4 

5 

6 

7 

8 

9 

10 

11 

i: 

13 

14 

15 

16 

17 

18 

19 

20 

21 

TT 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

COMPLAINANTS: 

EDERAL ELECTION COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

RST GENERAL COUNSEL'S REPORT 

RESPONDENT: 

RELEVANT STATUTES 

AND REGULATIONS: 

INTERNAL REPORTS CHECKED: 

FEDERAL AGENCIES CHECKED: 

I. INTRODUCTION 

This maiter involve 

Campaign Act. as amendec 

in 2012. As discussed belc 

committee status and appei 

Accordingly, we recornmei 

MUR: 6872 

DATE COMPLAINT FILED: 9/18/14 

DATE OF NOTIFICATION: 9/24/14 

DATE OF LAST RESPONSE: 11/17/14 

DATE ACTIVATED: 2/3/15 

ELECTION CYCLE: 2012 

EARLIEST SOL: 1/10/2017 

LATEST SOL: 2/10/2018 

Si 

Citizens for Responsibility and Ethics iiv^ 

Washington ^ 

Melanie Sloan 

"0 

New Models 

if 

52 U.S.C. §30101(4) 

52 U.S.C. § 30102 

52 U.S.C. § 30103 

52 U.S.C. §30104 

Disclosure Reports 

None 

COriHi'Jito;!"'' 

CtlA 

SENSITIVE 

V*-/' "I" 

ill--.- , 

Sx—i 

i an allegation that New Models violated the Federal Election 

(the "Act"), by failing to register and report as a political committee 

w. in 2012 New Models satisfied the statutoiy threshold for political 

rs to have had the major purpose of federal campaign acti\ ity. 

nd that the Commission find reason to believe that New Models 
MUR 6872 (New Models) 

First General CounseFs Report 

Page 2 of 8 

1 violated 52 U.S.C. §§ 30102. 30103. and 30104 by failing to register and report as a political 

2 committee in 2012. at\d authorize an investigation. 

3 II. F.ACTS 

4 New N'lodels was organized in 2001 and operates as a 501(c)(4) social welfare 

5 organization.' New Models states that it has raised $15,787,616 over the life of the 

6 organization." Accorditig to its tax return. New Models spent a total of $4,506,176 in 2012."' Of 

7 that total, the group spent $2,840,500 on the following political campaign and lobbying 

8 activities"*: 

9 • S2.171.000 tp Now or Never PAC. a political committee registered w ith the 

10 Commission"' 

11 

12 • S37.500 to Freedom PAC. at the time a political committee registered with the 

13 Commission*' 

14 , 

15 • S5.000 to Special Operations OPSEC Political Committee' 

16 

Compl. at 3: Resp.. Affidavit of Tim Crawford ' 2 (" Crawford Affidavit"). The Craw ford Affidavit 

appears to lack proper notarization. 

" Craw ford Aff. 14. New Models does not state how much it has spent over that period. 

New Models 2012 Form 990 (•"2012 Ta.x Return""!. Part I. Line 18; Compl.. F..\. A. The group s taN year 

appears to coincide with the calendar year. /«/.. Line A. 

2012 Tax Return. Sched. C. l.ine 2. 

' .fee Statement of Organization (Feb. 21. 2012). 

.fee Statement of Organization (Mar. 30. 2012). The Commission has since approved Freedom PAC's 

termination, .fee Termination Approval (Feb. 11. 201 .f!. The Complaint does not include this disbursement in 

calculating New Models's spending for major purpose. 

The recipient is identified only as "OPSEC" in the 2012 Tax Return, but Special Operations OPSEC 

Political Committee (which is also identified as "Special Operations OPSEC Political Fund"" in a Miscellaneous 

Report to the Commission) reported receiving S5.000 from New Models on September 21. 2012. See Miscellaneous 

Report to FEC at 32 (Dec. 19. 2012) (this document appears to be a late-filed October 2012 Quanerly Repon of 

Special Operations OPSEC Political Fiind). In the October 2012 Quarterly Report. OPSEC requested termination 

"out has not received Commission approval. The Complaint does not include this disbursement in calculating New 

Models's spending for major purpose. 
MLR 6872 (New Models) . 

First General Counsel's Report 

Page 3 of 8 

1 • S627.000 to Government Integrity Fund Action Network ("GIFAN"). apolitical 

2 committee registered with the Commission" 

3 

4 Additionally. New Models states that in 2012 it disbursed $292,000 to Citizens for a 

5 Working America for issue advocacy.'' This disbursement, however, appears to ha\ e been made 

6 to Citizens for a Working America P.AC, an independent expenditure-only political committee 

7 ("CWA P.AC").'" 

