::~~;Ej~DA DOCUMENT NO. 13-.2.1-I 

FEDERAL ELECTION COMMISSION 

Washington, DC 20463 

MEMORANDUM 

TO: The Commission Secretary 

FROM: Anthony Herman (\ 1 \ 

General Counsel \- } t:t 

June 26, 2013 AGENDA lTEM 

For Meeting of (o "'cR1 ,.l3 

SUBMITTED LATE 

SUBJECT: Department of Justice's Proposed Changes to the FECA 

Attached is the July 3, 2006 memo from Lawrence H. Norton to the 

Commissioner regarding Department of Justice's Proposed Changes to the FECA. The 

Commission has requested the document be placed on the agenda for June 27, 2013. 

Attachment 
Do'V£ 

7!-3/0(; 

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

JUL 0 3 2006 

MEMORANDUM 

TO: 

FROM: 

BY: 

SUBJ: 

The Commission 

Lawrence H. Norton 

General Counsel 

James A. Kahl 

Deputy General Couns:\ 

Rhonda J. Vosdingh ~ Associate General Counsel 

Department of Justice's Proposed Changes to the FECA 

SENSITIVE 

Attached is a facsimile from the Department of Justice (DOJ), including a letter to the 

Director of the Office of Management and Budget (OMB) transmitting DOJ's proposed letter to 

Congress recommending several legislative changes to the Federal Election Campaign Act. · 

According to our contacts at DOJ, their goal in proposing these changes "is to make the current 

enforcement situation better for both [DOJ] and the Commission." 

Because of the FEC' s independence, OMB typically would not send this type of package 

to the Commission. In this case, however, DOJ has expressly asked that OMB do so.1 DOJ has 

advised us that when OMB sends a proposal to an agency, OMB provides a deadline for any 

comments, and, if there are any comments, forwards them back to the drafting agency for review 

and comment. DOJ has suggested that because its proposals have not yet been forwarded to 

Congress, it might be premature for the Commission to send comments directly to Congress, 

though this decision would be up to the Commission. In the meantime, DOJ has invited the FEC 

to comment informally on these recommendations. 

Attachment: Facsimile dated, 6/23/2006 from Nancy Simmons (enclosing Letter from William 

E. Moschella, Assistant Attorney General, to the Honorable Rob Portman, Director, OMB, dated 

6/22/06) 

cc: Robert Costa 

Tina Van Brakle 

1 As of June 26, no such package has been received in the Office of General Counsel. 

DOCS OPEN #24480 

II :a o 

FHCM DOJ PUBLIC INTEGRITY (FRil 6. 23' 06 14:37/ST. 14:37/NO. 4861578287 P 

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l1YIPORTANT: This ~cis intended only for the use of the individual err c:ntity to whicn it is ad~ed. It 'ltJrf 

':onrs.ix: infonnation that is p:r:ivileged, COII.fidentiaJ, or otherwise protecte4 from d:isclosnn und'e:r a:pp~ble Iaw. Tf 

t b.e: ~cL::r ef this trsr~mrisrion %4 not the intended r~-ipic:m or the employee 01 agenr respOASJble for dd:ive.ring :!:::: 

transmission ro the :i:ntet~ded~ you are hereby notifitd that any disseminaticm. distn"bution, eOJ))'ing or usc of 

tlis ~on or it's COXlte:llts :i& ~$i>tol:ubited. lfyou h&ve received this tl'aDSIIJission in euor, please notify us. 

l: td olliu and s ori · trllllmlisriOl'l to U$ at the address ·ven below . 

. ,···FROM: 

~ U.S Dep 

Criminal D · ion, Public Integrity Seetion 

Bond .Building, Room 12100 

1400 N~ York A:~e. NW 

.-- Washfngtuu.,pc 20005 . \ 

'7~JI='Pftj: ~l'(w_~~_.) 

fYF~No. - VoieeNo. 

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DATE: .:2 d 

TO: ---4~..5~8Ce:=....4,~~-£jtJ.~;t_.UYLJ:.~"-..Jt.'.f!:.)'.:.£... ~ ~ I - 19 

P.01 
F~d~ DOJ PUBLIC INTEGRITY (FRil 6. 23' 06 14:37/ST. 14:37/NO. 4861578287 P ·2 

The Honorable Rob Portman 

Director 

Office of Management and BLJdget 

Washington, D.C. 20503 

Dear Mr. birector: 

U.S. Department of Justice 

Office of Legislative Affairs 

Wu~ D.C l0$JO 

June 22, 2006 

Enclosed is a copy of a proposed communication to be tnmsmitted to the Congress relative 

to a draft legislative proposal in the form of amendments to the Federal Election Campaign Act, 

2 u.s.c. §§ 431-455. 

