Comedy Central’s Stephen Colbert created his own shell corporation Thursday to demonstrate how Karl Rove launders money to his American Crossroads SuperPAC.

Because Rove only appears on Fox News, a ham loaf with classes substituted for the purposes of Colbert’s interview. With just a few bites out of “Ham Rove,” Colbert gained all of the Republican strategist’s memories and came to understand exactly how the SuperPAC hides its donors.

Unlike American Crossroads, Rove’s Crossroads GPS is a 501c4 organization that does not have to disclose its donors. Crossroads GPS can then transfer donations to the Americans Crossroads SuperPAC and the original donors remain secret.

“Clearly, these c4s have created an unprecedented, unaccountable, untraceable cash tsunami that will infect every corner of the next election,” Colbert noted. “And I feel like an idiot for not having one.”

With the help of former McCain campaign attorney Trevor Potter, Colbert created an anonymous shell corporation and a 501c4 organization.

“So I can get money for my c4, use that for political purposes, and nobody know anything about it until six months after the election?” Colbert asked.

“Yes,” Potter agreed. “And even then they won’t know who your donors are.”

“That’s my kind of campaign finance restrictions,” Colbert joked. “Can I take this c4 money and donate it to my SuperPAC?”

“You can,” Potter replied.

“But wait, SuperPACs are transparent,” Colbert observed. “And the c4 is secret. So I can take secret donations to my c4 and give it to my supposedly transparent SuperPAC. What is the difference between that and money laundering?”

“It’s hard to say,” Potter said.

Watch this video from Comedy Central’s The Colbert Report, broadcast Sept. 29, 2011.

Part 2