BEFORE THE FEDERAL ELECTION COMMISSION

In the Matter of ) QCIICITUIF

) MUR 6096 9UI91 1 1* t

Americans for Limited Government )

Research Foundation, )

Americans for Limited Government, Inc., )

and Howard Rich, Chairman of Americans )

for Limited Government )

rs, STATEMENT OF REASONS OF

••* CHAIRMAN STEVEN T. WALTHER,

J COMMISSIONER CYNTHIA L. BAUERLY, AND

^ COMMISSIONER ELLEN L. WEINTRAUB

*T

^ On April 2 1 , 2009, the Commission closed the file in this matter after failing to approve a

~ recommendation to dismiss this complaint against Americans for Limited Government Research

^ Foundation, Americans for Limited Government, Inc., and Howard Rich, Chairman of

Americans for Limited Government (collectively "Respondents"). The complaint alleged that

the Respondents obtained names and addresses from the Commission's disclosure reports, in an

alleged violation of 2 U.S.C. § 438(a)(4) and 1 1 C.F.R. § 104.15(a). Because we believed the

complaint's allegations and accompanying exhibit raised important questions about whether the

Respondents improperly used disclosed contributor information, we supported a motion to find

reason to believe that Americans for Limited Government Research Foundation, Americans for

Limited Government, Inc., and Howard Rich, Chairman of Americans for Limited Government

violated 2 U.S.C. § 438(a)(4) and 1 1 C.F.R § 104.15(a) in order to open an investigation to

ascertain whether the law was violated. That motion failed 3-3.

 1

The Federal Election Campaign Act of 1971, as amended, 2 U.S.C. § 431 et seq. ("the

Act") requires the Commission to make public reports filed within 48 hours of receipt and

prohibits any person from using or selling the information contained hi the reports "for the

purpose of soliciting contributions or for commercial purposes." 2 U.S.C. § 438(a)(4). Congress

limited the use of contributor information to discourage harassment and protect individuals'

privacy. Congress was concerned that reporting requirements could "open up the citizens who

are generous and public spirited enough to support our political activities to all kinds of

harassment ____ " and the purpose of the sale and use restriction was to "protect the privacy of the

generally very public-spirited citizens who may make a contribution to a political campaign or a

political party." 117 Cong. Rec. 30057 (1971) (statement of Senator Bellmon). In Advisory

Opinion 2003-24, the National Center for Tobacco-Free Kids asked, among other requests,

whether it could use reported contributor information to send educational information about

issues, policies, legislation, or issue advocacy. In light of the legislative history, the Commission

read the statute as a broad protection of contributors' privacy and determined that the proposed

1

 Chairman Walther, Commissioners Bauerly and Weintraub voted in favor of the motion; Vice Chairman Petersen,

Commissioners Hunter and McGahn voted against the motion.
communications could be "repetitive and intrusive/' and that the communications would "fall

within the realm of 'harassment'" that was antithetical to the purpose of 2 U.S.C. § 438(a)(4).

The Act requires that the Commission find "reason to believe that a person has

committed, or is about to commit, a violation" of the Act as a predicate to opening an

investigation into the alleged violation. 2 U.S.C. § 437g(a)(2). "Reason to believe" is a

threshold determination that by itself does not establish that the law has been violated. In fact,

"reason to believe" determinations indicate only that the Commission found sufficient legal

justification to open an investigation to determine whether there is probable cause that a violation

of the Act has occurred.2 Rather than finding reason to believe, the Commission may vote to

dismiss matters at the initial stages of an enforcement matter "due to factors such as the small

amount or significance of the alleged violation, the vagueness or weakness of the evidence, or

likely difficulties with an investigation."3

The complainant here alleged that the Respondents obtained the names and addresses of

donors to the Democratic Senatorial Campaign Committee from disclosure reports filed with the

Commission in order to send harassing letters to contributors. The letter states that its author,

Respondent Howard Rich has been subjected to "attacks, slurs and threats" for his support of

particular organizations. See Attachment A. The letter then states that, as a donor to a "new leftwing organization," the Complainant/recipient's "name has been put hi our database. We are

monitoring all reports of a wide variety of leftist organizations. As your name appears in

subsequent reports, it is our intent to publicize your involvement in your local community." Id

(emphasis added).

