The Campaign Legal Center yesterday joined in a lawsuit alleging widespread corruption in the awarding of contracts by the Houston Independent School District (HISD).  The Legal Center joins the legal team representing a Houston construction contractor who was locked out of the school district’s construction contracts after refusing to participate in the Board of Trustees’ widespread “pay-to-play” scheme.

This case brings into the daylight the pervasive and egregious corruption within HISD. Trustee and former HISD Board President Larry Marshall was an elected public official who, along with others at HISD, regularly abused his position of trust by placing his own interests above those of the students and employees of the school district. As a member of the Board of Education, he was charged with a duty of loyalty in overseeing the expenditures of local tax dollars, bond money and federal funds for the benefit of the students and employees of the Houston Independent School District. But since at least 1999, the lawsuit alleges, Mr. Marshall used his position of influence to extract bribes from companies seeking to do business and contract with the district in exchange for preferable treatment and contracts. Persons or companies who dared to interfere with HISD's pay-to-play system were terminated, forced to resign or no longer awarded contracts at HISD. CLC’s client, Gil Ramirez Group, was just one such victim of this pervasive public corruption scheme. 

            “As the suit alleges, Board President Marshall apparently required contractors to pay  monthly bribes only nominally hidden behind consultancy ’fees’ to Marshall’s associate for services never performed,” said Campaign Legal Center Executive Director J. Gerald Hebert.  “These actions deserve public scrutiny and their day in court. “The public has a right to know how their public officials have abdicated their duties of loyalty and corrupted their public positions. This lawsuit, by bringing HISD’s longstanding pay-to-play corruption into the light, will be a major step towards eliminating corruption throughout HISD and rebuilding the public trust in that governmental institution.” 

            To read the Campaign Legal Center’s response to Defendant’s second motion for summary judgment, filed yesterday, click here.

The deal struck late last night on the Omnibus funding measure removed some troubling campaign finance riders that would have rolled back longstanding reforms. The current bill however includes two riders that will cement in place the ‘dark money’ status quo for the 2016 election cycle.

The first rider blocks the Securities and Exchange Commission from acting on a proposed rule to require corporations to tell shareholders how corporate money is being spent on elections-- disclosure the Citizens United decision assumed shareholders would have. Current SEC Chair Mary Jo White has refused to slot the proposed rule for action, despite receiving more than a million signatures calling for action on the proposed rule, so this rider takes the pressure off her to do anything.

The IRS rider blocks the agency from clarifying rules governing the acceptable limits of political activities of social welfare organizations. There is virtually universal agreement that the current rules are confusing and unclear, and have resulted in abuses both by dark money groups and by IRS agents in the exemption approval process. However, the IRS effort to update these rules has been bogged down in bureaucracy and plagued by partisan opposition. Now, Congress has mandated that these same inadequate rules remain untouched for another year-- the agency is not even allowed to continue working on drafting better ones.

An effect of this rider is that the door to secret foreign dollars in U.S. elections remains wide open through secret contributions to these ostensibly "nonpolitical" groups that run campaign ads without any disclosure of their donors.

On the positive side, the omnibus deal is also notable for what was not included in terms of riders pushed by some Members on campaign finance issues-- no provision to remove the coordinated spending limits for parties, no ban on an Executive Order regarding disclosure of campaign finance activities by government contractors and no provision to effectively close down the remaining structure of the presidential public financing system. All of these were apparently considered during the deliberations on the Omnibus.

It is unfortunate and a sad commentary on the grip of deep-pocketed special interests on our elections that both of the remaining riders target the kinds of disclosure that the majority of Americans strongly support and that the Supreme Court has consistently upheld and has said is important to the functioning of our democracy. These riders encourage dark money groups to seek to gain even more leverage in our political discourse and our elections.

