CLC Update April 23, 2015

CLC Staff
Apr 23, 2015
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  1. FEC Complaints Filed Against Four Presidential Hopefuls for Campaign Finance Violations
  2. Wisconsin Supreme Court Urged to Affirm Constitutionality of State Restrictions on Coordinated Spending in John Doe Case
  3. FEC Complaint Filed Against Pras Michel and Super PAC Black Men Vote for Apparent “Straw Donor” Contributions of $875,000
  4. Oral Argument Heard in SEC Pay-to-Play Case
  5. Reform Groups File Two Sets of Comments in FCC Proposed Rulemaking on Extending Online Filing Requirements to Cable, Satellite and Radio
  6. Justice Department Indicts Sen. Bob Menendez (D-NJ): Statement of Policy Director Meredith McGehee
  7. Reform Groups Call on IRS to Clarify 49 Percent Approach
  8. Members of Congress Urged to Co-Sponsor DISCLOSE Act to Combat Growing Crisis of ‘Dark Money’ in Our Elections
  9. CLC’s Paul S. Ryan Lectures at Gettysburg College
  10. Senior Counsel Addresses New York Election Law Seminar
  11. CLC Legal Fellow Addresses George Washington University Graduate Students

 

FEC Complaints Filed Against Presidential Hopefuls for Violations of Campaign Finance Law

On March 31, the Campaign Legal Center, joined by Democracy 21, filed complaints with the Federal Election Commission (FEC) against Jeb Bush, Martin O’Malley, Rick Santorum and Scott Walker stating there was reason to believe they are violating federal campaign finance laws.

“These 2016 presidential contenders must take the American people for fools—flying repeatedly to Iowa and New Hampshire to meet with party leaders and voters, hiring campaign staff, and raising millions of dollars from deep-pocketed mega donors, all the while denying that they are even ‘testing the waters’ of a presidential campaign,” said Paul S. Ryan, Campaign Legal Center Senior Counsel.  “But federal campaign finance law is no joke and the candidate contribution limits kick in as soon as a person begins raising and spending money to determining whether they’re going to run for office.”

The four complaints document in detail the political activities of each of the presidential aspirants: traveling extensively to early primary/caucus states, battleground states and fundraising hotspots; building campaign infrastructures; fundraising to pay for these activities and to bankroll a formal presidential campaign. These activities constitute “testing the waters” under federal law and must be paid for with funds raised under the federal candidate contribution limits and restrictions (no more than $2,700 per individual donor, no corporate/union funds). Bush, O’Malley, Santorum and Walker are all raising funds above the $2,700 candidate limit, providing reason to believe they are violating federal law.

The complaints further allege that Bush, Santorum and Walker have actually crossed the threshold to become “candidates” as defined in federal law, by referring to themselves publicly as candidates and/or by amassing campaign funds that will be spent after they formally declare their candidacies. Consequently, they are currently violating candidate registration and reporting requirements, contribution limits and restrictions, as well as federal “soft money” prohibitions.

To read the complaint against Jeb Bush, click here.

To read the complaint against Martin O’Malley, click here.

To read the complaint against Rick Santorum, click here.

To read the complaint against Scott Walker, click here.

 

Wisconsin Supreme Court Urged to Affirm Constitutionality of State Restrictions on Coordinated Spending in John Doe Case

On March 17, the Campaign Legal Center, joined by Democracy 21, Common Cause in Wisconsin and the League of Women Voters of Wisconsin, submitted an amici brief to the Wisconsin Supreme Court, in Three Unnamed Petitioners v. Peterson.  The brief urges the court to find Wisconsin’s restrictions on the coordination of expenditures between candidates and outside groups constitutional.  The consolidated case centers around a challenge to a so-called John Doe investigation of alleged illegal coordination between the campaign of Wisconsin Governor Scott Walker and outside groups.  That investigation has been halted until various challenges are resolved.

The court is considering the argument that if coordinated expenditures do not expressly advocate the election or defeat of candidates, then they cannot be subject to regulation or limitation.  The U.S. Supreme Court specifically rejected that argument in McConnell v. FEC, holding that “there is no reason why Congress may not treat coordinated disbursements for electioneering communications,” i.e., a form of non-express advocacy, “in the same way it treats all other coordinated expenditures.”

“The Supreme Court has been unambiguous in its recognition that expenditures coordinated by outside groups with candidates are little more than ‘disguised contributions’ made to the candidates themselves,” said Tara Malloy, Campaign Legal Center Senior Counsel.  “These coordinated expenditures do not cease to be ‘disguised contributions’ to candidates simply because the audience is not expressly instructed to vote for or against a candidate.  Striking down Wisconsin’s restrictions on coordinated spending would in effect strike down contribution limits to candidates altogether.”

