Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-03019/USCOURTS-caDC-99-03019-0/pdf.json

Parties Involved:
Pornpimol Kanchanalak
Appellee
Duangnet Georgie Kronenberg
Appellee
United States of America
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 8, 1999 Decided October 8, 1999

No. 99-3019

United States of America,

Appellant

v.

Pornpimol Kanchanalak a/k/a Pornpimol Parichattkal, and

Duangnet Georgie Kronenberg,

Appellees

Consolidated with

No. 99-3034

Appeals from the United States District Court

for the District of Columbia

(No. 98cr00241)

Jonathan Biran, Attorney, United States Department of

Justice, argued the cause and was on the briefs for appellant.

Eric L. Yaffe, Attorney, entered an appearance.

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Reid H. Weingarten argued the cause for appellees. With

him on the brief were Erik L. Kitchen, Brian M. Heberlig,

and James Hamilton. Michael Spafford entered an appearance.

Before: Wald, Silberman and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Wald.

Wald, Circuit Judge: The government charged Pornpimol

"Pauline" Kanchanalak (aka Pornpimol Parichattkal) and

Duangnet "Georgie" Kronenberg with a scheme to disguise

illegal hard money contributions and soft money donations

from foreign nationals and corporations to national and state

political committees. Defendants were also alleged to have

caused political committees to file reports with the Federal

Election Commission ("FEC") falsely identifying lawful permanent residents as the source of funds that actually originated with foreign nationals and corporations in violation of 18

U.S.C. ss 2 (b), 1001. The government argued that s 441e of

the Federal Election Campaign Act ("FECA") prohibits any

infusion of money from foreign nationals into federal, state,

and local elections and that section 104.8 of the FEC

regulations requires that political committees report the true

source of their contributions and donations. Defendants asserted that as to both hard and soft money, political committees were not required to report the true sources of their

receipts, and as to soft money, FECA did not restrict such

donations by foreign nationals.1 They also argued that the

__________

1 Defendants now concede that in United States v. Hsia, 176 F.3d

517 (D.C. Cir. 1999), we rejected their contention that political

committees are not required to report the true sources of their hard

money but ask us to reconsider that decision. We have no authority to do so. See LaShawn v. Barry, 87 F.3d 1389, 1396 (D.C. Cir.

1996) ("One three-judge panel ... does not have the authority to

overrule another three-judge panel of the court.... That power

may be exercised only by the full court.").

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FEC reporting regulation could not reasonably be read to

require disclosures of the original sources of soft money

receipts.

Based on its prior rulings in United States v. Hsia and

United States v. Trie, the district court dismissed the hard

money counts, determining that the government needed to

demonstrate affirmative conduct beyond using conduit checks

for a false statement prosecution. See United States v. Hsia,

24 F. Supp. 2d 33 (D.D.C. 1998), rev'd, 176 F.3d 517, 523-24

(D.C. Cir. 1999); United States v. Trie, 23 F. Supp. 2d 55

(D.D.C. 1998). The district court also dismissed the soft

money counts, holding that the disclosure regulation, section

104.8(e), did not require political committees to reveal the

original sources of their soft money.

This court subsequently reversed the district court's ruling

in Hsia, finding that, in fact, the government had sufficiently

alleged affirmative conduct for a false statement prosecution

by charging that the defendant utilized conduit checks, and

that FECA requires the "true source" of hard money to be

reported. See United States v. Hsia, 176 F.3d 517 (D.C. Cir.

1999). On the basis of that ruling, the government seeks

reinstatement of the hard money counts in this case. We

agree that our decision in Hsia mandates reinstatement of

the hard money false statement counts, and thus we summarily reverse the district court's order with respect to those

counts.

We also find that the FEC regulation, section 104.8(e),

prohibits the reporting of conduit contributions with respect

to soft money and that s 441e of FECA also prohibits foreign

soft money donations. Accordingly, we reverse the judgment

of the district court with respect to the soft money counts as

well.

I. Background

Defendants, Pauline Kanchanalak and Duangnet Kronenberg, were charged with "knowingly and willfully caus[ing]

the submission of material false statements to the FEC." See

Superceding Indictment, at 24. Defendants are officers of

Ban Chang International (USA) Inc. ("BCI USA"), a foreign

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corporation. Kanchanalak is neither a citizen nor a permanent resident of the United States. Kronenberg is a permanent resident of the United States. The contributions in

question are checks made out to political committees and

signed by permanent residents of the United States, even

though the signing individuals were not the actual source of

the donated funds.

On November 13, 1998, a federal grand jury issued an eighteencount superceding indictment against defendants. The indictment charged violations of FECA, 2 U.S.C. ss 431 et seq.,

and regulations issued by the FEC pursuant to FECA. The

indictment generally alleges a scheme in which defendants

illegally provided both "hard money contributions" and "soft

money donations" to the Democratic National Committee

("DNC" or "the Committee") and other political committees.2

"Hard money" refers to funds that have been deposited by

the Committee into a "federal account" and are used to

finance federal election campaigns. "Soft money" refers to

funds that are deposited into a "non-federal" account and are

supposed to be used for, among other things, state and local

campaigns. See Trie, 23 F. Supp. 2d at 55. Defendants are

alleged to have illegally used conduits to donate to the

Committee both hard and soft money funds that originated

with foreign nationals and corporations. The conduits were

__________

2 A "political committee" is defined under FECA as follows:

(A) any committee, club, association, or other group of persons which receives contributions aggregating in excess of

$1,000 during a calendar year or which makes expenditures

aggregating in excess of $1,000 during a calendar year; or

...

