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January 17, 2013 

Jeff. S. Jordan 

Supervisory Attorney 

Complaints Examination & Legal Administration 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

Re: Response in MUR 6696 

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Dear Mr. Jordan, 

This response is submitted on behalf of Crossroads Grassroots Policy Strategies (OPS), 

Karl Rove, Haley Barbour, Steven Law, and Caleb Crosby jointly, by the undersigned counsel in 

the above-referenced matter. Mr. Rove received a copy of this Complaint from the Commission 

on December 3, 2012. Crossroads GPS received a copy of this Complaint, via its registered 

agent, on December 6, 2012. Crossroads GPS requested, and was granted, a 30-day extension of 

time to submit a response to the Commission. 

Mr. Rove and Governor Barbour are uncompensated advisors to Crossroads GPS. 

Neither is ah officer and neither sits on the Board of Directors. Mr. Law is the President of 

Crossroads GPS. Mr. Crosby is the Treasurer of Crossroads GPS. We presume that Messrs. 

Law and Crosby are named as Respondents only in their capacities as officers. 

CREW'S latest stunt is a press release roll-out of a complaint filed against Crossroads 

GPS with both the PEC and FBI.' The charges are typically sensational (Ms. Sloan claims a 

"criminal conspiracy" in her press release), but as is often the case with CREW, there is very 

little actual substance, and no merit whatsoever, to the alleged legal violations. The Complaint is 

' See CREW Press Release, "CREW Files FEC Complaint Against Crossroads GPS For Failing To 

Disclose Donors" (Nov. 15, 2012) available at hllo:/Avww.cilixcnsforethics.ore/le&al-Tilings/eni.rv/crewnies-Fec-comolaini-crossroads-aDS-failing-to-disclose-donors. 

Response in MUR 6696 

Page I of 21 
based primarily on two news articles that appeared on August 31 and September 4, 2012. Both 

articles were written by a Bloomberg BusinessWeek reporter who duplicitously gained entry to a 

private meeting hosted on August 30 by American Crossroads. While this meeting was widely 

reported among the Washington political press, no individual or organization used it as the basis, 

of a complaint in the following months - until now. The reason is quite obvious: the article is 

only of political interest, and it reveals no wrongdoing. 

Many of the "facts" that CREW alleges in support of its case do not actually appear in 

any of the cited materials, nor are they otherwise substantiated. Rather, CREW draws many 

inferences that are simply not true, and the Complaint is replete with speculation. Many of 

CREW'S conclusory statements are not reasonably drawn. Finally, several claims made in.the 

0 Complaint - including claims regarding the state of mind of unknown persons - are so obviously 

4 fabricated that it is almost certain that Ms. Sloan and Ms. Markley falsely swore to the 

Verifications submitted with their Complaint. 

CREW'S Complaint should be quickly dismissed and CREW admonished for, once 

again, filing an abusive, harassing, and baseless Complaint. We also request that Ms. Sloane and 

Ms. Markley be referred to the appropriate authorities for investigation into whether either or 

both violated 18 U.S.C. § 1001 when they executed their respective Verifications and submitted 

this Complaint. 

L Questions Presented 

Despite the length of the Complaint, the relevant questions raised are quite simple. Does 

the Complaint present credible and unrebutted evidence demonstrating that Crossroads GPS (i) 

solicited or received funds that were provided by a donor "for the purpose of furthering the 

reported independent expenditure" and (ii) then failed to properly report those contributions? 

As explained below, CREW's complaint does not satisfy the reason to believe standard 

set forth in MUR 4960 (Hillary Clinton), nor does it provide any evidence of a substantive 

violation of the law. For either or both reasons, the Complaint should be dismissed. 

IL "Reason To Believe" Standard 

The Commission has previously explained; 

The Commission will make a determination of'no reason to believe' a violation has 

occurred when the available information does not provide a basis for proceeding with the 

matter. The Commission finds 'no reason to believe' when the complaint, any response 

Response in MUR 6696 

Page! of 21 
filed by the respondent, and any publicly available information, when taken together, fail 

to give rise to a reasonable inference that a violation has occurred, or even if the 

allegations were true, would not constitute a violation of the law. For example, a 'no 

reason to believe' finding would be appropriate when: 

• A violation has been alleged, but the respondent's response or other evidence 

convincingly demonstrates that no violation has occurred; 

• A complaint alleges a violation but is either not credible or is so vague that ah 

investigation would be effectively impossible; or 

• A complaint fails to describe a violation of the Act. 

Statement of Policy Regarding Commission Action in Matters at the Initial Stage in the 

Enforcement Process, 72 Fed. Reg. 12,545, 12,546 (March 16, 2007). 

"'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 to believe that a violation of the Act has occurred." Statement of Reasons 

of Commissioners Bauerly and Weintraub in MUR 6056 (Protect Colorado Jobs, Inc.) at 2; see 

also Statement of Reasons of Commissioner Walther in MUR 6570 (Berman for Congress) at 9 

("A 'reason to believe' finding is not a finding that a respondent violated the Act, but instead 

simply means that the Commission believes a violation may have occurred."). 

"In order for the Commission to determine that a complaint provides a reason to believe a 

violation occurred, the complainant, under penalty of perjury, must provide specific facts from 

reliable sources that a respondent fails to adequately refute." Statement of Reasons of Vice 

Chairman Petersen and Commissioners Hunter and McGahn in MUR 6056 (Protect Colorado 

Jobs, Inc.) at 6. Taking into account the complaint, the sources of the allegations, and the 

response(s). Commissioners may ask if there is "sufficient information to find no reason to 

believe a violation occurred," or whether discrepancies or unanswered questions "raise[] 

sufficient questions to warrant further inquiry." Statement of Reasons of Commissioners 

Bauerly and Weintraub in MURs 6051 and 6052 (Wal-Mart Stores, Inc.) at 2. 

