Judge Backs Blind FEC Eye on Campaign-Finance Violations

WASHINGTON (CN) – The Federal Election Commission has the discretion to give a pass even in the face of “obvious” campaign-finance law violations, a federal judge ruled.

Wednesday’s ruling comes in response to complaints over the FEC’s decision not to prosecute a group that spent millions promoting Republican politicians despite obtaining tax-exempt status as a public-welfare organization.

When the Commission on Hope, Growth and Opportunity formed in 2010, it told the IRS in official paperwork that no part of its budget would be spent on influencing elections.

Though its investigation found that 85 percent of the nonprofit’s money went toward exactly that, the FEC voted to close the file in late 2015. Calling pursuit of the enforcement process “pyrrhic,” the FEC noted that the nonprofit had already shut itself down and that five-year statute of limitations on the group’s violations was set to expire.

Unwilling to accept that result, Citizens for Responsibility and Ethics in Washington filed suit against the FEC. CREW, as the group calls itself, complained that the commission’s blind eye toward flagrant violations helps “create a roadmap for other groups” with similar ideas.

U.S. District Judge Rudolph Contreras granted the commission summary judgment Wednesday.

“Taken together, the controlling commissioners concluded that the claim had become an academic exercise plagued with litigation risk and, therefore, not worth pursuing,” the 27-page opinion states. “Because their conclusion was rational, the court will not disturb it.”

CREW denounced the ruling in a statement Wednesday. “Obviously, we disagree with the court’s interpretation and decision here,” CREW spokesman Jordan Libowitz said in an email. “Our legal team is currently weighing its options for what comes next.”

There is little dispute that CHGO, the target of CREW’s ire, did its best to influence elections despite telling the government it would do no such thing. The nonprofit ran advertisements in 15 markets, including one that named specific politicians running for office during the 2010 midterm elections, according to the ruling.

In one ad to “Stop the Big Spenders in Congress,” CHGO stumped for Steve Southerland, the Republican campaigning to unseat a seven-term Democratic incumbent in Florida.

“It’s the worst economy in decades,” the ad said. “And the folks in Washington are living it up, spending our tax dollars like there’s no tomorrow. Leading this big song and dance: Obama, of course, and Nancy Pelosi. But there’s one face you might not expect to see — our old friend Allen Boyd. Instead of looking out for us, Boyd approved billions in deficit spending without missing a beat. Let’s pull the plug on this song and dance once and for all.”

As the screen fades to black, an image of Southerland appeared with the text: “Fight back. Join Steve Southerland. Stop the Big Spenders in Congress.”

Because of the way CHGO filled out its IRS paperwork, it did not have to disclose the names of its donors in the same way that political organizations must.

Even after the Democratic Congressional Campaign Committee and CREW filed complaints with the FEC, just before the 2010 elections, CHGO filed new paperwork with the IRS, reaffirming that it did not “engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office.”

Boyd meanwhile lost his seat to Southerland. When the FEC urged CHGO to preserve its records because of the investigation in January 2012, the group opted to wind down operations.

“My sense is that we ought to shut it down to make things less complicated moving forward,” one member wrote in an internal email about the FEC’s communications, according to the ruling.

Contreras agreed with the commission’s point, however, that an investigation into a defunct organization like CHGO would be difficult and likely fruitless.

“This is in line with common sense,” Contreras wrote. “The FEC has limited resources and may have little interest in punishing a group that it knows is unlikely to violate FECA again and possibly could not defray the costs of litigation through the payment of a fine.”