(C)any local committee of a political party which receives

contributions aggregating in excess of $5,000 during a calendar

year, or makes payments exempted from the definition of

contribution or expenditure ... in excess of $5,000 during a

calendar year, or makes contributions aggregating in excess of

$1,000 during a calendar year or makes expenditures aggregating in excess of $1,000 during a calendar year.

2 U.S.C. s 431(4).

Duangnet Kronenberg and Praitun Kanchanalak, a relative of

both defendants and an unindicted co-conspirator.3

More specifically, Count One charges that defendants engaged in a conspiracy to defraud the United States by

disguising the fact that the true source of funds contributed

to the DNC was BCI USA. See Appendix ("App.") 60-82;

Superceding Indictment p p 1-66. Counts Two through Fourteen charge that defendants knowingly and willfully caused

the DNC and other political committees to file false reports

with the FEC, which erroneously identified the sources of

contributions and donations, in violation of 18 U.S.C. ss 2(b),

1001.4 See App. 83-85, Superceding Indictment p p 1-2. The

false statements were contained in thirteen reports filed with

the FEC; each report is the subject of a separate count.

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Counts Two through Four, Six through Eight and Thirteen

of the superceding indictment were based solely on hard

money "contributions."5 The remaining false statement

__________

3 The indictment alleges that the defendants caused political

committees to receive checks signed "P. Kanchanalak," leading

political committees to believe that they were being made by

Pauline Kanchanalak, even as they were being drawn on Praitun

Kanchanalak's account. See Appendix at 67.

4 Section 1001 currently provides, in relevant part, that:

(a) Whoever, in any matter within the jurisdiction of the

executive, legislative, or judicial branch of the Government of

the United States, knowingly and willfully ... makes any

materially false, fictitious, or fraudulent statement or representation ... shall be fined under this title or imprisoned not more

than 5 years, or both.

18 U.S.C. s 1001. Some counts allege violations of the previous

version of s 1001. However, the differences between these versions are not relevant to the appeal.

Section 2(b) provides: "Whoever willfully causes an act to be

done which if directly performed by him or another would be an

offense against the United States, is punishable as a principal." 18

U.S.C. s 2(b).

5 A contribution is defined under FECA's definitional provision as

"any gift, subscription, loan, advance, or deposit of money or

counts were based either partly or wholly on soft money

funds that were not deposited into a federal account. Defendants sought dismissal of both the hard and soft money

counts, arguing that under 18 U.S.C. ss 2(b), 1001, the government had failed to demonstrate adequately that defendants "caused" the submission of false statements. Additionally, on the soft money counts, defendants argued that soft

money conduit contributions--even from foreign nationals--

were not prohibited under FECA.

On December 31, 1998, the district court, largely agreeing

with the defendants, dismissed Counts Two through Four and

Seven through Fourteen. See United States v. Kanchanalak,

31 F. Supp. 2d 13, 14 (D.D.C. 1999) ("Kanchanalak I"). The

district court's decision was based on its own prior reasoning

in United States v. Hsia, 24 F. Supp. 2d at 33, and Trie, 23

F. Supp. 2d at 55. In both Hsia and Trie, the government

had alleged only that the defendants signed conduit checks,

or solicited others to act as signers for conduit checks. The

court found that merely signing (or soliciting others to sign)

checks was not sufficient to demonstrate that the defendants

had "caused" the making of false statements about the actual

source of the contributions.6 In Hsia, it also found that the

"statements" at issue were literally true, since the check

writers were a source (if not the only source) of the contributed funds. In Kanchanalak I, the court found that the

__________

anything of value made by any person for the purpose of influencing

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any election for Federal office." 2 U.S.C. s 431(8)(A)(i).

6 In Hsia and Trie, the district court said that the indictment's

lack of specificity in this regard was constitutionally impermissible,

given that it charged conduct in an area which implicated First

Amendment considerations. The court found that "[t]he combination of First Amendment interests at stake and the threat of a

criminal prosecution necessitates a close examination of any indictment to ensure that the statutes utilized are neither overly vague

nor overly broad in their language or in their application." Hsia,

24 F. Supp. 2d at 56. This court later rejected this vagueness

argument, holding that the application of the statute to the conduit

check situation was not so broad so as to offend the First Amendment. See Hsia, 176 F.3d at 523.

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allegations were "virtually indistinguishable from the allegations at issue in Hsia and Trie." Kanchanalak I, 31 F. Supp.

2d at 14. Again, the government had failed to allege any

conduct that could satisfy the necessary causal elements of a

violation under 18 U.S.C. ss 2(b), 1001. In Kanchanalak I,

the district court did not reach the issue of whether there was

a basis--statutory or otherwise--for the government to allege

false statements at all with respect to soft money.7

On February 3, 1999, in United States v. Kanchanalak, 41

F. Supp. 2d 1 (D.D.C. 1999) ("Kanchanalak II"), the district

court dismissed all of the remaining false statement counts as

to Ms. Kanchanalak and all but one as to Ms. Kronenberg.