If the proposal of the National Center for Tobacco-Free Kids to send educational

materials to contributors violated Section 438(a)(4), then surely sending this type of harassing

letter does. "If there is any principle of the Constitution that more imperatively calls for

attachment than any other it is the principle of free thought -- not free thought for those who

agree with us but freedom for the thought that we hate." See United States v. Schwimmer, 279

U.S. 244,254-55 (1929) (J. Holmes, dissenting). See also NAACP v. Alabama, 357 U.S. 449

(1958); Brown v. Socialist Workers 74 Campaign Comm., 459 U.S. 87 (1982). A political

contributor should be able to contribute freely to organizations and causes without fear of threats,

harassment or reprisal. As the Commission emphasized hi Advisory Opinion 2003-24, the

prohibition on the use of contributor information was intended to protect donors against such

harassment.

Respondents state that the Commission should find no reason to believe they violated the

Act because the "names and addresses were gathered from publicly available sources, including

the Internet. None of the names and addresses to whom the letter was sent were[sic] gathered

from any FEC reports or from reports filed with the FEC by the DSCC." Response at 2.

2

 See 72 Fed. Reg. 12545, Statement of Policy Regarding Commission Action in Matters at the Initial Stage in die

Enforcement Process (March 16,2007).

3

 72 Fed. Reg. at 12546; see also Heckler v. Chaney, 470 U.S. 821 (1985).

2
This response that the information was "gathered from publicly available sources,

including the Internet," does not fully answer the complaint. TTie Internet contains many sites

where information disclosed in reports filed with the Commission is made available to the

public, including the Commission's own website at www.fec.gov. The response does not clearly

and unequivocally deny that the information originated from an FEC report. Additionally, our

own Internet searches did not reveal any public source that included the complainant's name and

address other than sites that compile information obtained from reports filed with the

Commission.

In light of the troubling nature of the letter sent to political contributors, the purpose of

the ban on using disclosed information, the unsatisfactory response, and the inability to ascertain

the source of the Respondent's information, we do not believe this matter should be dismissed at

the outset. We might have dismissed the matter at this early stage had the Respondents

explained clearly where the information was obtained on the Internet, as long as that source did

not derive from reports filed with the Commission. Based on the foregoing, we believe that a

limited investigation was warranted to ensure that information reported to the Commission was

not used to intimidate or harass.

Date Steven T. Walther

Chairman

Date Cynthia L. Bauerly

Commissioner

Date ( I Ellen. L. Weintraub

Commissioner
ATT ACHMENT A

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Ni
AMERICANS FOR

LIMITED GOVERNMENT

FOUNDATION

WWW.GETUBERTY.OKG

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ML*. James Ross

770 Park Ave.

New York, NY 10021

Dear Mr. Ross,

Recently a new left-wing organization announced that it

would be targeting donors to conservative, free-market

organizations. The major press announcement stated that the

organization intended to engage in such activities as "public

exposure," having "watchdog groups digging through the lives" of

these individuals, and "possible legal trouble."

As someone who has been put through that abuse over the

years, I can tell you from first-hand experience that it is not

fun and not something to take lightly. I have supported groups

and efforts that I believe will push back against the radical

agenda of the Left. And, I have paid the price for it, in

attacks, slurs and threats.

As a donor to one or more of these organisations and

efforts, you have been able to engage in these activities

without notice, operating in relative obscurity. I am writing

to inform you that this will no longer be the case.

Your name has been put in our database. We are monitoring

all reports of a wide variety of leftist organizations. As your

name appears in subsequent reports, it is our intent to

publicize your involvement in your local community. Should any

of these organizations be found to be engaged in illegal or

questionable activity, it is our intent to publicize your

involvement with those activities. You should know that,

instances of coordinated voter fraud are surfacing all across

America and investigations into possible criminal coordination

are underway.

For your review, I have enclosed a memorandum from our

legal counsel.

