^THEGOBERGROUP 

September 5, 2017 

VIA ELECTRONIC MAIL 

Mark Shonkwiier 

Antoinette Fuoto 

Office of Complainants Examination and Legal Administration 

Federal Election Commission 

999 E Street, NW 

Washington, DC 22210 

Re: MUR 6920 - Supplemental Response of Now or Never PAG 

Dear Mr. Shonkwiier and Ms. Fuoto: 

I am writing on behalf of Now or Never PAC and James C. Thomas, III, in his official capacity as 

Treasurer (collectively, "the Committee"), to provide a supplemental response to the complaint 

filed by Citizens for Responsibility and Ethics in Washington ("CREW") in February 2015. In 

summary, CREW alleges that the Committee and other Respondents in this matter (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, as amended (the "Act"). 

Procedural History 

As you are aware, the Committee was previously represented in this enforcement matter by other 

legal counsel, and our firm was not engaged by the Committee until August 2017. The Committee, 

through its previous legal counsel, filed an initial response arguing that § 30122 is designed to 

prevent the circumvention of contribution limits, which do not apply to independent expenditure 

only committees ("Super PACs") like the Committee. The Committee now seeks to supplement 

that response with additional legal analysis and arguments. 

The Office of Complainants Examination and Legal Administration has requested the Committee, 

provide additional facts prior to the parties engaging in pre-probable cause conciliation. Therefore, 

it should be noted in the record that the Committee's ability to provide additional facts is limited 

since the Committee's Treasurer, James C. Thomas, III, and one known agent. Axiom Strategies, 

LLC, are each separately represented by their own legal counsel. The Committee does, however, 

anticipate that Mr. Thomas and Axiom Strategies, LLC-will each provide the Commission with 

additional facts through their respective legal counsel, and it is our hope that our collective 

submissions will help bring this matter to a close. 

T I 202.417.3529 # | @GoberGroup 

F 877.437.5755 ' ® GoberGroup.com 
Now or Never PAC - MUR 6920 

September 5, 2017 

Page 2 of 5 

It is "Manifestly Unfair" to Pursue Enforcement Against the Committee 

The Act's giving-in-the-name-of-another prohibition focuses on the "true source" of a 

contribution; in other words, whether a person (i) passed funds through a straw donor to make a 

contribution; (ii) knowingly permitted his or her name to be used to effect that contribution; (iii) 

knowingly helped or assisted any person in making a contribution in the name of another; or (iv) 

knowingly accepted a contribution made by one person in the name of another. See 52 U.S.C. § 

30122; 11 C.F.R. § 110.4. 

Legislative history shows the purpose of the prohibition was to prevent individuals from using 

conduits to evade contribution limits. For example, during the Senate floor debate on the bill that 

eventually became § 30122, one of the bill's principal sponsors directly addressed the problem of 

wealthy individuals using conduit contributors to evade the individual contribution limits: 

If he is limited to $5,000, what does he do? He has no limitation on his own money. 

He is a man of influence. He wants to find $200,000. He finds 40 friends and gives 

it to them and each of them gives back $5,000. 

Let us close that loophole and go after the man who would bribe the election 

because he is so well financed. 

117 Cong. Rec. S29295 (daily ed. Aug. 4, 1971) (statement of Sen. Scott). 

Until recently, federal law prohibited all corporate contributions so § 30122 inquiries were 

consequently limited to whether a corporation (or some other person) paid or reimbursed 

individuals for making direct contributions in those individuals' names. In its landmark Citizens 

United opinion, the Supreme Court recognized the First Amendment right of corporations to 

expressly advocate the election or defeat of federal candidates. Therefore, Super PACs like Now 

or Never PAC and 501(c)(4) nonprofit corporations like the American Conservative Union 

("ACU") are now permitted to expend funds to expressly advocate the election or defeat of federal 

candidates, as well as to contribute funds to Super PACs for such express advocacy. Accordingly, 

the alleged § 30122 violation in this matter differs substantially from those previously considered 

by the Commission. 