Even as to those counts for which the government had

sufficiently met its burden of alleging "affirmative conduct,"

the district court found that there was an additional reason

supporting dismissal, namely, the inapplicability of FECA to

soft money.

The court found only one provision in FECA that arguably

provided a basis for alleging a false statement, namely s 441f,

which prohibits contributions in another person's name, and

that indisputably applied only to hard money.8 In the court's

words, "[o]n the thin reed of Section 441f, the government

... has a plausible argument that a report submitted by a

political committee to the FEC that lists the identity of a

'conduit' or a person other than the true source of a contribution contains a false statement." Kanchanalak II, 41

__________

7 In Kanchanalak I, the district court declined to dismiss some

disputed counts, ordering the parties to file supplemental briefs

indicating whether these remaining counts might survive Hsia. See

Kanchanalak I, 31 F. Supp. 2d at 15.

8 Section 441f, entitled "[c]ontributions in name of another prohibited," provides that:

No person shall make a contribution in the name of another

person or knowingly permit his name to be used to effect such

a contribution, and no person shall knowingly accept a contribution made by one person in the name of another person.

2 U.S.C. s 441f.

F. Supp. 2d at 7 (internal quotations omitted). However, that

argument "relied heavily on the definitions and operation of

FECA, definitions that apply only to hard money 'contributions' regulated by FECA." Id. Although FECA requires

political committees to report their hard money contributions,

the court could find no corresponding FECA provision requiring political committees to report soft money donations. Id.

(discussing 2 U.S.C. s 434 (b)(2)(A)).

The only reporting requirement directly applicable to soft

money donations was 11 C.F.R. s 104.8(e), which the court

characterized as a "stand alone provision in the regulations."

Id. at 8. However, that provision in "the regulations provided no indication of whether a national party committee is

obligated to report the 'true source' of any such donation";

thus the court said that the government "lacks any basis to

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argue that the statute and regulations require a political

committee to list the names of 'true sources' of soft money

donations in reports to the FEC." Id. Since neither FECA

nor FEC regulations required committee treasurers to report

the "true sources" of soft money donations, the court reasoned, defendants had not "caused" political committees to

issue "false statements," and, therefore, had not violated 18

U.S.C. ss 2(b), 1001.

After the district court ruled in Kanchanalak I and II, this

court reversed in large part the district court's decision in

Hsia. See Hsia, 176 F.3d at 517. In Hsia, we rejected the

district court's ruling that knowingly engaging in conduit

check writing was not enough to "cause" a false statement to

be made. Id. at 522-23. We found that s 434(b) of FECA

requires political committees to report the "true source" of

hard money contributions; thus, statements identifying conduits as the source of funds were not "literally true." Id. at

523-24.

The government now appeals the dismissal of the hard

money counts in Kanchanalak II on the grounds that its

reasoning was explicitly rejected in our Hsia decision. The

government also seeks reinstatement of the soft money

counts on the theory that the FEC reporting regulation,

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section 104.8(e), requires political committees to report the

same information for soft money that they report for hard

money, including the true sources of their receipts.

II. Discussion

A. Hard Money Counts

Our reasoning in United States v. Hsia, 176 F.3d 517 (D.C.

Cir. 1999), mandates reinstatement of the hard money counts

in this case. In Hsia we found that "the simple interposition

of conduits to sign the checks is certainly enough to 'cause' a

committee to make false statements in its report." Id. at 523.

We also held that FECA requires political committees to

identify the true source of hard money contributions. Therefore, if committees "did not report the true sources, their

statements would appear to be false." Id. at 524.

In these respects, this case is indistinguishable from Hsia.

As in Hsia, defendants are alleged to have acted as conduits

or utilized others as conduits in making contributions to

political committees in federal elections. By thus causing

political committees to report conduits instead of the true

sources of donations, defendants have caused false statements

to be made to a government agency. Accordingly, we summarily reverse the district court's orders dismissing the false

statement counts predicated on hard money contributions.

B. Soft Money Counts

1. The Soft Money Reporting Regulation

The validity of the false statement prosecutions based on

conduit soft money donations ultimately turns on whether the

FEC's soft money regulation, 11 C.F.R. s 104.8(e), is read to

require political committees to report the "true" sources of

their soft money donations. As the district court correctly

noted, there is no soft money counterpart to s 441f in FECA

itself, which prohibits conduit transfers of "contributions,"

i.e., hard money. We note at the outset, however, that

defendants do not attack the FEC's authority under the Act

to promulgate regulations that address the disclosure of soft

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money donations.9 However, defendants do contest the

FEC's interpretation of section 104.8(e) as a valid basis for a

false statements prosecution.

We first discuss the standard under which we review the

FEC's interpretation of its soft money disclosure regulation,

keeping well in mind that this interpretation must also satisfy

due process notice requirements of a criminal conviction for

false statements. In Paralyzed Veterans of America v. D.C.

Arena, L.P., 117 F.3d 579, 584 (D.C. Cir. 1997) (citations

omitted), we said:

Agency interpretations of their own regulations have

been afforded deference by federal reviewing courts for a

very long time and are sustained unless "plainly erroneous or inconsistent" with the regulation. It is sometimes

said that this deference is even greater than that granted

an agency interpretation of a statute it is entrusted to

administer.