1 8 The Complaint alleges that New Models was a political committee in 2012 because it 

^ 9 crossed the .Act's $1,000 threshold for political committees and spent approximately 68.5% of its 

4 10 total spending for 2012 on contributions to independent expenditure-only political committees.'.' 

2 11 I he Complaint does not include the New Models disbursements to Freedom PAC (S37.500) or 

2 12 OPSEC ($5,000) in its calculation, but it does include the disbursements to Now or Never PAC 

1.3 (S2.171.000). GIF.AN ($627,000). and Citizens for a Working America PAC ($292,000). 

14 New Models concedes that it surpassed the statutor\- threshold for political committee 

15 status by making over $1.000 in contributions during 2012 but states that its major purpose has 

16 never been federal campaign activity.'- New Models (through its President and COO. Tim 

" Statement of Organization (July 12.2011). The 2012 Ta.\ Return states that these funds were given to 

" Goveminent integrity Fund." which is a separate 501(c)(4) organization than Government Integrity Fund Action 

Network. See 2012 Tax Return. Schedule C. Pan 1-C. Line 5. As the Compiaint points out. the einplo>er 

identification number listed on the 2012 Tax Return is that of GIFAN. and GIFAN reported receiving the New 

Models contri'oution in its 2012 Pre-General Report. See Compl. at 4 n. 1. Ex. B. 

• ' 2012 Tax Return. Schedule I. Part 11. Line 3; Compl.. Ex.,A. 

' See Compl. at 4. Ex. D: Statement of Organization ofCW'A PAC (Sep. 13. 2010). 

.Set-Compl. at 6-7. 

Resp. at 2; Crawford Aff. •" 3. The Commission should afford no particular weight to mere legal 

conclusions made in an affidavit. A.L Pickens Co.. Inc. v. Yoting.sioun Sheet A Tube Co.. 650 F.3d 118. 121 (6th 

Cir. 1981)(^giving no weight to legal conclusions in affidavit because "[t]he affidavit is no place for ultimate facts 

and conclusions of law") (qiioiihfr 6 MiX)Ri.'s FI;OI;R.\I. PR.ACTICI^ 56.22(1). at 56-1316 (Supp. \')'7^)):.Scluiheii »•. 

.Xi.ssun Motor Corp. in LS.-1. 148 F.3d 25. 30 (1st Cir. 1998); 2A C.J.S. Al'l'll)..\vi : s § 39 ("It is improper for 

affidavits to embody legal arguments, and legal arguments and summations in affidavits will be disregarded by the 

courts."). 
MLR 6872 (New Models) 

First General Counsel's Report 

Page 4 of 8 , 

1 Crawford) states that it has never made an independent expenditure, electioneering 

2 communication, or public statement advocating the election or defeat of a federal candidate, nor 

3 has its website or any of its materials stated that the organization's purpose is to support the 

4 election or defeat of a federal candidate.New Models further states that the contributions 

5 identified in the Complaint amount to less than 20% of the group's spending from 2001 to 2014. 

6 and that this is the proper time frame for determining its major purpose.'"' 

7 II. LEGAL ANALYSIS 

8 The Act and Commission regulations define a "political committee" as "any committee. 

9 club, association or other group of persons which recei\ es contributions aggregating in excess of 

10 SI.000 during a calendar year or which makes expenditures aggregating in excess of $1,000 

11 during a calendar year."'" In Buckley v. Valeo.^^ the Supreme Court held that the term "political 

12 committee" "need only encompass organizations that are under the control of a candidate or the 

13 major purpose of which is the nomination or election of a candidate."'' Aceordingl\. an 

14 organization that is not controlled by a candidate must register as a political committee only if 

Id. 4-10. The Crawford Affidavit also states that "New Models has made no federal political 

contributions in any \ ear other than in 20I2. ' Ui ' 11; .tee Resp. at 4. The Commission's records, however, show 

that New Models made two contributions to Citizens for a Working America PAC ("CW .4 PAC") on September 3. 

2010 (for S255.000). and October 14. 2010 (for SI0.000). .See October 2010 Quarterly Report of CWA PAC at 6-7; 

Post-General 2010 Report of CWA PAC at 6. CWA PAC is registered with the Commission as an independent 

c.\penditure-oniy political committee. .See Statement of Organization ofCWA PAC (Sep. 13. 2010). The New 

Models contributions were the only contribiitions received b\ CWA PAC during 2010. and it made only one 

independent e.\penditure (for S254.779) on September 13. 2010. .See October 2010 Quarterly Report at 7. The 

reporting of these contributions in Commission-filed reports appears to be at odds with the Crawford Affidavit and 

contentions made in the Response. These contributions, however, were not w ithin the 2012 calendar year, which we 

use to analyze major purpose in this case-. .See/«/;•«. 

