The Campaign Legal Center and Democracy 21 today provided additional materials to the Internal Revenue Service (IRS), supplementing previous submissions regarding several controversial organizations that appear to be in clear violation of their tax status as 501(c)(4) “social welfare” organizations.  Today’s letter to the IRS backs up an earlier request that the agency investigate Crossroads GPS, the American Action Network, Americans Elect and Priorities USA.

“These organizations have chosen to file for special tax status seemingly for no other purpose than to hide the identities of their donors while pursuing blatantly political agendas,” said J. Gerald Hebert, Executive Director of the Campaign Legal Center.  “The IRS must step up and do its job by curbing these abuses and enforcing the laws on the books.  It defies belief that an organization tries to claim it is a ‘social welfare’ organization while boasting to reporters that it is running ads against a candidate in an attempt to scare him out of seeking reelection and seemingly dedicating itself entirely to candidate-election related activities.”

The Internal Revenue Code does not require section 501(c)(4) tax-exempt organizations to disclose their donors to the public, but does require such organizations to engage primarily in the promotion of social welfare.  As today’s letter points out, “Federal court decisions have established that in order to meet this requirement, section 501(c)(4) organizations cannot engage in more than aninsubstantial amount of any non-social welfare activity, such as directly or indirectly participating or intervening in elections.” 

Democracy 21 took the lead in preparing the IRS letter.  To read the full letter, click here. To read the earlier letter to the IRS, click here.

Today, the Campaign Legal Center, and a coalition of reform groups, urged the Senate Committee on Homeland Security & Government Affairs to pass a strong version of a bill banning congressional insider trading at its markup of the legislation tomorrow.  The “Stop Trading on Congressional Knowledge Act” (STOCK Act) has seen a groundswell of congressional support in the wake of a scathing CBS News “60 Minutes” piece on congressional insider trading last month.

 

“It is vitally important that Congress pass strong legislation in this instance to make clear that Members are not above the law.  This is a necessary first step for Congress to begin repairing its historically low approval ratings. A Gallup poll this week that showed Members of Congress had leapfrogged telemarketers, car salespeople and even lobbyists to tie an all-time low for any profession in terms of the public’s view of Members’ honesty and ethical standards,” said Meredith McGehee, Campaign Legal Center Policy Director.  “At least the Senate is continuing to move forward on with this legislation while in the House Republican Leadership abruptly cancelled a planned markup of companion legislation despite widespread public outrage and a majority of House Members cosponsoring the legislation.”

The December 12, 2011 Gallup poll found that sixty-four percent of Americans rate the honesty and ethical standards of Members of Congress as "low" or "very low," equaling the record "low"/"very low" rating for any profession since Gallup began this ranking in 1976.  The record low rating matched by Congress was previously held exclusively by lobbyists in a 2008 poll.  To view the Gallup poll,click here.

The full Committee on Homeland Security & Government Affairs will markup the STOCK Act at a hearing to be held on Wednesday, December 14, at 10:00 a.m. in the Dirksen Senate Office Building, room SD-342.

The organizations signing the letter include the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, the Sunlight Foundation and U.S. PIRG.

The full text of the letter to the committee follows below.

 

 

December 13, 2011

 

The Hon. Joseph Lieberman, Chairman                                             

The Hon. Susan Collins, Ranking Member

Committee on Homeland Security & Governmental Affairs

U.S. Senate

Washington, D.C. 20510

 

Support the “Stop Trading on Congressional Knowledge Act”

And Send Strong Legislation to the Senate Floor for Full Consideration

 

Dear Chairman and Ranking Member:

 

Our organizations – the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, the Sunlight Foundation  and U.S. PIRG – strongly support passage of the “Stop Trading on Congressional Knowledge Act” (STOCK Act), designed to prevent congressional insider trading.

 

We urge the Senate Committee on Homeland Security & Governmental Affairs to approve a strong version of the legislation at its markup on Wednesday and send it to the Senate floor for final passage.

 

The STOCK Act provides a clear and unambiguous application of the laws against insider trading to members of Congress and their staff, and others who do business with Congress. The Act also provides for disclosure to ensure compliance with the law.

 

The STOCK Act has widespread support, including strong bipartisan support from members of Congress. We urge the Committee to follow through on the public’s expectation that Congress will act promptly to address this important issue.

 

The Committee is expected to mark-up legislation that embodies key elements of the legislation sponsored by Senators Kirsten Gillibrand (D-NY) and Scott Brown (R-Mass.), and by 25 other Senators as well. We urge the Committee to report the bill tomorrow and the Senate to act on the legislation either before the Senate adjourns this year or at the outset of next year’s session.

 

Respectfully Submitted,

 

Campaign Legal Center

Citizens for Responsibility and Ethics in Washington

Common Cause

Democracy 21

Public Citizen

Sunlight Foundation

U.S. PIRG

Today, the Campaign Legal Center, and a coalition of reform groups, called on the Speaker of the House and the House Majority Leader to heed calls from a majority of the colleagues to pass legislation to curb congressional insider trading.

