FEDERAL ELECTION COMMISSION 

WASHINGTON. D.C. 20463 

BEFORE THE FEDERAL ELECTION COMMISSION 

In the Matter of ) 

) 

American Conservative Union, el al. ) MUR 6920 

) 

STATEMENT OF REASONS OF 

VICE CHAIR CAROLINE C. HUNTER AND 

COMMISSIONER LEE E. GOODMAN 

The Commission found reason to believe that Respondents American Conservative 

Union ("ACU"), Now and Never PAC, and Government Integrity, LLC ("GI, LLC") violated 

section 30122 of the Federal Election Campaign Act of 1971, as amended ("the Act"), conducted 

an investigation, voted unanimously to find probable cause that ACU violated the Act, and 

entered into a conciliation agreement that required the Respondents to pay a civil penalty in the 

amount of $350,000. 

The Commission voted unanimously, on January 24, 2017, to find reason to believe that 

ACU and Now or Never PAC violated the Act. The Commission also voted unanimously to find 

reason to believe against an "Unknown Respondent."' Nine months later, on September 19, 

2017, the Commission's Office of General Counsel ("OGC") submitted a report to the 

Commissioryecommendin^ find reason to believe tw^non-respondents, 

||||||^|^^H|||^^^H||('^B') and an individual associated withHH violated the Act by 

maSn^^ontnouUorn^Now or Never PAC in the name of ACU.^ We voted to proceed to 

enforce the Act against thre^^pondents—ACU, ree Respo: Now or Never PAC, and GI, LLC—but not to 

add the fourth organization,,|||^ as ^ a Respondent for the following reasons. 

' Commission Certification, MUR 6920 (Jan. 24,2017). On July 11, 2017, the Commission voted 

unanimously to substitute GI, LLC in place of "Unknown Respondent" and voted unanimously to find reason to 

believe 01, LLC violated the Act. See Commission Certification, MUR 6920 (July 11, 2017). 

^ OGC did not recommend substituting^^^s an Unknown Respondent. That was irregular. The 

Commission typically would vote to add a person or organization and then vote to find reason to believe. We 

believe that parties added to a matter are entitled to formal notice of a complaint pursuant to 52 U.S.C. § 

30109(a)(1), and a right to respond to the complaint, before the Commission votes to find reason to believe that 

party has violated the Act. 

^ References herein to^Hincorporate an individual associated with^H 
A. The Legal Theory ofJ[[Legal Responsibility Was Unclear 

The legal theory on which OGC based its recommendation to make a reason to believe 

finding as toBB was unprecedented and unclear.'* OGC argued that|m violated the Act by 

~|, which in turn donated funds toa non-profit corporation, 

which in turn contributed the funds to th^upei^AC^fiie^rjjJ violated the Act by making 

a contribution in the name of an LLC||||m|||m^mm was, and remains, an unclear 

legal issue. We have previously explained our reluctance to punish citizens for novel theories of 

violations, in cases of first impression, where the law is evolving, and citizens did not have fair 

notice. We applied that reluctance in cases involving LLC contributions as recently as February 

2016.^ Our action in those matters is under judicial review at this time and we have been 

awaiting judicial clarification of our decision in those cases.^ It would have been unfair and 

possibly inefficient to pursue enforcement against^ for engaging in similar conduct where the 

issue was not clear, we had dismissed similar legal theories against other persons, and a federal 

court is currently reviewing the reasonableness of our action. Furthermore, there is scant legal 

precedent applying 52 U.S.C. § 30122's "true source" rule to ftmders three or four layers behind 

the reportable contribution to a Super PAC. These issues were likely to be contested and 

Ijtigated. 

The Commission already was proceeding in an area of law that was contested by three 

Respondents. There was no direct, established precedent holding that non-profit corporations, all 

of which accept donations from other persons, violate 52 U.S.C. § 30122 when they make a 

contribution to a Super PAC with funds received from another donor. Non-profit corporate 

contributions to Super PACs are still a relatively new phenomenon under the Act, authorized in 

2010 by two court decisions recognizing constitutional protections for such activity. Citizens 

United and SpeechNow? The Commission has not defined the circumstances under which a 

non-profit corporation's contribution of funds it received from another person constitutes that 

person's contribution under section 30122 of the Act. Already pursuing a contested legal theory 

in a case of first impression, we believed adding a novel question - the responsibility of a fiinder 

of a LLC donor to a non-profit contributor to a Super PAC - would distract from and thereby 

complicate our efforts to establish a clear precedent in the case of the three Respondents that 

directly transacted the contribution. 

