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R| STATECRAFT 

^1 LAW • GOVERNMENT • CRISIS MANAGEMENT 

May 23, 2017 

Mark Shonkwiler 

Antoinette Fuoto 

Federal Election Commission 

Office of Complainants Examination and Legal Administration 

999 E Street, NW 

Washington, DC 20463 

mshonkwiler@fec.gov 

afuoto@fec.gov 

Re: Response of James C. Thomas, III in MUR 6920 

Dear Mr. Shonkwiler and Ms. Fuoto: 

K.ORY LANGHOFER 

Managing Airocncy 

4 I write on behalf James C. Thomas, III in response to your letter of April 20, 2017 in the above7 referenced matter. This letter provides Mr. Thomas' position regarding the legal standard governing the 

Complaint's allegadons that the Respondents (1) made, received or facilitated a contribution in the name of 

another, and/or (2) violated the reporting requirements of the Federal Election Campaign Act of 1971 (the 

"Act"). 

I. Contributions in the Name of Another 

The Act provides that "[n]o 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 

contribudon made by one person in the name of another person." 52 U.S.C. § 30122. The Commission's 

implemendng reguladon supplements the statutory prohibidon with a proscripdon of the aiding and 

abetdng of conduit schemes, specifying that it is a violadon for an individual to "[k]nowingly help or assist 

any person in making a contribudon in the name of another." 11 C.F.R. § 110.4(b)(l)(iii). 

The Complaint alleges that an endty that was unknown at the dme (but, based on informadon 

obtained after the Complaint was filed, was apparendy Government Integrity, LLC) made a contribudon to 

Now or Never PAC through a conduit, namely, the American Conservadve Union ("ACU"). See Compl. 

Tni 22, 25, 27. Mr. Thomas is not alleged to have been the source of the funds, their uldmate recipient, or 

the conduit through which they passed; any claim with respect to Mr. Thomas must necessarily be 

predicated upon the aiding and abetdng provision of Secdon 110.4. 

For liability to attach to Mr. Thomas on this issue, it must be established that (1) there existed a 

conduit arrangement between arid among Government Integrity, ACU, and Now or Never PAC; and (2) 

that Mr. Thomas "knowingly" pardcipated in and assisted the arrangement. Each facet of the claim 

incorporates a disdnct state of mind element, as discussed below.. 

649 North Founh Avoniic 

Pliocni.N, Arizona S5003 

www.sr3iccnfclaw.com 
Letter lo the Federal >7.lecrion Commission, 

May 23, 2017 

A. Conduit Arrangements Require a Shared Purpose by the Participants 

A prohibited "contribution in the name of another" necessarily entails a conscious purpose by the 

source of the funds to circumvent the Act's contribution limits or reporting requirements. Although no 

explicit intent criterion is articulated on the face of the statute, it inheres in the concept of a "contribution," 

which is defined as "anything of value made by any person for the purpose of influencing any election for 

Federal office." 52 U.S.C. § 30101 (8)(A)(i) (emphasis added). This "purpose-laden definition of 

'contribution' set forth in FECA's very own definitional section," Van Holkn, 811 F.3d at 493, dictates that 

the mere existence of a monetary transfer and objective indicia of its apparent use do not necessarily 

engender a "contribution;" the defining attribute is the subjective intent of the person furnishing the funds. 

1 For this reason, the Commission has interpolated a rigorous "purpose" requirement into the 

7 prohibition on contributions in the name of another. In a recent series of enforcement actions involving 

^ independent expenditure committees' disclosures of contributions received from closely held corporations 

^ or limited liability companies, the General Counsel's Office's explained that a violation pivots on whether 

A the original donor "sought to elude the reporting requirements of the Act by using ... a mere pass through 

Z intermediary for the funds." MUR 6930 (In re Michel), First General Counsel's Report at 2;' see also MUR 

4 6485 (In re W Spann), First General Counsel's Report), Supplement (revising report to clarify that "the 

4 analysis requires examination of whether a source transmitted property to another with the purpose that it be 

8 used to make or reimburse a contribution" (emphasis added)). 

