Today, the Campaign Legal Center, joined by Democracy 21, supplemented complaints to the Federal Election Commission (FEC) and Department of Justice (DOJ) regarding possible violations of campaign finance law by two companies seemingly created for the purpose of funneling $12 million to the Super PAC FreedomWorks for America while hiding the identity of the donor. New information uncovered by The Washington Post indicates that Illinois millionaire Richard J. Stephenson was the source of the $12 million and that FreedomWorks itself, led by executive vice president Adam Brandon, orchestrated the scheme for Stephenson to evade federal campaign finance disclosure laws. The FEC and DOJ have been urged to investigate whether Stephenson, Brandon and FreedomWorks violated federal campaign finance laws by making and receiving political contributions in the names of two shell companies.

“The latest report, if true, confirms our suspicion that the two companies were created to illegally hide the donor of $12 million given to FreedomWorks in the final weeks leading up to the election,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “Further, the report implies that FreedomWorks played a role and knowingly received the contributions from Mr. Stephenson illegally made in the name of the two straw donor companies. Assuming the media reports can be verified by DOJ and the FEC, the agencies must act quickly to enforce the law and deter future illegal use of straw donors to evade disclosure laws. The integrity of our elections depends on it.”

The two companies named in the original complaint, Specialty Group Inc. and Kingston Pike Development LLC, were both created by William S. Rose of Knoxville, Tennessee in late September 2012 and over the six weeks leading up to Election Day funneled more than $12 million to FreedomWorks.

To read the letter to the Department of Justice, click here.

To read the letter to the FEC, click here.

The Campaign Legal Center today joined Democracy 21 citing new evidence in urging the Internal Revenue Service (IRS) to deny Karl Rove’s Crossroads GPS tax-exempt status as a section 501(c)(4) social welfare organization. The letter points to the recent public dissemination by the news organization ProPublica of Crossroads GPS’s application to the IRS seeking privileged 501(c)(4) tax exempt status as a “social welfare” organization able to keep its donors secret. The application describes an organization bearing little resemblance to the Crossroads GPS whose recent Federal Election Commission (FEC) filings revealed $70 million in independent expenditures and electioneering communications to elect Republican candidates or defeat Democratic candidates for federal office in the 2012 elections.

“The application filed with the IRS by Crossroads GPS is laughable in the face of the growing body of evidence against the pretense that Crossroads GPS is a ‘social welfare’ organization,” said J. Gerald Hebert, Legal Center Executive Director. “The IRS has now allowed this charade to go on for two election cycles at great harm to our democracy and it is long past time when the agency should step up and enforce the law. The tax code is being abused to allow the very rich to spend tens of millions of dollars anonymously in an attempt to buy election results, and by extension to purchase still more influence in Washington. The inaction of the agency will only encourage more widespread abuse of the system in future election cycles so it is important that it act quickly and decisively after its long delay.”

To read the full letter sent today to the IRS, click here.

Today, the Campaign Legal Center urged Rep. Heath Shuler (D-NC) and Rep. Jo Ann Emerson (R-MO) to resign from Congress or at the very least recuse themselves from all official matters related to the issues of energy or the environment and broader matters like the “fiscal cliff” due to conflicts of interest created by the jobs they will start when they leave office.

In January, Rep. Shuler will join Duke Energy as its vice president of federal affairs and Rep. Emerson will become President and CEO of the National Rural Electric Cooperative Association (NRECA). Both organizations have high-profile lobbying operations in Washington and spend millions of dollars annually lobbying Congress.

“It is hard to imagine a more clear cut conflict of interest.   Representative Shuler and Representative Emerson, in their waning days in office, face issues that will impact their future employers,” said Meredith McGehee, Campaign Legal Center Policy Director. “Out of respect for the institution and their constituents, Representative Shuler and Representative Emerson should resign immediately. If they don't resign, they should, at a minimum, recuse themselves from voting. Landing lucrative jobs based on lobbying former colleagues sadly has a long tradition in Washington. But at the very least Members leaving public service to cash in through the revolving door should not be in the business of serving two masters while still holding office.”

To read the letter to Representative Emerson, click here. To read the letter to Representative Shuler, click here.