Resp. at 4-5. 

'• 52 (j.S.C. 30I0I(4)(A): 11 C.F.R. $ 100.3. 

424 U.S. 1 (1976) 

U. 
VIUR 6872 (New Models) 

rirst Genera! Counsel's Report 

Page 5 of 8 

1 .(!) it crosses the $1.000 threshold and (2) it has as its "major purpose" the nomination or election 

2 of federal candidates. 

New Models concedes that it surpassed the Act's threshold for political cotrimittee status 

4 by making over SI.000 in contributions during 2012."' Therefore, the sole issue here is whether 

5 New Vlodels also had the requisite, major purpose. 

6 To determine an entity's "major purpose." the Commission considers a group's "overall 

7 conduct." including its disbursements, activities, and statements." The Commission compares 

8 how much of an organization's spending is for "federal campaign activity" relative to "activities 

9 that fajre not campaign related.""" In this case, the available information does not include 

10 e.xamples of New Models's public statements or non-contribution acti\ ities. With regard to its 

11 known spending. New Models spent a total of S4.506.176 in 2012."' Approximately S3.090.000 

A contribution to a political committee satisfies the definition of " expenditure." which includes "(i) any 

purchase. pa> ment. distribution, loan, advance, deposit, or gift of money or anxlhing of value, made by any person 

for the purpose of influencing any election for Federal office. " 52 U.S.C. j 30101(9) (A); see Advisor\ Op. 1996-

18 (International .Association of Fire Fighters) at 2-3 (account would not be "accepting or making contributions for 

the purposes of the Act" and thus w ould not constitute a political committee). New Models's contributions to 

political committees in 2012 satisfy the Act s threshold requirement for political comininee status. See 52 L .S.C. 

S 30I01(4)(A): II C.F.R. § 100.5. 

'' Political Committee Status. 72 Fed. Reg. 5595. 5597 (Feb. 7. 2007). 

W. at 5601. 5605. 

I he time frame used for determining major purpose has been considered in previous matters before the 

Commission, including VIURs 6081 (.American Issues Project). 6396 (Crossroads GPS). 6402 (American Future 

Fund). 6538 (Americans for Job Security), and 6589 (American Action Network). As we have noted, we believe 

that a calendar > car provides the firmest statutory footing for the Commission's major purpose determination and is 

consistent w ith the Act's plain language and prior decisions of those couns that have previously addressed questions 

of political committee status. The Act defines "political committee" in terms of expenditures made or contributions 

received " during a calendar >ear." 52 L'.S.C. § 30101(4); see FEC v. Malenick. 310 P. Supp. 2d 230. 237 (D.D.C. 

2004) ("".Accordingly, because Triad and then Triad Inc. 's major purpose was the nomination or election of specific 

candidates in IW6. and because Triad received contributions aggregating more than SI.000 in 1996.1 find that 

Triad and Triad. Inc.. operated as a "political committee' in 1996.") (emphasis added): FEC v. COP.-iC. 917 F.Supp. 

851. 853 (D.D.C. 1996) (group founded in 1979. yet coun discusses major purpose only in 1989 and 1990): .tee «/.v« 

MUR 5492 (Freedom. Inc.) (analyzing group's admitted major purpose in 2004 even though group was formed in 

1962); MURs 5577. 5620 (National Association of Realtors - 527 Fund) (analyzing NAR-527 Fund's 2004 

spending even though group had registered with IRS since 2000): .MUR 5755 (New Democrat Network) (analyzing 

New Den"iocrat Network s 2004 spending while group had existed since at least 1996): MUR 5753 (League of 
4 .4 

12 

MUR 6872 (New Models) 

First General Counsel's Report 

Page 6 of 8 

1 (or 68.5%) of that total was spent on the contributions identified in the Complaint, an amount 

election cycle also indicate 

that is sufficient to establish that the group's major purpose in 2012 was the nomination or 

election of federal candidates.^" 

Although we maintain that a calendar year is the most appropriate time frame for 

analyzing major purpose, under the facts here New Models's spending over the 2011-2012 

> that its major purpose may be federal campaign activity. NewModels spent $1,480,065 in 2011." and thus a total of S5,986,241 during 2011-2012. The 

8 contributions identified in t'he complaint make up 51.6% of New Models's spending over that . 

