Candidates seeking the presidential nomination of a political party are eligible to receive public matching funds if they so choose and if they meet the conditions of eligibility for receiving the funds. 26 U.S.C. 9031 et seq. As one of those conditions, a candidate must agree in writing to abide by an overall spending limit during the primary campaign. 26 U.S.C. 9033(b). For the 1996 election, the overall primary spending limit was approximately $37 million. (1)
President Clinton and former Senator Dole both sought and received taxpayer funds, and in exchange, both signed commitment letters to the Federal Election Commission in which they agreed to comply with the primary election spending limit. (2)
Major party nominees are also eligible to receive full public funding of their general election campaigns, provided they agree to limit their spending to the public money received. 26 U.S.C. 9003(b). For the 1996 general election, the public funding is approximately $62 million to each major party candidate. President Clinton and former Senator Dole both have sought and received this money and have agreed in a written commitment to comply with the condition to limit their campaign spending to $62 million. (3)
The national political parties are authorized to make expenditures, subject to a limit, in connection with the general election campaign of their presidential nominees. 2 U.S.C. 441a(d). For the 1996 presidential general election, the limit on party spending is approximately $12 million. (4) The national parties are not separately aughorized to make any other expenditures directly to support a presidential candidate. (5)
There are a number of statutory limitations, prohibitions and disclosure requirements (set forth below) that accompany the above provisions. For "knowing and willful" violations of these limitations, prohibitions and disclosure requirements, there are federal felony penalties. In particular, two criminal statutory provisions are applicable:
First, the Federal Election Campaign Act (FECA), in 2 U.S.C. 437g(d)(1)(A), states:
Any person who knowingly and willfully commits a violation of any provision of this Act which involves the making, receiving, or reporting of any contribution or expenditure aggregating $2,000 or more during a calendar year shall be fined, or imprisoned for not more than one year, or both.
Second, section 9042 of the Presidential Primary Matching Payment Account Act ("the Primary Fund Act"), which establishes the presidential primary campaign financing system, 26 U.S.C. 9042, states:
Any person who violates the provisions of section 9035 shall be fined not more than $25,000, or imprisoned not more than five years, or both. Any officer or member of any political committee who knowingly consents to any expenditure in violation of the provisions of section 9035 shall be fined not more than $25,000, or imprisoned not more than five years, or both.
The Justice Department guidelines for criminal prosecution of election offenses state:
Intentional and factually aggravated violations of the FECA are crimes, subject to prosecution by the Justice Department. ....Most violations of the FECA and the public financing provisions of Title 26 are handled civilly by the FEC. A campaign financing violation is generally prosecuted criminally only if it was a willful violation of a core prohibition of the FECA, ... involved a substantial sum of money, and resulted in the reporting of false campaign information to the FEC.
In addition, a scheme to infuse illegal sums into a federal election campaign impedes the FEC in its statutory enforcement and disclosure responsibilities. Such schemes have been successfully prosecuted as conspiracies to abstruct and impede the lawful functioning of a government agency... and as willfully causing false information to be submitted to a federal agency. (6)
The matters involved here and set forth in detail below clearly fall within these guidelines for criminal prosecution. These matters deal with potentially willful and knowing violations of "core" provisions of the FECA, (7) that involve "substantial" sums of money, and result in the reporting of "false campaign information" to the Federal Election Commission.
These matters also deal with "a scheme to infuse illegal sums into a federal election campaign" that would have the effect of impeding the FEC from carrying out its statutory enforcement and disclosure responsibilities.
Therefore under the Justice Department's guidelines, the allegations discussed below warrant a criminal investigation.
Criminal violations of the campaign finance statutes must be "knowing and willful". We believe the violations set forth below meet this standard.
We believe the Committees and their agents intended to circumvent the law: they intended to make expenditures in the presidential primary campaign in excess of what could be legally spent to promote their candidates; they intended to spend "soft money" that could not be legally spent to directly support a federal candidate, and that could not be legally spent to directly support a federal candidate, and they intended to use their repsective political parties as conduits to accomplish these goals. In short, there was "such reckless disregard of the consequences as to be a knowing, conscious and deliberate flaunting" of the FECA, which constitutes a "knowing and willful" violation the the Act. AFL-CIO v. FEC, 628 F.2d.97 (D.C. Cir.) cert. den. 449 U.S. 982; see also Screws v. United States, 325 U.S. 91, 106 (1945) (where, in dealing with violations of the Civil Rights Act, the Court required that the defendants "at least act in reckless disregard" of constitutional prohibitions or guarantees).
Even if the standard is the "good faith" test adopted by the U.S. Supreme Court for tax cases in Cheek v. U.S., 498 U.S. 192 (1991) -- i.e., that a person has not acted willfully if he had a "good faith" belief he was not violating the law -- the unreasonableness of the interpretation of the FECA under the factual circumstances set forth below would constitute evidence for a jury to consider in determining whether a defendant's claimed good faith belief in the legality of his actions was in fact the state of mind with which the acts were carried out. This is not an issue that can properly be resolved by you as Attorney General in deciding whether to appoint an independent counsel. Rather, it must be resolved by the independent counsel in deciding whether to initiate a prosecution or, ultimately, by a jury.