In addition to complicating the legal theory, the facts establishing|||[||H potential legal 

liability were unclear. Historically, the Act's giving-in-the-name-of-another prohibition focused 

" See Heckler v. Chaney, 470 U.S. 821, 824-25 (1985) (noting FDA Commissioner had refused to take 

enforcement action because of his conclusion that FDA jurisdiction in the area was unclear). 

^ See Statement of Reasons of Chairman Matthew S. Petersen and Commissioners Caroline C. Hunter and 

Lee E. Goodman in the Matters of MURs 6485 (W Spann LLC. el al.), 6487 & 6488 (F8, LLC, et a/.), 6711 

(Specialty Investments Group, Inc. el at.), and 6930 (SPM Holdings LLC, ei at.). 

® See Campaign l^egal Center, el al. v. FEC, No. 16-CV-0072 (filed Apr. 22, 2016). 

' See Citizens United V. F£C, 558 U.S. 310 (2010); SpeecAWOH'v. FEC. 559 F.3d 686 (D.C. Cir. 2010). 
on the "true source" of a contribution and whether a person passed funds through a straw donor 

for the intended purpose of making a contribution. All contributions by non-profits have an 

original source, a donor, but defining each contribution by a non-profit as a contribution in the 

name of two or three original donors as the "true source" of the contribution is wholly new 

terrain under 52 U.S.C. § 30122. As to H any investigation would have been required to 

focus on whether the funds used to make a contribution were intentionally funneled through GI, 

LLC for the purpose of making a contribution that evades the Act's reporting requirements. The 

Commission had circumstantial evidence but no direct evidence of||^ 

LLC^In other words, evidence as to|||||Hntent required further factual 

development as tojHfcuring a period when time was running out.' 

B. Risk of Statute of Limitations Ext)irihg 

Second, had the Commission added ^||as a Respondent at its September 19,2017 

executive session, and provided ^^Jiotice of th^omplaint and notice that it had been 

substituted as a named Respondent, and afforded|||[|||an opportunity to respond,that proeess 

would have significantly delayed enforcement against the other Respondents and diverted 

valuable agency resources. The case was already facing a statute of limitations deadline" and 

we were more concerned with focusing Commission resources on successful enforcement 

against the principal Respondents, ACU, Now or Never PAC, and GI, LLC. The investigation 

into the activities of these organizations was advanced and there was substantial factual 

development. We were concerned that addingjjjHat that late date, and delaying the case t^^ 

allow time for a response, would delay enforcement efforts against them. Moreover, had 

filed a response, OGC would have first reviewed the response and provided the Commission 

with its recommendation, a process which would have taken additional weeks. At least a month 

to two months would have been added to the case, delaying conciliation efforts with the three 

principal Respondents. 

* Jn a separate statement our colleague has publicly prejudged|||||||Hguilt, characterizing unknown persons 

as "key players in a scheme" and asserting they are guilty of "engineering an intricate plot to defeat the public's 

interest" and "trying to influence the election." See Cover Letter to the Statement of Commissioner Ellen L. 

Weintraub in MUR 6920 (Americar^onservative Union) (Dec. 19,2017). Our colleague goes on to conclude 

(without citing any statement by that persons unknown "got avvay with it." Our colleague has presupposed 

facts and intent without investigation or consideration of a response. See Statement of Commissioner Ellen L. 

Weintraub at I, MUR 6920 (ACU) ("[WJhoevcr concocted this elaborate scheme ... succeeded in hiding their 

identity"). Such prejudgment raises serious due process concerns, heightened in this matter where the nonrespondent has challenged Commission action in a pending lawsuit. See. e.g., 52 U.S.C. § 30109(a)(3) (mandating 

each respondent be given a copy of probable cause brief and an opportunity to respond). 

' Further complicating any future investigation of ^Hs the fact that Christopher W. Byrd, GI, LLC's sole 

manager and officer, died in 2014. 

The Commission by statute must allow Respondents fifteen (IS) days to respond to a complaint. 52 U.S.C. 

§ 30109(a)(1). Even after finding reason to believe a respondent has violated the law, the Commission's standard 

practice is to afford the respondent an opportunity to respond to the reason to believe finding, which is articulated in 

a factual and legal analysis. 

" The statute of limitations would have run as to^Hin October 31,2017. See Third Gen. Counsel's Rpt. at 

I n. I (Sept. 15,2017), MUR 6920 (ACU). •• 
However, even if the Commission had dispensed with formal notiee and the right to 

respond and proceeded directly to enforcement of its reason to believe finding, it would have 

forced yet another series of precious time consuming procedures^GC's pos^investigation 

recommendation to find probable cause would have been sent to||^Pand^H||would have 

fifteen (15) more dav^o respond to that recommendation.'^ Even if the Commission voted to 

find probable cause,mwould have had a minimum of thirty (30) days to conciliate.'^ 

Thus, the Commission was aware that the time remaining on the five-year statute of 

limitations to conclude enforcement was imminent. The statute of limitations would run on or 

about October 31, 2017, five years after the date ACU contributed to Now or Never PAC.'" A 

« majority of Commissioners expressed concerns about concluding the case before the statute of 

7 limitations ran, and we believed the most efficient prosecutorial path forward was to finalize the 

ig case against the three Respondents as efficiently and expeditiously as possible, whether by 

4 conciliation or civil action. 

