The Federal Election Campaign Act (FECA) requires federal political committees to disclose comprehensive details about their spending, including the name of each person that receives a campaign expenditure or other payment above $200 along with the amounts, dates and purposes of those payments.
The FEC has made clear that this reporting requirement can apply even when a political committee routes the spending through another entity. In particular, a political committee must disclose information about the ultimate recipient of its spending if (1) the intermediary through which it routed that spending does not have an arm’s-length relationship with the committee or (2) the intermediary merely acted as a conduit for payments to the ultimate payee.
In other words, campaigns can’t evade disclosure by funneling payments through intermediaries.
In July 2020, CLC filed an administrative complaint with the FEC alleging that then-President Donald Trump’s 2020 presidential campaign committee and an associated fundraising committee had violated these reporting requirements. Drawing on media reports and public records, the complaint (which CLC supplemented in January 2021) alleged that the committees had funneled payments to vendors through two firms with close ties to the campaign without disclosing the details of the ultimate payments as required by FECA.
One of the businesses, American Made Media Consultants (AMMC), was apparently created by Trump campaign officials. The other, Parscale Strategy, is the consulting firm of former Trump campaign manager Brad Parscale. CLC’s administrative complaint therefore alleged that Trump’s political committees did not have an arm’s-length relationship with either firm.
In addition, CLC’s filings alleged that both AMMC and Parscale Strategy functioned as conduits through which the campaign paid vendors and staff that were working for the campaign. Parscale Strategy, for example, reportedly paid the salaries of several campaign officials, including Kimberly Guilfoyle and Lara Trump.
Because both AMMC and Parscale Strategy had close ties to the two Trump committees and served merely as conduits for payments to campaign vendors, FECA required the committees to disclose the details of the ultimate payments to the vendors — not just the top-level payments to AMMC and Parscale Strategy.
But rather than comply with this requirement, the committees reported only un-itemized bulk payments to AMMC and Parscale Strategy, hiding the details of the committees’ spending from public scrutiny.
After reviewing CLC’s complaint, the FEC’s nonpartisan Office of General Counsel recommended that the agency investigate the matter. But investigating an administrative complaint requires the affirmative support of four of the FEC’s six Commissioners, and three Commissioners refused to even investigate CLC’s allegations.
As CLC’s lawsuit explains, these Commissioners’ purported justifications for this decision do not stand up to legal scrutiny. CLC has therefore asked a court to intervene and invalidate the FEC’s unlawful dismissal of its complaint.
The Trump campaign’s use of shell corporations deprived voters of key details about the campaign’s operations. Through this suit, CLC seeks to force the FEC to do its job and enforce voters’ right to know those details.
What’s at Stake
As the U.S. Supreme Court has explained, disclosure of campaign finance information serves a vital purpose: equipping voters with the information necessary to know “where political campaign money comes from and how it is spent” and thereby “to make informed decisions” in elections. By allowing the Trump committees to conceal their spending, the FEC has left voters in the dark about those committees’ activities and invited future campaigns to similarly evade transparency requirements.
The FEC has a responsibility to ensure there is transparency and accountability in our elections by investigating and acting on potential FECA violations like those alleged in CLC’s administrative filings.