"Unwarranted legal conclusions from asserted facts .... or mere speculation ... will not 

be accepted as true. In addition, while credibility will not be weighed in favor of the 

complainant or the respondent, a complaint may be dismissed if it consists of factual allegations 

that are refuted with sufficiently compelling evidence provided in the response to the complaint 

.... [PJurely speculative charges, especially when accompanied by a direct refutation, do not 

form an adequate basis to find reason to believe that a violation of the FECA has occurred." 

Statement of Reasons of Commissioners Mason, Sandstrom, Smith, and Thomas in MUR 4960 

Response in MUR 6696 

Page 3 of 21 
(Hillary Clinton) at 2-3.^ "[M]ere 'otriciai curiosity' will not suffice as the basis for FEC 

investigations." FEC v. Machinists Non-Partisan League, 655 F.2d 380, 388 (D.C. Cir. 1981). 

"(UJnder the Act, before making a reason to believe determination, the Commission must 

assess both the law and the credibility of the facts alleged. To do so, the Commission must 

identify the sources of information and examine the facts and reliability of those sources to 

determine whether they 'reasonably [give] rise to a belief in the truth of the allegations 

presented.' Only once this standard is met may the Commission investigate whether a violation 

occurred." Statement of Reasons of Vice Chair Hunter and Commissioners McGahn and 

Petersen in MUR 6296 (Kenneth Buck) at 5-6 

I As discussed in more detail below, the Complainant's allegations warrant a "no reason to 

believe" finding and should be dismissed. The evidence presented in the Complaint does not 

4 show any violation of the law. The specific "facts" cited by CREW that allegedly demonstrate 

^ the violation are based entirely on incorrect inferences and assumptions that CREW refers to as 

[J its "information and belief." That "information and belief," however, is maliciously wrong - as 

P opposed to being merely mistakenly wrong. CREW simply makes up critical "facts" for which 

B there is absolutely no evidentiary basis. 

* 

CREW'S general lack of credibility as a legitimate "watchdog"^ and its history of filing 

frivolous complaints with the Commission should also be taken into account when weighing the 

reliability of the allegations made. Coupled with the Respondents' correction of the record that 

CREW presents, and the specific refutations of the "facts" that CREW alleges, the Commission 

should have no difficulty dispensing with this matter. There is more than "sufficient information 

^ See also Statement of Reasons of Vice Chair Hunter and Commissioners McGahn and Petersen in MUR 

6296 (Kenneth Buck) at 6 ("As in MUR 4960 (Hillary Clinton), the complaint in this matter lacked 

specific facts to establish that Buck, his authorized committee, and Morgensen violated the Act. Instead, 

the complaint was based 'upon information and belief,' a phrase that appears at least once on every page. 

None of the allegations were based on personal knowledge and, with two exceptions, the complaint does 

not identify any source for its allegations, credible or otherwise. Moreover, Respondents sufficiently 

refuted the factual allegations made in the complaint. Thus, the Commission is required under the statute 

and its own regulations to find no reason to believe Respondents violated the Act."). 

' See, e.g., Karen Tumulty, "The Hill Monitor," Time (Oct. 23,2006) ("Since its founding in 2003, 

CREW has worked through legal and regulatory channels to press allegations of impropriety almost 

exclusively against Republicans.") available at 

htlp://www.i.iriie.cQm/time/maBazinc/arl!cle/0.9171..1.549301.00. him I.: Paul Singer, "Watchdog, Donors 

Share Common Foes," Roll Call (Jan. 29, 2008) ("a review of entities against which CREW has filed 

complaints and information about its donors suggests that the organization may be guilty of the same 

practice — attacking groups and individuals who are the foes of CREW's donors") available at 

http://www.rollcall.com/issucs/53 85/-21.796-1.html. 

Response in MUR 6696 

Page 4 of 21 
to find no reason to believe a violation occurred" here. Statement of Reasons of Commissioners 

Bauefly and Weintraub in MURs 6051 and 6052 (Wal-Mart Stores, Inc.) at 2 (emphasis in 

original). 

111. Discussion of Factual Matters Raised In Complaint 

A. The 14 Advertisements Screened 

The Complaint wrongly presumes that the advertisements that were screened for 

attendees at the August 30 meeting were advertisements for which Crossroads GPS was seeking 

funding. The Complaint alleges: "Crossroads GPS officials solicited the attendees for additional 

contributions, apparently to pay to broadcast the advertisements the potential donors just viewed 

or to broadcast other ads in those races."'* Complaint at ^ 28 (emphasis added). This is not the 

case, and CREW'S speculation on this point is simply wrong. 

The following advertisements were screened at the August 30 meeting: 

1. American Crossroads, "Behind," aired on or about June 13,2012. 

flutD://wvw.voutube.com/watch?v=wrEPOIeA3sY) 

2. Crossroads GPS, "Cost," aired on or about August 15,2012. 

fhi.tp://www.\'outube.com/walch?v=Q58A:DvndS8w1 

3. Crossroads GPS, "Cheap," aired on or about July 3,2012. 

('hltp://www.voutube.com'/watch?v=alFDQaWhk6Y) 

4. Crossroads GPS, "Get Up," aired on or about August 23, 2012. 

fhUD://www.voui:ube.com/watch?v— IXF/KsuBrnM) 

5. Crossroads GPS, "Suffered," aired on or about August 23, 2012. 

(http://www.voutube.com/watch?v=S2fTu4UHsdn 

See also Complaint at 55 ("Crossroads GPS showed attendees of the August 30, 2012 fundraiser 

advertisements targeting Democratic Senate candidates in Ohio, Virginia, Montana, Florida, 

Massachusetts, and Nevada. Several of the ads were produced by Crossroads GPS. Immediately after the 

ads were shown. Crossroads GPS solicited contributions from the attendees. Among other things, Mr. 

Law noted more money was needed because advertising rates had increased."); Complaint at ^ 56 ("On 

information and belief. Crossroads GPS received contributions given with the intention that the money be 

spent on independent expenditures broadcasting the advertisements shown at the fundraiser or 

broadcasting other ads in the Ohio, Virginia, Montana, and Nevada Senate races.") (emphasis added). 

