosiers for Jobs, a super PAC that supported Sen. Dick Lugar, R-Ind., during his failed primary campaign;
• Hamburger chain White Castle, which gave $25,000 to the Congressional Leadership Fund;
• Defense contractor B/E Aerospace, which gave $50,000 to Restore Our Future;
• Payday lender QC Holdings, which gave $25,000 to Restore Our Future; and
• Weaver Holdings, the parent company of the Indiana-popcorn company known for its brands “Pop Weaver” and “Trail’s End,” sold by Boy Scouts across the country, which has donated $2.4 million to American Crossroads, the super PAC founded by GOP strategists Karl Rove and Ed Gillespie.

Only a few other Fortune 500 companies have joined Chevron, which ranks third on the elite list behind only Exxon Mobil and Walmart, in making contributions to super PACs, and none has given as much as the energy giant.

Caesar’s Entertainment Corp., for instance, ranked by Fortune at No. 288, has given $150,000 to Majority PAC, a group that is spending to help Democrats retain the majority in the U.S. Senate.

“Fortune 500 companies are the least likely to be the ones who will be out in front giving publicly,” said Rick Hasen, a law professor at the University of California-Irvine. “They want to have influence over elections and elected officials, but they don't want to alienate customers.”

By category, companies in the finance, insurance and real estate sector donated more than $15 million, “general business sector” firms gave about $14 million and energy sector companies contributed more than $11 million, according to the analysis.

Unions, by contrast, have donated about $60 million to super PACs, from their treasuries or political action committees.

The top union donors include the National Education Association ($9 million), the United Auto Workers ($8.6 million) and the AFL-CIO ($6.4 million). All of these groups have spent heavily on Democratic candidates.

Money 'hiding in plain sight'
Additional corporate money may be flowing through politically active nonprofits that don’t disclose their funders.

“I strongly suspect that most of the corporate money is hiding in plain sight in trade associations like the U.S. Chamber of Commerce,” said Ciara Torres-Spelliscy, a professor at the Stetson University College of Law.

For its part, the Chamber — which collects dues from companies such as Aetna, Chevron, Dow Chemical and Microsoft — has reported spending more than $35 million on political ads, which have overwhelmingly favored Republican politicians.

Facts about Specialty Group Inc. are scant.

Records filed with the Tennessee Secretary of State’s office show it registered on Sept. 26, listing 61-year-old attorney William S. Rose, Jr., as its agent. Rose’s $634,000 home — about a 30-minute drive from downtown Knoxville — is listed as its “principal office.”

Yet the company’s money has made a huge impact.

After the cash infusion from Specialty, FreedomWorks produced numerous advertisements, including one that blasts Duckworth as a crony of former Illinois Gov. Rod Blagojevich, who was impeached and sentenced to 14 years in federal prison following a corruption scandal.

Duckworth is a double amputee and Iraq War veteran. She headed Illinois’ Department of Veteran Affairs and later served in President Barack Obama’s U.S. Department of Veterans Affairs.

FreedomWorks’ new ad features grainy footage of Duckworth and audio of her saying, “Gov. Blagojevich has charged me with the mission of taking care of my buddies, and that is what I’m doing.” But it leaves out the fact that when she said “buddies,” she was referring to other veterans and members of the military.

FreedomWorks for America treasurer and legal counsel Ryan Hecker says the organization only supports candidates who are “ethically right.”

Anton Becker, Duckworth's campaign press secretary, says it’s conservative outside groups who are peddling "lies."

When asked for details about Specialty Group and the source of its contributions, Hecker expressed ignorance, and doubted that voters care about where the money came from.

“We are in compliance with the law, and we are doing what we can to report to the Federal Election Commission,” he said. “If there’s an issue with Specialty, it’s their issue. It’s not our issue.”

Andrea Fuller of the Center for Public Integrity contributed to this report.

This story is a collaboration between the Center for Public Integrity and the Center for Responsive Politics. For up-to-date news on outside spending in the 2012 election, follow our Source2012 Tumblr and the hashtag #Source2012 on Twitter.