Two statutory provisions are violated when a presidential campaign committee exceeds the spending limit that the candidate agreed to abide by in return for receiving taxpayer funds. When the violation is knowing and willful, it becomes criminal under 2 U.S.C. 437g(d)(1) and 26 U.S.C. 9042, both set forth above.
The first provision violated by exceeding the spending limit is in the FECA which states, in 2 U.S.C. 441a(b)(1)(A):
No candidate for the office of President of the United States who is eligible under ... section 9033 of title 26 (relating to eligibility for payments) to receive payments from the Secretary of the Treasury may make expenditures in excess of [the spending limit]. (8) This provision makes it illegal for a candidate who receives taxpayer funds to exceed the overall spending limit in the presidential election.
The second provision violated by exceeding the spending limit is contained in the Primary Fund Act, which establishes the presidential primary campaign financeing system. Section 9035 of the Act (26 U.S.C. 9035 states:
No candidate shall knowingly incur qualified camapign expenses in excess of the expenditure limitation applicable unter section 441a(b)(1)(A) of title 2. ... This provision also makes it illegal for a candidate who receives taxpayer funds to exceed the presidential primary spending limit in the FECA.
Thus, it is a criminal violation of both the FECA (section 437g(d)(1)) and the Primary Fund Act (section 9042) for a presidential campaign committee or its agents to knowingly and willfully make "expenditures" or incur "qualified campaign expenses" in excess of the spending limit that a presidential candidate agrees to in order to receive taxpayer funds.
C. Knowing And Willful Violation Of The Ban On Use Of Corporate And Union Money, And The Limit On Individual Contributions, In Federal Elections Is A Federal Crime.
The FECA, in 2 U.S.C. 441b, makes it illegal for any corporation or labor union to make contributions or expenditures to directly support a federal candidate, and for any candidate or political party to receive or accept any such funds for that purpose. When the violation is knowing and willful, it becomes criminal under 2 U.S.C. 437g(d)(1)(A).
Section 441b provides:
It is unlawful for ... any corporation whatever, or any labor organization, to make a contribution or expenditure in connection with any election at which presidential and vice presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to, Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, or for any candidate, political committee, or other person knowingly to accept or receive any contribution prohibited by this section. (Emphasis added)The FECA, in 2 U.S.C. 441a(a)(1), also makes it illegal for any person to contribute more than $1,000 to a candidate with respect to any federal election, or more than $20,000 per year to any national political party:
No person shall make contributions --
(A) to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate, exceed $1,000;
(B) to the political committees established and maintained by a national political party ... in any calendar year which, in the aggregate, exceed $20,000; ... The FECA provides in 2 U.S.C. 441a(f), that it is illegal for any candidate or political committee to accept any contribution in excess of these contribution limits, or to make any expenditure in violation of the statute's limits. When the violation is knowing and willful, it becomes criminal under 2 U.S.C. 437g(d)(1)(A).
Section 441a(f) provides:
(a)(1) Each treasurer of a political committee shall file reports of receipts and disbursements in accordance with the provisions of this subsection. ...(b) Each report under this section shall disclose--....
(2) for the reporting period and calendar year, the total amount of all receipts, and total amount of all receipts in the following categories:
(A) contributions from persons other than political committees; ...
(C) contributions from political party committees;...
(3) the identification of each --
(A) person (other than a political committee) who makes a contribution to the reporting committee during the reporting period, whose contribution or contributions have an aggregate amount or value in excess of $200 within the calendar year, ...
(4) for the reporting period and the calendar year, the total amount of all disbursements, and all disbursements in the following categories:
(A) expenditures made to meet candidate or committee operating expenses; ...
(G) for an authorized committee, any other disbursements; ...
(5) the name and address of each --
(A) person to whom an expenditure in an aggregate amount or value in excess of $200 within the calendar year is made by the reporting committee to meet a candiate or committee operating expense, together with the date, amount, and purpose of such operating expenditure.
Thus, it is a criminal violation of the FECA, 2 U.S.C. 437g(d)(1)(A), for a presidential campaign committee or its agentts to "knowingly and willfully" fail to report all contributions and expenditures in excess of $200 made in connection with a presidential campaign.
The TV Ad Campaigns At Issue Were A Clinton Ad Campaign And A Dole Ad Campaign, Respectively, And Were Subject To The Presidential Primary Spending And Contribution Limits And Prohibitions. Under the FECA, an expenditure is defined to include "any purchase, payment, ... or anything of value, made by any person for the purpose of influencing any election for Federal office. ..." 2 U.S.C. 431 (9)(A). Similarly, under the Primary Fund Act, a "qualified campaign expense" is defined to include "a purchase, payment... or gift of money or of anything of value incurred by a candidate, or by his authorized committee , in connection with his campaign for nomination for election. ..." 26 U.S.C. 9032(9).
