Nov 20, 2007 -- CQ: Huge FEC Fine Leaves Larger Financing Issues Unresolved
By: Emily Cadei

When The Media Fund, a pro-Democrat advocacy organization, agreed to pay a $580,000 civil penalty to the Federal Election Commission (FEC) for election law violations Monday, it did little to placate those who brought the complaint in the first place. Campaign finance reform advocates are protesting that the punishment is too little, too late. The penalty, the seventh largest in the Commission's history, is the latest in a string of such fines levied against political organizations for their activities in the 2004 election. And though it addresses past activities, the FEC's response to these groups may influence the 2008 race.

The Media Fund was part of a network of liberal 527 organizations — so named for the section of the tax code under which they are authorized — organized with backing from billionaire George Soros to raise and spend unregulated money on behalf of 2004 Democratic presidential nominee John Kerry . This network included America Coming Together (ACT), which was focused on get-out-the-vote activities, and America Votes, which coordinated a grassroots election efforts among progressive non-profits. The Media Fund, headed by former Clinton administration official Harold Ickes, spent more than $53 million on a national advertising campaign that touted Kerry's credentials and attacked the record of President George W. Bush .

The FEC found that the group's advertisements amounted to "express advocacy," meaning they advocated the election and/or defeat of federal candidates. Under federal election law, an organization engaging in this type of communication is required to register as a political action committee with the Commission, file regular disclosure reports and obey strict individual contribution limits. The Media Fund failed to do so, filing instead with the Internal Revenue Service and accepting more than $55 million in "soft money" — funds raised outside federal contribution limits, including from prohibited sources such as corporations and unions.

The fine against the Media Fund is the FEC's eleventh this year against a 527 or 501(c)4 non-profit organization accused of violating campaign finance regulations during the 2004 election. America Coming Together agreed in August to a $775,000 fine for similar offenses. On the Republican side, 527 organizations Swift Boat Veterans for Truth, Club for Growth and Progress for America Voter Fund also were assessed fines totalling $1.4 million in the past year.

According to campaign finance reform advocates, this series of fines reflect the failures of the FEC's current case-by-case approach to regulating 527 organizations. Pro-reform organizations Democracy 21 and Campaign Legal Center, which along with the Center for Responsive Politics filed the complaints against The Media Fund and ACT, responded to the latest settlement with a release that applauded the decision but lamented the fact that it came nearly four years after the original complaint had been filed. The groups also expressed concern that the fine was too small to serve as much of a disincentive against future campaign law abuses.

In the release, Democracy 21 President Fred Wertheimer and Campaign Legal Center Executive Director J. Gerald Herbert noted that the fines against The Media Fund, ACT, Progress for America and Swift Boat Veterans for Truth, were "only slightly more than $2.4 million, a minimal fraction of the illegal expenditures," totaling more than $200 million, "the FEC found to have occurred."

"This is no way to deter similar huge illegal expenditures from taking place in the future," Wertheimer and Herbert wrote.

The two men also warned that similar campaign finance law violations are likely to occur in the coming election cycle.

Wertheimer and Herbert wrote: "Unless the FEC moves quickly to make clear to political operatives that they will see much tougher enforcement by the FEC . . . we are facing huge illegal expenditures by 527 groups and other groups in the 2008 presidential and congressional elections, for the third federal election in a row."

The FEC, did not return calls for comment. But it has consistently stood by its regulatory approach to 527s, arguing that it provides an effective means of monitoring all organizations, regardless of tax status. In its Supplemental Explanation and Justification on political committee status, published in February, the Commission wrote: "The Commission's decisions not to single out 527 organizations is entirely consistent with the statutory scheme, Supreme Court precedent, and Congressional action regarding 527 organizations."

"Political committee status . . . must be applied and enforced by the Commission through a case-by-case analysis of a specific organization's conduct," the FEC maintained.

That position was reinforced in August by the U.S. District Court for the District of Columbia. The court rejected a suit brought by Republican Rep. Christopher Shays of Connecticut and former Massachusetts Democratic Rep. Martin T. Meehan that sought to require 527 organizations to file with the FEC, something the FEC argued against.