Moreover, we were confident that a global conciliation with the Respondents could be 

achieved, absent the procedural, legal, and investigative complexities presented b\ 

involvement. 

m^^Yet OGC had declined to pursue conciliation with the three named Respondents for_ 

several months while it devoted time and resources to investigating a potential violation b> 

We were concerned that OGC had already lost several months of the statute of limitations in this 

process. We did not want to lose additional time or lose the realistic opportunity to resolve the 

matter effectively. Furthermore, we believed time would not accommodate the remaining 

enforcement steps, required by statute, and thus any finding would be academic. We have 

declined to issue purely academic findings. 

C. Commission's Decision Was Reasonable under Heckler 

In sum, we concluded the prudent and prefeixed course was to conciliate with the named 

Respondents. The Commission was well within its discretion to take the safer course. 

52 U.S.C..§ 30109(a)(3). 

52 U.S.C.§ 30109(a)(4). 

5ee Third Gen. Counsel's Rpl. at 1 n.l (Sept. 15.2017), MUR 6920 (ACU, e/«/.); 28 U.S.C. § 2462 

(statute of limitations for civil penalties). See also FECv. Nat'l Right to Work Comm., 916 F. Supp. 10 (D.D.C. 

1996); FEC v. NRSC, 877 P. Supp. 15 (D.D.C 1995). 

" See Statement of Reasons of Vice Chairman Matthew 8. Petersen and Commissioners Caroline C. Hunter 

and Lee E. Goodman, MURs 6391/6471 (Commission on Hope, Growth, and Opportunity). See also CREW v. 

FEC, 236 F. Supp. 3d 378 (D.D.C. 2017), appeal docketed. No. 15-2038 (Mar. 21,2017). 
"An agency decision not to enforce often involves a complicated balancing of a number 

of factors which are peculiarly within its expertise."'^ Here, we concluded the unclear state of 

the law, imminent expiration of the statute of limitations and other legal difficulties weighed in 

favor of proceeding to conciliation with the named Respondents promptly and without 

jeopardizing the resolution in hand by adding|||H|on more uncertain legal and factual grounds. 

That deci sion was reasonable.' ^ 

D. The Public Interest was Served By the Commission's Decision 

Finally, we believed the public interest would be best served by establishing the legal 

precedent that the prohibition against contributing in the name of another in section 30122 is 

violated where Donor 1 donates funds to Non-Profit 2 with specific instructions to contribute 

those funds to Super PAC 3. The Commission had strong, direct evi^nce establishing that 

course of conduct here with respect to three Respondents, but not^H In addition to 

establishing the precedent, we believed the Commission could deteHuture misconduct by a 

conciliation agreement requiring a significant civil penalty. These objectives would be 

complicated by adding two additional Respondents with novel legal and factual defenses. Itithe 

end, our effort proved successful. The Conciliation Agreement in this enforcement matter 

establishes clear precedent, imposed a large $350,000 civil penalty, and it will deter future 

misconduct. ITie Act's disclosure and informational purposes were served. This matter could 

have gone in a different direction, one that would have delayed any resolution for years. We 

avoided that. 

Caroline C. Hunter ' Date 

Vice Chair 

Z>ge. Z-O; Z.0/^ 

Lee E. Goodman Date 

Commissioner 

Heckler V. Chaney, 470 U.S. 821, 831 (1985) (Agencies must determine what action, if any, should be 

taken, depending on numerous factors, including "whether agency resources are best spent on this violation or 

another, whether the agency is likely to succeed if it acts, whether the particular enforcement action requested best 

fits the agency's overall policies, and, indeed, whether the agency has enough resources to undertake the action at 

all"). 

" See CREfVv. FEC, 236 F. Supp. 3d 378 (D.D.C. 2017), appeal docketed. No. 15-2038 (Mar. 21,2017). 

"Under [] established notions of prosecutorial discretion, then, it is hardly incumbent upon the Commission to 

pursue every additional, alleged violation that occurred against every potential respondent that exists, especially 

when" the Commission pursued the central respondent. Statement of Reasons of Commissioner David M. Mason at 

4, MURs 4568,4633. 4634, and 4736 (Carolyn Malenick, et at.).