DeSantis allies could shift $86 million to help him run for president as watchdogs cry foul

Allies of Florida Gov. Ron DeSantis are reportedly planning to execute a controversial money transfer to free up tens of millions of dollars to support his expected 2024 presidential campaign.

DeSantis, widely considered former President Donald Trump's top potential Republican primary rival, won his 2018 gubernatorial race and easily clinched reelection in 2022 with the help of a deep-pocketed state political committee. The group has raised more than $225 million for DeSantis and currently boasts nearly $86 million in cash on hand.

But if DeSantis decides to run for president — as he is widely expected to do in the coming weeks — he is legally barred from dumping that war chest into his federal campaign coffer. That's because federal law bans the transfer of state-level political funds to a national election.

Instead, the governor's allies could try to transfer them to a pro-DeSantis federal super PAC, which is required to remain independent of his potential presidential bid. The Wall Street Journal, citing people familiar with the situation, has reported that those plans are underway.

"That is the path we expect for DeSantis to take," Shanna Ports, senior legal counsel for the nonprofit government watchdog Campaign Legal Center, said in an interview.

Ports' group argues that such a transfer from a candidate-controlled state committee to a federal super PAC is illegal. But other experts disagree, and Ports acknowledged that the Federal Election Commission "has not had the teeth to enforce in this area."

There's history to support that claim: The FEC allowed a similar maneuver during the 2020 congressional race of Rep. Byron Donalds, R-Fla.

Donalds, a former state representative, had resigned as chair of his own political committee, "Friends of Byron Donalds," shortly before running for Congress. A few months later, that state group contributed more than $107,000 to a federal independent political committee that supported Donalds' candidacy.

The Campaign Legal Center filed a complaint accusing Donalds of violating a ban on using non-federal funds, or "soft money," for a federal election. But the FEC took no action on the matter, unpersuaded that Donalds controlled the state group's moves after he resigned.

Friends of Ron DeSantis could soon try to transfer a moneybag roughly 800 times the size of Donalds'. But experts say that when it comes to the law, size doesn't matter.

"Ultimately, the legal principles aren't really changed by the amount of money involved," Bradley Smith, a Republican former FEC commissioner, said of the potential transfer of funds.

"My basic take on it is that I don't think they're going to have a real problem," Smith said.

The state committee, Friends of Ron DeSantis, appears to be positioning itself for the transfer. The group this week selected state Sen. Blaise Ingoglia, a Republican ally of DeSantis, to take over as its chairman. The committee's website, which as recently as last month had listed DeSantis as its "associated person," now lists Ingoglia.

The state senator confirmed his appointment in a statement to CNBC that does not specify it will focus on electing state-level candidates. Instead, Ingoglia's statement says the group will "put children first" and echoes rhetoric used by the governor in his highly publicized fight to ban some classroom discussion about gender identity and sexual orientation.

A spokeswoman for Ingoglia could not immediately be reached for further comment.

Friends of Ron DeSantis is allowed to accept unlimited contributions from donors, and it shows. The group in recent years received single donations of $10 million, from hotelier Robert Bigelow, and $5 million from hedge fund CEO Ken Griffin, among many others that far exceed the $6,600 cap that individuals can give to national election committees.

Bigelow has also revealed himself as the top donor to Never Back Down, a super PAC that says it has already raised more than $33 million as it encourages DeSantis to run for president.

Spokespeople for Never Back Down declined CNBC's requests for comment about the state committee's reported transfer of funds.

Meanwhile, DeSantis appears to be preparing to launch a presidential campaign.

Backed by a heavily Republican state Legislature, DeSantis spent the preceding two months passing reams of new state policy that broadly sketch the kind of populist, culture-focused agenda he is expected to espouse on the campaign trail.

The GOP state lawmakers also passed measures allowing DeSantis to run for president without resigning as governor and shielding his travel records from public view.

He has also been hosting a flurry of dinners and other events with prospective Republican donors, according to various news outlets.

Roy Bailey, a Texas bundler who recently met with DeSantis, sang the governor's praises in a call with CNBC. "I've told him I'm hoping he gets in and prayerfully considers it, and I'm ready to support him if he does," Bailey said.

The process has apparently garnered some mixed results, however. Republican megadonor Steve Schwarzman, opted to hold off on contributing to DeSantis' efforts after a recent meeting, Bloomberg reported.

If successful, the transfer of cash from DeSantis' state committee to a super PAC could also help reverse the governor's downward slide in some polls of the potential primary race.

Trump has pulled ahead as the clear frontrunner while bashing DeSantis at every available opportunity, even after being criminally charged with falsifying business records and found liable for sexual abuse and defamation. Trump, who is also under criminal investigation in two federal cases and one in Georgia, has pleaded not guilty to the business charges and moved to appeal the sexual abuse verdict.

Some experts, like those at the Campaign Legal Center, see the use of state funds at the federal level as a loophole. But Smith, the Republican former FEC commissioner, noted that calling it a loophole implies it isn't illegal.

"I think the loophole exists because of serious constitutional concerns," he said. "One person's loophole is another person's constitutionally protected speech."