Sincerely,

Howard Rich

Chairman
ARTHUR L ICMOID

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EOWMOO-OCKEMAN

JOtfT*. HUMOUR

LAW OFFICES

WEBSTER, CHAMBERLAIN & BKAN

1747 PKNNSYLVANIA AVENUE, N.W.

WASHINGTON, D.C. 20006

(202) 785-9500

PAX: (202) 835-0243

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SAIWIF. MOOICT

MEMORANDUM

TO: Howard Rich, Chairman

Bill Wilson. President

Americans for Limited Government

FROM: Frank M. Nortliain

DATE: September 22.2008

RE: Heightening Awareness of Political Activity

COPl

The federal election laws require (he reporting and disclosure ot'lhe identities of

contributors to political candidates, political parties and politically active organizations thai are

subject to regulation by the Federal Election Commission. In addition, publicly available reports

to the Federal Election Commission contain the names of individuals and organizations that

provide services or other support to PAC's and advocacy groups. Section 527 organizations (lie

publicly available reports with the internal Revenue Service that disclose the identities of a!) of

the contributors to those 527 organizations.

The mandated public disclosure of this information is intended to provide the public with

valuable assistance in exercising the right to vote arid/'as the Supreme Coun has acknowledged,

is "fundamental to die political process."

Because information concerning political contributors and activities is fundamental, tbe

public may rftely discuss and comment upon those individuals and organizations that engage in

political activity. The "transparency" sought to be achieved by disclosure, is intended to

encourage open discussion and debate concerning politicians and issues, as well as the

proponen%md opponents on each side. Tltt? intended:fesult will be an "informed electorate."

Undisclosed Political Activity

• • -« "

Despite the mandatory disclosure rules, there are many 527 groups and nonprofit

organizations that engage in fundraising and political activity without filing reports with the

Federal Election Commission or the Internal Revenue Service. In fact, in recent years, the

Federal Election Commission has been recovering record amounts of fines and civil penalties in

large part due to 527's and nonprofit iharviblated mfe'laW by collecting and expending millions
of dollars that slumlcl have been fully disclosed. In many or those cases. Hie FEC investigations

that led 10 the imposition of fines and penalties were instigated by complaints filed by

nongovernmental watchdogs.

The federal election laws expressly anticipate active citizen oversight ni'ilic Fairr.il

Election Commission and its enforcement role and encourage citizens to monitor political

activities and to make their own reports/complaints to ihc FKC. Any citizen may rile a complaint

with Hie FEC, alerting the Commission to alleged violations of the election laws, and the FEC

must take some action on the complaint.

Although the Federal Election Commission may initiate investigations and compliance

proceedings on its own. me Commission is also reliant on nongovernmental individuals and

entities to ulerl the Commission to election law violations.

Individual!! and groups, engaging in political activity that is not reported or disclosed to

the FEC or IRS. may be discussed and commented upon just as much as those individuals and

entities that do flic reports and make disclosures. If tb« non-reporting individuals or gumps do

violate the election laws, they can be subject to severe monetary penalties, as well as other

sanctions.

Election I .aw Violations

In the 2004 election cycle, there were several 527 organizations and other nonprofit* thai

collected substantial sums of money, in violation of the federal contribution limits, by jidvihin;-

contributors thai the monies being solicited were not subject to FliC regulation. In actuality, us

Inter determined by the FEC. those monies were subject tn regulation and exceeded contribution

and expenditure limitations.

The FEC exacted substantial monetary penalties in resolving ihc investigations of those

entities and imposed severe restrictions on their continued existence and operations. During the

investigations, the F1:,C also utilized its extensive law enforcement authority 10 delve into the

files and bank account records of individuals who had made contributions lo the groups (hai were

under investigation.

The FF-C has broad investigative authority, including subpoena powct which permits die

Commission to subpoena records from virtually any person who actively contribute* to or

participates in an organization or group under investigation. The FEC may also force people to

provide depositions and testimony under oath.

Both civil and criminal penalties may be pursued for violation of the election laws. Civil

penalties in the amount of S5.0QO.OO or more QCJ violation may be sought by thu Commission: if

the amount of money involved in a violation exceeds S5.000.00. then the Commission may seek

that greater amount. The Commission may also seek injum-tive relief imposing restrictions on a

person's future political activity.

Hy their nature, many FEC investigations and enforcement proceedings drag on for years

and the individuals involved in the matter being investigated will be subject to having to respond

to inquiries and requests for records throughout the investigation.

Both governmental enforcement of election laws and the exposure of illegal political

activity by civic-minded individuals serve to promote informed public opinion and lo prevent

misuses oflhe political process arid abuses of the laws governing political activity.