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A staffer working at the Obama campaign headquarters in Chicago collapsed and died, the Chicago Tribune reported Saturday, citing campaign officials.

Paramedics were dispatched shortly before 11 a.m. on  Friday to attend to Alexander Okrent, 29, after he became unconscious, the report said, citing a Chicago Fire Department spokesman.

He was pronounced dead at 11:45 a.m., the report said.  Police were not called because the incident did not appear suspicious, but an autopsy was scheduled to determine the cause of death, it said.

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President Barack Obama, who was campaigning in Virginia, called Okrent’s family to offer condolences, the Tribune said, citing campaign officials.

Okrent's LinkedIn profile describes him as a paid media and polling regional director at Obama for America and shows that he has worked in a variety of capacities for the Obama campaign since 2003-2004.

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The mayor of the nation's capital is facing calls to resign amid allegations that he knew money was spent illegally on his successful campaign for election in 2010.

The Washington Post, citing unnamed sources, reported Thursday that Mayor Vincent Gray met with longtime associate Jeanne Clarke Harris on Jan. 10 to discuss the expenditures. The Post said the disclosure was the first indication that Gray knew of the improper spending before federal raids on the homes and offices of Harris and Jeffrey E. Thompson in March.

NBCWashington.com reported that it had confirmed that the January meeting took place.

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On Tuesday, Harris, 75, pleaded guilty in a case in which she was accused of helping foster a $653,000 shadow campaign for Gray in 2010. Harris, who was charged with obstruction of justice and conspiring to break campaign finance laws, could receive 30 to 37 months in prison, and a fine between $6,000 and $60,000.

She admitted to helping hide the spending of money by Thompson, who has not been charged in the case, the Post said.

Harris said she wasn't the person who came up with the plan, but she declined to say who had, NBCWashington.com said.

Three members of the D.C. Council called Wednesday for Gray's resignation, hours after Gray said he had "no plans" to step down, NBCWashington.com reported. The council members were Muriel Bowser, Mary Cheh and David Catania.

"Whether or not (Gray) knew of the massive election fraud that was taking place in his name, he is responsible for it," said a statement from Cheh, who endorsed Gray in his 2010 campaign, NBCWashington.com reported.

Cheh had broken with her ward to endorse Gray for mayor in 2010. The vast majority of Ward 3 residents voted for incumbent Adrian Fenty. In an interview on NBC4 Wednesday evening, she said she was "very, very sad" to call for Gray's resignation.

Catania said the scandal is hurting the city.

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"The legitimacy of the election was called into question by all this illegal money," Catania said Wednesday. "Gray should not be the beneficiary of that illegality. He needs to think about the best interest of the city."

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ANALYSIS

By not losing on any of the six felony counts for which he was being tried, John Edwards won the biggest victory of his political and legal life on Thursday. A mistrial on five counts and an acquittal on one resulted in a clear -- if not complete -- legal vindication and a likely fatal setback for federal prosecutors seeking to convict the former U.S. senator and 2004 Democratic vice presidential nominee for allegedly violating the Federal Election Campaign Act.    

Arguably the most famous American lawyer since Clarence Darrow to face a criminal trial, Edwards may well see the inside of a courtroom again, but as a still-licensed attorney rather than as a criminal defendant facing retrial. 

Having followed the investigation and prosecution since its inception in 2008, having attended pre-trial hearings in 2011 and having witnessed the entire 2012 trial, I offer the following seven takeaways on what happened, why, and what’s coming:

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The government’s case can only get worse.  The trial that just ended represented prosecutors’ best opportunity to obtain a conviction.  The U.S. Department of Justice’s failure to prevail on a single count had nothing to do with the quality of the lawyers involved.  David V. Harbach, from DoJ’s Public Integrity Section in Washington, D.C., and Robert J. Higdon, with the U.S. Attorney’s office in Raleigh, N.C., both did a masterful job.  