We have followed that standard in FEC cases, explaining:

The Supreme Court, we note, explicitly concluded in

DSSC [FEC v. Democratic Senatorial Campaign Committee] "that the [Federal Election] Commission is precisely the type of agency to which deference should

presumptively be afforded."

John Glenn Presidential Comm., Inc. v. FEC, 822 F.2d 1096,

1097 (D.C. Cir. 1987) (citing FEC v. Democratic Senatorial

Campaign Comm., 454 U.S. 27, 37 (1981)); see also Fulani v.

FEC, 147 F.3d 924 (D.C. Cir. 1998) (FEC entitled to "substantial deference" when interpreting own regulation). Quite

apart from the substantial deference that we owe the agency,

we find it eminently reasonable for the FEC to interpret

section 104.8(e) to require political committees to report the

true source of their soft money donations.

__________

9 FECA explicitly grants the FEC broad powers to administer its

duties under the Act. See, e.g., 2 U.S.C. s 437c(b)(1) (granting

FECA the authority to formulate general policy with respect to the

administration of FECA); accord 2 U.S.C. ss 437d(a)(8), 437d(e) &

437g(a).

We begin with the language of the provision itself. See

Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S.

552, 557-58 (1990). Section 104.8(e) provides, in relevant

part, that:

National party committees shall disclose in a memo

Schedule A information about each individual, committee,

corporation, labor organization or other entity that donates an aggregate amount in excess of $200 in a calendar year to the committee's non-federal account(s). This

information shall include the donating individual's or

entity's name, mailing address, occupation, or type of

business, and the date of receipt and amount of any such

donation.... The memo entry shall also include, where

applicable, the information required by paragraphs (b)

through (d) of this section.

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11 C.F.R. s 104.8(e).

There can be no doubt, and indeed the district court acknowledged, that section 104.8(e) imposes a reporting requirement

with respect to soft money that includes the identity of the

"donating individual[ ]," as well as, "where applicable," the

information required for hard money sources in section

104.8(b)-(d).10 The district court, however, focused on the

fact that "donates" is nowhere defined in the regulation (or in

FECA), and does not have an ordinary meaning that confined

__________

10 The district court deemed it a "stand alone provision in the

regulations," not rooted in any particular provision within the

FECA. Kanchanalak II, 41 F. Supp. 2d at 7. We are not sure

why this is relevant. We also point out that in its effort to locate a

statutory source for the prohibition against soft money conduit

contributions, the district court discussed only 2 U.S.C. s 441f, the

provision which prohibits hard money contributions in the name of

another, and which it found was not applicable to soft money. See

id. Notably, the district court opinion never addressed s 441e,

which proscribes contributions from foreign nationals, as a potential

source for the statutory prohibition on at least some soft money

conduit contributions. One reason it may not have done so is that it

had previously found in Trie that, contrary to the FEC's interpretation, s 441e is inapplicable to soft money.

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it to the true source of the donated funds. In the district

court's words:

[T]he regulations provide no indication of whether a

national party committee is obligated to report the "true

source" of any such donation. In fact, the word "donates" is never defined in either the statute or regulations. The government therefore lacks any basis to

argue that the statute and regulations require a political

committee to list the names of "true sources" of soft

money donations in reports to the FEC.

Id.

Defendants reiterate here the district court's reasoning,

concluding that "an individual who writes a soft money donation check to a committee literally constitutes a 'donating

individual' or an individual that 'donates' to the committee's

non-federal account, even if that individual is in fact reimbursed for the donation." Br. of Appellees, at 11-12.

That proposition does not seem so apparent to us. To

donate ordinarily signifies the act of giving away something

over which the giver has control or sovereignty. Thus a

donation is defined, inter alia, as "a formal grant of sovereignty or dominion." Webster's Third New International

Dictionary (Unabridged) 672 (1976). And indeed in Hsia,

this court rejected a similarly restrictive definition of persons

who "make the contribution" in the case of hard money,

declaring that the "demand for identification of the 'person

who makes the contribution' is not a demand for a report on

the person in whose name money is given; it refers to the

true source of money." Hsia, 176 F.3d at 524. We see no

critical distinction between the ordinary meaning of the terms

"contribute" and "donate" in that respect.11

There is, however, an even more crucial sentence in section

104.8(e) that validates the FEC's interpretation, namely, the

requirement that "the memo entry shall also include, where

__________

11 We recognize that because of the special definition of contribution in the Act, s 441f prohibits conduit contributions of hard

money only. But this limitation on the scope of s 441f does not

upset the ordinarily synonymous meanings ascribed to both terms.

applicable, the information required by paragraphs (b) through

(d) of this section." 11 C.F.R. s 104.8(e). Thus, subsection

(e), by its own terms, cannot be read in isolation, but must be

read to incorporate (unless inapplicable) the earlier hard

money disclosure requirements of paragraphs (b) through (d).