Response in MUR 6696 

Page 5 of 21 
6. Crossroads GPS, "Foundation," aired on or about November 9, 2011. 

(htto://www. voLitiibc.com/watch?v=iNxe,i!:4ddpa01 

7. Crossroads GPS, "Investigation," aired on or about August 3, 2012. 

(httD://www.voutube.c6m/\v.aich7v=tWY38AvvU98il 

8. Crossroads GPS, "Wake Up," aired on or about July 7,2011. 

fhttp://www.voutube.com/wtiteh?v=ESAszBVMnC4Y 

9. Crossroads GPS, "Typical," aired on or about Decerriber 9,2011. 

(h tt P://WVVW. VOU t ube. coin/vva tc h? v=L3 UN 0.s 1-1 a bF I) 

10. Crossroads GPS, "Tried," aired on or about July 12, 2012. 

n>ltp://wwvv.voutLibe.com/vvaLch?v=spu06VQiT8EY 

fj II. Crossroads GPS, "News," aired on or about July 31,2012. 

0 (htip://www.voiitube.com/watch'?v=2kW:rrF x2rAY 

1! 

12. Crossroads GPS, "Stopwatch," aired on or about June 5, 2012. 

fhtlp://www.voutube.cbm/.watch?v=Dn\vQAUM8P9E'l 

13. American Crossroads, "Smoke," aired on or about July 19,2012. 

flUtp://www.vbutube.c6m/watch?v=S A1-IL5K1 XeA) 

14. The fourteenth advertisement screened was an advertisement prepared for focus 

group purposes, and which was never intended for public distribution. 

Thirteen of the fourteen advertisements screened at the August 30 meeting had already 

been paid for and aired. These advertisements were not screened as part of an effort to secure 

funding so that they could be aired, as the Complaint speculates. The fourteenth advertisement 

was a focus group ad that was not produced for public distribution, and was never aired. 

The screened ads were nothing more than examples of advertisements for which 

American Crossroads (in two cases) and Crossroads GPS (in eleven cases) had already paid and 

aired. 

Response in MUR 6696 

Page 6 of 21 
B. Mr. Rove's Recounting of Conversation With Donor 

CREW'S limited information regarding Mr. Rove's conversation with a supporter and 

donor comes from two versions of the same source. 

Ms. Koihatkar's September 4, 2012, article includes. the following passage;. 

As for the closely watched race in Ohio, one of the states that has generated the most 

political spending by outside groups like American Crossroads, Rove said that he'd had a 

call from an unnamed out-of-state donor who told him, "1 really like Josh Mandel," 

referring to the Ohio treasurer attempting to unseat Democrat Sherrod Brown. The 

donor. Rove said, had asked him what his budget was in the state; Rove told him $6 

million. "'I'll give ya $3 million, matching challenge,"' Rove said the donor told him. 

"Bob Castellini, owner of the Cincinnati Reds, is helping raise the other $3 million for 

that one." 

Sheelah Kolhatkar, Exclusive: How Karl Rove's Super PAC Plays the Senate, Bloomberg 

BusinessWeek (Sept. 4, 2012). 

Subsequently, in an interview with Democracy Now!, Ms. Kolhatkar recounted the same 

comments as follows: 

Rove specifically mentioned that he'd had a call from an anonymous benefactor who did 

not come from Ohio, who came from another state but who was just very interested, and 

wanted to donate half of their $6 million budget in the state. So the condition was it had 

to be a matching challenge. This donor was a big fan of Josh Mandel, who is running 

against Brown. So Rove mentioned that the owner of the Cincinnati Reds baseball team 

was helping raise that money. 

Sheelah Kolhatkar, Democracy Now! Interview, September 5, 2012. 

The conversations recounted by Mr. Rove to attendees at the August 30 meeting took 

place months before, in the spring of 2012. See Affidavit of Karl Rove at T| 4. Mr. Rove had at 

least one other conversation with Mr. Castellini regarding the so-called "matching challenge" in 

summer of 2012. /cl. at^ll. 

The conversation with the donor who stated, "I'll give ya $3 million, matching 

challenge," did not include any discussion of any particular television advertisements, television 

advertisements in general, or the contents, timing, or targeting of any existing, planned, or 

Response in MUR 6696 

Page 7 of 2.1 
5 

hypothetical advertisements. See Affidavit of Karl Rove at^I 6. No specific efforts that could or 

would be made by Crossroads GPS were discussed. See id. at TI 7. There was no discussion of 

spending the donor's funds on any specific method of communication. See id. at TI 8. There was 

no discussion of independent expenditures. See id. at 9. 

At no time did this donor ask, insist, or require that any of the pledged funds be spent in 

any particular manner or on any particular or specific efforts or projects. See id. at 10. Rather, 

this donor indicated to Mr. Rove that he was a supporter of Josh Mandel, and offered to donate 

funds toward Crossroad GPS's budget in the State of Ohio. Mr. Rove understood that the donor 

intended the pledged funds to be used in some manner that would aid the election of Josh 

1 Mandel. 5ee/^/.at1I1|5, 10. 

0 The resulting "matching program" generated approximately $1.3 million; these funds 

4 vvere not solicited for any purpose other than for general use in the Stale of Ohio. See id. at Tjl 3. 

o 

l- The donor who issued the "matching challenge" never made a single contribution in the 

0 amount of $3 million. Rather, this donor contributed a larger amount to Crossroads GPS that 

7 was not in any way earmarked for any particular use. Upon receipt of this contribution, Mr. 

Rove understood that the donor did not intend the earlier "matching program" to be a formal 

program, but rather, was simply a way of encouraging Crossroads GPS's general fundraising 

efforts. See id. at ^ 14. 

