LLCs are growing vehicles for laundering dark money contributions into federal elections. Anonymous donors are giving contributions to super PACs through LLCs, and only the LLCs, not the actual donors, are being disclosed to the public by the super PACs.
The Campaign Legal Center and Democracy 21, over the course of several years, filed complaints with the Federal Election Commission (FEC) against donors for violating the “straw donor” provision of Federal Election Campaign Act (FECA). These donors broke disclosure laws by hiding behind personal Limited Liability Companies (LLC) to anonymously make contributions to super PACs. Their anonymous contributions ranged from $857,000 to over $12 million, and several of the donors openly admitted in the media that they had used their personal company for the purpose of hiding their identities from the public. Still, the FEC dismissed all five complaints, after the three Republican commissioners voted not to investigate and sanction these donors.
The Campaign Legal Center and Democracy 21 filed this lawsuit against the FEC for dismissing five complaints that CLC and D21 had filed with the agency. The Supreme Court has repeatedly recognized that disclosure laws play a vital role in providing the electorate with critical information to make informed choices. Prohibiting the use of straw donors to hide the true source of a contribution is essential to the law.
On March 29, 2017, the U.S. District Court for the District of Columbia rejected the FEC's motion to dismiss, allowing the case to proceed.
Even though this is a clear violation of the law, the FEC refuses to take action to enforce the law. The agency is now sanctioning the intentional undermining of the integrity of campaign finance disclosure. Each time the FEC fails to pursue a serious violation of the law, it weakens our democracy and the ability of Americans to know who is truly influencing our elections. It also sends a loud and clear message that those who violate campaign finance laws will face no penalties.
Our FEC complaints and lawsuit are designed to bring an end to these ‘secret money’ schemes before they get completely out of hand and to obtain enforcement of the law in cases that we believe involve clear violations.
The lawsuit states that in dismissing these complaints, the FEC has “undermined FECA’s purposes, including its goal of promoting transparency in elections and providing the electorate with information about who is speaking to it during elections.” CLC and D21, along with the public, “were deprived of timely information about the sources of the contributions made to the super PACs – information to which they are legally entitled to under FECA.”
The lawsuit calls for the court to find that the FEC’s dismissal of the complaints was “arbitrary, capricious, and an abuse of discretion, and otherwise contrary to the law,” and seeks a judicial order demanding the FEC enforce the law within 30 days.