 

• Full trial coverage on msnbc.com
• Full transcripts of closing arguments (.pdf)
• Analysis by Hampton Dellinger

Harbach and Higdon knew the law and the facts.  They were prepared and skilled in their direct and cross examinations.  Their closing arguments were powerful, indeed eloquent.  They clearly earned the respect of presiding U.S. District Court Judge Catherine Eagles and virtually every important evidentiary ruling went in their favor.  And yet they still came up short.  Moreover, it is likely the government’s key witness -- former Edwards aide turned Edwards accuser Andrew Young -- would do even worse in a second trial where he could be cross-examined not only about statements in his sex scandal tell-all, “The Politician,” but also his days of first trial testimony.  

Even if prosecutors could obtain a conviction, would it survive on appeal?  What was easily overlooked in the daily theatrics of the trial -- and even without Edwards or his mistress, Rielle Hunter, taking the stand, there was courtroom drama by the barrelful – was how vulnerable any conviction of Edwards would be to reversal on appeal.  

The U.S. Court of Appeals for the Fourth Circuit, and then likely the U.S. Supreme Court, could question whether there was sufficient evidence of Edwards’s criminal intent in a case where the government had to prove beyond a reasonable doubt a “knowing and willful” violation of FECA.  Plus, the correctness of the trial judge’s ruling that “the government does not have to prove that the sole or only purpose of the money [to cover up the affair] was to influence the election” would be scrutinized on review. 

TODAY: Rielle Hunter writes tell-all book

And, as the Citizens United decision epitomizes, federal judges and justices are now extremely skeptical of campaign-related spending restraints in the absence of actual or likely political corruption. The lack of any evidence of a quid pro quo in the Edwards’s case, would have brought the First Amendment implications of the prosecution into the foreground on appeal, along with a host of other credible grounds for a conviction reversal. 

John Edwards may be many bad things, but he’s no Rod Blagojevich.   Disconcertingly youthful hair aside, comparing Edwards to the former Illinois governor now in federal prison after being retried on political corruption charges in 2011 isn’t fair.  First, Blagojevich’s initial trial resulted in a conviction on one count.  Edwards of course was just acquitted on the sole count where the jury reached unanimity.  

More important, Blagojevich was accused of engaging in classic quid pro quo political corruption – essentially offering an incredibly valuable official act (appointment to a U.S. Senate seat) in exchange for support for his re-election campaign.  As noted above, In Edwards’s case there was no allegation – none – of a quid pro quo.  One of the affair cover-up funders was Rachel “Bunny” Mellon.  A near centenarian at the time of her payments to Andrew Young and his wife, Cheri, (only a fraction of were passed along to Hunter), her ambassador appointment days were surely over. The other funder,  Fred Baron, had no designs on Attorney General or other high office as far as we know. Neither sought an earmark or any other official act.  

This would have been a very different case if it wasn’t the first of its kind.   Having assisted with political corruption investigations and efforts to uphold campaign finance restrictions during my years in the North Carolina Attorney General’s office, I naturally side with “clean campaign” types, some (but not all) of whom supported the Edwards prosecution.  But what supporters of the government’s case generally failed to acknowledge was the lack of any clear legal precedents in favor of indicting and trying Edwards, something I pointed out months ago. 

Full trial coverage from NBC News and msnbc.com

Politicians – even deeply flawed ones like John Edwards – deserve to know what the rules are before they are indicted for breaking them.  As one critic of the case told me recently: it’s one thing to ask jurors to throw the book at a defendant, it’s another to ask them to write it first. 

Left hand (DoJ) meet right (FEC).  While the prosecution was above reproach in terms of courtroom conduct, the absence of a finding by the Federal Election Commission of even a civil violation related to Edwards’ conduct was striking.  As discussed in a prior post, DoJ’s typical practice has been to only bring criminal charges in situations where the FEC saw wrongdoing at some level; before a criminal case is brought, “There must be no doubt that the commission considers that the underlying conduct presents a FECA offense,” the Department wrote in 2009. 

The Edwards jury got a glimpse into the FEC’s satisfaction with the Edwards campaign filings, and even that small view may well have been decisive.  While the FEC is a very different agency than DoJ, the less aligned the two are on campaign finance probes the more likely Edwards-like trial losses will continue to occur. 