The State of New Hampshire and the United States Attorney General reached an agreement today that would grant a bailout for the ten towns and townships in the State that are subject to the preclearance requirements of the Voting Rights Act.  The agreement was submitted to a three-judge court in Washington, DC, and asks the court to wait thirty days to enter it, so that the towns can publicize the proposed settlement.  Campaign Legal Center Executive Director J. Gerald Hebert serves as legal counsel to the State of New Hampshire in his capacity as a solo practitioner.  New Hampshire becomes the first state to bailout since Congress changed the bailout requirements under the Voting Rights Act in 1982.

To read the joint motion to enter consent judgment and decree, click here. To read the proposed consent judgment and decree, click here.

Today, the Campaign Legal Center, joined by Democracy 21, asked the Federal Election Commission (FEC) and Department of Justice (DOJ) to investigate possible violations of campaign finance law by two companies that appear to have been created for the purpose of funneling $12 million to the Super PAC FreedomWorks for America, while hiding from the public the source of the funds. Specialty Group Inc. and Kingston Pike Development LLC were both created by William S. Rose of Knoxville, Tennessee in late September 2012 and over the six weeks leading up to Election Day funneled more than $12 million to FreedomWorks.

“Federal law prohibits making contributions ‘in the name of another person.’ This law is essential to providing voters with accurate disclosure regarding the true source of funds contributed to political committees such as FreedomWorks,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “These companies appear to have been created to hide the identities of one or more donors that pumped millions of dollars into a Super PACs anonymously in the final weeks before an election. If these laws are not enforced and donors are allowed to contribute millions of dollars to Super PACs in the name of straw companies, not only will campaign finance disclosure laws be rendered useless, but the door will be left wide open to the possibility of foreign campaign contributions helping determine election outcomes in the United States.”

To read the FEC complaint, click here. To read the letter to the Department of Justice, click here.

Last night, Stephen Colbert announced on the Colbert Report that the Ham Rove Memorial Fund had made a grant of more than $135,000 to the Campaign Legal Center. A condition of the grant requires that the Legal Center name its conference room The Ham Rove Memorial Conference Room. The staff at the Legal Center is already referring to the room by its new name and look forward to dedicating the conference room and bringing the space into full compliance with the condition as soon as the plaque arrives.

“We vow to do our best to ensure that groups like Americans for a Better Tomorrow, Tomorrow and Colbert Super PAC SHH will not be able to get away with their anonymous shell game shenanigans in future election cycles,” said Legal Center President Trevor Potter. “We are also delighted that the Ham Rove Memorial Fund made a similar contribution to our friends at the Center for Responsive Politics for the invaluable service they provide in tracking money in our political system.”

The Ham Rove Memorial Fund was created by Mr. Colbert with money he raised though his Colbert Super PAC. The Colbert Report was awarded with a prestigious Peabody Award for the segments of the show related to the Super PAC and the nation’s completely dysfunctional campaign finance system in the wake of the Supreme Court’s controversial Citizens United decision and a series of failures by regulatory agencies, including the Federal Election Commission and the Internal Revenue Service (IRS).

Through his private law practice, Legal Center President Trevor Potter was a frequent guest on the show serving as Mr. Colbert’s attorney and explaining the intricacies of campaign finance and tax law to the show’s national audience. Mr. Potter helped create the Colbert Super PAC, the related 501(c)(4) Colbert Super PAC SHH and ultimately the Ham Rove Memorial Fund where the hundreds of thousands of dollars from Colbert Super PAC had vanished last month without a trace, courtesy of loopholes in the IRS regulations.

To watch Mr. Colbert’s announcement of the grant on last night’s show, click here.

Groups of various political persuasions joined together today calling upon House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.) to reauthorize and appoint new board members to the Office of Congressional Ethics (OCE), and for President Barack Obama finally to step up to the plate and appoint to the Federal Election Commission (FEC) new commissioners who will pull the campaign finance agency out of its moribund state.

Enforcement of congressional ethics rules and the nation’s campaign finance laws are at dire risk if these two watchdog agencies are allowed to go defunct.

The terms of four of the six board members of the OCE expire at the end of the month. If these board members are not promptly replaced, the critical work of this agency in overseeing enforcement of congressional ethics will come to a halt in the 113th Congress. Speaker Boehner and Minority Leader Pelosi have exclusive authority to appoint a new OCE board.

Meanwhile, the deadlocked FEC has become so dysfunctional when it comes to enforcing the nation’s campaign finance laws that it is incapable of fulfilling its mission. The terms of five of the six FEC commissioners have long expired, providing President Obama with an ideal opportunity to replace the feuding commissioners with appointees dedicated to enforcing the campaign finance law.

