Campaign Legal Center and Democracy 21 file complaints against shell companies hiding donors to Super PACS supporting Rubio and the liberal Coalition for Progress  

WASHINGTON – The Campaign Legal Center, a leading campaign finance watchdog, along with Democracy 21, today filed two complaints with the Federal Election Commission (FEC), calling on the agency to investigate campaign donors who are skirting disclosure laws by hiding behind corporations to anonymously fund elections.

The first complaint asks the FEC to investigate whether DE First Holdings, which came into existence just one day before it gave $1 million to the Super PAC Coalition for Progress, and the person who was the true source of the funds, violated the Federal Election Campaign Act (FECA). Based on a report by Politico New Jersey, it appears this company was set up for the purpose of laundering money to a political committee while hiding the true source of the funds.

The second complaint asks the FEC to investigate Andrew Duncan and IGX, LLC for also violating the same sections of the FECA that prohibit the use of straw donors. Duncan admitted in an AP story that he had used the company, IGX, to make a secret donation of $500,000 to the Super PAC supporting Marco Rubio, Conservative Solutions PAC.

“Americans need to be aware of the sources of political money so they can understand if and how public officials could be influenced,” said Paul S. Ryan, deputy executive director of the Campaign Legal Center. “We call on the FEC to enforce the law and ensure our elections are transparent and fair by investigating and sanctioning companies and individuals who mask campaign donations.” 

In this Age of Super PACs and Dark-Money Groups, Congressional Ethics Committees Should Improve Guidance to Help Restore the Public’s Trust in Washington

WASHINGTON – The Campaign Legal Center today urged the Senate and House Ethics Committees to issue new, more detailed guidance for members of Congress to limit the appearance of special treatment or legislative favors for political donors in a post-Citizens United era.

“Stronger, clearer guidance is an important step in restoring the public’s faith that every American – not just those with enough money to buy access and influence – has a fair chance to be heard on our nation’s policies and laws,” said Meredith McGehee, policy director for the Campaign Legal Center. “The current rules are vague and outdated.  Since the Congressional Ethics Committees last looked at the links between political solicitations and legislative actions, the magnitude of money involved in elections has increased by leaps and bounds.  New guidance should provide U.S. representatives and senators with the information they need to help ensure they do not violate the rules, while allowing the public to hold them accountable when they do.”

In the last six years, there have been major changes to our campaign finance laws, including the emergence of Super PACs,  especially the growing number of candidate-connected Super PACs – PACs that are ostensibly independent but have close ties to candidates and are perceived by the public as an affiliated arm of the candidates; a new Federal Election Commission rule allowing candidates (including U.S. senators and representatives) to solicit funds for Super PACs in private meetings; and the rise of 501(c)(4) dark-money groups  that can now spend unlimited funds to influence the outcome of elections.

The CLC letter to the committees explains the urgent need for improved guidance in this area and offers suggestions for how the committees can offer clarity. 

Today’s revelation that the IRS has granted Crossroads GPS status as a “social welfare” organization is truly outrageous. It is a dangerous victory for those in Congress who have relentlessly bullied the IRS into refusing to enforce the laws limiting the political advocacy of tax exempt organizations. It was bad enough when the agency buckled to congressional pressure and postponed, until after this election cycle, a rulemaking to clarify the amount of political activity 501(c)(4)s are permitted to undertake while claiming federal tax-exempt status. But giving Crossroads GPS its stamp of approval is further evidence that the IRS no longer has the will to enforce the law. There is little question this will cause a major jump in the use of this privileged tax status to evade disclosure of political spending on a massive scale. 

Crossroads GPS was created by cofounder Karl Rove after he found that some potential big donors were not comfortable giving money publicly to his Super PAC American Crossroads. The Super PAC’s political director Carl Forti freely admitted at the time that they created Crossroads GPS to keep the names of donors secret. From its founding the group appears to have run roughshod over the restrictions on political spending by so-called “social welfare” groups.

By allowing an organization like Crossroads GPS to spend in our elections secretly and with impunity, the IRS has all but guaranteed that similar “dark money” groups will proliferate. It is impossible to defend depriving the public of the true sources of the funding behind the flood of political ads seeking to influence election outcomes as “promoting social welfare.” The public has the right to know who is funding our elections.

Today, in Independence Institute v. Williams, the U.S. Court of Appeals for the Tenth Circuit dismissed a challenge to the “electioneering communications” disclosure provisions enshrined in Colorado’s state constitution, affirming a federal district court decision upholding the law. The Campaign Legal Center, joined by Democracy 21 and Public Citizen, filed an amici brief with the Tenth Circuit to defend Colorado’s law on March 4, 2015, and also filed an amici brief with the lower court in 2014. The state measure is materially indistinguishable from the federal “electioneering communications” disclosure statute, which the U.S. Supreme Court upheld as recently as 2010 in its Citizens United decision.

“This ruling marks another resounding victory for disclosure against a nationwide flood of challenges to laws that require the reporting of nothing more than the identity of those spending significant sums on candidate-focused ads shortly before elections. Independence Institute asked the court to ignore Supreme Court precedent and permit it to conceal the ‘dark money’ donors underwriting its ad campaign on the eve of an election,” said Tara Malloy, Campaign Legal Center Deputy Executive Director. “But the Supreme Court, by overwhelming 8-to-1 margins, has twice upheld a federal disclosure law nearly identical to Colorado’s. We are pleased the Tenth Circuit recognized Coloradoans’ vital interest in knowing the identities of those who seek to influence them shortly before elections and rejected this brazen attempt to re-litigate binding Supreme Court precedent.”