C. Crossroads GPS 2012 Activity In Ohio 

CREW alleges that "Crossroads GPS spent $6,363,711 on independent expenditures 

opposing Sen. Brown in the Ohio Senate race." Complaint at TI40. This figure comes from the 

Center for Responsive Politics' repackaging of FEC data. This total includes only Crossroads 

GPS's independent expenditures opposing Senator Brown's re-election, and does not reflect 

Crossroads GPS's total activity within Ohio during 2012, or its "Ohio budget." 

Crossroads GPS spent over $10 million on television advertising in Ohio in 2012 that 

mentioned one or both of the two candidates in the Senate race. Some of these advertisements 

were reported to the Commission as electioneering communications or independent 

expenditures, and those reports are on the public record. Other issue and policy advocacy ads 

did not fall into either category and were not required to be reported to the Commission. 

Production costs for these television ads amounted to approximately $ 150,000. Crossroads GPS 

also spent an additional .$240,000 on online (Internet) advertising directed to Ohio residents, and 

approximately $43,000 on polling. 

Response in MUR 6696 

Page 8 of 21 
CREW'S lazy reliance on the work of a third party aggregator yields incomplete 

information in its Complaint. While the $6.3 million figure conveniently corresponds to the $6 

million "matching" program that never fully existed, that figure represents only a bit over half of 

what Crossroads GPS actually spent. 

D. Crossroads GPS RFAI Response Dated July 19,2011 

The Complaint makes much of a response to a Request For Additional Information 

(RFAI) submitted on behalf of Crossroads GPS on July 19, 2011. That response speaks for 

itself, as does another substantially similar response filed by Crossroads GPS on November 29, 

2012, after CREW submitted its Complaint. 

Crossroads GPS is fully aware of its FEC reporting and disclosure obligations and has 

4 endeavored to satisfy those obligations at all times during its existence. Crossroads GPS has 

^ never failed to report contributions required to be reported under the Act and FEC regulations. 

I CREW seeks to cast Crossroads GPS's July 19, 2011, response to a RFAI that should never have 

been sent as "proof of a knowing and willful violation of law. As demonstrated in this 

Response, however, there was no violation of the law, period. 

To the extent that the aforementioned RFAI suggests that Crossroads GPS did not satisfy 

certain disclosure obligations, we reiterate here that the canned language used by the Reports 

Analysis Division (RAD) badly misstates the disclosure requirement set forth at 11 C.F.R. §. 

109.10(e)(l)(vi). Rather than simply quote the regulation at issue, RAD uses an incorrect 

restatement of that regulation. 

In June 2011, the Commission sent to Crossroads GPS a RFAI that was immediately 

available to the public via the Commission's website. That RFAI contained a poor restatement 

of 11 C.F.R. § 109.10(e)(l)(vi) that very obviously does not track the language of the actual 

regulation. The media, either intentionally or lazily, misunderstood and misreported both the 

nature and meaning of the RFAl.^ The Commission never made any sort of public correction of 

this misstatement of law, and the RFAI remains on the public record. RAD has subsequently 

delivered RFAls featuring the same incorrect language to a variety of entities. 

Crossroads GPS's RFAI response was necessitated solely because the Commission 

publicly distributed a misstatement of the law, which has gone uncorrected. Now, the phony 

"watchdogs" at CREW believe they have found a way to turn Crossroads GPS's correction of the 

' See, e.g., Alex Roarty, FEC Asks Crossroads to Reveal Donors, NationalJournal (June 16, 2011) 

available at httD://www.nationalioLirnal.com/hotline/camDaittn-law-watch/fec-asks-crossroadsrto-revealdonors-20110616. 

Respoivte in MUR 6696 

Page 9 of 21 
Commission's mistake into "evidence" of an alleged knowing and willful (i.e., criminal) 

violation of the law. 

E. American Crossroads vs. Crossroads GPS 

American Crossroads and Crossroads GPS are legally separate organizations. Nearly all 

of the specific material to which CREW cites in its Complaint refers to "American Crossroads" 

fundraising and "American Crossroads" efforts, yet CREW's complaint is lodged against 

Crossroads GPS. CREW attempts to gloss over the distinction with the claim that "While Mr. 

Law and Mr. Barbour apparently used the name 'American Crossroads' in their fundraising 

pitches,... they evidently used it to mean both American Crossroads and Crossroads GPS." 

jg Complaint at ^ 30 (emphasis added). This is pure speculation on CREW's part, and it is both 

rl apparent and evident that CREW has absolutely no personal knowledge of what Mr. Law or Mr. 

^ Barbour said or intended. 

The author of the two articles which serve as the sole basis of CREW's Complaint 

acknowledged in her interview with Democracy Now! that American Crossroads and Crossroads 

GPS are separate organizations. While Ms. Kolhatkar offered her own (incorrect) opinion that 

the two organizations share very similar missions, she nevertheless clearly understood that there 

are two organizations and she distinguished between them in her reports. Thus, there is 

absolutely no reason to pretend - as CREW does - that either Ms. Kolhatkar or Messrs. Law, 

Rove, and Barbour, carelessly used the term "American Crossroads" as some sort of catch-all 

phrase that encompasses both groups. 

The news articles written by Ms. Kolhatkar on which CREW relies indicate that Mr. Law 

and Mr. Barbour made separate, general solicitations of funds for American Crossroads, and not 

Crossroads GPS. This is entirely consistent with the fact that the August 30 meeting was hosted 

by American Crossroads. Based on these facts and Ms. Koihatkar's acknowledged awareness of 

the separateness of the two organizations, the most reasonable conclusion to draw is that Mr. 

Law and Mr. Barbour actually meant what they said and solicited funds specifically for 

American Crossroads. Thus, to the extent that CREW's complaint pretends that attendees were 

orally solicited for contributions to Crossroads GPS, see, e.g.. Complaint "Count IV", the 

evidence does not support that claim. 