Today, the Campaign Legal Center again urged the House Ethics Committee and the Office of Congressional Ethics (OCE) to establish a Task Force to review and recommend changes to clarify House rules concerning recusal and conflicts of interest by Members.  In a letter to Ethics Committee Chair Charles Dent (R-PA) and Ranking Member Linda Sanchez (D-CA) and OCE Co-Chairs David Skaggs and Judy Biggert, CLC offered new accounts that raise questions of potential Member conflicts on a large scale in the fields of biomedicine and healthcare.

“The current rules are weak and lack transparency which presents problems with actual conflicts of interest as well as with the public’s faith in its elected representatives in Washington,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Neither Members nor the general public are well served by the current weak rules concerning recusal and conflicts of interest. Under the current system, Members are dogged by the shadow of potential conflicts in their actions and the general public too often assumes the worst about Congress because there is no transparency in the current system.”

The letter urges the Ethics Committee and OCE to establish a joint Task Force to review the current practices and guidance, and then publicly recommend changes in House rules and procedures to clarify when Members should recuse themselves from not only voting but also other legislative activities in order to protect against conflicts of interest.  The process, the letter emphasized, should also include a public notification as part of the process to ensure public confidence that Members are not using their official position to further personal interests.

Currently House rules require that every Member “shall vote on each question put, unless he has a direct personal or pecuniary interest in the event of such question.”  It appears that most most Members go no further in order to determine whether to recuse themselves from voting or taking action on a matter directly affecting their financial interests.  However, the House Ethics Manual (Manual) differentiates between voting and other legislative “advocacy” actions such as “sponsoring legislation, advocating or participating in an action by a House committee, or contacting an executive branch agency.”  The Manual also states that prior to undertaking such non-vote advocacy implicating financial interests, a Member should clear it with the Ethics Committee.  Under current guidelines, there is no way for the public to determine whether Members seek clearance from the Ethics Committee.

To read the letter, click here.   

Reforms groups sent a letter today enclosed below to President Barack Obama, House Democratic Leader Nancy Pelosi and Senate Democratic Leader Harry Reid urging them to block any last minute efforts to kill the presidential tax check off system in the Omnibus spending bill.

The reform groups include Campaign Legal Center, Common Cause, CREW, Demand Progress, Democracy 21, Every Voice, League of Women Voters, Issue One, People For the American Way, Public Citizen and U.S. PIRG.

The full letter follows below.

Dear President Barack Obama, House Democratic Leader Nancy Pelosi & Senate Democratic Leader Harry Reid,

It is our understanding that last minute efforts may be pursued in the Omnibus bill to restore public financing for the presidential nominating conventions in return for taking away the funds currently in the presidential tax checkoff system.

House Republicans have tried to kill the presidential tax checkoff system in the past and take away its funds. These efforts have been opposed by President Obama and blocked by congressional Democrats.

We strongly urge you to block this last minute effort which would put the final nail in the coffin of the presidential public financing system rather than leave in place the opportunity to repair the system. This would also undermine the essential efforts being pursued to create a small donor, public matching funds system for congressional races.

The Super PAC financing of the 2016 presidential election clearly demonstrates the need to fix the presidential public financing the system, not destroy it. A repaired presidential funding system would engage millions of ordinary Americans in financing our presidential election rather than having presidential financing dominated by the Super Rich.

We strongly urge you to block any effort to kill the presidential tax checkoff system or to take away the money currently in the presidential tax checkoff fund.

Campaign Legal Center

Common Cause

CREW

Demand Progress

Democracy 21

Every Voice

League of Women Voters

Issue One

People For the American Way

Public Citizen

U.S. PIRG

Today, the Campaign Legal Center (CLC) received notification that the Federal Election Commission (FEC) has fined pro-Mitt Romney Super PAC Restore Our Future (ROF) $50,000 for illegally spending millions of dollars airing an advertisement in 2012 that was originally produced and aired by the 2008 Romney presidential campaign.  ROF treasurer Charles S. Spies signed a conciliation agreement on behalf of ROF, agreeing to pay a civil penalty of $50,000.

