The Southern Poverty Law Center Indictment

The excellent Patrick McKenzie has a very long Bits About Money post on the the Southern Poverty Law Center (SPLC) indictment. It is filled with details about bank operating procedures. I’m going to summarize. The post is divided into what I think of as two parts. First, did the SPLC commit bank fraud? Second, what is the backstory behind the indictment?

The first part is simple, McKenzie argues that yes the SPLC committed bank fraud, more specifically false statements to a federally insured bank under 18 U.S.C. §1014–the main reason why this is not a hard call is that almost any false statement made to influence a bank, no matter how small, is illegal and can get you 30 years. Moreover, the banks are essentially an investigatory arm of the state and they collect data for decades, any piece of which can generate an indictment. The main way in which the SPLC committed bank fraud is that they set up fake businesses to pay secret informants. Neither of these things, as far as I know, are per se illegal but lying to your bank about the ownership, control and purposes of accounts opened in fictitious business names is illegal.

When Bank-1 investigated, an SPLC employee asked the bank to close several of the accounts and transfer the remaining balances to an SPLC account. Later, SPLC’s president/CEO and board chair confirmed in writing that the accounts were opened for SPLC operations and operated under SPLC authority. As Patrick writes, the letter is “a succinct confession to bank fraud.” Thus, the case that the SPLC paid informants through bank accounts opened under fictitious business names appears strong.

But the government had long been aware of SPLC’s informant work, indeed the existence of the informant program has been public knowledge for decades. It’s hard to see how to run a secret network to pay informants without hiding some information–could the SPLC simply have told the bank what they were doing? It seems to me that the punishment for false statements to a bank ought to depend on the motive and intention of the false statements but the law isn’t written that way. Another administration, however, would certainly look away. Which brings us to the second part of the story.

The SPLC itself was embedded in banking and private-sector decision making. Suppose Acme Inc., a large business, wanted to offer its employees matching grants for charitable donations. Acme, however, doesn’t want newspaper headlines like “Acme donated to the KKK!” So Acme contracts with a firm that vets charitable donations, and that firm uses a blacklist created by the SPLC. This was routine. Amazon used the SPLC list for AmazonSmile; workplace-giving vendors used or advertised SPLC screening; all of this gave the SPLC and the broader Change the Terms coalition power to pressure social media, tech, and financial infrastructure firms over speech, blacklisting, and payments because they were already in the door and embedded in their systems.

When the SPLC was mostly identifying nearly universally despised organizations like the KKK, all of this was more or less accepted by everyone in the know, except perhaps for a few hard core civil-libertarians. But in the woke era the SPLC overplayed their hand. The SPLC and related organizations began to take on conservative, Trump affiliated organizations with widespread support. Through a massive PR and outreach campaign they pressured social media organizations, tech firms, and finance firms to follow along–and this was not just a media campaign, the Change the Terms coalition had hundreds of meetings with top level staff. The partisan nature made it legally questionable but when your allies are in power. these things can be overlooked. In perhaps the most remarkable part of the document, Patrick quotes a donor fundraising letter from Free Press and Free Press Action (not the SPLC but part of the larger coalition):

Our efforts have yielded numerous concrete changes. After years of pressure from Free Press and our allies, Twitter finally banned Trump[.]

…Facebook initially suspended Trump “indefinitely” and later changed his suspension to a two-year ban. We’re now pushing the company to permanently ban Trump and to close a loophole that’s allowing a Trump PAC to fundraise and organize on his behalf.

…FUND THE FIGHT. Your generosity makes our work possible. Please give what you can today to make sure we have the resources we need to keep fighting for equitable media policies that improve people’s lives.

As Patrick notes, the fund raising letter closed with the following deadpan disclaimer:

Free Press and Free Press Action are nonpartisan organizations….Free Press and Free Press Action do not support or oppose any candidate for public office.

Trump won. Many people will say the indictment is the result. That may well be true but that doesn’t make the indictment legally weak.

Read the whole thing for a lesson in how SPLC’s list and coalition work became embedded in private-sector decisioning systems and more generally for a behind the scenes look at how institutional power actually works.