Posted November 20, 2007 by Fred Wertheimer and J.Gerald Hebert Another "Cost of Doing Business" Fine for Media Fund's 527On November 15, 2007, the FEC entered into a settlement with The Media Fund, a pro-Democratic 527 group, and found that the group made illegal soft money expenditures of more than $50 million during the 2004 presidential campaign. Under the settlement, The Media Fund agreed to pay a $580,000 civil penalty and to desist in the future from violating the campaign finance laws by using soft money to pay for federal campaign activities. The settlement arose out of an FEC complaint filed on January 15, 2004 by Democracy 21, the Campaign Legal Center and the Center for Responsive Politics. The complaint alleged that The Media Fund was illegally spending soft money to influence the 2004 presidential campaign. We are pleased that the FEC has taken action to find that The Media Fund engaged in massive illegal soft money expenditures on campaign ads and mailings to influence the 2004 presidential election. We are deeply concerned, however, that this action comes almost four years after our FEC complaint was filed and more than three years after the 2004 presidential election was held. We similarly are deeply concerned that the amount of the penalty imposed against The Media Fund in this case represents only a tiny fraction -- about one percent -- of the more than $50 million that the FEC found The Media Fund illegally spent to influence the 2004 presidential election. In response to complaints filed in 2004 by Democracy 21, the Campaign Legal Center and the Center for Responsive Politics, the FEC has now found that two pro-Democratic 527 groups, The Media Fund and America Coming Together, made more than $150 million in illegal soft money expenditures in the 2004 presidential campaign, and two pro-Republican groups, Progress for America Voter Fund and Swift Boat Veterans for Truth, made more than $50 million in illegal soft money expenditures in the election. The total fines imposed by the FEC on these four 527 groups for more than $200 million in illegal soft money expenditures, however, was only slightly more than $2.4 million, a minimal fraction of the illegal expenditures the FEC found to have occurred. This is no way to deter similar huge illegal expenditures from taking place in the future. The long delay in resolving The Media Fund case and the relatively minimal fine imposed on The Media Fund provides another powerful example of why case-by-case enforcement against 527 groups by itself will not work. It also shows why illegal activities by 527 groups will continue to undermine the nation's campaign finance laws, unless the FEC acts to issue proper regulations and impose prohibitive fines. Unless the FEC moves quickly to make clear to political operatives that they will see much tougher enforcement by the FEC in the 2008 election, including fines commensurate with the size of the violations, we are facing huge illegal expenditures by 527 groups and other groups in the 2008 presidential and congressional elections, for the third federal election in a row. We strongly urge the FEC to issue a formal ''Statement of Policy'' that puts 527 groups, their organizers and managers, and their major donors who play such a role, on formal notice that spending soft money to influence federal elections as was done in the 2004 election is illegal; that such violations in the future will be swiftly addressed and face being treated by the FEC as ''knowing and willful'' violations; that the FEC will hold organizers and managers of 527 groups, including their major donors who play such a role, liable for such violations; and that 527 groups, their organizers and managers and their major donors who play such role, face penalties for such violations in amounts that are commensurate with the size of the illegal expenditures that are made. Democracy 21 and the Campaign Legal Center currently have two complaints pending at the FEC against four pro-Democratic and pro-Republican 527 groups for making illegal expenditures to influence the 2006 congressional elections. The FEC has not yet acted on these complaints. The FEC complaints filed in 2004 by Democracy 21, the Campaign Legal Center, and the Center for Responsive Politics against America Coming Together, Swift Boat Veterans for Truth and Progress for America Voter Fund, all for making massive illegal expenditures in the 2004 presidential election, were previously addressed by the FEC through settlements similar to The Media Fund settlement. The FEC found that The Media Fund, a 527 group, violated the law by failing to register with the FEC as a political committee and failing to abide by the contribution limits, source prohibitions and reporting requirements that apply to federal political committees. The FEC found that The Media Fund raised $59 million through 2004. Of this, approximately 93 percent -- over $55 million -- was soft money, i.e., funds from labor organizations (or corporations) that are prohibited from giving money to federal political committees, or from individuals who gave in amounts that exceeded the $5,000 limit on contributions to political committees. The Media Fund spent $57 million through 2004, and of this, more than $53 million, or 92 percent, was for broadcast ads, newspaper ads, or mailers that referred to President George Bush or Senator John Kerry ''in the context of the 2004 Presidential election.'' According to the FEC, ''These advertisements attacked the character, qualifications, and fitness for office of George Bush, or supported the character, qualifications, and fitness for office of John Kerry.'' Citing the text of specific ads, the FEC found that these ads contained ''express advocacy,'' because ''all of these communications comment on George Bush's character, qualifications, and fitness for office, explicitly link those charges to his status as a candidate for President, and have no reasonable meaning than to encourage actions to defeat George Bush.'' The FEC also found that The Media Fund solicited contributions that ''clearly indicated that the funds received would be targeted to the election or defeat'' of the 2004 Presidential candidates. The FEC concluded that:
The FEC found that ''the focus on TMF was on running advertisements in the '17 key states' considered to be battleground states in the 2004 presidential election....TMF's fundraising presentations explicitly cited the goal of reaching ‘270 electoral votes' for the Democratic Presidential nominee.'' Further, the FEC found:
The bottom line here is that The Media Fund had a ''major purpose'' to influence federal elections, and made more than $1,000 in expenditures to expressly advocate the election of Senator Kerry or the defeat of President Bush. Because of that, The Media Fund was required to register as a federal political committee, and to raise and spend only hard money for its federal campaign activities. The Commission found instead that it raised and spent tens of millions of dollars of soft money to influence the 2004 presidential campaign, all of which was illegal. As part of the settlement, The Media Fund has agreed to ''provide an executed copy of this agreement to each of its current and former officers, principals, agents, representatives, successors, and assigns, and certify in writing to the Commission that is has complied with this requirement....'' This unique provision of the settlement sets the stage for potential ''knowing and willful'' violations in the future if violations occur by the same persons. Such ''knowing and willful'' violations are subject to civil penalties as high as 200 percent of the size of the violations involved and are also subject to criminal prosecution. |
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