2

A. The Legal Theory of IDT’s Legal Responsibility Was Unclear 

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

finding as to IDT was unprecedented and unclear.4

 OGC argued that IDT violated the Act by 

funding an LLC that it established, which in turn donated funds to a non-profit corporation, 

which in turn contributed the funds to the Super PAC. Whether IDT violated the Act by making 

a contribution in the name of an LLC it established and funded 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 

2016.5

 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.6

 It would have been unfair and 

possibly inefficient to pursue enforcement against IDT 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 funders three or four layers behind 

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

litigated. 

 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.

7

 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 funder 

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 IDT’s potential legal 

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

                                                            

4

 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). 

5

 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, et al.), 6487 & 6488 (F8, LLC, et al.), 6711 

(Specialty Investments Group, Inc. et al.), and 6930 (SPM Holdings LLC, et al.). 

6

 See Campaign Legal Center, et al. v. FEC, No. 16-cv-0072 (filed Apr. 22, 2016). 

7

 See Citizens United v. FEC, 558 U.S. 310 (2010); SpeechNOW v. FEC, 559 F.3d 686 (D.C. Cir. 2010).