Response in -MUR 6696 

Page 10 of 21 
ly. APDlication of 11 e.F.R. 8 109.10feVn(vn 

A. History of the Regulation 

Central to this matter is the proper application of 11 C.F.R. § I09.10(e)(l)(vi), which 

requires that persons other than political committees disclose on independent expenditure reports 

"the identification of each person who made a contribution in excess of $200 to the person filing 

such report, which contribution was made for the purpose offurthering the reported independent 

expenditure" (emphasis added). This regulation was adopted in 1980 and has not been 

substantively modified since then.^ The 1980 Explanation and Justification indicates that "[t]his 

section has been amended to incorporate the changes set forth at 2 USC 434(c)(1) and (2) 

regarding reporting requirements for persons, other than a political committee, who make 

independent expenditures." Final Rules On Amendments to Federal Election Campaign Act of 

1971,45 Fed. Reg. 15,080, 15,087 (March 7, 1980). 

B. CREWs Suggestion That The Regulation Does Not "Give Full Effect" To 

The Act Is Irrelevant 

fn what is obviously a suggestion that the Commission should disregard the plain 

language of a regulation that has existed for over 30 years, CREW claims: 

The FEC's interpretation of the statute [2 U.S.C. § 434(c)(2)(C)] fails to give full effect 

to these provisions. At a minimum, the statute requires identification of persons who 

made contributions "for the purpose of furthering an independent expenditure," but the 

regulation only requires identification of persons who made contributions "for the 

purpose of furthering the reported independent expenditure." 

Complaint at II 16n.l. This argument is entirely irrelevant in an enforcement context. To. read 

the reporting requirement set forth at 11 C.F.R. § 109.10(e)(l)(vi) as CREW suggests - which 

would apply a very different substantive standard - would require a formal rulemaking to amend 

the regulation. The FEC cannot conduct a rulemaking exercise under the guise of an 

enforcement matter, or otherwise disregard the language of a duly-enacted, longstanding 

regulation. One should not simply accept CREW's argument that the statute and corresponding 

regulation are inconsistent, or that the regulation does not adequately reflect Congressional 

intent. To do so is to conclude that CREW's self-serving reading of the 1979 Amendments to 

Prior to the BCRA-era revisions to the Commission's regulations, this provision was located at 11 

C.F.R. § 109.2(a)(l)(vi). 

Response in MUR 6696 

Page II of 21 
the Act, 33 years later, is somehow more "correct" than the Commission's essentially 

contemporaneous interpretation of those Amendments in 1980. 

C. Operation of the Existing Regulation 

In a recent enforcement matter, three Commissioners explained that under Section 

109.]0(e)(l)(vi), "a donation must be itemized on a non-political committee's independent 

expenditure report only if such donation is made for the purpose of paying for the 

communication that is the subject, of the report." Statement of Reasons of Chairman Petersen 

arid Commissioners Hunter and McGahn in MUR 6002 (Freedom's Watch, Inc.) at 5. See also 

1 Findings Of Fact in SpeechNow.org. v. FEC, 2009 U.S. Dist. LEXIS 89011 (D.D.C. Sept. 28, 

Q 2009) at 22 ("52. Because SpeechNow does not accept any targeted or 'earmarked' funds, it need 

only disclose all of its contributors who provided money 'for the purpose of furthering' its 

4 independent expenditures. Keating Decl. at P 36; 2 U.S.C. 434(c)(2)(C). For each independent 

^ expenditure SpeechNow were to make, SpeechNow would have to disclose all donors whose 

c contributions were given for such purpose and were used to fund any portion of the independent 

0 expenditure at issue. Id."). 

^ The professional campaign finance "reform" industry, with Representative Van Hollen 

serving as the named filer, recently submitted a petition for rulemaking to revise 11 C.F.R. 

§ I09.10(e)(l)(vi). Even those who make their living as the FEC's greatest detractors recognize 

that the regulation can only be revised via the formal rulemaking process. In their rulemaking 

petition, the "reform" lobby describes Section 109.10(e)(l)(vi) as requiring "disclosure only of 

those contributors who state a specific intent to fund a specific ('the reported') independent 

expenditure." Rep. Van Hollen Petition for Rulemaking to Revise and Amend Regulations 

Relating to Disclosure of Independent Expenditures (April 21, 2011) at 3. Furthermore, the 

petition explains, "under the regulation, all contributions to the person making the independent 

expenditure that were not given for the specific purpose of furthering the specific reported 

independent expenditure are not required to be disclosed." Id. (emphasis in original). The 

petitioners also note: 

Under present-day II C.F.R. § 109.10(e)( I )(vi), even if a contributor gave money to a 

person making independent expenditures with knowledge that the contributed funds 

would be used for independent expenditures, and specifically intended that the funds be 

used for that purpose, the contribution would still not be subject to disclosure under the 

regulation unless the contributor intended that the funds be earmarked and used for a 

specific independent expenditure. 

Id. at 4. 

Response in MUR 6696 

Page i 2 of 21 
While the existing regulation may be unpopular in some quarters at the moment, due to 

circumstances that changed decades after the regulation was adopted, there appears to be broad 

agreement across the spectrum with respect to what the existing regulation says, and how it 

operates in practice. 

D. Donative Intent 

As noted, the critical elements of Section 109.10(e)(l)(vi) are (1) the intent of the donor 

in making a contribution, and (2) the specificity of that intent. To the extent that any of the 

donors referenced in CREW's complaint actually made contributions to Crossroads GPS, 

CREW's various characterizations of their donative intent(s) should not be accepted by the 

Commission as fact. CREW has no personal knowledge of any of these matters. Rather, any 

conclusions drawn by the Commission regarding the intent of any donors referenced in the 

Complaint must be drawn from the actual evidence presented, and not from CREW's selfserving legal conclusions. 

Counts 1,11, and III of CREW's complaint are based entirely on a brief passage from Ms. 

Kolhatkar's September 4, 2012, article, and her September 5 interview on Democracy Now!, All 

that CREW really knows about the supposed intent of the "unnamed out-of-state donor" -

notwithstanding its sworn assertions that go well beyond this evidence - comes exclusively from 

these two sources. 