The letter to Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA), called for a rescheduling of the markup of the “Stop Trading on Congressional Knowledge Act” (STOCK Act) which was reportedly cancelled by Cantor despite a majority of the House (225 Members), including 76 Republicans, cosponsoring the legislation.

The STOCK Act, which had been introduced in previous session, had garnered few sponsors until a damning report on the CBS News magazine “60 Minutes”.   After the story aired, Members responded to the public outcry and rushed to co-sponsor the legislation.

“Speaker Boehner should seriously consider what a markup postponement would mean.  A ‘slow walking’ of this legislation would be seen as nothing more than an attempt to calm public outrage through delay so that Congress could once again avoid policing its own,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Delaying the markup of the legislation beyond next week would likely push the House vote on the legislation into 2012 and it would be hard to come up with a charitable interpretation of such an act.”

The organizations signing the letter include the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG.

Companion bills have been introduced in the Senate and a hearing was held last week.

The full text of the letter follows below.

December 9, 2011

The Hon. John Boehner

The Hon. Eric Cantor

U.S. House of Representatives

Washington, D.C. 20515

 

Republican Leadership Should No Longer Delay Full Consideration

of Legislation to Ban Congressional Insider Trading (H.R. 1148)

Dear Speaker Boehner and Majority Leader Cantor:

Our organizations -- Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG – urge the Republican congressional leadership to end its delay of House consideration of the “Stop Trading on Congressional Knowledge” (STOCK) Act.

A majority of House members (225), including 76 Republican Representatives, are co-sponsoring the STOCK Act (H.R. 1148) introduced by Reps. Timothy Walz (D-Minn.) and Louise Slaughter (D-NY). This is real bipartisan legislation.

The STOCK Act received a constructive and informative hearing before the House Financial Services Committee and was scheduled for further consideration and amendments on December 14. However, the Republican leadership stepped in and directed Chairman Spencer Bachus (R-Ala.) not to move forward with this important legislation.

This legislation should be marked up by the House Financial Services Committee and voted on by the full House before Congress adjourns this year. Clearly, a majority of Congress recognize that a serious problem exists regarding the potential for insider trading by members and staff and want to move forward with fair and balanced legislation to address the problem. Only the Republican congressional leadership is now standing in the way.

We see no legitimate basis for the cancelation, reportedly by House Majority Leader Eric Cantor, of the Committee markup of this bill that had been scheduled for next week. Prohibiting congressional insider trading is not a partisan issue and should not be derailed by party politics. It’s an issue that involves ensuring that members of Congress do not abuse their public office for improper personal gain.

We urge you to join with a majority of your colleagues and let this legislation move forward.

Sincerely,

Campaign Legal Center

Citizens for Responsibility and Ethics in Washington

Common Cause

Democracy 21

Public Citizen

Sunlight Foundation

U.S. PIRG

The abrupt cancellation of the House Judiciary Committee’s markup of the STOCK Act is a slap in the face to the American people.  The move by House Majority Leader Eric Cantor comes on the same day that a majority of House Members have co-sponsored the legislation.  Once again, congressional leadership is putting its own interests above those of citizens.

Majority Leader Cantor has put the kibosh on a bill - now cosponsored by more than 220 House Members - to ensure that Members of Congress are sufficiently covered by anti-insider trading statutes.  This cynical move, based on the hope that the public won’t notice, only reinforces the low-standing of the 112thCongress and speaks volumes of the root causes of the record-low public approval ratings for this Congress.

Speaker Boehner must reject this move by Rep. Cantor and see to it that a well-drafted bill protecting against insider trading by Members of Congress and their staffs moves out of the House immediately.

The Legal Center and a coalition of reform organizations have repeatedly urged Members to support the Stock Act. To read the letters, click here, here, and here.

Today, the Campaign Legal Center, and a coalition of reform groups, called again for a ban on congressional insider trading as the House Financial Services Committee held a hearing downplaying the need for the legislation. In a letter to both houses of Congress, the groups urged Members to quickly enact legislation to ban the practice.

The “Stop Trading on Congressional Knowledge Act” (STOCK Act) has been introduced previously but garnered few sponsors until a damning report aired recently on the CBS News magazine “60 Minutes”.  After the report and the ensuing public outcry, Members rushed to co-sponsor the legislation and schedule hearings.

“The public is absolutely right to be outraged that Members may have used their elective office to line their own pockets,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Sadly it takes the sniff of a scandal to spur Congress into even considering regulating its own conduct.  But the witness list and the tone of much of the questioning today raises concerns that Speaker Boehner – with the tacit support of a number of Members from both parties - may well attempt to slow-walk this legislation in the hope that public outrage will die down.  Ignoring the public fury on this topic would be a grave mistake for Leadership of either party.”

The organizations signing the letter include the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG.

Companion bills have been introduced in the Senate and a hearing was held last week.

The full text of the letter follows below.