Please advise this office as to the relationship of the proposed communication to the 

program of the President 

Enclosure 

Sincerely, 

'Jf;.u_. f. 71ujJ./t.. 

William E. Moschella. 

Assistant Attorney General 

•To coordinate clearance, please contact: Adrien Silas, 514-7276. 

202 514 30133 P.e2 
?~C)( DOJ PUBLiC INTEGRITY (FRll 6. 23' 06 14: 37 /ST. 14: 37/NO. 4861578287 P 3 

The Honorable J. Dennis Hastert 

Speaker 

U.S. House of Representatives 

Washington, D.C. 2051.5 

Dear Mr. Speaker: 

U.S. Department of Justice 

Office of Legislative Affairs 

I am transmitting herewith a legislative proposal, in the form of amendments' to the 

Federal Election Campaign Act ("FECA"). 2 U.S.C. §§ 431..455. The amendments are largely 

teclmical in nature. They are designed to eliminate statutory loopholes, make the sentencing for 

FECA offenses more uniform; and improve the effectiveness of the Justice Department's 

cri.J."llinallaw enforcement responsibilities under the campaign financing laws. 

Most of the amendments we propose are the result of three decades of experience in 

enforcing the FECA. In addition, several of the proposals arose out of our more recent work 

with the United States Sentencing Commission, which was dire.cted by Congress to promulgate a 

seatencing guideline for FECA offen£es and to submit legislative recommendations regarding 

the enforcement of these Jaws. See Bipartisan Campaign Reform Act of 2002 (''BCRA .. ), § 314. 

In response to these congressional mandates, the Sentencing Commission promulgated a specific 

guideline for FECA crimes, U .S.S.G. § 2Cl.8. It also submitted legislative recommendations to 

eliminate inconsistencies in the penalties for FECA offenses and to reduce the felony threshold 

for two .FBCA offenses. See REPORT TO 1HE CONGRESS: INCREASED PENAL TIES FOR CAMPAIGN 

FINANCE OFFENSES AND lEGISlATJVE REcOMMENDATIONS (May 2003). 

Our main proposal is to harmonize sentencing for FECA offen~s by combining the two 

FECA felony provisions in the BCRA into a single felony provision that would apply to all 

FECA offenses involving S 10,000 or more. The Sentencing Commission included this 

recommendation in its 2003 report to Congress. The Justice Department concurs with. the 

Sentencing Commission's other two recommendations regarding felony exposure for two 

particularly aggravated violations of of FECA: coercion of certain contributions in violation of 2 

U.S. C. § 441b(b)(3) and misrepresentation of campaign authority to damage an opponent's 

campaign in violation of2 U.S. C. § 44lb(a). 

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FBCH DOJ PUBLIC INTEGRITY (FRIJ 6. 23' 06 14: 38/ST. 14: 37/NO. 4861578287 P 4' 

The Honorable J. Damis Hastert 

Pagel 

In addition, the Justice Department recommends. four steps to close inadvertent or 

unwarranted statutory gaps or loopholes: 1) amending the prohibition in 2 U.S.C. § 44lf against 

conduit contributions, so that it includes non-Federal donations; 2) amending the prohibition in 2 

U.S. C.§ 441g against contributing cash, so that it includes accepting cash; 3) amending the 

·prohibition in 2 U.S.C. § 441h(b) against fraudulent solicitations concerning candidates or 

political parties, so that it includes fraudulent solicitations concerning political committees; and 

4) amending the prohibition in 2 U.s:-c. § 439a against converting contributions to candidates, so 

that it includes contributions to political committees. 

We also are transmitting two minor proposals arising from the 2002 campaign .financing 

reforms. The first is adding to the FECA a definition of"dona.tion." The significance of this 

term under FECA has increased as a resuh of the BCRA and now is included in the FECA's 

criminal penalty provision, 2 U.S.C. § 437g(d). The second proposal is to extend FECA's 

mandatory period for retaining of records, from three years to five years. See 2 U.S.C. § 432(d). 

This change would hannonizc the FECA 's retention period with the BCRA's new five-year 

statute of limitations for prosecuting FECA offenses. See 2 U.S.C. § 455. 