As explained above, CREW's "factual" claims about this supposed series of transactions 

are badly flawed. The passage that appeared in Bloomberg BusinessWeek indicates that the 

contribution was not made for the purpose of funding any particular advertisements. Rather, to 

the extent the donor's intent is described at all, the evidence indicates that the funds were 

intended as a general grant for use in Ohio. In the Democracy Now! interview, M.s. Kolhatkar's 

recounting indicates that the donor's intent was described as an intention to "donate half of their 

$6 million budget in the state." Again, nothing here demonstrates that any contribution was 

made for the purpose of funding any particular advertisements, advertisements in general, or that 

the donor had any knowledge of any particular Crossroads GPS efforts. 

As noted above, the independent expenditures that Crossroads GPS reported making in 

connection with the 2012 Ohio Senate race were developed well after the conversation recounted 

in the Bloomberg BusinessWeek article and at ^ 23 of the Complaint took place in Spring 2012. 

There is also no evidence - and CREW does not suggest - that this "unnamed donor" and Mr. 

Rove discussed or otherwise developed advertisements during their conversation. In short,, there 

is no evidence and no suggestion that the unnamed donor "exercised control over how his [or 

her] contribution was spent." Statement of Reasons of Vice Chair Bauerly and Commissioner 

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Weintraub in MUR 6002 (Freedom's Watch, Inc.) at 2, 4. Accordingly, this donor could not 

possibly have had the requisite and specific intent to finance the advertisements that Crossroads 

GPS subsequently created, aired, and reported. 

Furthermore, as Mr. Rove attests, the "unnamed donor" never made a single contribution 

in the amount of $3 million. Rather, that donor made a larger contribution that was not 

earmarked in any way. 

There is no basis to conclude, and CREW points to no actual evidence indicating, that 

Crossroads GPS financed OMy reported independent expenditure "in whole or in part with funds 

donated for the purpose of furthering that particular advertisement." CREW's "information and 

belief is not actual eviderice - it is speculation and wishful thinking. There is no evidence 

presented in the Complaint (or anywhere else) that Crossroads GPS solicited or received funds 

for even the general purpose of making independent expenditures. At best, CREW's complaint 

lazily regurgitates a news articles that shows that an "unnamed donor" discussed providing funds 

for general use in a specified state. Far more specificity is required before Section 

109.10(e)(])(vi) is triggered. 

"Nor is there is any evidence of any subsequent actions or events from which information 

regarding donative intent might conceivably be gleaned. Specifically, there is no information 

indicating that any particular donor "parcel[led] out his money project by project," "rejected 

almost all of the staffs proposals that have been brought to him," or otherwise "exercised control 

over how his contribution was spent." Statement of Reasons of Vice Chair Bauerly and 

Commissioner Weintraub in MUR 6002 (Freedom's Watch, Inc.) at 2,4. 

V. Discussion of Legal Matters Raised In Complaint 

A. Complaint "Count I" 

"Count I" asserts that an individual made $3 million in contributions to Crossroads GPS 

that should have been disclosed on corresponding independent expenditure reports. The donor's 

supposed intent is described several different ways: 

• Paragraph 37 asserts that this person "made $3 million in contributions for the 

purpose of furthering the independent expenditures Crossroads GPS made in 

the Ohio Senate race." 

• Paragraph 38 asserts that this person "told Mr. Rove he was giving Crossroads 

GPS $3 million to spend on the Ohio Senate election between Sen. Brown and 

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Mr. Mandel. The donor further said the contribution was a 'matching 

challenge' to meet Crossroads GPS's $6 million budget for the state." 

• In Paragraph 39, CREW alleges, "on information and belief," that 

"Crossroads GPS received $3 million from the unnamed donor who 

contributed the money with the intent that it be spent on the Ohio Senate 

race." 

• Paragraph 41 alleges that Crossroads GPS's independent expenditure reports 

failed to identify the person "who made $3 million in contributions for the 

purpose of furthering those independent expenditures." 

• Paragraph 42 alleges that Crossroads GPS "received $3 million in 

contributions from the unnamed donor for the purpose of furthering the 

reported independent expenditures in the Ohio Senate race." 

Cpntributions are reportable under Section 109.10(e)(l)(vi) only i f the donor made the 

contribution "for the purpose offurthering the reported independent expenditure" To the extent 

that CREW'S various characterizations attempt to assert a standard different from the one set 

forth at Section ]09.10(e)(l)(iv), those allegations should be ignored and dismissed. The 

Commission could also reasonably conclude from CREW's varying descriptions of the donor's 

intent thai CREW knows nothing about the subject. 

1. Complaint ^37 

The donor referenced in Paragraph 37 of the Complaint did not actually make a single 

contribution in the amount of $3 million. Rather, the donor contributed a larger amount that was 

not earmarked in any way. 

Paragraph 37 of the Complaint alleges that "Crossroads GPS knowingly and willfully 

failed to identify the person who made $3 million in contributions./<)r the purpose of furthering 

the independent expenditures Crossroads GPS made in the Ohio Senate race." Complaint at 

37 (emphasis added). As noted above, there is no evidence of any such intent. Even assuming 

for the sake of argument that the donor actually did contribute to Crossroads GPS "for the 

purpose of furthering the independent expenditures Crossroads GPS made in the Ohio Senate 

race," that donative intent would create a reporting obligation under 11 C.F.R. § 109.10(e)(l)(iv) 

only //the donor had specific knowledge of the actual independent expenditures referenced. 

Here, this is not possible. The advertisements that CREW erroneously alleges the donor funded 

were not created until well after the contributor donated the funds at issue. The contributor had 

no creative discussions with any representative of Crossroads GPS about these independent 

expenditures. 

