Delayed FEC Cases Match Romney Super PAC Complaints

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By Kenneth P. Doyle

July 16 — The Federal Election Commission apparently has struggled for nearly four years to decide what to do about allegations that millions of dollars in contributions to Mitt Romney's 2012 presidential campaign super PAC violated rules against making contributions under another name.

Paul S. Ryan, an attorney with the nonprofit Campaign Legal Center (CLC), helped draft three FEC complaints filed in August 2011 involving the super PAC supporting Romney, who became the Republican nominee in 2012. The Romney super PAC was known as Restore Our Future.

The complaints were filed by CLC and Democracy 21, another nonprofit that supports strong campaign finance regulation.

Ryan told Bloomberg BNA that these three complaints appeared to match the three oldest pending enforcement matters listed on a memorandum and chart presented by FEC Commissioner Steven Walther July 16 and detailing the FEC's current enforcement backlog.

Ryan cautioned that, due to FEC secrecy rules, no one outside the agency can know for sure which cases are referred to on the chart. The chart did not name the respondents in the cases but provided details about when each case was initiated and how it has been handled by the agency.

The chart was presented by Walther at an open meeting where he, along with two other commissioners holding Democratic seats on the FEC, criticized Republican colleagues for holding up action on numerous, unspecified matters.

The FEC's three Republican commissioners have responded to critics by insisting that they need enough time to carefully consider complex campaign finance cases in order to reach the correct result in each case under the law.

Disguised Contributions Alleged 

CLC alleged in its 2011 complaints involving Restore Our Future that three $1 million contributions listed in an FEC disclosure report as coming from obscure corporations actually came from individual supporters of Romney's campaign who didn't want their names revealed. The contributions thus violated FEC rules against contributions “in the name of another person,” the complaints said.

The actual donors were publicly identified soon after the FEC report was filed and news reports highlighted the disclosure questions. The FEC has never ruled, however, whether the original report was proper or included illegal conduit contributions.

The highest-profile donor involved in the episode was Edward Conard, a former colleague of Romney's at the investment firm Bain Capital, who acknowledged he gave a $1 million contribution that was reported as coming from a limited liability company called W Spann LLC. Other wealthy donors also were publicly identified as being behind listed super PAC contributions from two other companies, F8 LLC and Eli Publishing L.C. All these contributions were targeted in the FEC complaints filed by Ryan and CLC.

Restore Our Future amended its FEC report in 2011 to list Conard as a contributor, though the other listed contributions were not changed and the super PAC continued to insist that its original report was proper.

The super PAC's attorney, Charles Spies of the firm Clark Hill, indicated in a statement at the time that reporting the original corporate contributions was constitutionally protected and was highlighted solely by “critics who disagree with our viewpoint.” Spies did not explain why the super PAC amended the FEC report, though headlines about the flap had become a distraction for Romney and his campaign, then in its early stage.

‘Slam-Dunk Violations.'

Ryan told Bloomberg BNA in a phone interview July 17 that he thought when the CLC complaints were filed in 2011 that they involved “pretty much slam-dunk violations” of the law, especially after the true donors involved were publicly identified.

As the years have passed with no FEC ruling on the legal issues involved, however, many more complaints about other shadowy donations to other super PACs have surfaced, without any apparent response from the FEC.

For example, CLC filed a new FEC complaint earlier this year after a report by the nonprofit Center for Public Integrity identified that the rapper Pras Michel allegedly provided $875,000 for a super PAC contribution listed as coming from his company, SPM Holdings LLC. The money went to finance a super PAC Black Men Vote, which supported President Barack Obama's 2012 re-election campaign.

In addition, most of the super PACs created recently to support the 2016 presidential candidates are due to file their initial disclosure reports with the FEC by July 31. It remains to be seen whether these reports list contributions from obscure companies or other organizations that collect money from undisclosed donors.

Counsel's Report Submitted, Withdrawn 

Details provided on Walther's chart about the three oldest FEC cases still being considered closely matched the details of the CLC complaints involving the Romney super PAC. The oldest cases on the chart all were assigned to FEC staff attorneys in late August 2011, soon after the trio of CLC complaints was filed, and the three FEC matters have been handled together, indicating they involve similar facts and legal issues.

The Walther chart revealed that an initial staff report with recommendations from the FEC general counsel's office was presented to the six FEC commissioners on Nov. 29, 2011. This first general counsel's report then was withdrawn on Jan. 31, 2012. The general counsel's report was resubmitted on April 29, 2014—a delay of more than two years.

The chart did not say why the initial report was withdrawn or what, if any, differences were in the original and resubmitted reports. After the report was resubmitted, it was set to be considered during executive sessions of the commission that took place this month.