Indeed, when the Commission considered MURs 6485, 6487, 6488, 6711, and 6930 in 2016— 

more than 3'A years after the facts giving rise to this enforcement matter—three Commissioners 

recognized'that "application of the true source analysis to determine whether a corporation may 

be considered a straw donor for an individual's contribution is an issue of first impression before 

the Commission." Statement of Reasons of Chairman Matthew S. Petersen and Commissioners 

Caroline C. Hunter and Lee E. Goodman at 1-2 (April 1, 2016), MURs 6485, 6487, 6488, 6711, 

and 6930 (W Spann LLC, et at.). Those Commissioners reasoned: 

[T]his is the first occasion the Commission has examined whether it is possible for 

individuals to violate section 30122 by contributing in the names of their closely 

held corporations and corporate LLCs. Based on Commission precedent, the 
Now or Never PAC - MUR 6920 

September 5, 2017 

Page 3 of 5 

regulated community may have reasonably concluded that the answer to that 

question was "no." Therefore, because Respondents did not have prior notice of the 

legal interpretation discussed above, we determined that applying section 30122 to 

Respondents would be inconsistent with due process principles. The Supreme 

Court has observed that "[a] fundamental principle in our legal system is that laws 

which regulate persons or entities must give fair notice of conduct that is forbidden 

or required." F.C.C. v. Fox Television Stations, 567 U.S. 239, 253 (2012); see also 

Statement of Reasons of Vice Chairman Donald F. McGahn and Commissioners 

Caroline C. Hunter and Matthew S. Peterson at 23 (July 25, 2013), MUR 6081 

(American Issues Project) ("[D]ue process requires that the public know what is 

required ex ante, and that the Commission acknowledge and provide the public with 

prior notice of any regulatory change."). 

Those Commissioners then concluded that it would be "manifestly unfair" to pursue enforcement 

against W Spann LLC and other respondents because Commission precedent did not provide 

adequate notice regarding the application of § 30122 to closely held corporations and corporate 

LLCs that make contributions to Super PACs. Similarly, at the time Now or Never PAC received 

the contribution in question—which occurred 3/2 years prior to the Commissioners' Statement of 

Reasons in the W Spann LLC, et al. MURs—Commission precedent had not provided adequate 

notice regarding the application of § 30122 to nonprofit corporations like ACU that make 

contributions to Super PACs. Simply put, in determining whether the Respondents in this matter 

had adequate notice regarding the application of § 30122, there is no substantive distinction 

between W Spann LLC and ACU. 

The Commission Must Prove Scienter to Establish a S 30122 Violation 

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 contribution made by one person in the name of another person." 52 U.S.C. § 30122. The 

Commission's implementing regulation supplements the statute by also prohibiting the aiding and 

abetting of impermissible contribution-in-the-name-of-another schemes. That implementing 

regulation is codified at 11 C.F.R. § 110.4; 

§ 110.4 Contributions in the name of another; cash contributions. 

(a) [Reserved] 

(b) Contributions in the name of another. (1) No person shall— 

(i) Make a contribution in the name of another; 

(ii) Knowingly permit his or her name to be used to effect that contribution; 

(iii) Knowingly help or assist any person in making a contribution in the name of 

another; or 

(iv) Knowingly accept a contribution made by one person in the name of another. 

Notably, each prohibited action set forth in (b)(i) - (iv) requires the Commission to prove scienter 

to establish a .violation of the contribution-in-the-name-of-another prohibition. To be clear, despite 

the absence of "knowingly" in paragraph (b)(i), no person can be found in violation of (b)(i), (b)(2). 
Now or Never PAC - MUR 6920 

September 5, 2017 

Page 4 of 5 

(b)(3), or (b)(4) unless the Commission first proves that a source transmitted property to another 

with the intent to mask the identity of the true source. 

This scienter requirement was discussed in detail in the Statement of Reasons of Commissioners 

Petersen, Hunter, and Goodman in the W Spann, LLC, et al. MURs, in which those Commissioners 

stated; 

[T]he proper focus in these matters is whether the funds used to make a contribution 

were intentionally funneled through a closely held corporation or corporate LLC 

1 for the purpose of making a contribution that evades the Act's reporting 

y requirements, making the individual, not the corporation or corporate LLC, the true 

iQl source of the funds. Thus, in matters alleging .section 30122 violations against such 

4 entities, the Commission will examine whether the available evidence establishes 

4 the requisite purpose. 