“This was a blatant violation of the law.  It’s unacceptable that the FEC took nearly four years to resolve the matter with a fine that amounts to a light slap on the wrist for millions of dollars in illegal spending,” said Campaign Legal Center Deputy Executive Director Paul S. Ryan.  “On the bright side, the FEC has now confirmed the obvious: it’s illegal for Super PAC’s to recycle candidate campaign ads.”

Under FEC regulations, financing the republication of campaign materials prepared by a candidate or candidate committee constitutes a “contribution for the purposes of contribution limitations” of the person or group making the expenditure.  Super PACs like ROF are prohibited from contributing to candidates.  Consequently, every dollar ROF spent airing this ad constitutes an illegal contribution.

Beginning in February 2012, ROF made major ad buys to air the 2008 Romney campaign ad—initially in advance of primaries in Arizona and Michigan and continuing through the November 2012 general election.  CLC filed a complaint with the FEC on February 27, 2012, after ROF’s initial ad buy in Arizona and Michigan, alleging illegal in-kind contributions by Restore Our Future, Inc. to presidential candidate Mitt Romney.

According to the Wall Street Journal, ROF spent $4.3 million to air the ad in nine battleground states in May—the Super PAC’s first general election ad buy.  Other press accounts indicate millions more were spent by ROF to air the ad.  According to the book The 2012 Presidential Campaign: A Communication Perspective, this ad (“Saved”) was the Super PAC’s “most-aired political spot.”

To read the conciliation agreement between the FEC and ROF, click here.

To read the complaint filed by the Legal Center on February 27, 2012, click here. 

Today, the Campaign Legal Center, Common Cause and the Sunlight Foundation filed complaints at the Federal Communications Commission (FCC) against 18 television stations in 7 markets across 4 states that incorrectly identified Independence USA PAC as the “true sponsor” of political advertisements, when in fact the true funder of the PAC is Michael Bloomberg.  On November 19, 2015, the groups warned the stations by letter that they were in violation of the Communications Act and FCC regulations and should identify Bloomberg as the sponsor on all future broadcasts of Independence USA ads.  Since none of the stations agreed to change their sponsorship identification after receiving the letters, the groups are filing complaints against each of them.  The complainants are represented by the Institute for Public Representation of Georgetown University Law Center.

“Broadcasters across the nation receive a massive windfall from election advertising.  They should be held accountable when they allow political advertisers to hide the true identities of the deep-pocketed funders behind them,” said Meredith McGehee, Campaign Legal Center Policy Director. “These stations were warned that they were in clear violation of the law but have continued to cash the checks and run the ads for Independence USA PAC without identifying Michael Bloomberg as the group’s sole funder.  The identity of those paying to air television ads seeking to influence election outcomes is vital information to voters.  The law of the land requires that those sponsors be clearly identified.”

The Communications Act and the FCC’s sponsorship identification rules require broadcasters to go beyond simply naming the entity that paid for an ad and to disclose the “true identity” of the sponsor of the ad. In the case of Independence USA PAC, the Super PAC acts essentially as a personal advertising arm for Mr. Bloomberg, yet the stations failed to fully and fairly inform the public about who was attempting to influence them despite being given easily-accessible, publicly-available information, including Federal Election Commission filings regarding Mr. Bloomberg’s financing of the ads.  Under the Communications Act, broadcasters are required to “exercise reasonable diligence” to obtain the information needed for proper sponsorship identification.

See below for the list of stations and links to complaints filed.

St. Louis

KMOV (CBS)

Kansas City

KCTV (CBS)

KMBC-TV (ABC)

KSHB-TV (NBC)

Miami

WSVN (Fox)

WTVJ (NBC)

Orlando-Daytona Beach

WESH (NBC)

WKMG-TV (CBS)

WOFL (Fox)

Detroit

WDIV-TV (NBC)

WJBK (Fox)

WXYZ-TV (ABC)

Milwaukee

WTMJ-TV (NBC)

WDJT-TV (CBS)

WISN-TV (ABC)

Madison

WMTV (NBC)

WKOW (ABC)

WISC-TV (CBS)