While there was no indication on the chart pointing to why the initial staff recommendation in these cases was withdrawn, nor why it took so long for a report to be resubmitted, the dates on the chart may provide a clue.

The chart indicated the original staff report was completed soon after former FEC General Counsel Anthony Herman came to the agency in the fall of 2011. The redrafted report came after Herman left the FEC in 2013, following a battle with Republican commissioners over enforcement procedures.

More than two years after Herman's departure, the post of FEC general counsel remains vacant, though the counsel's office continues to operate.

Other Cases `Held Over' 20 Times 

In the memo accompanying the chart presented July 16, Walther highlighted years-long delays in resolving FEC enforcement cases and called for the commission to commit to resolving its oldest cases before considering newer matters. He noted that he was not criticizing FEC staff but focusing only on the commissioners, who have refused to vote on several cases for years after staff recommendations were presented.

The cases he highlighted included a total of five that have been pending a commission vote for more than three years after the initial staff recommendation, including the three cases that appeared to correspond to the CLC complaints. Another two cases have been pending for at least two years and 15 more that have been pending for at least a year.

Three of the older cases identified in Walther's chart — but not those corresponding to the CLC complaints — were identified as having staff recommendations first submitted on June 6, 2012, and Aug. 28, 2012, and then being “held over” on 20 separate meeting dates since then.

FEC procedures allow each commissioner to ask that a matter be postponed to a future meeting. The rules also prevent action from being taken on any matter unless a four-member majority of the commission agrees. The FEC is evenly divided among three holding Democratic seats and three Republicans and has had deadlocked votes on numerous issues in recent years.

As a result of delays in resolving cases, “the transparency goals of the [Federal Election Campaign Act] and the credibility of the commission's overall enforcement process suffer — and cynicism increases,” Walther's memo said.

Republicans Vow ‘Timely Resolution.'

Walther's proposal to hold additional meetings and try to force votes on the oldest enforcement matters was defeated on a 4-2 vote at the July 16 commission meeting, with FEC Chairwoman Ann Ravel joining the three Republicans to oppose it. FEC Democrat Ellen Weintraub supported Walther's motion, saying she would agree to any move to get more enforcement action.

All the commissioners, however, said during the meeting that they supported the goal of clearing the backlog of cases.

A statement from the FEC's three Republican commissioners on “timely resolution of enforcement matters” responded to Walther's memo and other calls to improve the agency's efforts. In the statement, the Republicans—Lee Goodman, Caroline Hunter and FEC Vice Chairman Matthew Petersen—defended their previous actions while acknowledging that more progress was needed.

“As commissioners our most important consideration when handling enforcement matters is reaching the right result,” the Republican commissioners said. “Federal campaign finance laws regulate in an area where fundamental free speech interests are at stake.”

In addition to complex legal and constitutional issues, they added, the FEC needs to treat similar respondents and violations fairly and keep track of pending court cases that could interpret the law differently and require the commission to adjust its enforcement efforts.

The FEC Republicans added, however, that they recognized the importance of making decisions and therefore supported a move by Ravel at the July 16 meeting to schedule more future meetings on enforcement cases and to “expedite resolution of pending matters.” In a rare note of collegiality at the deeply divided agency, the Republican commissioners added that they “look forward to continuing to work with our colleagues to achieve this result.”

Investigations of Old Cases Possible 

It remained unclear at the July 16 meeting when the FEC commissioners might actually vote on the longest-pending enforcement matters. It was also unclear, even if votes are taken, how soon the public might know about the FEC's decisions in these cases.

The FEC usually takes about a month or more to make public any final action on an enforcement matter. In addition, if the commissioners were to vote to begin a full investigation, that process could take additional months or years, during which no information about the cases could be made public under the FEC's confidentiality rules.

Ryan said he believed it was still possible for the FEC to conduct an investigation of the complaints about contributions to the Romney super PAC, even though the relevant actions occurred years ago. However, he noted that any vote to pursue a matter now would “only trigger the beginning of the process” of investigation and possible settlement negotiations.

“There is still a potential for years of further delay,” he added.

Last month, Ryan said his organization might file a new round of lawsuits challenging the FEC's failure to resolve many past enforcement cases, including those focused on the Romney super PAC contributions.

Campaign finance law allows complainants to ask a federal court to order action if the FEC has not acted on its own to resolve a complaint within 120 days of filing. Success in such suits is rare, however, and litigation is a costly alternative.

Ryan told Bloomberg BNA on July 17 that his organization had not made a decision yet on legal action, but filing lawsuits on a range of pending complaints, including those involving contributions to the Romney super PAC, was “still a distinct possibility.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com