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CLARK HILL 

^ .... Clark Hill PLC 

i;,' I 601 Pennsylvania Avenue NW 

Norlh Building. Suite 1000 

Washinglon. DC 20004 

Charles R. Spies T 202.772.0909 

T 202.572.8660 F 202.772.0919 

F 202.572.6663 

Email: csples@ciarl(hlll.com cl8.rkhlll.com 

April 23, 2015 

Jeff S. Jordan 

Supervisory Attorney 

Complaints Examination & Legal Administration 

Federal Election Commission 

999 E Street. NW 

Washington, DC 20463 

VIA FACSIMILE: (202) 219-3923 

Re: MUR 6920- Aniericaii Conservative Union Response to Complaint 

Dear Mr. Jordan: 

We arc writing this letter on behalf of our client, American Conservative Union 

("ACU"), in response to the Complaint filed by the Citizens for Responsibility and Ethics in 

Washington ('CREW") alleging that ACU violated the Federal Election Campaign Act of 1971, 

as amended ("FECA" or "Act"), and Federal Election Commission ("Commission") regulations 

by knowingly making a contribution in the name of another. The Complainant is a self-styled 

"good government" group that routinely files baseless, speculative complaints, and this is no 

exception. We respectfully request that the Commission dismiss the Complaint in this matter as 

it is not worthy of the Commission's limited time and resources. 

I. Background 

ACU is a tax-exempt social welfare organization organized under section 501(c)(4) of the 

Internal Revenue Code. ACU is the oldest and largest conservative grassroots organization in 

the United States. ACU promotes conservative positions on issues to Meihbers of Congress, the 

Executive Branch, State legislators, and the public. In addition, ACU has a long history of 

engaging in political activity consistent with IRS regulations. 

During the 2012 election cycle, ACU made a contribution to Now or Never PAC, an 

Independent Expendituie-Only Committee registered with the Commission. The Complaint 

alleges that the funds for this contiibution were not from ACU, and as a result, ACU knowingly 

made a contribution in the name of another. The Complaint's basis for this assertion is ACU's 
I 

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MUR 6920 Response by American Conservative Union 

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Amended 2012 Form 990 which disclosed a contribution of $1.71 million to Now or Never PAG, 

and included language added by ACU's auditors which stated that "the SI.71 million was a 

political contribution received by the Organization and promptly and directly delivered to a 

separate political organization." The auditors did not consult with contemporaneous ACU staff 

regarding the nature of this transactipn, and instead relied upon the face of ACU's financials to 

support their notation on the amended IRS filing. 

The facts are that the ACU received donations totaling $10,277,123 in 2012, including an 

amount sirhilar to $1.7 million, and those $10,277,123.00 of donations were deposited into 

ACU's general treasury account. ACU engaged in a wide range of public education and political 

activities in 2012, including making electioneering communications. Those political activities 

included a contribution of $1.7 million to Now or Never PAC on October 31, 2012. At the time 

of both the contribution to ACU, and ACU's other election-related 2012 activity, ACU staff 

consulted with experienced legal counsel to confirm that such transactions were permissible 

under the Act.' 

11. Legal Analysis 

Section 501(c)(4) nonprofit organizations are permitted to engage in partisan political 

activity so long as such activity does not becomes the organization's primai-y purpose.^ In 

addition, IRS regulations permit 501(c)(4) organizations to accept political contributions that ai-e 

"promptly and diiectly" ti-ansferred to a separate segregated fund.' Thus, ACU was permitted to 

accept funds from a person and subsequently contiibute those funds or a mixture of funds, to a 

separate segregated fund or political committee. Likewise, it was permissible for Now or Never 

PAC to accept the contribution and disclose that it was received from ACU. The question here, 

however, is whether Now or Never PAC was also required to investigate, determine, and then 

disclose the name of the person or corporation who made the donation or donations to ACU 

whose funds were then donated to Now or Never PAC. 

A. Section 441 f is an Anti-Circumvention Rule that is Inapplicable 

to Super PACS 

The Act 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."^ This 

statute was designed to prevent the cii-cumvcntion of contribution limits, and is clearly applicable 

to and has been enforced regarding contributions to candidates, separate segregated funds, and 

' ACU staff consulted with an election law attorney at Wiley Rein LLP, a well-known and highly regarded firm that 

includes a former PEC Commissioner and represents many prominent organizations. 

^ Rev. Rul. 81-95,1981-1 CB. 332. 

^26C.F.R. § 1.527-6(e). 

' 2 U.S.C, § 44If (current version at 52 U.S.C.S. § 30122). 

; T iV W i i T T 

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traditional PACs. The legislative history of the Act demonsti-ates that the purpose of 44If was to 

prevent individuals from using conduits or straw donor schemes to evade the contribution limits. 