Making an oft- maligned profession look good, part 1.   Lawyers are often derided, but it wasn’t only the prosecutors who acquitted the profession well. The defense team – D.C.-based Abbe Lowell, aided by North Carolinians Allison Van Laningham and Alan Duncan -- was similarly stellar.  Maybe even more important than the skillful advocacy was the degree of civility and professionalism displayed by attorneys on both sides, both to their co-counsel and to their adversaries. The stakes in this case were sky high for the defense and the prosecution: Edwards’ liberty on one side, the ability of the DoJ’s Public Integrity section to obtain a conviction in a high profile trial on the other. And yet the battling advocates were almost unfailingly courteous and respectful to each other. It’s the kind of courtroom decorum lawyers should exhibit every time but too often don’t. 

Making an oft-maligned profession look good, part 2.   Another frequently poked-fun-at group -- the mainstream media – also acquitted itself well at the Edwards trial, save for one unfortunate allegation (“the flirting juror”), which was later retracted.  I was particularly struck by an effort to ensure an accurate record of the proceedings that began almost immediately.  Despite all the competitive pressures to be the first media member to race out of the courtroom and proclaim the latest trial twist, reporters and producers (print, radio and TV) would immediately circle up at each break and compare notes with each other, all in effort to ensure that witness’ testimony, lawyers’ arguments, and the judge’s rulings were reported as close to verbatim and 100 percent correct as possible.  Because the trial was not televised, it was only the assembled press that could provide a picture of what transpired. The picture of media competitors collaborating to make sure everyone got the story right is one I’ll never forget. 

I’m a lawyer first but I enjoyed assisting with the reporting and analyzing of the Edwards trial.  It was an honor to assist NBC, MSNBC and of course msnbc.com with coverage of the case.   Above all, thanks to you the reader for taking the time to consider my take.

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Prosecutors rested their case against John Edwards on Thursday without calling his mistress, Rielle Hunter, to testify. Instead, some of the former Democratic presidential candidate’s closest friends and advisers gave dramatic, often unflattering testimony about his actions as his once-promising political career collapsed amid a sex scandal.

Edwards' defense team will ask U.S. District Court Judge Catherine C. Eagles on Friday to dismiss the case, arguing that prosecutors haven't proven their case. If the judge allows the trial to go forward, the defense will begin presenting its side Monday — and may call Hunter to testify. Edwards could also take the stand in his own defense.

It is unclear whether the defense intends to call the 48-year-old Hunter, who has not attended the proceedings, to testify.

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• Full trial coverage on msnbc.com
• Analysis by Hampton Dellinger

In a court order issued March 21, Judge Catherine Eagles wrote: "The defense contends, without contradiction by the Government, that Ms. Hunter's statements have been consistent over time and that she has not said nor is she likely to say that Mr. Edwards admitted or committed any element of the charged offenses. The defense is of the view that her testimony will support inferences in favor of Mr. Edwards and will in fact generally be consistent with the defense theory of the case." 

According to court documents, Hunter has been granted immunity from prosecution in connection with the case.

 

Edwards has pleaded not guilty to six counts related to campaign finance violations. Prosecutors say he spearheaded a scheme to use nearly $1 million in secret payments from Fred Baron, his campaign finance manager, and 101-year-old heiress Rachel "Bunny" Mellon to hide his affair and keep his presidential campaign viable.

Edwards denies knowing about the secret payments, which his lawyers contend were gifts from friends rather than campaign contributions. He faces up to 30 years in prison if convicted.

While the past 14 days of testimony has focused on the money trail, the trial has also revisited Edwards' breathtaking fall. He had an affair with Rielle Hunter, a videographer on his campaign, as he renewed his marriage vows to his cancer-stricken wife, Elizabeth. He fathered a child with Hunter and then a decision was made for his right-hand man to claim paternity so Edwards could keep up his lofty political ambitions. And he lied repeatedly to his wife, his advisers and the public.

As prosecutors wrapped up their case, they showed the jury records detailing the money spent to hide Hunter — $319,500 in cash, luxury hotels, private jets and a $20,000-a-month rental mansion in Santa Barbara, Calif. The bills, flashed up on a large screen for the jury to see, were all paid by Baron, a wealthy Texas lawyer who served as Edwards' 2008 campaign finance chairman.