Among those provisions is subsection (c), which provides that:

"[a]bsent evidence to the contrary, any contribution made by

check, money order, or other written instrument shall be

reported as a contribution by the last person signing the

instrument." 11 C.F.R. s 104.8(c) (emphasis added).12 The

incorporation of this disclosure provision into section 104.8(e)

is significant. Its language is transparent; a committee may

not report that a signer is the actual source of funds if it is

aware that the signer is not the source.13 The plain implicaUSCA Case #99-3019 Document #468748 Filed: 10/08/1999 Page 12 of 23
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__________

12 The district court did refer to subsection (c) in addressing the

hard money reporting requirements in Hsia, but limited its application to committee treasurers. Hsia, 24 F. Supp. 2d at 59 (noting

that the provision "implies that if there is 'evidence to the contrary'

of which the political committee is aware, the committee may not

report the contribution as having been made by the last person

signing the instrument. The FEC regulation, if not the statute

itself, therefore implies that the term 'contributor' is not synonymous with the phrase 'the last person signing the instrument' and

that the political committee is supposed to identify the 'true source'

of a contribution if it knows the true source."). The district court

thus found that while 11 C.F.R.s 104.8 (c) may impose obligations

on the committee treasurer, it does not impose the same obligation

on a donor, absent a knowing conspiracy with the treasurer to

conceal the true source.

In Kanchanalak II, the district court acknowledged subsection

(c) in a footnote, but failed to draw the connection we find between

subsection (c) and subsection (e). See Kanchanalak II, 41 F. Supp.

2d at 7 n.6.

13 Our analysis in Hsia is relevant here again. If political committees did not report the true sources of their donations, their

statements would appear to be false. Even if the defendants did

not themselves make false statements to the FEC (and are not

being charged as such), "the simple interposition of conduits to sign

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tion of this is that a signer, who through a knowing conduit

transaction, causes a committee to make an erroneous identification by withholding "evidence to the contrary," may be

held responsible for causing the false statement.

Defendants offer one counter-argument. The term "contribution" contained in 11 C.F.R. s 104.8(c) is defined as "any

gift ... for the purpose of influencing any election to Federal

office." 2 U.S.C. s 431(8)(A) (emphasis added). Since the

term "contribution" in subsection (c) is thus limited to hard

money used for federal elections, the entire subsection (c) by

its own terms is similarly limited and hence not "applicable"

to the soft money reporting requirements of section 104.8(e).

A closer and more contextual reading of section 104.8 and

its various subsections disposes of this argument. Subsections (b), (c), and (d) of section 104.8, all incorporated by

reference into subsection (e), address requirements for "contributions." On defendants' apocalyptic reasoning none

would ever be applicable to subsection (e); this reading in

turn would render the entire incorporation clause referring to

subsections (b) through (d) superfluous. See Benavides v.

DEA, 968 F.2d 1243, 1248 (D.C. Cir. 1992) (declining to

interpret a provision so as to render it superfluous). Surely

it is not reasonable to think that the FEC would have

incorporated other subsections into subsection (e), when "applicable," if it knew or intended that none of these subsections

could ever apply to soft money. The more reasonable interpretation by far is that these hard money disclosure requirements apply to soft money reporting unless there is an

obvious reason why they should not.14

__________

the checks is certainly enough to 'cause' a committee to make false

statements in its report." Hsia, 176 F.3d at 523.

14 It bears noting that the FEC has not been particularly consistent when it has employed the term "contribution" in regulations

and opinions. Indeed, the term is often used synonymously with

"donation." See, e.g., 11 C.F.R s 113.3 (referring to "funds donated

... to a candidate for federal office"); 11 C.F.R. s 115.2 (a)

(prohibition on federal contractor "contributions" not applicable to

"contributions ... in connection with State or local elections");

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Not only is the FEC's construction of section 104.8(e)

reasonable, but it also advances the articulated concerns that

impelled the FEC to adopt the regulation in the first place.

See Methods of Allocation Between Federal and Non-Federal

Accounts, 55 Fed. Reg. at 26,058.15 Adopted in 1990 as part

of a "comprehensive set of allocation rules" drafted to "provide additional safeguards against the use of impermissible

[soft money] funds in federal election activity by expanding

the disclosure of receipts and disbursements by national

party committees," section 104.8, in particular, was "[r]evised

[to] ... require national party committees to disclose the

source and amount of receipts by their non-federal accounts

... as well as by their federal accounts under the current

rules." The revised section was retitled "Uniform Reporting

of Receipts," id., "to reflect its broadened application" to both

hard and soft money. To that end, "[n]ew paragraph (e)," the

FEC explained, "require[s] national party committees to also

disclose information about receipts to their non-federal accounts." Id. This "broadened disclosure" was designed to

"help eliminate the perception that prohibited funds [soft

money] have been used to benefit federal elections and campaigns." Id.

Given our druthers, we might have wished that the FEC

elaborated in greater detail just why identifying the true

source of soft money would prevent the reality or the perception of soft money being illicitly used for federal election

__________

FEC Advisory Op. 1998-11 (Sept. 3, 1998), 1998 WL 600994, at *3

(discussing "contributions in connection with State and local elections"); FEC Advisory Op. 1997-14 (Aug. 22, 1997), 1997 WL

529606, at *2 (discussing "contributions" to "State party building

funds") (emphasis added in all citations).

15 In interpreting a regulation, we may consider a contemporaneous statement of the agency's policy reasons for promulgating it.

See Sierra Pac. Power v. EPA, 647 F.2d 60, 65 (9th Cir. 1981) ("An

appellate court will ordinarily give substantial deference to a contemporaneous agency interpretation of a statute it administers.