9 period.^^ Thus, whether th: analytical time frame for major purpose is a calendar year, the 

10 group's fiscal year,"^ or the relevant election cycle, New Models's spending on federal campaign 

11 activity appears to constitu e the majority of its overall spending. 

New Models argues that it lacks major purpose because the contributions identified in the 

3 

4 

5 

6 

7 

13 Complaint amount to "less than 20%" of its overall spending since the group's inception in 

14 2001Even assuming tht t this is the proper time frame for analyzing its major purpose, the 

15 available information does not provide-an adequate basis for such an assessment. New Models 

Conservation Voters) (analyzing- LCV's 2004 spending even though one of LCV's funds had registered with the IRS 

as early as 2000); MURs 5694, 5910 (Americans for Job Security) (analyzing activity from 2000 through 2006 in 

determining group's major purpose in 2006, despite the fact that the group was founded in 1997); MUR 5487 

(Progress for America VP) (analyzing group's major purpose based on 2004 disbursements where group had raised 

S4.6 million and spent SI 1.2 million through 2006). 

The total rises to S3,132,500 (69.5%) if the contributions to Freedom PAG and OPSEC are included. 

Compl.. Ex. E. 2011 Tax Return of New Models, Line 18. 

The total rises to 52.3% if the contributions to Freedom PAC and OPSEC are included. 2A 

2b 

In this case, the fiscal y 

Resp. at 4-5. 

;ar aligns with the calendar year. See supra note 3. 
MUR 6872 (New Models) 

First General Counsel's Report 

Page 7 of 8 

1 includes in its Response a list of annual furidraising totals for each year from 2002-2014,^' but 

2 does not include any summary of its spending over that period. Given that omission — and 

3 recognizing also that the Response appears to have mistaken certain material facts concerning its 

4 past spending"* — New Model's assertion concerning the character of its spending since the date 

5 of its formation does not discredit the record evidence that suggests that its major purpose 

2 6 appears to have been federal campaign activity, as alleged."^ 

0 7 Thus, based on the currently available information, it reasonably appears that New 

8 Models made over SI ,000 in expenditures in 2012 and had the major purpose of nominating or 

9 electing federal candidates. Accordingly, we recommend that the Commission find reason to 

10 believe that New Models violated 52 U.S.C. §§ 30102, 30103, and 30104 by failing to register 

11 and report as a political committee in 2012. 

12 in. INVESTIGATION 

13 We plan to seek information to afford the Commission the ability to determine the scope 

14 of New Models's reporting obligations and to identify potential witnesses who may have 

15 relevant knowledge of those facts. Although we intend to seek information through voluntary 

16 means, we also request that the Commission authorize the use of compulsory process, including 

' Crawford AfT., Attach. I. According to Crawford, these fundraising totals are drawn from federal tax 

returns, with the e.xception of 2003, which is based on "expenditures from bank records" and 2014, which is based 

on year-to-datc bank records. W. ^ 14, Attach. I. 

.S'cc lup/u notes 8, 13. 

A reason to believe determination is not conclusive that an allegation is true, but rather recognizes the 

seriousness of the allegations and provides an opportunity to conduct an administrative fact-finding inquiry' to 

resolve whether in fact a violation occurred. See Statement of Policy Regarding Commission Act in Matters at the 

Initial Stage in the Enforcement Process. 72 Fed. Reg. 12,545 (Mar. 16. 2007) (A reason-to-believe finding indicates 

"only that the Commission found sufficient legal justification to open an investigation to determine whether a 

violation of the Act has occurred."). Thus, the Commission previously has determined as a matter of policy that a 

reason-to-be I ieve finding is appropriate "in cases where the available evidence in the maner is at least sufficient to 

warrant conducting an investigation." See id. (reason^o-believe finding appropriate where complaint "credibly 

alleges that a significant violation may have occurred, but further investigation is required to determine whether a 

violation in fact occurred and. if so, its exact scope"). 
MUR 6872 (New Models) 

First General Counsel's Report 

Page 8 of8 

1 

2 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

the issuance of appropriate 

necessary. 

IV. RECOMMENDATIONS 

1. 

2. 

3. 

4. 

Find reason 

30104 by fa 

interrogatories, document subpoenas, and deposition subpoenas, as 

to believe that New Models violation 52 U.S.C, §§ 30102,30103, and 

ling to register and report as a political committee in 2012. 

Approve the attached Factual and Legal Analysis. 

Approve compulsory process, as necessary. 

Approve the appropriate letters. 

Date •A * Darnel A. Petalas 

Associate General Counsel for Enforcement 

William A. Powers 

Assistant General Counsel 

Peter Reynolds 

Attomev