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In other words, this donor played no role whatsoever in developing, creating, or funding 

any specific independent expenditure - rather, the donor simply pledged funds to be spent 

somehow in connection with the Ohio Senate race, and later made a larger donation with no 

strings attached. Even if we assume that the $3 million pledged earlier was subsumed within the 

larger donation made. Crossroads GPS was free to spend that amount in any way it wished so 

long as it somehow aided in the election of Josh Mandel. This general "purpose" does not create 

any reporting obligation under 11 C.F.R. §109.l0(e)(l)(vi). 

JjfCrossroads GPS had received a donation or contribution from a person, "which 

contribution was made for the purpose of furthering the reported independent expenditure," then 

Crossroads GPS would have reported it as required by FEC regulations. However, no such 

contribution was made for such purpose, and accordingly. Crossroads GPS was not required to 

make any corresponding donor disclosure. 

2. Complaint 38 - 42 

Paragraphs 38-42 of the Complaint purportedly provide the factual basis for CREW's 

Count 1 allegation. The Complaint, however, simply assumes the facts not in evidence that 

CREW believes would be necessary to show the violation alleged. CREW substitutes its own 

legal conclusions and "information and belief as "facts" and plants them into a restatement of 

the regulatory provision it claims was violated. 

For example, at Paragraph 38, CREW claims that "[a]ri unnamed donor told Mr. Rove he 

was giving Crossroads GPS $3 million to spend on the Ohio Senate election between Sen. Brown 

and Mr. Mandel." This is decidedly not what this "unnamed donor told Mr. Rove." Mr. Rove's 

recounting of what this donor said to him is set forth in the Complaint at Paragraph 23. 

At Paragraph 42, CREW goes a step further and fabricates a key piece of information it 

believes is necessary to establish a violation. CREW claims that Crossroads GPS "received $3 

million in contributions from the unnamed donor for the purpose of furthering the reported 

independent expenditures in the. Ohio Senate race" (emphasis added). First, as explained above, 

Crossroads GPS never received a single contribution in the amount of $3 million from this 

donor. Second, there is absolutely no evidence in support of CREW's concocted assertions 

regarding the donor's purported intent or purpose. The disconnect between the vague recounting 

of a conversation paraphrased in a news account and the specificity of CREW's allegation is 

readily apparent. The news report indicates that a donor reportedly said, "1 really like Josh 

Mandel," asked the size of a state budget, and said 'I'll give ya $3 million, matching challenge. 

From this, CREW concludes, in a sworn complaint no less, that this donor contributed "for the 

purpose of furthering the reported independent expenditures in the Ohio Senate race." Aside 

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from the obvious Impossibility of CREW knowing anything about this particular individual's 

specific donative intent, it is also worth noting that "the reported independent expenditures" had 

not even been conceived at the time the donor made.this statement. 

B. Complaint "Count 11" 

In "Count II," CREW refers to donors about whom it knows next to nothing, and 

maintains that there are one or more donors out there somewhere who contributed a combined $3 

million to Crossroads GPS. Simply put, there was no "$3 million in 'matching' contributions." 

As explained above, one or more donors contributed a total of approximately $1.3 million in 

1 connection with the Ohio matching program. 

a 4 As is the case in "Count I," the intent of these unknown donors is described several 

different ways. 

• In Paragraph 43, CREW refers to "the persons who made $3 million in 

'matching' contributions for the purpose of furthering the independent 

expenditures Crossroads GPS made in the Ohio Senate race." 

• Paragraph 44 claims that "[a]s of August 30,2012, Crossroads GPS was in the 

process of soliciting 'the other' $3 million in contributions for spending in the 

Ohio Senate election." 

• In Paragraph 45, on CREW's "information and belief," "Crossroads GPS 

solicited and received $3 million in contributions from donors given with the 

intention that the money be spent on the Ohio Senate race." 

• Paragraph 47 refers to "the persons who made $3 million in contributions as 

part of the 'matching challenge' for the purpose of furthering those 

independent expenditures." 

• Finally, in Paragraph 48, CREW claims that "Crossroads GPS had received $3 

million in contributions as part of the 'matching challenge' from donors for 

the purpose of furthering the reported independent expenditures in the Ohio 

Senate race." 

Based on the evidence presented and the Complaint itself, it is obvious that CREW has 

no idea who these alleged donors might have been, how many there were, how much any of 

them gave individually, when they made these alleged contributions, or why they contributed. 

However, CREW is certain that they gave "ybr the purpose of furthering the reported 

independent expenditures in the Ohio Senate race." There is no evidence presented to support 

this conclusion, and CREW has no relevant personal knowledge. 

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Where a complainant cannot provide credible details regarding "who," "what," and 

"when," it certainly cannot be relied upon to provide the "why." The allegations are not 

adequately substantiated under the "reason to believe" standard set forth in MUR 4960 (Hillary 

Clinton) and amount to "purely speculative charges ... [that] do not form an adequate basis to 

find reason to believe that a violation of the FECA has occurred." Statement of Reasons of 

Commissioners Mason, Sandstrom, Smith, and Thomas in MUR 4960 (Hillary Clinton). 

Furthermore, CREW's assertions regarding the specific intent of donors about which nothing 

else is known are so obviously fabricated that Ms. Sloan and Ms. Markley almost certainly 

falsely swore to the Verifications submitted with this Complaint. The rote prefacing of an 

assertion with the hedge "on information and belief does not create a license to lie. 

"Count If of the Complaint alleges that "Crossroads GPS knowingly and willfully failed 

to identify the persons who made $3 million in 'matching' contributions for the purpose of 

furthering the independent expenditures Crossroads GPS made in the Ohio Senate race." 

Complaint at 143; see also Complaint at If 47. As explained above, there are no "persons who 

made $3 million in 'matching' contributions for the purpose of furthering the independent 

expenditures Crossroads GPS made in the Ohio Senate race," meaning Crossroads GPS could 

not possibly have "knowingly and willfully failed to identify" them. 

The donors who contributed approximately $1.3 million in connection with the matching 

program did not make those contributions "for the purpose of furthering the independent 

expenditures Crossroads GPS made in the Ohio Senate race." There is no evidence presented 

regarding any donor's intent. However, any funds solicited or received by Crossroads GPS in 

connection with the matching program were limited for subsequent use only to the extent that 

donors expected the funds would be spent somehow in Ohio. 