When dealing with an interpretation of regulations the agency has

itself promulgated, 'deference is even more clearly in order.' ")

(quoting Udall v. Tallman, 380 U.S. 1, 16 (1965)).

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purposes. We do know that the overall design of the new

allocation and reporting requirements was "to track the flow

of non-federal funds transferred into federal accounts" to

insure they were used only for legitimate allocation of joint

expenses. It does not seem to require any leap from that

premise to the conclusion that tracking such a flow will often

be easier if the true source of the soft money is identified.

For instance, the identity of the real donor may suggest to

the FEC monitor that special scrutiny is in order to insure

the pristineness of the federal side of the ledger. Ultimately,

however, we know of no bar to an agency's interpretation of a

prophylactic disclosure rule, such as this one, that may overshoot the mark a bit, so long as it stays in reasonable range.16

To cut to the chase, we find that the language and purpose

of section 104.8(e) permits only one reasonable interpretation.

In an effort to enhance its ability to prohibit the illegal

commingling of hard and soft money receipts, the FEC

required identifying information for the donors of both to

assist it in tracking the flow of funds between the two.

2. Fair Notice

That the FEC's interpretation of its disclosure regulation

as applying to the true source of soft money is a reasonable

one does not end the matter. For to support a criminal

prosecution, it must give fair notice to the subject of what

conduct is forbidden. The Due Process Clause of the Fifth

Amendment prohibits punishing a criminal defendant for

conduct "which he could not reasonably understand to be

proscribed." United States v. Harris, 347 U.S. 612, 614

(1954). The Supreme Court has held that this "fair warning"

requirement prohibits application of a criminal statute to a

defendant unless it was reasonably clear at the time of the

__________

16 Defendants also counter that "no purpose would be served by

requiring the reporting of the original source of soft money," given

that "soft money donations in the name of another are not prohibited by FECA." Br. of Appellees, at 12, n.13. This ignores the

FEC's longstanding interpretation of s 441e as barring foreign

national contributions of soft money in section 110.4a.

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alleged action that defendants' actions were criminal. United

States v. Lanier, 520 U.S. 259, 266 (1997).

The Superceding Indictment does not offend the principles

of due process and fair notice because the defendants should

reasonably have understood federal laws to require committees to report the true source of soft money donations.

Additionally, they should reasonably have understood that

disguising those true sources would cause false statements to

be made in violation of 18 U.S.C. ss 2(b), 1001. The court in

Hsia, which addressed the hard money reporting requirement, found that this "case fits comfortably within the clear

and previously accepted scope of ss 2(b) and 1001." Hsia,

176 F.3d at 523. We find likewise in this case. In arguing

that ss 2(b), 1001 may not comfortably be applied to soft

money reporting, defendants assert that it was previously

unclear that section 104.8(e) required real source identification for soft money, thus it would violate the due process

requirement of clear notice to hold them criminally accountable now. We disagree.

Section 104.8(e) explicitly covers soft money; the FEC has

interpreted it as such since its promulgation and announced

its prophylactic purpose at that time. It also expressly

incorporated several hard money disclosure requirements laid

down in earlier subsections (b) through (d) into the subsection

(e) requirement. One of those, subsection (c), unambiguously

permits committees to report the name of the signer of a

check as the donor only if there is no "evidence to the

contrary." If an individual possesses that contrary evidence

and participates in the conduit transaction by signing the

check himself or conspiring with another to do so, he is

"causing" a false statement to be made to the FEC in

violation of ss 2(b), 1001. That is clear notice enough.

3. The Foreign National Prohibition

The government offers a further justification for the soft

money reporting requirement. It contends that s 441e of

FECA bars foreign nationals from making both hard money

contributions and soft money donations, indirectly or directly,

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for use in either federal or local elections. This statutory bar,

it says, provides a powerful justification for the true source

reporting requirement of soft money--that is, to ensure that

United States citizens and permanent residents are not conduits for soft money that originates with foreign nationals.

Defendants resolutely maintain that the statutory language of

s 441e restricts that provision's scope to federal elections.

In determining whether an agency's interpretation of a

statute is appropriate, we apply Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).17

Under Chevron, the court examines whether the statute

speaks "directly ... to the precise question at issue." Chevron, 467 U.S. at 842-43. If the statute "has not directly

addressed the precise question at issue," then the agency's

construction, if reasonable, should be honored. Id.

Through a promulgated regulation and an advisory opinion,

the FEC has indicated that s 441e prohibits soft money

donations as well as hard money contributions by foreign

nationals. See, e.g., 11 C.F.R. s 110.4(a); FEC Advisory

Opinion, 1987-25 (Sept 17. 1987), 1987 WL 61721. Section

441e provides, in relevant part, that:

It shall be unlawful for a foreign national directly or

through any other person to make any contribution of

money or other thing of value, or to promise expressly or

impliedly to make any such contribution, in connection

with an election to any political office; or in connection

with any primary election, convention, or caucus held to

select candidates for any political office; or for any

__________

17 Defendants argue that this court should not give Chevron

deference to the FEC's interpretation of an ambiguous statute in a

criminal proceeding. Defendants' support for this proposition is

scant. That criminal liability is at issue does not alter the fact that

reasonable interpretations of the act are entitled to deference. See

Babbitt v. Sweet Home Chapter of Communities for a Great Or.,

515 U.S. 687, 703-05 (1995) (according Chevron deference to a

Department of the Interior regulation which interpreted a criminal

provision of the Endangered Species Act).