^ (emphasis added). On page 12 of that Statement of Reasons, those Commissioners further stated: 

Where direct evidence of this purpose is lacking, the Commission will look at 

whether, for instance, there is evidence indicating that the corporate entity did not 

have income from assets, investment earnings, business revenues, or bona fide 

capital investments, or was created and operated for the sole purpose of making 

political contributions. These facts would suggest the corporate entity is a straw 

donor and not the true source of the contribution. This analysis will be required 

even if a single member exercises sole authority over the disposition of the entity's 

resources. Because closely held corporations and corporate LLCs are 

constitutionally entitled to make contributions to Super PACs, such contributions 

shall be presumed lawful unless specific evidence demonstrates otherwise. Absent 

such evidence, the Commission will have no reason to believe that a contribution 

made by a closely held corporation or corporate LLC was in violation of section 

30122. In short, this approach vindicates the purposes underlying section.30122 

while simultaneously acknowledging the speech rights of closely held corporations 

and corporate LLCs and avoiding constitutional doubt. 

Therefore, the Commission's test for determining whether a contribution was made in the name of 

another should effectively have two prongs: 

1. First, an examination of whether a source transmitted property to another with the purpose 

that it be used to make or reimburse a contribution; and 

2. Second, an examination of whether that source transmitted property to another with the 

intent to mask the identity of the true source. 

While this scienter requirement may not be favored by certain Commission members and staff, it 

is nonetheless required to distinguish impermissible § 30122 contributions from conduit 

contributions transferred lawfully. For example, contributors often make conduit contributions 
4 

Now or Never PAC - MUR 6920 

September 5, 2017 

Page 5 of 5 

through platforms such as ActBlue that satisfy the first prong of the test, but every conduit 

contribution effectuated through that platfonrr certainly does not constitirte an irnpennissible 

contribution in the name of another. Simply put, intent matters. 

Importantly, Cormrrissioners Petersen, Hunter, and Goodman have agreed that contributions from 

closely held corporations and corporate LLCs to Super PACs, which is aualogoirs to ACU's 

contribution to the Courrnittee, "shall be presiurred lawfrtl imless specific evidence demonstrates 

otherwise." Statement of Reasons of Chainrran Matthew S. Petersen arrd Conmrissiouers Carolirre 

C. Hunter and Lee E. Goodman at 12 (April 1, 2016), MURs 6485, 6487, 6488, 6711, and 6930 

(W Sparm LLC, et a!.). It necessarily follows that the Commission camiot use circirmstantial 

evidence to infer the scienter of the "Unknowtr Respondent" referenced in the complaint (or, for 

tlrat matter, the intent of the Committee). 

While the Commission may have deemed such circrmrstantial evidence to be sufficient to jirstify 

its initial "reason to believe" finding, the Comrrrission carmot find probable cairse in this matter 

imless there is sufficient, specific evidence to support CREW's allegation that the Unkrrown 

Respondent transmitted properly to ACU with the ititenr to mask the identity of the trire source. lit 

the absence of such evidence, the Commission must conclude this matter without ftulher action. 

H.R. Rep. No. 94-917, at 3-4 (Mar. 17, 1976); see AFL-CIO v. FEC, 628 F.2d 97, 98, 101 (D.C. 

Cir. 1980) (stating that a "knowing and willfirl" violation requires "'defiance' or 'knowing, 

conscious, and deliberate flaimtirrg' of the Act"). It follows that, without a § 30122 violation, the 

Committee caimot be deemed to have violated the Act's reporting requir'emeuts by reporting a 

$1,710,000 contribution from ACU. 

Conclusion 

The Committee respectfully mges the Commissioners to follow previous precedent and conclude 

that it would be "manifestly unfair" to pursue enforcement against the Committee since it did not 

have adequate notice regarding the application of § 30122 to the contribution at issue; In the 

altenrative, the Committee requests that the Commission promptly close this matter because there 

is not sufficient evidence to support CREW's allegation that the Unknown Respondent transmitted 

property to ACU with the intent to mask the identity of the true soiuce. In other words, the 

Cormnission must acknowledge that it lacks proof of the requisite scienter needed to create and 

sustain a § 30122 violation. It follows that, without a § 30122 violation, the Cormiiittee carmot be 

deemed to have violated the Act's reporting requirements. 

If you require additional iuforaiation, or if I can be of any assistance, then I can be reached at (512) 

354-1787. 

Sincerely, 

Clrris K. Gober 

Coimsel, Now or Never PAC