Thus, any money spent by a presidential candidate or his agents "for the purpose of influencing" the candidate's campaign, or "in connection with" the candidate's campaign is an "expenditure" under the FECA and a "qualified campaign expense" under the Primary Fund Act, and therefore counts against the candidate's spending limit. This includes, of course, money spent by a candidate's campaign committee or its agents to conduct an advertising campaign to support the candidate.
It is clear that a candidate makes an "expenditure" and incurs a "qualified campaign expense" for a candidate ad campaign, within the meaning of the federal campaign finance laws, where the candidate's campaign committee or its agents:
- Prepare, direct and control the ad campaign;
- Target the ads to run in presidential battleground states; and
- Run ads that name the candidate and promote his candidacy, or name his opponent and criticize him.
The record discussed below shows that these circumstances exist here for both the Clinton ad campaign run through the DNC and the Dole ad campaign run through the RNC. Under such circumstances, it does not make any difference if the candidate campaign chooses to use a political party (or any other third party) as a conduit through which it runs its campaign ads, as both the Clinton Committee and the Dole Committee did in this case.
Thus, the Clinton ad campaign and the Dole ad campaign, run through their respective political parties, are candidate ad campaigns and the money spent on these ads are candidate "expenditures" under the FECA and "qualified campaign expenses" under the Primary Fund Act. As such, the expenditures count against the overall primary election spending limits applicable to the Clinton Committee and the Dole Committee. The contributions used to finance these expenditures must also meet the contribution prohibitions and limitations contained in federal law, and must comply with the law's disclosure requirements.
In addition to the fact that the money spent on these ad campaigns plainly meets the definition of "expenditure" by a candidate under the FECA, the Act also provides, in 2 U.S.C. 441a(b)(2)(B), that for purposes of the presidential campaign spending limits, an expenditure is "made on behalf of a candidate" if it is made by any "agent of the candidate for purposes of making any expenditure," or by "any person authorized or requested by ... an agent of the candidate, to make the expenditure."
Thus, this provision also makes the money spent on the ad campaigns at issue here expenditures "on behalf of a cnadidate," and accordingly subject to the presidential primary spending limit applicable to the Clinton Committee and the Dole Committee.
Since the TV ad campaigns at issue here were candidate ad campaigns, and the expenditures involved were therefore candidate expenditures, the question whether the TV ads contained any terms of "express advocacy" is required for an ad by an independent group to fall under the federal campaign finance laws, see Buckley v. Valeo, 424 U.S. 1, 43 (1976), no one has ever contended, and no court has ever found, that an ad run by a candidate must contain terms of "express advocacy" in order to be treated as an expenditure under the campaign finance laws.
No one would argue, for instance, that an ad run by the Clinton Committee that promotes President Clinton's candidacy should not count against the Committee's spending limit simply because it does not say "Vote for Clinton." Indeed, many of the ads financed directly by the Clinton Committee and the Dole Committee do not contain any such terms of "express advocacy". Yet the Clinton Committee and the Dole Committee themselves have treated these ads as candidate ads and counted these expenditures against their spending limits.
The same holds true for the Clinton Committee ads and the Dole Committee ads run through their respective political parties: since they are candidate ads and candidate expenditures, there is no requirement for them to contain express advocacy in order to be covered by the federal campaign finance laws.
The record demonstrates that each presidential campaign committee used its respective national political party as a conduit to run its ad campaign, and that therefore the ad campaign is a candidate campaign expenditure. But the same result would be reached under federal law even if each presidential campaign and its national party was simply engaged in a joint venture in which the candidate campaign committee and the party coordinated their activities and each other.
Under 2 U.S.C. 441a(a)(7)(B)(i), expenditures "made by any person in cooperation, consultation, or concert, with, or at the request or suggestion of, a candidate, his authorized political committees, or their agents, shall be considered to be a contribution to such candidate," and "shall also be reported as an expenditure" by the recipient candidate. 11 C.F.R. 104.13(a)(2). (8)
The record in this case clearly shows that there was direct involvement and control by the candidate campaign committees or their agents in virtually all aspects of the ad campaigns at issue. There is no way to treat these ad campaigns as efforts by the parties independent from and uncoordinated with the candidates and their agents.
Thus, even if the ad campaigns were not candidate ads run through the parties as conduits, they would still constitute expenditures by the candidates under section 441a(a)(7)(B)(i) of the FECA. As expenditures coordinated between the candidate campaign committees and their respective parties, they would constitute in-kind contributions to, and expenditures by, the candidates under this section, and therefore would count against the candidate's spending limits.
FOOTNOTES FOR "THE APPLICABLE FEDERAL STATUTES THE CLINTON AD CAMPAIGN RUN THROUGH THE DNC
THE DOLE AD CAMPAIGN RUN THROUGH THE RNC
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