DOJ: Watchdog Groups Urge DOJ to Name Special Outside Counsel to Investigate Legality of Bush Super PAC Scheme

CLC Staff
May 27, 2015
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Today, the Campaign Legal Center joined Democracy 21 in calling on the Justice Department to investigate whether former Governor Jeb Bush and his associated Super PAC, the Right to Rise Super PAC, are engaged in knowing and willful violations of the campaign finance laws.

The groups also requested Attorney General Loretta Lynch to exercise her statutory authority to appoint a Special Counsel to conduct the investigation and any prosecutions that the Special Counsel finds warranted.

While recognizing that the dysfunctional Federal Election Commission (FEC) does not enforce the campaign finance laws, the groups also filed an FEC complaint on the matter in order to be on record with the agency.

Today’s letter to the Justice Department is the first of a series of requests the groups plan to make to the Department for investigations regarding potential knowing and willful campaign finance violations by presidential candidates and their individual-candidate Super PACs.

According to Campaign Legal Center Executive Director J. Gerald Hebert:

It is hard to conclude that laws are not being broken when you look at Jeb Bush’s actions as an ‘undeclared’ candidate and the laws on the books.  Quite clearly this is a man very actively running for President and raising tens of millions of dollars in ‘soft money’ to aid his quest. Denying he is a candidate does not exempt the former governor from obeying the law which prohibits candidates from raising and spending soft money.  While the FEC has all but declared that it will not be enforcing campaign finance laws this election cycle, that does not mean the laws passed by Congress and signed by Presidents of both parties may be ignored.

If the FEC will not do its job, then it falls to the Department of Justice to enforce the law and investigate these apparent knowing and willful pattern of violations of the law by the individuals and groups associated with Jeb Bush’s shadow campaign.

Jeb Bush is not alone in the presidential field in seeming to thumb his nose at the law and this will not be the only time we ask the Justice Department to step in to fill the breach in the laws passed by Congress in the wake of previous scandals to keep the White House and Congress off the auction block.

The letter sent by the group cites 52 U.S.C. section 30125(e)(1) of the federal campaign finance laws which states:

A candidate, individual holding Federal office, agent of a candidate or individual holding Federal office, or an entity directly or indirectly established, financed, maintained or controlled by or acting on behalf of 1 or more candidates or individuals holding Federal office, shall not —

(A) solicit, receive, direct, transfer, or spend funds in connection with an election for Federal office, including funds for any Federal election activity, unless the funds are subject to the limitations, prohibitions, and reporting requirements of this Act;…

52 U.S.C. § 30125(e)(1) (emphasis added).

The letter states:

Jeb Bush is a candidate for President. The Right to Rise Super PAC is an entity that has been established, and is being financed, maintained and controlled, by Bush and his agents.  The Super PAC is also acting on behalf of Bush.  As such, it is prohibited from raising or spending money that does not comply with Federal contribution limits and source prohibitions (i.e., “soft money”).  52 U.S.C. § 30125(e)(1).  Bush is likewise prohibited from raising and spending soft money through such an entity.  Id. 

As we explain below, there are powerful grounds to believe that both Bush and the Right to Rise Super PAC are violating these prohibitions and, in so doing, that they are engaged in a scheme to allow unlimited contributions to be spent directly on behalf of the Bush campaign and thereby violate the candidate contribution limits enacted to prevent corruption and the appearance of corruption. 

According to the letter:

There are strong grounds to believe that Jeb Bush and the individual-candidate Super PAC supporting his campaign, the Right to Rise Super PAC, have violated 52 U.S.C. § 30125(e), which prohibits a candidate, and any “entity directly or indirectly established, financed, maintained or controlled by or acting on behalf of” a candidate, from raising funds that do not comply with Federal contribution limits and source prohibitions (i.e., “soft money”). 

The Right to Rise Super PAC is an entity that Bush, both directly and indirectly through his agents, has “established” and that is “acting on his behalf” for the purpose of raising and spending soft money to promote his presidential campaign.  Similarly, Bush, both directly and indirectly through his agents, has “financed,” “maintained” and “controlled” the Right to Rise Super PAC, which is “acting on his behalf” for the purpose of promoting Bush’s presidential campaign.  Accordingly, there is reason to believe that Bush is violating section 30125(e) by raising soft money for and through such an entity, and that the Right to Rise Super PAC is violating section 30125(e) by raising and spending soft money on behalf of Bush.

Bush is a Candidate

Despite the claims that Bush is not a candidate because he has not declared his candidacy, the letter from the groups documented that the Bush claims are contradicted by the facts and by the applicable law.

According to the letter:

Although to date he has publicly claimed otherwise, Jeb Bush is a “candidate” for the Republican nomination for President in the 2016 election.  He has received contributions or made expenditures aggregating $5,000 or more for purposes of seeking that nomination.  52 U.S.C. § 30101(2).

