Apr 28, 2003 -- FEC Decision on Leadership Forum and Democratic State Parties Organization

On April 25, the FEC informed the Legal Center and other public interest groups that there was no reason to believe that the Leadership Forum, the Democratic State Parties Organization (DSPO), the Democratic National Committee (DNC), and individuals associated with these entities had violated the Bipartisan Campaign Reform Act's national party soft money ban. The ban extends to any entity "directly or indirectly established, financed, maintained or controlled" by the national parties. The Legal Center, Common Cause, Democracy 21, and the Center for Responsive Politics/FEC Watch had filed a complaint with the FEC in November of 2002, alleging that the Leadership Forum was established, financed, maintained or controlled by the National Republican Congressional Committee (NRCC) on account of its having received a $1.0 million soft money transfer from the NRCC just prior to Election Day 2002, statements from top Republicans indicating that Republican shadow committees were being set up to raise and spend soft money in the 2004 elections, and close ties between the Leadership Forum's directors and the House Republican Leadership. The complaint likewise alleged that DSPO was established, financed, maintained or controlled by the DNC. Among other things, at a secret party conclave prior to Election Day 2002, the Chair of the DNC urged Democratic donors to take future fundraising calls from the head of DSPO, who was also the President of the Association of State Democratic Chairs (ASDC).

The Office of General Counsel prepared a report on this matter for the FEC Commissioners, recommending that they find that the Leadership Forum, DNC, DSPO and associated individuals had not violated the Reform Act's national party soft money ban. These recommendations were approved by a vote of four Commissioners. The report indicated that the Leadership Forum would not be considered "established, financed, maintained or controlled" by the NRCC as a matter of law based on current facts. In reaching this conclusion, the report emphasized that the Leadership Forum had returned the $1.0 million soft money donation to the NRCC and indeed indicated, "[h]ad the money not been returned, the evidence would have pointed strongly to a conclusion that the NRCC 'financed' the Forum." It also cautioned the Leadership Forum regarding the potential for its future activities to trigger a finding of affiliation with the NRCC "in light of the apparent close and continuing ties that persons associated with the Forum have with the NRCC and House Republican leadership." The report also indicated that there was reason to believe that the NRCC violated the national party soft money ban by accepting the refunded $1.0 million in soft money from the Leadership Forum. However, given that the NRCC then returned the funds to the original donors prior to December 31, the Commission opted to take no further action with respect to this violation. With regard to DSPO, the Office of General Counsel's report noted that the membership of DSPO and the ASDC appeared to be identical -- and that the two groups "[f]or all practical purposes . . . appear to be the same organization." Observing the integration of the ASDC to the official structure of the DNC, the report concluded that DSPO is indirectly established, financed, maintained or controlled by the DNC. It declined to find any violation of the Reform Act because DSPO has not yet undertaken any activities. However, the report indicated that DSPO could not accept any non-Federal funds in light of its relationship with the DNC and the operation of the Reform Act's national party soft money ban.

Click here to view the General Counsel's report.

Click here to view Statements of Reasons submitted by Chair Weintraub and Commissioners Thomas and McDonald.

Click here to view the Statement of Reasons submitted by Commissioner Mason.

Click here to view the Statement of Reasons submitted by Commissioner Smith.

Click here to view the Statement of Reasons submitted by Commissioner Toner.