The Legal Center was assisted in the filing of the amici brief by Susan Crawford of Cullen Weston Pines & Bach LLP.

To read the amici brief, click here.

 

FEC Complaint Filed Against Pras Michel and Super PAC Black Men Vote for Apparent “Straw Donor” Contributions of $875,000

On April 13, the Campaign Legal Center, joined by Democracy 21, urged the Federal Election Commission (FEC) and Department of Justice (DOJ) to investigate possible violations of campaign finance laws by rap artist Pras Michel, his company SPM Holdings LLC, the Super PAC Black Men Vote and its Treasurer, William Kirk Jr. relating to “straw donor” contributions totaling $875,000 made by Pras Michel to Black Men Vote in the name of SPM Holdings LLC.

The complaint to the FEC and letter to DOJ ask the agencies to formally investigate the activities of Mr. Michel and SPM Holdings LLC for apparent violations of the ban on making contributions “in the name of another” and of Mr. Kirk and Black Men Vote for knowingly accepting “straw donor” contributions and misreporting the source of the funds to the FEC.  According to a story from the Center for Public Integrity, Pras Michel admitted that SPM Holdings LLC is “just a holding company to do my everyday business through.” 

Mr. Michel made contributions to Black Men Vote in his own name, but the money he gave through SPM Holdings LLC made up more than two-thirds of the total budget of the Super PAC.  The complaint outlines reason to believe that Mr. Michel knowingly made “contributions in the name of another” and that those contributions were accepted by the Super PAC and its treasurer, Mr. Kirk, who knew the true identity of the donors in violation of the law.

“This seems a clear cut violation of the straw donor prohibition, complete with a confession, and the FEC needs to act to uphold the law in order to prevent wholesale evasion of disclosure laws,” said Paul S. Ryan, FEC Program Director at the Campaign Legal Center.  “Increasingly LLCs and other business entities are being utilized by political donors to launder money and hide their true identities.  If the practice is not stopped by the FEC or the Justice Department, it will serve as a green light to lawbreakers seeking to buy influence with politicians while keeping the public in the dark.”

To read the FEC complaint, click here.  To read the letter to the Department of Justice, click here.

 

Oral Argument Heard in SEC Pay-to-Play Case

On March 23, the D.C. Circuit Court of Appeals heard oral argument in New York Republican State Committee v. Securities and Exchange Commission (SEC), a challenge to an SEC rule prohibiting pay to play practices in state investments.

The SEC rule being challenged bars investment firms from managing state assets, like pension funds, for two years after a firm or its associates make more than de minimis contributions to officeholders or candidates who have or would have power to award investment contracts.  On September 30, 2014, the U.S. District Court for the District of Columbia dismissed a challenge brought by two state Republican parties for lack of subject matter jurisdiction, agreeing with the SEC that the D.C. Circuit Court of Appeals was vested with jurisdiction to hear the challenge to the lay-to-play rule. 

On January 28, 2015, the Campaign Legal Center, joined by Democracy 21, filed an amici brief in the case, arguing that the SEC rule was constitutional and that the Republican Party petitioners did not have standing to bring the challenge.

To read the brief, click here.

 

Reform Groups File Two Sets of Comments in FCC Proposed Rulemaking on Extending Online Filing Requirements to Cable, Satellite and Radio

As part of the Federal Communications Commission’s (FCC) consideration of extending online filing requirements to cable, satellite and radio providers, the Campaign Legal Center, joined by Common Cause and the Sunlight Foundation, filed comments on March 16 and then reply comments in April 14 again urging the agency to move quickly to put the new requirements into effect before the 2016 elections.  The groups are represented by the Institute for Public Representation of Georgetown University Law Center.  The proposed rulemaking announced by the FCC in August came in quick response to a request filed by CLC on July 31, 2014.  All television broadcasters are required to file their public files on a public FCC database.

The original comments, urged the Commission to extend the online filing requirements to cable, satellite and radio providers, to base any exemption for commercial radio stations according to political advertising revenue rather than seize and to implement formatting requirements so the data will be put to its best use.  In the most recent reply comments, the groups urged the FCC to reject a suggestion by the National Association of Broadcasters to limit enforcement complaints to only viewers (and listeners) who live in the viewing area and to require stations to use the FCC website.  Those comments also reiterated support for ensuring any waivers provided to radio stations are based on appropriate criteria and for requiring the data filed to be in a standardized, searchable database, instead of pdfs.

To read the comments filed on March 16, click here.

To read the reply comments filed on April 14, click here.