The fact of his candidacy is so apparent, and so overt, that Bush himself has found it hard to maintain what is really the ongoing charade of his purported non-candidacy. According to one published report:

Jeb Bush finally said what everybody knows – that he’s running for the 2016 Republican presidential nomination.  Then he tried to take it back.

“I’m running for president in 2016, and the focus is going to be about how we, if I run, how do you create high sustained economic growth,” Bush said in a video posted by NBC News.

The apparent declaration comes as Bush has been dodging the question of whether he’s a real candidate or is pursuing a strategy of running without saying so, to allow him to coordinate with his Right to Rise Super PAC and the dark money Right to Rise Policy Solutions.[1]

The letter further stated:

In all pertinent respects, Bush has been engaging in activities as an active candidate at least since January 2015.  He has been traveling extensively to early primary states since January 2015, and has been speaking and organizing in those states.  For instance, according to one published report:

For months, Bush has been privately wooing top New Hampshire Republicans in a flurry of phone calls, emails, private meetings, and even hand-scribbled thank-you notes.  He has met with top state legislators, local mayors, and, in particular, dialed up a long list of Mitt Romney's old hands here.

Bush already has three strategists laying the groundwork in the state: Killion; Rob Varsalone, a former top adviser to Republican Sen. Kelly Ayotte; and Nate Lamb, a field director for Sen. Scott Brown's failed 2014 campaign.  In addition, Ryan Williams, a former Romney operative who has worked for the New Hampshire Republican Party, is helping the Bush team through his firm, FP1 Strategies.[2]

Bush has also been heavily involved in fundraising for the Right to Rise Super PAC, which is raising funds solely for the purpose of making expenditures to further Bush’s presidential campaign.  An individual becomes a “candidate” if the individual raises “funds in excess of what could reasonably be expected to be used for exploratory activities or undertakes activities designed to amass campaign funds that would be spent after he or she becomes a candidate….”  11 C.F.R. § 100.72(b). 

By these standards, Bush is a “candidate.”  The fact that he has refrained from formally announcing his candidacy is not determinative.  If Bush is raising and spending money as a candidate, he is a candidate under the law, whether or not he declares himself to be one.

Further grounds for concluding that Bush is a “candidate” pursuant to 52 U.S.C. § 30101(2) are set forth in a complaint filed with the FEC on March 31, 2015 by the Campaign Legal Center and Democracy 21.  That complaint is attached and incorporated herein by reference.

The Bush Scheme Violates the Campaign Finance Laws

The letter spelled out the case for why the Bush scheme violates the campaign finance laws. The letter stated:

Individual-candidate Super PACs, such as the Right to Rise Super PAC, provide a means for donors to evade and circumvent the candidate contributions limits.  The Federal Election Campaign Act limits to $2,700 the size of a contribution that a presidential candidate or his authorized campaign committee can accept from an individual donor.  52 U.S.C § 30116(a)(1).  FECA also prohibits a corporation or labor union from making a contribution to a presidential candidate.  52 U.S.C. § 30118(a).  Individual-candidate Super PACs, which are devoted to promoting the election of a single candidate, serve as ready vehicles for eviscerating these candidate contribution limits that were enacted to prevent corruption.

The campaign finance laws contain provisions to prevent the circumvention of the basic $2,700 candidate contribution limits.  By providing a vehicle for wealthy donors to make contributions on behalf of a specific candidate that directly benefits that candidate, but where such contributions do not comply with the Federal contribution limits, individual-candidate Super PACs such as the Right to Rise Super PAC operate in violation of the contribution limits and the anti-circumvention protections of the law.

Section 30125(e)(1) states:

A candidate, individual holding Federal office, agent of a candidate or individual holding Federal office, or an entity directly or indirectly established, financed, maintained or controlled by or acting on behalf of 1 or more candidates or individuals holding Federal office, shall not —

(A) solicit, receive, direct, transfer, or spend funds in connection with an election for Federal office, including funds for any Federal election activity, unless the funds are subject to the limitations, prohibitions, and reporting requirements of this Act;…

52 U.S.C. § 30125(e)(1) (emphasis added).

This prohibition is broadly drafted.  It applies to any candidate for Federal office or federal officeholder or to any “agent” of a candidate or of an officeholder, as well as to any “entity directly or indirectly established, financed, maintained or controlled by or acting on behalf of” a candidate or officeholder.  Id.  Such candidates, officeholders, agents and entities cannot “solicit, receive, direct, transfer or spend funds in connection with an election for Federal office” unless those funds comply with the contribution limits and prohibitions, and reporting requirements, of Federal law.  Id.

***

Section 30125(e) prohibits any entity that is “directly or indirectly established, financed, maintained or controlled by or acting on behalf of” a Federal candidate from soliciting, receiving, directing or spending contributions that do not comply with the Federal contribution limits and source prohibitions.

Jeb Bush is a “candidate” within the meaning of FECA, notwithstanding the fact that he has not yet made a formal announcement of his candidacy and notwithstanding his claims that he is not a candidate. 