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person to solicit, accept, or receive any such contribution

from a foreign national.

2 U.S.C. s 441e.

Although the text by itself might appear comprehensive

enough to encompass soft money, the defendants point to the

use of the word "contribution" in that section; contribution is

defined elsewhere in the Act as applying to hard money for

federal elections. The term "contribution," as we have noted,

includes: "(i) any gift ... made by any person for the

purpose of influencing any election for Federal office...." 2

U.S.C. s 431(8)(A)(i).

This definition, say defendants, limits the scope of s 441e

to federal elections. Principles of consistent usage in statutory interpretation must, however, be applied consistently.

While defendants focus exclusively on the term "contribution," they ignore the phrase "any political office" which

appears not only in s 441e but also in its neighboring provision, s 441b. Section 441b distinguishes between contributions to federal offices and those tendered to "any political

office."18 Thus while s 441b regulates the manner in which

most corporations and labor organizations may contribute to

__________

18 Section 441b provides, in relevant part, that:

(a) It is unlawful for any national bank, or any corporation

organized by authority of any law of Congress, to make a

contribution or expenditure in connection with any election to

any political office, or in connection with any primary election

or political convention or caucus held to select candidates for

any political office, or 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....

(b)(2) For purposes of this section ... the term "contribution

or expenditure" shall include any direct or indirect payment,

distribution, loan, advance, deposit, or gift of money, or any

services, or anything of value ... to any candidate, campaign

committee, or political party or organization, in connection with

federal offices, that same provision limits the contributions

that nationally chartered banks and corporations may make

"in connection ... with any political office." 2 U.S.C. s 441b

(emphasis added). By distinguishing federal offices from

"any political office," Congress plainly intended to reach

certain contributions made to state and local offices. Guided

by the same canon of consistent usage that the defendants

invoke on behalf of the term contribution, we think it telling

that Congress employed the phrase "any political office"

when defining the scope of the foreign-national contribution

provision. Accordingly, the language of s 441e does not unambiguously cabin its reach to only federal offices.19

__________

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any election to any of the offices referred to in this section....

2 U.S.C. s 441b.

19 Defendants attempt to answer the government's s 441b argument by noting that s 441b(b)(2) carries its own definition of the

term contribution, distinct from that contained in s 431(8)(A)(i). It

defines a contribution as "any direct or indirect payment, distribution, loan, advance, deposit or gift of money, or any services, or

anything of value ... to any candidate, campaign committee, or

political party or organization, in connection with any election to

any of the offices referred to in this section." 2 U.S.C. s 441b

(b)(2) (emphasis added). The question then becomes what are the

offices referred to in this section. Subsection (a), for example,

prohibits national banks and federally chartered corporations from

making contributions "in connection with any election to any political office, or in connection with any primary election or political

convention or caucus held to select candidates for any political

office." 2 U.S.C. s 441b(a).

Defendants concede that the term "any political office" in

s 441b(a) must include non-federal offices since elsewhere in the

same subsection, the statute prohibits "any corporation whatever"

(presumably, including, but not limited to federally chartered corporations) from making a contribution in connection with elections to

federal offices. Presumably, if Congress had intended to prohibit

only the entities referenced in subsection (a) (including national

banks and federally chartered corporations) from making federal

The legislative history and structural scheme of the statute

tend to buttress the FEC's broader interpretation of section

441e but can hardly be read as making its case conclusively.

Section 441e was preceded by 18 U.S.C. s 613, a subsection

of the Foreign Agents Registration Act ("FARA"), which

made it unlawful for "agents of foreign principals" to "knowingly mak[e] any contribution of money or other thing of

value ... in connection with an election to any political office

or in connection with any primary election, convention, or

caucus held to select candidates for any political office." 18

U.S.C. s 613 (repealed 1976). Nothing in the committee

report that accompanied the original passage of section 613

indicated that Congress intended for the phrase "an election

to any political office or in connection with any primary

__________

contributions, the clause concerning national banks and federally

chartered corporations would have been surplusage.

But then defendants go on to argue that if Congress had intended

to modify the Act's generic definition of "contribution" for purposes

of s 441e to cover non-federal elections, it could have done so

explicitly as it did with s 441b. In response to this, the government notes that ss 441b and 441e were both preceded by provisions

in Title 18, which were moved to Title 2 as part of the amendments

to FECA in 1976. The government argues that s 441b's special

definition of the term contribution is a vestigial remainder from the

preceding provision, 18 U.S.C. s 610, which Congress inadvertently

failed to remove. It also points out that there was no definition of

"contribution" in the predecessor to s 441e (which was part of the

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Foreign Agents Registration Act ("FARA")).

Candidly we see no way to definitively resolve this statutory

puzzle other than to declare an ambiguity and move on to our

traditional rules for resolving ambiguities.

As a final note, we do think both defendants and the district court

make too much of the definition of "contribution" as controlling the

interpretation of every section in which it appears. Congress itself

performed with no such consistency. Although contribution by

itself does mean contribution to a federal candidate, Congress in

many sections of the Act added contributions "for Federal office"

although that seems surplusage. In contrast in others like ss 441e

and 441b, it used contribution in conjunction with the phrase "for

any political office." Compare ss 441a, 441b, and 441e.

election, convention, or caucus held to select candidates for

any political office" to be restricted to federal office.20 And

significantly, this relevant language of s 441e has remained

identical through multiple amendments to FARA and to the

provision itself, when the 1976 amendments moved the provision from Title 18 to FECA. The 1976 FECA Amendments

Report said "[section 441e] is the same as Section 613." H.R.