 

Justice Department Indicts Sen. Bob Menendez (D-NJ): Statement of Policy Director Meredith McGehee

On April 1, U.S. Senator Bob Menendez (D-NJ) was indicted on corruption charges and the Campaign Legal Center released the following statement from Policy Director Meredith McGehee:

“The indictment of Sen. Bob Menendez (D-NJ) by the Public Integrity Section of the Justice Department is an encouraging sign as the details of the case and the conduct of the Senator have raised troubling questions for far too long.  The Public Integrity Section has been in a defensive crouch since misconduct by its prosecutors led to the overturning of the 2008 conviction of Sen. Ted Stevens (R-AK) for a series of well-documented misdeeds by the late Senator.  It is high time the Public Integrity Section step up and take a more active role in safeguarding our democracy and the public’s faith in its government officials.  To restore its tarnished image, the Public Integrity Section must send a clear message to the American people that no one is above the law no matter how high an office they hold.  The kind of cronyism reflected in the Menendez case -- you scratch my back, I'll scratch yours -- confirms what most Americans believe about Washington.  The question now is whether the prosecution can prove if Sen. Menendez has crossed the line into criminal activity.” 

 

Reform Groups Call on IRS to Clarify 49 Percent Approach

In a letter sent on April 3 to the Internal Revenue Service, the Campaign Legal Center, Democracy 21 and Public Citizen called on IRS Commissioner John Koskinen to clarify his remarks that Congress created a framework that allows 501(c)(4) groups to spend up to 49 percent of their expenditures on campaign activities.

The groups took exception to comments made by Koskinen claiming that Congress had “set up a framework” that allowed 501(c)(4)s to “spend a significant amount on politics.”  The letter clarified that the law passed by Congress states that 501(c)(4) organizations must be operated “exclusively” for the promotion of social welfare.  The groups went on to point out that the IRS has long recognized, the “promotion of social welfare” does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.”  Treas. Reg. § 1.501(c)(4)-1(a)(2)(ii).

The letter pointed out that the informal 49% threshold Koskinen mentioned stemmed from an IRS regulation stating that 501(c)(4)s must be operated “primarily” for the promotion of social welfare.  That regulation was enacted by the IRS without any change in the original law passed by Congress prohibiting all but de minimus political activity by 501(c)(4)s.

The groups urged Koskinen to issue new IRS regulations making clear that a section 501(c)(4) organization cannot spend more than, at most, an insubstantial or de minimis amount of its expenditures on political activities and enforce the laws passed by Congress in order to stem the widespread abuse of the law for political purposes.

To read the full letter, click here.

 

Members of Congress Urged to Co-Sponsor DISCLOSE Act to Combat Growing Crisis of ‘Dark Money’ in Our Elections

On March 18, the Campaign Legal Center joined with other reform groups in urging Members of the House and Senate to co-sponsor the DISCLOSE Act, legislation responding to the unprecedented amounts of anonymously-funded political spending triggered by the Supreme Court’s decision in Citizens United v. FEC.  The bills introduced by Rep. Chris Van Hollen (D-MD) (H.R. 430) and Sen. Sheldon Whitehouse (D-RI) (S. 229) would reveal the contributors behind ‘dark money’ political spending and allow voters to make informed decisions at the polls as the Supreme Court envisioned in its Citizens United ruling.  

“We are now entering our fourth election cycle since Citizens United and ‘dark money’ spending continues to grow exponentially each cycle as influence is bought and sold behind closed doors in Washington,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Americans deserve to know who is buying special access and influence with their elected representatives.  The DISCLOSE Act will restore some honesty and integrity to the political process and it is long overdue.”

To read the letter, click here.

 

CLC’s Paul S. Ryan Lectures at Gettysburg College

On March 16, CLC Senior Counsel Paul S. Ryan was a guest lecturer at Gettysburg College’s Public Policy Program “capstone” seminar.  This year’s seminar, taught by Center for Responsive Politics Senior Fellow Bob Biersack, is focused on campaign finance issues.  Ryan spoke about the 2016 presidential election and his recent white paper “Testing the Waters” and the Big Lie: How Prospective Presidential Candidates Evade Candidate Contribution Limits While the FEC Looks the Other Way.

 

Senior Counsel Addresses New York Election Law Seminar

On March 24, CLC Senior Counsel Tara Malloy spoke at a seminar on campaign finance law organized by the New York State Bar Committee on Election Law.  Ms. Malloy provided a review of federal campaign finance law and outlined recent Supreme Court decisions.

 

CLC Legal Fellow Addresses George Washington University Graduate Students

On March 16, CLC Legal Fellow Josh Bone guest lectured at a George Washington University graduate school class taught by former member of Congress Martin Frost.  Bone’s talk focused on Texas’s restrictive voter photo ID law, which CLC continues to fight in court.  The talk also covered other efforts to suppress the vote, including voter ID laws in other states, early voting cutbacks, and restrictive registration rules.       

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