The Right to Rise Super PAC has been “directly or indirectly” “established” by Jeb Bush.  The Super PAC has been established by agents and associates of Jeb Bush and is organized for the sole purpose of promoting Bush’s presidential campaign. 

The Right to Rise Super PAC has been “directly or indirectly” “financed” by Jeb Bush.  Bush has attended multiple fundraisers for the Super PAC and has solicited funds for the Super PAC. 

The Right to Rise Super PAC has been “directly or indirectly” “maintained or controlled” by Jeb Bush.  Bush and his agents are directly involved in making decisions about both the staffing of the Super PAC and the allocation of tasks to the Super PAC and as between the Super PAC and the official Bush campaign.  Bush’s close associates, former staff and political operatives are working with or for the Super PAC, and are in discussions with the Super PAC and with Bush about whether to assume formal leadership roles for the Super PAC.

***

The Right to Rise Super PAC is also “directly or indirectly”  “acting on behalf of” Jeb Bush.  The sole purpose of the Super PAC is to promote the election of Bush as president.  The Super PAC is being operated as an arm of the Bush political operation and is acting in concert with Bush and his agents for the common objective of promoting Bush’s candidacy.

***

Accordingly, the Right to Rise Super PAC is an entity “directly or indirectly established, financed, maintained or controlled or acting on behalf of” Jeb Bush and his campaign within the meaning of section 30125(e).  Thus, the Right to Rise Super PAC has violated section 30125(e) by soliciting, receiving and spending contributions that do not comply with the Federal contribution limits and source prohibitions.  Similarly, Jeb Bush has violated section 30125(e) by soliciting, receiving, directing and spending contributions through the Right to Rise Super PAC that do not comply with the Federal contribution limits and source prohibitions.

Justice Department Investigation and Special Counsel

According to the letter:

Although the Federal Election Commission (FEC) has exclusive jurisdiction over civil enforcement of the campaign finance laws, 52 U.S.C. § 30109(a), the Department of Justice has its own separate responsibility to enforce the campaign finance laws against “knowing and willful” violations.  52 U.S.C. § 30109(d); see generally Federal Prosecution of Election Offenses (7th ed. May 2007) (DOJ Handbook). 

The letter cited three considerations that support an investigation by the Justice Department into the activities involved in the Bush scheme:

First, these activities concern potential violations of the limits and source prohibitions on contributions to Federal candidates, provisions that the Department considers to be at the “heartland” of the campaign finance laws. 

*****

Second, the scale of the potential violation here is massive and certainly warrants the attention of the Department. 

******

Third, the FEC is widely recognized today as a dysfunctional enforcement agency that is repeatedly left paralyzed by a 3 to 3 split among its members, which results in deadlock and agency inaction on enforcement matters.  

According to the letter:

In light of the effective collapse of the civil enforcement system as a result of the paralysis of the FEC, it is essential for the Department to exercise its concurrent jurisdiction to enforce the criminal provisions of the campaign finance laws.  E.g., Handbook at 177 (“Criminal prosecution under FECA can be pursued before civil and administrative remedies are exhausted.”)

The letter also pointed out that since this case involves potentially serious violations of the campaign finance laws by a leading Republican Party presidential candidate and that candidate’s associated individual-candidate Super PAC, the Department would have a conflict of interest and the appearance of such in conducting this investigation. The letter stated:

Accordingly, both the public interest and Justice Department regulations require you to invoke the procedures set forth in 28 C.F.R. § 600.1 et seq. to appoint a Special Counsel from outside the Department to assume responsibility on behalf of the Department for handling this matter.  …

By taking this position, we do not impugn the integrity of any official in the Department.  Nor do we believe as a general matter that an Attorney General appointed by the President of one political party is incapable of investigating candidates or political committees of the opposing party.  But this matter presents extraordinary circumstances because it involves a leading Republican presidential candidate, because the timing of this activity is at the beginning of the 2016 presidential campaign, and because very large amounts of illegal contributions involved.

The letter concluded:

Under the circumstances involved in this case, you should exercise your authority under section 600.1 of the Department’s regulations to appoint a Special Counsel to undertake an investigation of whether Bush and the Right to Rise Super PAC have violated 52 U.S.C. § 30125(e)(1) by accepting contributions or making expenditures with funds raised in excess of the applicable limits set forth in 52 U.S.C. §§ 30116(a)(1) and 11 C.F.R. §§ 110.3, and if so, to take appropriate prosecutorial and remedial measures.

 

To read the full letter, click here.

 

[1]           P. Blumenthal, “Jeb Bush Messes Up Charade Of Not Running For President,” The Huffington Post (May 13, 2015).

 

[2]           S. Goldmacher, “Jeb Bush looks weak in Iowa.  He can’t count on Florida.  So he must win here,” National Journal (May 5, 2015).

 

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