Eleven watchdog groups from various ideological persuasions – Americans for Campaign Reform, Campaign Legal Center, Citizens for Ethics and Responsibility in Washington (CREW), Common Cause, Democracy 21, Judicial Watch, League of Women Voters, National Legal and Policy Center, Public Citizen, Sunlight Foundation and U.S. PIRG – today signed on to letters either to the congressional leaders and/or President Obama calling upon them to replace the members of the OCE and FEC whose terms have expired with people dedicated to making these agencies function responsibly and effectively.

Several of the groups noted that the very existence of the OCE, a semi-independent watchdog agency run by people who are not members of Congress, has helped encourage the House Ethics Committee to become more active and accountable. In the short four years of its existence, the OCE has prompted the Ethics Committee to issue more than three times the number of disciplinary actions than it has done in the entire previous decade.

In the letter to Speaker Boehner and Minority Leader Pelosi, the groups wrote:

“The terms of four members of OCE’s board will expire at the end of this year, leaving just the two chairmen – Porter Goss and David Skaggs – as sitting board members. OCE cannot function without an active board of directors…. It is the responsibility of solely your two offices to agree upon and appoint board members for the expired terms in the 113th Congress … We urge you to proceed in a timely fashion to consider and appoint qualified and responsible members to OCE’s board of directors so that the agency’s useful work is not interrupted as we enter the 113th Congress.”

At the same press conference, many of the groups appealed to President Obama to breathe life back into the FEC by replacing the commissioners whose terms have expired. In all four core mission areas – enforcement, audits, regulations and advisory opinions – the number of official actions taken by the FEC has plummeted to all-time lows in the past few years, and the percentage of deadlocked votes on the reduced number of actions it has voted on have spiked to incapacitating levels. In enforcement actions alone, the percentage of deadlocked votes has increased about eight-fold annually since prior to 2008.

In the letter to President Obama, the groups wrote:

“Today’s Federal Election Commission is a broken agency that has itself become a national campaign finance scandal. … The immediate future of the FEC will follow one of two paths: either federal campaign finance laws will continue to be largely unenforced by a moribund agency, or new commissioners will be appointed who are committed to carrying out the agency’s mission. … We encourage you to take the latter path of nominating and seeking the final appointment of responsible commissioners who will fulfill their statutory duties – and we encourage you to make these appointments soon.”

To read the letter to Speaker Boehner and Minority Leader Pelosi, click here.

To read the letter to President Obama, click here.

To read the comments delivered at the press conference by Legal Center Policy Director Meredith, McGehee, click here.

Today, the Campaign Legal Center, joined by Democracy 21, filed an amici curiae brief in the U.S. Court of Appeals for the Second Circuit, defending the disclosure provisions and contribution limits of the State of Vermont’s campaign finance law in Vermont Right to Life Committee (VRLC) v. Sorrell. The suit is part of a long string of challenges to state disclosure laws.

“This is suit is just the latest case to ask yet another federal court to ignore legal precedent in order to gut the type of disclosure law that has repeatedly been upheld by the Supreme Court and appellate courts,” said Tara Malloy, Legal Center Senior Counsel.  “In recent years there has been a concerted and well-funded litigation campaign aimed at undermining federal, state and local disclosure laws. The clear goal is to keep anonymous the buying of selling of influence with elected officials. Fortunately, the courts have long recognized that disclosure laws serve the vital public interest in preventing corruption of public officials and ensuring that voters can make informed decisions at the polls.”  

In recent years the disclosure laws in nearly two dozen states have been challenged, and the vast majority of these challenges have been turned away by the courts. More than half of these challenges have been brought by groups represented by James Bopp, the former Republican National Committeeman from Indiana who originally brought the Citizens United case exclusively as a challenge to federal disclosure laws. Despite other aspects of the controversial decision, the Supreme Court in Citizens United turned away the disclosure challenge by an overwhelming 8-1 majority.

In addition to challenging disclosure requirements, VRLC asks the court to invalidate the state contribution limits as applied to its fund that allegedly makes only independent expenditures. The district court, however, found that the “independent” fund was anything but independent, citing evidence that there was a “fluidity of funds” and “no clear functional divide” between the allegedly “independent” fund and VRLC’s political committee making contributions directly to Vermont candidates.

To read the brief filed by the Campaign Legal Center and Democracy 21, click here.