Baron began paying the expenses after tabloid reporters tracked down the pregnant mistress in Chapel Hill, where she had been secretly living in a house rented for her only a few miles from the Edwards family estate. Hunter was being closely watched over by Edwards' once-close confidant, Andrew Young, who falsely claimed paternity of boss' baby as the tabloid prepared to expose the affair.

As part of the cover-up, Baron paid for Hunter — and Young and his wife — to cross the country on private flights worth more than $80,000 and stay in waterfront hotel suites costing nearly $44,000, including bar tabs and frequent room service. Baron also leased a mansion in Santa Barbara for the mistress as she prepared to give birth, with total costs over the next eight months totaling $184,378.

Several witnesses testified that Edwards knew what the money was spent on; others were less definitive.

Earlier Thursday, a former unpaid economic adviser to Edwards testified that the candidate actively courted his Democratic rivals in an effort to be tapped as the eventual nominee’s running mate, even as his own campaign was collapsing.

The adviser, Leo Hindery, said he was an intermediary between Edwards and former Sen. Tom Daschle, who was then with Obama's campaign. On the night of Jan. 4, 2008, after Obama won the Iowa caucuses, Edwards asked Hindery to talk to Obama's camp.

"Edwards believed it was important that Mrs. Clinton not be the nominee,” Hindery testified. “He thought it would be a disaster."

Hindery said he reached out to the Obama campaign, via Daschle, and said, "Mr. Edwards for his support would like to be part of (the administration) and be attorney general." Daschle was skeptical and questioned "whether this is appropriate," he said.

Hindery also testified Edwards thought if he became attorney general that might eventually evolve into a nomination for the Supreme Court.

The jockeying didn't end there. When Obama didn't accept Edwards with open arms, he started talking to Clinton's campaign, Hindery said. 

Earlier in the campaign corruption trial, adviser Tim Toben said he was astonished when Edwards told him in June 2008 he still had a desire to become Obama's running mate or fill his Cabinet.

"I was alarmed," Toben testified. "I couldn't believe a man with a 4-month-old baby with another woman would seriously consider running for vice president."

The advisers' testimony is key because prosecutors are trying to show jurors that Edwards still had political aspirations after his campaign was suspended in January 2008.

Lisa Myers, Michael Austin and Stacey Klein of NBC News and the Associated Press contributed to this report.

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ANALYSIS

As prosecutors head into the final week of  their case, the issue of John Edwards’ mindset looms large.  

During week two of the trial, Cheri Young, wife of former Edwards’ aide Andrew Young, along with former Edwards staffers, described a reckless, feckless Edwards who -- thanks to his extramarital affair with campaign videographer Rielle Hunter -- imperiled his campaign, destroyed his marriage and nearly ruined another, that of the Youngs. Time and again, the testimony brought to mind one phrase: What was he thinking?!

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But the key remaining question is not where Edwards’ head was from a political or marital perspective, but whether prosecutors can present the jury with evidence suggesting he “knowingly and willfully” violated the Federal Election Campaign Act (FECA). While many familiar criminal statutes are based on strict liability (drunken driving laws, for example), the U.S. Supreme Court has ruled that the concept that “ignorance of the law is no excuse” is a “legal cliché” which demands too little of prosecutors seeking to enforce statutes requiring proof of a “knowing” violation. 

Laws such as FECA contain the additional element of a “willful” violation, requiring even more for a conviction as prosecutors acknowledged in their proposed jury instructions: 

“’Willfully’ means to act with knowledge that one’s course of conduct is unlawful and with the intent to do something the law forbids, in other words, with the bad purpose to disobey or to disregard the law.” A 2008 letter from the Justice Department offers a similar understanding of the high bar set by Congress when lawmakers (cognizant of being a target group for FECA prosecutions) included the word “willful” in FECA’s criminal provisions: “Please be assured that we intend to vigorously pursue instances where individuals or organizations knowingly and intentionally violate the clear commands of this important statute.” 