For example, one of the primai-y sponsors of the bill that ultimately became Section 441f 

confu'med that he was aware of schemes to evade the contributions limits, including schemes 

involving "donations through brothers, sisters, cousins, aunts and infant children" and schemes 

in which "an employee gets a cash bonus with the understanding that a portion will go to a 

favored candidate. After hearing more evidence of different schemes. Senator Mathias 

applauded the bill for "making some limitation on contributions so that rich men can no longer 

buy elections, either by contributing to theii" own campaigns or by having families and friends 

contribute inordinate amounts to various hidden committees."® (ingress recognized that there 

would be schemes to evade the contribution limits that applied to candidates and political 

committees, and enacted Section 441 f to address that concern. 

Importantly here, no contribution limits apply to Independent Expenditure-Only 

Committees ("Super PACs"). Section 441 f is an anti-proliferation rule enacted to prevent 

circumvention of the contribution limits. Yet, circumvention is not a concern for contributions to 

Super PACs since they may accept unlimited conti'ibutions as there is no risk of corruption. The 

Supreme Court has long recognized a sharp distinction between contributions to candidates and 

independent expenditures. Contributions can be restricted to a candidate, the Supreme Court has 

held, because of the risk that they will lead to quid pro quo corruption, and Section 44 If bolsters 

this restiiction.' Independent expenditures, however, present no corresponding risk, of 

conuption.® The Supreme Court eliminated any doubt about this in Citizens United: 

"independent expenditures.. .do not give rise to conuption or the appeai-ance of corruption."' 

With independent expenditures, "[t]he candidate-funding circuit is broken," thereby "negat[ing] 

the possibility that [the] expenditures will result in the sort of quid pro quo corruption with which 

oui' case law is concerned."" Section 441f was enacted to address the same concern: that is, the 

risk of quid pro quo corruption that contributions to candidates pose. Super PACs pose no such 

risk. 

^ Federal Election Campaign Act of 1971; Hearings on S. 1. S. 382, and S. 956, Before the Subcommittee on 

Communications of the Senate Committee on Commerce, 92nd Cong., 1st Sess. 233-34 (1971). 

'Id. 

' Buckley v. Valeo, 424 U.S. 1,26-27 (1976) (pa curiam). 

'M.at45. 

' Citizens Unitedv. FEC, 558 U.S! 310,357 (2010). 

AL Free Enter. Club's Freedom Club PACv. Bennett, 131 S. Ct. 2806,2826-27. 

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B. The Commission Has Not Applied Section 441f to Super PACs 

It is no coincidence that the Commission has not applied Section 441 f to Super PACs 

because it is constitutionally suspect in light of recent court decisions." There is simply no 

cognizable anti-corruption intei-est in enforcing this provision to Super PAC contributions. The 

only interest the Supreme Court has recognized to justify contribution limits is quid pro quo 

coiTuption, and that interest is lost when applied to Super PACs. 

In this matter, ACU raised over $10.2 million in 2012, including the aforementioned 

contribution to ACU in an amount similar to SI.7 million. The entire $10.2 million was 

deposited into ACU's general treasury account, which was used to pay for a number of political 

activities during the 2012 election, including the contribution of $1.7 million to Now or Never 

PAC. ACU relied in good faith on the advice of experienced legal counsel who confirmed the 

legality of the transaction at the time it occurred. 

III. Conclusion 

All funds used to make the contiibution to Now or Never PAC came fi-ora ACU's general 

treasui-y account, the same account that was used to pay for a variety of activities during 2012. 

Moreover, the contribution was publicly disclosed by Now or Never PAC. The application of 

Section 44If to contriiiutions made to Super PACs is far from settled, and the Commission 

should not use an enforcement action to resolve this question. Thus, we respectfully request that 

the Commission dismiss the Complaint. 

Thank you for your consideration of this matter, and please do not hesitate to contact me 

directly at (202) 572-8663 with any questions. 

Respectfully submitted. 

Charles R. Spies 

Elizabeth Beacham White 

Counsel to American Conservative Union 

" For example, LLCs are peimiited to make unlimited contributions to Super PACs; however, it has never been 

interpreted that sucli contributions violate Section 44If if ilie Supei- PAC does not report the names of the individual 

members of the LLC. See "How the Pounder of the Pugees Became a Big-Tirae Donor Without Anyone Knowing," 

slate.com at 

hito://www..sl;\i.e.c<ini/articles/news .iiid riolitics/nolitics/20l5/03/nr.-i.s inichtfl fuiitled s'lincr niic black rnm vote 

liinited li.ihiliiv ciMnnaiiies.htinl. 

i-nii. 

20247716ai 48092/179193