Independence Institute wished to run a broadcast ad referring to Governor John Hickenlooper (D-CO) shortly before Election Day without disclosing its donors. The challenged law requires donor disclosure when groups spend more than $1,000 on “electioneering communications”—defined as certain television, radio and print ads that mention the name of a state candidate within 60 days of a general election or 30 days of a primary election.

The U.S. Congress enacted the federal “electioneering communications” disclosure law to curb widespread evasion of earlier disclosure requirements that applied only to “express advocacy” ads. Since then, the Supreme Court has twice upheld this law: first in McConnell v. FEC (2003) in a facial challenge and again in Citizens United v. FEC (2010) in an as-applied challenge. Independence Institute’s parallel challenge to the federal law (Independence Institute v. Federal Election Commission) was rejected by the U.S. District Court for the District of Columbia on October 6, 2014, and is currently on appeal before the D.C. Circuit. The Campaign Legal Center filed amici briefs in both stages of the federal case.

To read the opinion, click here.

To read the Legal Center’s Tenth Circuit brief in the case, click here.

Yesterday, the Campaign Legal Center joined with the League of Women Voters, the National Council of Jewish Women, and the Voting Rights Institute at Georgetown Law in filing an amici brief in Wittman v. Personhuballah, the fourth voting rights case the Supreme Court has taken this Term.  The brief urges the Court to uphold a lower court ruling that Virginia’s 2012 congressional redistricting plan, and in particular District 3 represented by Congressman Bobby Scott, constitutes an intentional, and unconstitutional, racial gerrymander.  The appeal is being pursued by Republican Members of Congress who stand to benefit from the plan’s partisan results and who intervened in the case.  Whether they have standing to pursue the case is one of the issues on the appeal.

“Appellants are essentially asking the Court to eviscerate its prior racial gerrymandering doctrine and sanction the explicit use of race as a proxy to achieve political goals.  This is flatly inconsistent with the Supreme Court’s repeated prohibition on racial stereotyping,” said Campaign Legal Center Legal Fellow Danielle Lang.  “The radical overhaul of the racial gerrymandering doctrine requested by the Congressmen challenging the three-judge court’s ruling would have dire consequences for the equal voting rights of minority communities across the nation.”

The challenge to the Virginia Legislature’s 2012 redistricting plan was originally brought by voters who argued that Virginia’s Third Congressional District, which extends nearly 100 miles from Richmond to Norfolk, was racially gerrymandered.  By intentionally packing as many black voters into the 3rd District as possible they argued, the Legislature allowed racial considerations to predominate the drawing of the district.  In 2014, a three-judge panel of the U.S. District Court for the Eastern District of Virginia agreed and declared Virginia’s congressional map unconstitutional.  After the Virginia General Assembly failed to enact a remedial plan, the federal court selected a new redistricting plan drawn by a court-appointed special master.  The Supreme Court has denied Appellants’ application for a stay of the implementation of the new map. 

To read the brief filed in the U.S. Supreme Court, click here.

Oral argument is scheduled to be heard on March 21, 2016. 

Today, the Campaign Legal Center, filed a brief on behalf of plaintiffs in Fairley v. Hattiesburg, urging the U.S. Court of Appeals for the Fifth Circuit to reverse the District Court’s erroneous and dangerous rejection of their Voting Rights Act challenge to the 2012 Hattiesburg City Council redistricting plan.  The brief argues that the redistricting plan violates Section 2 of the Voting Rights Act because it deprives Black voters of an equal opportunity to elect representatives of their choice on account of their race. 

Hattiesburg, Mississippi has undergone significant demographic changes in recent years.  As a result, Blacks now comprise a majority of the population and a plurality of the voting age population.  Nonetheless, in 2012, the majority-White Hattiesburg City Council, over the objection of its Black members, passed a redistricting plan that packs Black voters into two super-majority wards and creates three safe majority-White wards.  The plan thus maintains White-majority control over the City Council in majority-Black Hattiesburg, a city characterized by extremely racially-polarized voting patterns.

Despite the fact that the plan leaves Hattiesburg’s majority-Black population with only two of five seats on the Council (40%), the District Court incorrectly held that the City Council was “roughly proportional” and upheld the plan.  In doing so, the District Court failed to acknowledge far more proportional options such as creating a third majority-Black or a competitive ward.  The District Court treated this alleged “proportionality” as an improper safe harbor for Defendants despite Plaintiffs’ probative evidence of vote dilution. 

“This is exactly the kind of redistricting plan that the Voting Rights Act is meant to prohibit. It dilutes Black voting strength and deprives Black citizens in Hattiesburg of an equal opportunity to effectively participate in the political process,” said Campaign Legal Center Legal Fellow Danielle Lang.  “Ultimately, White voters, a minority in Hattiesburg, can always elect three of their candidates of choice to control the City Council while Black voters, the largest voting bloc in Hattiesburg, only have the opportunity to elect a minority of Council members.  This is not equality of opportunity by any measure.”

The legal team representing the Hattiesburg voters in the appeal also includes the New York Law School’s Racial Justice Project and Ellis Turnage, a civil rights litigator in Mississippi.

To read the brief, click here.