Of course the defense hopes that once the focus is on whether Edwards willfully violated the statute, the inquiry will be not just on the law’s wording (which is quite broad) but on how federal regulators have enforced the law (never criminally in a case factually similar to Edwards’). How presiding Judge Catherine Eagles resolves the question of “how FECA reads vs. how it’s been enforced” when confronted with it directly – either at the point the defense seeks to call former Federal Election Commissioners to the stand or during jury instructions – will be a critical moment in the case.

Full trial coverage from NBC News and msnbc.com

Analysis by Hampton Dellinger

For now, it’s ironic that the two witnesses last week who seemed the least perturbed by the Edwards-Hunter affair (Rachel Mellon’s interior designer Bryan Huffman and her lawyer Alex Forger) offered the best possibility of evidence that the government could argue helps meet its “willfulness” burden. Huffman was prepared to testify that heiress Rachel “Bunny” Mellon’s support of Edwards, including the money ultimately benefitting Hunter (as well as the Youngs), stemmed from her desire to “make a president.” Judge Eagles ruled the statement to be inadmissible hearsay. 

 However, jurors did get to hear lawyer Forger repeat a statement from a former Edwards attorney: “John has said, yes, he acknowledges, now, that this (Mellon’s money) was for his benefit.” While this admission (like the one from Mellon via Huffman) may only get the government so far – it doesn’t suggest that Edwards (or Mellon) thought such a “benefit” ran afoul of FECA – it is a start for prosecutors as they seek to surmount their greatest hurdle: showing John Edwards didn’t just “lose his mind” but possessed a criminal one as well.

 

Early reaction among supporters and opponents alike approved of Rick Santorum's withdrawal from the Republican presidential race Tuesday, according to msnbc.com's computer-assisted analysis of online reaction.

Santorum, a former senator from Pennsylvania whose strong showing among conservatives in primaries and caucuses surprised many observers, suspended his campaign Tuesday amid concerns for the health of his daughter Bella, who was hospitalized for complications from the chromosomal disorder Trisomy 18.

Santorum suspends presidential campaign

Reaction was swift on social media and political forums. Most of the online discussion simply passed along the news or tried to dispassionately assess the effect on the campaign, according to msnbc.com's analysis of more than 14,500 posts on Twitter, Facebook and forums Tuesday afternoon and evening.

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Among those commenters, the consensus was that Santorum's decision cleared the way for the nomination of former Massachusetts Gov. Mitt Romney, as summarized by James Kust, a sportswriter in Eau Claire, Wis.:

But about 20 percent did express clear opinions about Santorum's decision, with those welcoming the news outpacing those expressing disappointment by a 9-to-1 ratio through early Tuesday evening. While many people applauded Santorum for putting his family first, others rejoiced that he was leaving the race.

(The analysis uses a tool called ForSight, a natural-language data platform developed by Crimson Hexagon Inc., which is used by many media and research organizations, including the Pew Research Center and ESPN, to gauge public opinion in new media.)

For supporters of Santorum, who ran a strongly conservative campaign opposing same-sex marriage and abortion, the announcement reinforced what attracted them to him in the first place.

One of those was Kelly Clinger of Atlanta, a spokeswoman for the anti-abortion-rights group Silent No More Awareness Campaign:

Others who may not have supported Santorum still sent him good wishes for his daughter, like Eric Johnson, a student at Kennesaw State University in Georgia:

But as you would expect for a candidate whose clear-cut positions drew sharp divisions among voters, much of the reaction was political, and most of that was anti-Santorum, including this tweet from Davis Allen, a student at Arizona State University:

On the political discussion group PeoplesPoliticsIII, a frequent commenter using the name Noserose criticized Santorum for his public expressions of faith:

A similar sentiment came from Waymon Hudson, a freelance writer from Chicago, who said on Facebook:

And for some, Santorum's withdrawal makes the campaign "much less amusing now," as Wes Platt, an online game writer and designer from Durham, N.C., tweeted.

That reaction was summarized by Elliott Lerner, a student at Wake Forest University in Winston-Salem, N.C., who moonlights occasionally as a standup comic:

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