Conf. Rep. No. 94-105, at 67 (1976) (emphasis added). Ultimately, neither the plain language of s 441e nor its legislative

history reveals Congress's unambiguous intent.

In the face of such statutory ambiguity, we are required to

reach Chevron's second prong, which requires judicial deference to an agency's reasonable interpretation. Indeed, this

court has noted in several opinions that the FEC's express

authorization to elucidate statutory policy in administering

FECA "implies that Congress intended the FEC ... to

resolve any ambiguities in statutory language. For these

reasons, the FEC's interpretation of the Act should be accorded considerable deference." Orloski v. FEC, 795 F.2d

156, 164 (D.C. Cir. 1986); accord Fulani v. FEC, 147 F.3d 924

(D.C. Cir. 1998); Republican Nat'l Comm. v. FEC, 76 F.3d

400 (D.C. Cir. 1996); LaRouche v. FEC, 28 F.3d 137 (D.C.

Cir. 1994).

The FEC has consistently interpreted s 441e as applicable

to federal, state, and local elections since 1976. In that year

it promulgated 11 C.F.R. s 110.4 which provides, in relevant

__________

20 Indeed, the House Conference report accompanying the

amendments to FARA, which established s 613, explain that the

"new section relating to agents of foreign principals ... would

prohibit such agents from making or promising to make in their

capacity as agents contributions in connection with any election to

any political office or in connection with any primary election,

convention, or caucus to select new candidates." H.R. Rep. No.

89-1470, at 15, reprinted in 1966 U.S.C.C.A.N. 2397, 2410-11.

Notably the relevant language of the provision ("an election to any

political office or in connection with any primary election, convention, or caucus held to select candidates for any political office")

remains unchanged in the present provision.

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part:21

(1) A foreign national shall not directly or through any

other person make a contribution, or an expenditure, or

expressly or impliedly promise to make a contribution, or

an expenditure, in connection with a convention, a caucus, or a primary, general, special, or runoff election in

connection with any local, State, or Federal public office.

(2) No person shall solicit, accept, or receive a contribution as set out above from a foreign national.

11 C.F.R. s 110.4(a).

It is unfortunate, but true, that neither the FARA, in which

the predecessor of s 441e first appeared, nor FECA, to which

it was removed in 1976, provides detailed reasons why Congress extended the ban in those sections to state and local

elections. However, the legislative history of FARA does

state repeatedly that it is designed to "protect the interests of

the United States by requiring complete public disclosure by

persons acting for or in the interests of foreign principals

where their activities are political in nature." S. Rep. No.

88-875, at 1 (1964).22 Hence, we do not regard the absence of

any more explicit reasons by Congress (or the FEC) to be

fatal to the reasonableness of the FEC's interpretation. The

__________

21 See Establishment Clause, 41 Fed. Reg. 35,950 (Aug. 25, 1976)

(establishing 11 C.F.R. s 110.4(a) and other regulations following

the 1976 amendments to FECA); see also 11 C.F.R. s 110.4(a);

FEC Advisory Opinion, 1987-25 (Sept. 17. 1987), 1987 WL 61721.

22 The Report continues: "Such public disclosure as required by

the Act will permit the Government and the people of the United

States to be informed as to the identities and interests of such

persons and so be better able to appraise them and the purposes for

which they work." S. Rep. No. 88-875, at 1; see also H.R. Rep. No.

89-1470, at 2 (1966). Senator Fulbright also commented on the

floor that foreign agents "will have to make public all their political

contributions." 109 Cong. Rec. 16598 (1965) (emphasis added).

Finally, in old s 613, "agent of a foreign principal" was defined as

"one who within the United States solicits ... or disburses contributions, loans, money or other things of value for or in the interests

of such foreign principal" (emphasis added).

language of the statute and the explicit regulation of the FEC

interpreting it provide an additional reason that the defendants should have known that 104.8(e) imposed a true source

reporting requirement for soft money donations.23

III. Conclusion

For the reasons previously stated in our decision in Hsia,

we reverse the district court's orders that dismissed the false

statement counts predicated on hard money contributions.

We also find that the reporting regulation, section 104.8 (e),

requires the reporting of the true sources of conduit contributions with respect to soft money and that s 441e forbids

foreign national donations of soft money. Thus, the judgment

of the district court, with respect to the soft money counts, is

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reversed as well.

So ordered.

__________

23 To argue, as defendants do, that the rule of lenity compels us to

reject the FEC's otherwise reasonable interpretation of an ambiguous statutory provision is to ignore established principles of law.

See Babbitt, 515 U.S. at 704 n.18 ("We have never suggested that

the rule of lenity should provide the standard for reviewing facial

challenges to administrative regulations whenever the governing

statute authorizes criminal enforcement. Even if there exist regulations whose interpretations of statutory criminal material provide

such inadequate notice of potential liability, the ... regulation [at

issue], which has existed for two decades and gives fair warning of

its consequences cannot be one of them.").

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