Thus, the transfer of funds, in similar amounts and in short succession, from Person A to Person B 

to Person C is necessary but not sufficient to delineate a contribution in the name of another. As the 

Commission has repeatedly recognized in this and similar contexts, speculative suppositions about what an 

individual objectively should have known cannot supplant proof of actual intent, and a subjective conscious 

purpose cannot be extruded solely from the face of the transaction. See, e.g., MUR 6930 (In re Michel), First 

General Counsel's Report at 9 (recommending dismissal where evidence did not show donor had "the 

intent to make a political contribution" through another and "did not seek to circumvent the Act's 

disclosure requirements"); MUR 6661 (In re Robert E. Murray), Statement of Reasons of Commissioners 

Petersen, Hunter and Goodman), at 18 (concluding that employer's alleged statement to employee that 

"bonuses would more than make up for" employees' contributions did not supply reason to believe 

employer intended to reimburse employees for contributions); (f. Electioneering Communications, 72 FR 

72899-01, 72911 (Dec. 26, 2007) (interpreting statute requiring disclosure of "all contributors who 

contributed an aggregate amount of SI ,000 or more to the person making the disbursement" for an 

electioneering communication to apply only to "those persons who made a donation . . . specifically for the 

purpose of furthering ECs," as evidenced by, for example, express designations accompanying the funds); 

MUR 6002 (In re Freedom Watch), Statement of Reasons of Commissioners Petersen, Hunter and 

McGahn), at 6-7 (newspaper reports that donor participated in development of organization's advertisement 

did not support reason to believe that donor had "the purpose of furthering" the electioneering 

communication at issue, particularly where organization had other significant sources of financial support 

and organization's history of accurate campaign finance reports indicated "the group was not trying to hide 

the identities of its donors"); MUR 6217 (In re CHIP PAC), Factual & Legal Analysis, at 3-4 (noting that 

' At least three Commissioners agree that the General Counsel's report in MUR 6930 encapsulates 

"the dispositive legal analysis" for claims of this type. MUR 6485, 6487 & 6488, 6711, and 6930, 

Supplemental Statement of Reasons of Commissioners Petersen, Hunter and Goodman, at 2. 

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"funds are considered earmarked only when there is clear documented evidence of acts by donors that 

resulted in their funds being used by the recipient committees for expenditures on behalf of a particular 

campaign"). 

A necessary corollary is that the state of mind of an alleged conduit cannot be imputed to an alleged 

true donor. See MUR 6661 stipra, at 18 (employee's belief that employer would reimburse pohdcal 

contribudons through compensadon bonuses did not supply reason to believe that employer subjecdvely 

intended to, or actually did, provide such reimbursements). In this vein, the ACU's apparent unilateral 

representadon to the Internal Revenue Service that its contribudon to Now or Never PAC consisted of 

monies it received from others, rather than its own funds, see Compl. Ex. C, is not a proxy for the subjecdve 

intent of Government Integrity LLC at the dme it transmitted funds to the ACU.^ 

In short, a sine qua non of an improper contribudon in the name of another is proof that the source 

of the contribudon acted with the subjecdve purpose of utilizing a conduit in order to conceal its idendty. 

The complaint and suppordng documents do not evidence any conscious design by Government Integrity 

LLC to evade the Act's repordng requirements, or that Now or Never PAC shared this purpose at the dme 

it received a donadon from the ACU. 

B. Liability for "Knowirigly" Assisting a Contribution in the Name of Another Requires 

Proof of Actual Knowledge of the Conduit Arrangement 

Even if it could be demonstrated that Government Integrity LLC was the actual source of ACU's 

donadon to Now or Never PAC, no liability attaches to Mr. Thomas under 52 U.S.C. § 30122. As noted 

above, it is not alleged that Mr. Thomas personally was either the true source of the funds, the conduit 

through which they were transmitted, or their uldmate recipient. Accordingly, the only regulatory predicate 

for any claim against Mr. Thomas is the Commission's reguladon providing that a person may not 

"[k]nowingly help or assist any person in making a contribudon in the name of another." 

Crucially, in this context "knowingly" connotes significandy more than mere general awareness of 

one's physical acts. Rather, the aiding and abetdng prohibidon "applies to those who inidate or insdgate or 

have some significant pardcipadon in a plan or scheme to make a contribudon in the name of another." 

