FEC Accused of Laxity With Rove’s Group

WASHINGTON (CN) - A nonprofit government watchdog has sued the Federal Election Commission for allowing Karl Rove's Crossroads group to spend millions of dollars on campaign ads without disclosing the donors.

Citizens for Responsibility and Ethics in Washington and an Ohio voter sued the FEC on Feb. 16 in Federal Court.

It claims the FEC's dismissal of CREW's administrative complaint against Rove's group was "arbitrary, capricious, an abuse of discretion, and contrary to law," specifically, the Federal Election Commissions Act.

CREW complained to the FEC in November 2012 that Rove and his Crossroads Grassroots Policy Strategies (Crossroads GPS) group had "received a contribution in excess of $3 million that was given for the explicit purpose of aiding the group's support for the election of Josh Mandel in the United States Senate race in Ohio."

(Mandel, the Ohio treasurer, lost that race to incumbent Sen. Sherrod Brown.)

CREW claims that Rove, founder of Crossroads GPS, raised the money from the donor.

"It is undisputed that Crossroads GPS ran extensive independent expenditure television advertisements in Ohio for that very purpose," CREW says in its new complaint. "Indeed, Crossroads GPS admits that broadcasting independent expenditures was its primary activity in Ohio. Under the law, spending on ads like these must be disclosed to the FEC and, importantly, contributors who paid for them also must be disclosed. Nonetheless, despite admitting that this multimillion-dollar contribution was made for the explicit purpose of electing a federal candidate and was used to fund independent expenditures for that same purpose, Crossroads GPS never disclosed the identity of the contributor because, it argues, the contributor did not specifically intend to further a particular independent expenditure in the exact form that Crossroads GPS eventually ran it in the state."

CREW calls that bogus reasoning, and says Rove and Crossroads did the same thing in other Senate races, including in Virginia, Nevada and Montana, where they brought campaign donors to meetings and showed them "'example' independent expenditure advertisements (nearly all of which were Crossroads GPS's), and then solicited money" for campaign ads, which Crossroads subsequently paid to broadcast.

CREW calls the entire process an "evasion" of the Federal Election Commissions Act, or FECA, which the FEC is tasked with enforcing.

"Voters have a vital interest in knowing the identities of those who pay for independent expenditures in support or opposition to federal candidates, an interest that is not lessened merely because the contributor may not be aware of the exact form of the final independent expenditure," the complaint states.

The 28-page lawsuit provides details of a 2010 Florida fund raiser by Crossroads GPS and a close associate, American Crossroads.

"Approximately 70 high-earning and powerful donors, including hedge fund billionaires and investors, attended the fundraiser," CREW says, adding that it got the information from an eyewitness at the meeting.

Rove briefed the group on 15 Senate races, including Mandel's in Ohio Treasurer, and showed 14 sample political ads before the fund-raising began in earnest, 11 of which were produced by Crossroads GPS.

According to the complaint, Rove told the prospective donors that he had "received a call from an unnamed out-of-state donor regarding the [Ohio] race. According to Mr. Rove:

"[The donor] told him, 'I really like Josh Mandel.' The donor, Rove said, had asked him what his budget was in the state; Rove told him $6 million. 'I'll give ya $3 million, matching challenge,' Rove said the donor told him. Bob Castellini, owner of the Cincinnati Reds, is helping raise the other $3 million for that one."

Crossroads GPS reported spending $6.4 million in "independent expenditures" to oppose Sen. Brown that year, according to the complaint. Crossroads told the donors its goal that year was to raise $300 million, and spent more than $17 million on the Virginia, Montana and Nevada U.S. Senate races in 2012, CREW says, but disclosed none of the names of those Crossroads donors.

Nonetheless, in March 2014, when the FEC Office of General Counsel issued its first report about CREW's 2012 complaint against Crossroads GPS, the FEC concluded that a donor's intent to support Josh Mandel's election did not indicate that the donor intended to further independent expenditure, and found "no basis" to conclude that this was the intent of other Crossroads GPS donors.

Based on the report's recommendations, the FEC deadlocked, 3-3, on Nov. 17, 2015. A month later, it voted unanimously to dismiss the complaint.

CREW seeks declaratory judgment, and wants it ordered to comply with the law, and costs.

The FEC said it does not comment on litigation.

CREW's house attorney Adam Rappaport did not respond to an emailed request for comment.

CREW is a 501(c)(3) nonprofit, Crossroads GPS a 501(c)(4), and a spinoff of American Crossroads, a SuperPAC.

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