December 6, 2011

The Hon. Harry Reid

The Hon. Mitch McConnell

The Hon. John Boehner

The Hon. Nancy Pelosi

All Members of the U.S. Senate and House of Representatives

RE:     Current law has not prevented Congressional insider trading. Congress must pass the “Stop Trading on Congressional Knowledge Act”

Dear Senator Reid, Senator McConnell, Representative Boehner, Representative Pelosi, Members of Congress:

Our organizations – Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and US PIRG  – strongly support passage of the “Stop Trading on Congressional Knowledge Act” (STOCK Act) designed to prevent congressional insider trading. In spite of recent movement intended to deflect the need for the bill, we believe Congress should quickly enact a strong bill with clear language prohibiting Members of Congress from using insider information to make stock decisions.

While we welcome the recent memo released by the House Committee on Ethics indicating that insider trading violates ethics laws, the memo is not a substitute for clear, enforceable statutes. At the House Committee on Financial Services hearing today, a number of witnesses claimed that current insider trading laws apply to Members of Congress. Unfortunately, both miss the point. The issue is not whether current law applies to Members of Congress, but whether current law is sufficient to curtail insider trading by Members. Recent news accounts raising the specter of Members of Congress using non-public information to make decisions about stock trades indicates that it is not. A strong bill that clearly prohibits congressional insider trading is required.

Members of Congress are, of course, privy to a great deal of non-public information that would impact stock prices. There is evidence to suggest that such information has been used for their own personal gain, yet, to our knowledge, no enforcement action for insider trading has been taken against a Member of Congress. Enforcement agencies will remain reluctant to prosecute insider trading by Members of Congress until Congress passes legislation that provides, in no uncertain terms, clear guidance that they, like the general public, are banned from using insider information to make decisions about stock transactions.

In addition to preventing self-dealing, passage of the STOCK Act provides the opportunity to increase transparency about legal trades. Members of Congress should be required to submit information about stock transactions soon after they are made. The Clerk of the House and the Secretary of the Senate should then be required to publicly disclose—quickly and online—the information submitted by the Members.

There is momentum for the STOCK Act because the specter of insider trading by Members of Congress further damages the public confidence in a Congress whose approval rating hovers around a record low 10%. Those who would prefer to keep the status quo intact should not derail the effort with distractions claiming current law is sufficient. Furthermore, mandatory blind trusts are not a solution to the problem. “Blind trusts” are often not blind at all to the participants, and we do not support trading public disclosure for secrecy. Congress has the responsibility to ensure that it is subject to the same laws against self-dealing that apply to the general public, and that those laws are enforced. Passage of the STOCK Act is critical for Congress to help restore the public’s trust in the institution.

Sincerely,

Campaign Legal Center

Citizens for Responsibility and Ethics in Washington

Common Cause

Democracy 21

Public Citizen

Sunlight Foundation

US PIRG

The Federal Election Commission today voted to a 3-3 deadlock in response to an advisory opinion request from Super PAC American Crossroads for permission to “fully coordinate” ads with candidates, using unlimited corporate and individual contributions, without those ads being considered prohibited “coordinated expenditures.”

“The result of today’s deadlock is that American Crossroads did not get the green light it sought  from the FEC to fully coordinate ads with candidates,” said Campaign Legal Center FEC Program Director Paul S. Ryan.  “Instead, any ads run by American Crossroads that feature federal candidates will be subject to legal scrutiny and may be deemed illegal.”

The Campaign Legal Center, together with Democracy 21, filed comments with the Commission on November 14, urging the Commission to reject American Crossroads’ request for permission to coordinate its ads with candidates.

“American Crossroads’ request was absurd and flew in the face of decades of Supreme Court decisions upholding laws to prevent political corruption,” said Ryan.  “The Supreme Court has long recognized the importance of contribution limits to preventing corruption, and that expenditures coordinated with candidates must be treated as contributions in order to prevent easy circumvention of the limits.  We applaud Chairwoman Bauerly and Commissioners Weintraub and Walther for their efforts today to maintain the integrity of the contribution limits.”

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

 

Today, the House Judiciary Committee unanimously passed the “Clean Up Government Act of 2011” (H.R. 2572).  The legislation would restore important tools for federal prosecutors fighting public corruption – specifically revisions to the Honest Services and illegal gratuities statutes – that have gradually been pared away by adverse court decisions.  A companion measure has been reported out of the Senate Judiciary Committee and is awaiting full Senate action.

Campaign Legal Center Policy Director Meredith McGehee issued the following statement after the vote.

“Today’s Committee vote was encouraging but the preceding debate was not.  Fortunately the verbal heel-dragging ceased when the vote was called. Still, there may be attempts, cloaked in the guise of concerns about over-criminalizing politics, to weaken the measure as it moves forward.  This legislation is too important to fall victim to Congress’ reticence to pass anything that might hold Members accountable.  .  With record low approval ratings, it is vital for Congress to show its willingness to get serious about combating public corruption.

“We urge Speaker Boehner to schedule a full House vote on H.R. 2572 this month before Congress adjourns as should Majority Leader Harry Reid on the Leahy-Cornyn bill in the Senate.  Representatives Jim Sensenbrenner (R-WI) and Mike Quigley (D-IL) deserve credit for fashioning a bipartisan bill that could pass this usually polarized Committee unanimously.”

To read the letter sent yesterday to the full committee by the Legal Center and a coalition of reform groups, click here.