Affiliated Committees. Transfers. Prohibited Contribudons. Annual Contribudon Limitadons and 

Earmarked Contribudons. 54 Fed. Reg. 34098-01, 34105 (Aug. 17, 1989).^ This concepdon of the 

"knowingly" element in Secdon 1101.4(b)(l)(iii) is consonant with - and indeed compelled by - foundadonal 

precepts of aiding and abetdng liability. It is a setded (and intuidvely obvious) maxim that "[t]he state of 

mind required for convicdon as an aider and abettor is the same state of mind as required for the principal 

^ It should ^ noted that the ACU's amended Form 990 for 2012 is internally inconsistent on this 

point. Specifically, it reports the transacdon with Now or Never PAC on Part I-C, Line 5 of Schedule C as 

a transfer of funds it received from others, but also represents on Line 2 that the donadon consisted of the 

ACU's own funds. The IRS' official instrucdons confirm that amounts reported on Line 2 reflect funds 

disbursed by the organizadon in its own discredon, not earmarked donadons, see 2012 Instrucdons for 

Schedule C (Form 990 or 990-EZ) at 4, available a/https://www.irs.gov/pub/irs-prior/i990sc-2012.pdf 

^ The Commission's guidance apparendy. derived directly from a judicial construcdon of aiding and 

abetdng liability in the context of contribudons made in the name of another. See id. (cidng FEC v. 

Rodrigues^, No. 86-687 Civ-T-10(B) (M.D. Fla. May 5,1987)). 

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offense." United States v. Valencia, 907 F.2d 671, 680 (7th Cir. 1990); Burnett v. Ai Baraka Inv. eir Dev. Corp., 

274 F. Supp. 2d 86, 104 (D.D.C. 2003) (to be civilly liable for aiding and abetting, "the defendant must be 

generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the 

assistance" (citing Halherstam v. Welch, 705 F.2d 472, 477 (D.C. Cir. 1983)); see also Bosemondv. United States, 

134 S. Ct. 1240, 1248 (2014) ("To aid and abet a crime, a defendant must not just 'in some sort associate 

himself with the venture,' but also 'participate in it as in something that he wishes to bring about' and 'seek 

by his action to make it succeed.'"). Since a conscious purpose to evade the Act's contribution limits or 

reporting mandates is a constitutive element of a contribution in the name of another, it follows that an 

individual "knowingly" helps or assists the scheme only if he subjectively shares—or at least is fully 

cognizant of—the illegal objective. Further, an individual cannot retroactively assume aider and abettor 

status on the basis of knowledge he acquired after the operative acts were completed; rather, liability is 

contingent upon his actual knowledge of all elements of the underlying offense at the time it was undertaken. 

See Rosemond, 134 S. Ct. at 1251 (defendant "needed advance knowledge of a firearm's presence" to have 

aided and abetted the firearms offense). 

4 In sum, Mr. Thomas cannot be liable for knowingly helping or assisting the making of a 

3 contribution in the name of another in the absence of proof that (1) Government Integrity, LLC and Now 

or Never PAC subjectively intended to utilize the ACU as a straw donor in order to circumvent the Act's3 reporting requirements; and (2) Mr. Thomas had actual knowledge of Government Integrity, LLC's and/or 

- Now or Never PAC's illicit purpose when he took action to further the contribution. Evidence that Mr. Thomas 

executed certain ministerial functions—such as preparing campaign finance reports or authorizing wire 

transfers—does not even remotely approximate the nature and quantum of proof necessary to sustain aiding 

and abetting liability.^ 

II. Violations of the Act's Reporting Requirements 

The Complaint's allegation that Now or Never PAC failed to accurately and timely disclose 

Government Integrity, LLC as the true source of the funds transmitted by the ACU presupposes that the 

entities acted with the intent to make a contribution in the name of another. See Compl. 20, 25. For the 

reasons discussed above, there is insufficient evidence to infer any such subjective purpose; it follows that 

any alleged violations of the Act's reporting requirements are similarly unsustainable. 

Even if it were established, however, that Government Integrity, LLC was the true source of the the 

ACU's contribution, this fact would not engender any liability on the part of Mr. Thomas personally. In 

general, the Commission will proceed against a treasurer personally "only when available information (or. 