C. Complaint "Count III" 

Complaint "Count 111" asserts a "conspiracy" to "violate the FECA and defraud the FEC 

by knowingly and willfully failing to identify" the donors/contributions referenced in Counts I 

and 11. Complaint at If 49. This allegation is presumably targeted to the FBI (and the media), as 

the Commission does not enforce 18 U.S.C. § 371. Nevertheless, the "facts" on which CREW 

premises its Counts I and 11 are badly flawed, and CREW presents no evidence of any 

wrongdoing or of any violation of the Act or Commission regulations. There can be no 

"conspiracy" to "violate the FECA" where there is no violation of FECA. 

Messrs. Rove, Law, and Crosby did not "unlawfully conspire[] to violate the FECA and 

defraud the FEC." See Complaint at ^ 49. Nor did they "knowingly enterf] into an unlawful 

agreement to intentionally violate 2 U.S.C. § 434 and 11 C.F.R. §§ 109.10(b) - (e) and to 

defraud the FEC by failing to identify the person who made $3 million in contributions for the 

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purpose of furthering the independent expenditures Crossroads GPS made in the Ohio Senate 

race, and by failing to identify the persons who made $3 million in 'matching' contributions for 

the purpose of furthering those independent expenditures." See Complaint at^ 50. Neither Mr. 

Crosby, nor Mr. Law, nor Mr. Rove "committed overt acts to effect the object of the conspiracy 

in violation of 18 U.S.C. § 371," nor "caused others to commit overt acts to effect" the same. 

See Complaint 51 -53. 

D; Complaint "Count IV" 

The allegations contained in "Count IV" of the Complaint should be dismissed outright. 

1 CREW alleges that "Crossroads GPS knowingly and willfully failed to identify the persons who 

^ made contributions for the purpose of broadcasting the advertisements shown at the August 30, 

2012 fundraiser or broadcasting other ads in those races." Complaint at 1| 54. On CREW's 

4 "information and belief. Crossroads GPS received contributions given with the intention that the 

^ money be spent on independent expenditures broadcasting the advertisements shown at the 

[• fundraiser or broadcasting other ads in the Ohio, Virginia, Montana, and Nevada Senate races." 

Q Complaint at H 56. 

^ As noted above, the materials on which these particular allegations rest (i.e., Sheelah 

Kolhatkar's August 30 article) indicate that towards the end of the August 30 meeting, Mr. Law 

and Mr. Barbour made separate, general solicitations of funds Tor American Crossroads, not 

Crossroads GPS. 

Once again, the advertisements that were screened for attendees at the August 30 meeting 

were not screened for the purpose of seeking funding for them. Thirteen of fourteen ads had 

already been paid for and aired, and the fourteenth advertisement was never intended for public 

distribution. As a basic factual matter, no attendee could have contributed "for the purpose of 

broadcasting the advertisements shown at the August 30, 2012 fundraiser." In addition, the 

Complainant has presented no evidence whatsoever indicating that anyone in attendance actually 

made a contribution following the August 30 meeting, let alone made a contribution "for the 

purpose of... broadcasting other ads in those races." To the extent CREW's allegations in 

"Count IV" are even a factual possibility, those allegations are "purely speculative" and should 

be dismissed pursuant to the Statement of Reasons in MUR 4960 (Hillary Clinton) ("purely 

speculative charges, especially when accompanied by a direct refutation, do not form an 

adequate basis to find reason to believe that a violation of the FECA has occurred"). 

The allegations in "Count IV" that are not precluded as a basic factual matter amount to: 

"//someone in attendance at the August 30 meeting subsequently made a contribution to 

Crossroads GPS, and if that contribution was made "for the purpose of broadcasting ... other ads 

Response in MUR 6696 

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in the Ohio, Virginia, Montana, and Nevada Senate races," then that person should have been 

reported on a Crossroads GPS report, and Crossroads GPS 'knowingly and willfully' failed to do 

so." There is no evidence for either of these "ifs," and the alleged donative purpose does not 

create a disclosure requirement under Section 109. IO(e)( l)(vi). At a minimum, a donor who is 

subject to disclosure under Section 109.10(e)(l)(vi) must know what advertisement he or she is 

funding. A donation made for the far more general purpose of funding unspecified 

advertisements to be broadcast in a handful of states at some later date does not satisfy the 

requirement that the contribution be made "for the purpose of furthering the reported 

independent expenditure." Here, CREW simply engages in baseless speculation in the hopes the 

Commission will undertake an investigation. 

Nevertheless, Crossroads GPS did not solicit or receive, at any time, any contributions 

"for the purpose of... broadcasting other ads in those races." 

E. Complaint "Count V" 

Finally, Complaint "Count V" asserts a "conspiracy" to "defraud the PEC by knowingly 

and willfully failing to identify" the donors/contributions referenced in "Count IV." Complaint 

at II59. Like "Count 111," "Count V" and its allegations based on 18 U.S.C. § 371, are 

presumably targeted to the FBI and the media; As explained above, "Count IV" does not 

identify any violation of the Act or Commission regulations or present any evidence of any 

"conspiracy" to violate any law. 

VI. Conclusion 

For the reasons set forth above, CREW's complaint should be dismissed because it fails 

to satisfy the standards .set forth in MUR 4960 (Clinton). Alternatively, the Commission.should 

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find no reason to believe a violation of the.Act occurred. In addition, Ms. Sloan and Ms: 

Markley should be referred to the appropriate authorities for investigation into whether, they 

executed false Verifications in. connection, with the submitted Complaint. 

Sincerely, 

I 

0 

£i 

I 

Thomas J. Josefiak 

Michael Bayes 

Counsel to Crossroads GPS, Karl Rove, 

Haley Barbour, Steven Law, and Caleb 

Crosby 

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