Conservative Ad Backer Hurdles DC Circuit Appeal

WASHINGTON (CN) – An outfit that spent millions promoting Republican politicians, but billed itself as a public-welfare organization to avoid taxes, avoided charges Friday thanks to a 2-1 ruling from the D.C. Circuit.

In a lengthy dissent to the ruling, U.S. Circuit Judge Cornelia Pillard argued that the case against CHGO, short for the Commission on Hope, Growth and Opportunity, deserved a new round at the Federal Election Commission.

Back in 2015 the FEC closed its case against CHGO because its members had tied 3-3 on whether to bring enforcement proceedings.

Calling this outcome flawed, Citizens for Responsibility and Ethics in Washington noted that the FEC’s own investigation cited a report by CHGO to the Internal Revenue Service that no part of its budget would be spent on influencing elections.

In actuality, 85 percent of CHGO’s money went toward exactly that, including some ads for Mick Mulvaney. A former South Carolina congressman, Mulvaney now leads the Consumer Financial Protection Bureau under the Trump administration in addition to his duties as budget director.

Judge Pillard called it evident Friday that the 2015 “dismissal of CHGO’s case depended materially on an erroneous legal view of the organization’s political-committee status.”

“If, as my colleagues think, the commission did not base their dismissal on a legal interpretation, the agency could readily explain as much on remand,” Pillard added.

CREW spokesman Aaron Rodriguez said the group is disappointed with how the court resolved the dispute.

“We’re obviously disappointed in the decision in this case,” Rodriguez said Friday. “Our legal team is currently reviewing the decision to determine what our next steps are.”

Meanwhile, a spokesperson for the FEC declined to comment on the decision, citing department policy of not commenting on litigation.

CREW appealed to the D.C. Circuit after U.S. District Judge Rudolph Contreras granted the FEC summary judgment last year, calling its decision not to take action against CHGO a “rational exercise of prosecutorial discretion.”

In Friday’s ruling, U.S. Circuit Judge Raymond Randolph wrote for the majority that the commissioners who voted not to take action against CHGO laid out perfectly valid reasons for voting the way they did.

“In short, these commissioners  would have exercised the agency’s prerogative not to proceed with enforcement,” Randolph wrote. “There is no doubt the commission possesses such prosecutorial discretion.”

Randolph cited the Supreme Court’s decision in Heckler v. Chaney to advance the point that courts generally cannot look into agencies’ decisions to not bring enforcement actions if the law leaves it up to the agency to make such choices.

“Chaney controls this case,” Randolph wrote. “The three naysayers on the commission placed their judgment squarely on the ground of prosecutorial discretion. Nothing in the substantive statute overcomes the presumption against judicial review.”

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