Any contention that Mr. Thomas' actions were "knowing and willful" would require proof of an 

additional element, namely, that Mr. Thomas "acted with an evil-meaning mind, that is to say, that he acted 

with knowledge that his conduct was unlawful." Bryan v. United States, 524 U.S. 184, 193 (1998); see also 

United States V. Danielcsyk, 788 F. Supp. 2d 472, 491 (E.D. Va.), rev'd in part on other ffvunds, 683 F.3d 611 (4th 

Cir. 2012) (holding that "the Government must prove that Defendants intended to violate the law" to 

establish knowing and willful violation of prohibition against contributions in the name of another); United 

States V. Whittemore, 944 F. Supp. 2d 1003, 1006 p. Nev. 2013), affd, 776 F.3d 1074 (9th Cir. 2015) (same). 

For the reasons discussed above, no evidence could plausibly support such a finding as to Mr. Thomas in 

this case. 

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inferences fairly derived therefrom) indicates that the treasurer had knowledge that his. or her conduct 

violated a duty imposed by law, or where the treasurer recklessly failed to fulfill his or her .duties under the 

act and regulations, or intentionally deprived himself or herself of facts giving rise to the violations." 

Statement of Policv Regarding Treasurers Subject to Enforcement Proceedings. Notice 2004-20, 70 Fed. 

Reg. 3-01 (Jan. 3, 2005). Mere negligence or carelessness in the preparation of campaign finance reports 

does not beget personal liability. See id. 

There is no evidence that Mr. Thomas was in any way derelict in performing his duties as the 

treasurer of Now or Never PAC, let alone that he recklessly or intentionally abdicated his legal 

responsibilities. Commission regulations required Mr. Thomas to "examin[e] all contributions received for 

evidence of illegality and for ascertaining whether contributions received" exceeded contribution limits or 

originated from an illicit source. See 11 C.F.R. § 103.3(b). The contribution of 51.71 million made by the 

ACU to Now or Never PAC on October 31, 2012 bore no indicia of illegality. As an independent 

expenditure only committee. Now or Never PAC is constitutionally entitled to accept unlimited 

^ contributions from non-foreign corporations, including the ACU. See generally SpeecbNow.org v. Fed. Flection 

^ Comm'n, 599 F.3d 686 (D.C. Cir. 2010). Nothing in the Act or the Commission's regulations required Mr. 

S Thomas to elicit information from the ACU concerning the reasons for, and circumstances attendant to, its 

4 decision to contribute to Now or Never PAC. SimDarly, there is no basis in the law for positing that Mr. 

4 Thomas' duty of care as Now or Never PAC's treasurer encompassed an obligation to draw upon 

information and records he may have acquired in his engagements with third party clients (including 

Government Integrit}', LLC). 

Even if it were somehow incumbent upon Mr. Thomas to affirmatively investigate whether there 

existed a nexus between Government Integrity, LLC's donation to the ACU and the latter's subsequent 

transfer to Now or Never PAC, his failure to do so does not here establish an intentional or reckless 

disregard of a legal duty. Now or Never PAC's 2012 Post-General Election report, which disclosed the 

ACU's contribution, was prepared and filed more than a month after the transaction occurred at the height 

of a frenetic election season, at which point Mr. Thomas inevitably would have been inundated with other 

demands and his attention divided between numerous clients. In such a context, any failure by Mr. Thomas 

to more diligently inquire into the provenance of the ACU's contribution—assuming he was legally 

obligated to do so at all—would have been the product of simple negligence, not any malign intent. 

* * * 

In sum, there is no evidence (1) that Government Integrity, LLC or Now or Never PAC subjectively 

intended to use the ACU as a conduit in order to evade the Act's reporting requirements, or (2) that Mr. 

Thomas had actual knowledge of any such purpose by the parties at the time of the transaction, or (3) that 

Mr. Thomas intentionally or recklessly violated his legal duties as Now or Never PAC's treasurer in 

preparing and filing its 2012 Post General Election report. Accordingly, any action by the Commission 

against Mr. Thomas in his personal capacity is unwarranted. 

Respectfully, 

8 

Kory Langhofer 

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