The fioal c;,.tcgory or our proposals addresses the seiious difficulties that have arisen as~ 

result of the overlappingjuri~diction of the Department ofJustice and the Federal Election 

Commission \'FEC"') over knowing and willtW violations oftbe FECA. As discussed below, 

FECA's current structure imposes significant and frequently de1rimental obstacles that prevent 

the FEC from sharing with Federal prosecutors iDfonnation in the FEC's possession suggesting 

that Federal crimes have oeeurred. Our proposals are designed to remove these obstacles and 

facilitate che FEC's reporting of criminal intelligence to the Justice Department They would 

increase the Department's ability to investigate and prosecute FECA offenses as well as other 

Federal crime.c; involving schemes to obstruct the PEC's administrative, enforcement, and 

disclosure dutie.c;. 

The FEC's position is, that under current law, it can inform the Justice Department of 

infonnAtion in the FEC's possc~ion suggesting that an offense under FECA has occurred only 

after the FEC (1) ba~~; determined that there is ''reason to believe" a FECA violation bas occurred; 

(2) has conducted an investigation of the matter. (3) has determined that the investigation 

indicates that there is "probable cause to believe" a FECA violation has occurred and that the 

violation was "'knowing.and wiJlful;" and (4) then detemJines that the matter should be refened 

to the Department of Justice for prosecutorial evaluation. Su PECA, subparagraphs 437g(a)(2), 

(5)(C). Not only do these multiple determinations talce considerable time, at least four FEC 

commissioners must vote affinnativcly to take each step. Su FECA, subsection 437c(c). Given 

this procedure, it is not SUiprising that the FEC has made less than 20 criminal refem.Is since the 

FEC was created in 1975, and that, of this number, many were referred too close to the 

expir.ation of the statute of limitations to atl'o.rd an opportunity for appropriate investigation by 

the Justice Department 

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(FRil 6. 23' 06 14:38/ST. 14:37/NO. 4861578287 P 5 

The Honorable J. Dennis Hlll.1ert 

Pagc3 

Jn addition, when a formal referral has been made to the Justice Department, the FECA 

requires that the Justice Department furnish the FEC with monthly starus reports. See FECA, 

Subsection 437g(c). Th.is reporting requirement is contrary to the Department's usuaJ policy of 

not commenting on pending criminal investigations. 

These statutory impediments to sharing criminal intelligence with the Justice Department 

are aggravated by the FEe's interpretation of a statutory provision, FECA, subparagraph 

43 7g(a)(12)(A), that bars certain enforcement-related disclosures to the public. Subparagraph 

437g(a)(12)(A) states that "any notification or investigation made under [FECA ·s administrative 

enforcement piovisions} shall nuL be made public by the Commission or by any person ... " 

Violators of this prohibition are subject to monetary fines. Since its inception, the FEC has taken 

the position that the words "made public" include sharing with Justice Department prosecutors 

facts suggesting criminal offenses that are developed in the course of the FEC's administrative 

enforcement proceedings. As thus interpreted by the FEC, subparagraph 437g(a)(12)(A) has 

resulted in the FEC'a general refusal to share criminal intelligence with the Justice Department 

except through the tim.c-<:onsum.ing and uncertain formal referral procedure outlined above.1 

We disagree with the FEC's broad reading of the critical pbrase "made public." We 

believe that the sole intent of this provision was to prevent the F.EC and its staff from Jealcing the 

substance of pending enforcement matters to the media or the general public. During the past 

several years the FBC bas begun to adopt a more fluid inte~pretation of this provision and on 

occasion has shared information wilh us. This trend should be recognized and encouraged. 

However, we believe that the statutory provision remains an obstacle to effective 

communications, partly because section 437g(a)(l2)(B) may cast upon the Commissioners and 

Commission staff the shadow of individual liability for violating the prohibition and partly 

because referral of criminal intelligence to appropriate law enforcement authorities is among the 

FEC's enumerated ~wers" but not among its enumerated "duties." Cf. FECA, Subparagraph. 

437d(a)(9) (the FEC has the "power" to report apparent aiminal offense..; to ••appropriate law 

enforcement authoritiesj with fECA, Subsection 438(a) (the FEC has no corresponding "duty" 

to make such referrals). 

Although a Federal law enforcement agency, the FEC has no crimin~llaw enforcement 

authority and this is the only circumstance ofwhich we arc aware in which a Federal law 

enforcement agency may be shielded by statute from the usual duty to report to the Jus1ice 

'Where the Justice Department has become aware of a FECA offense, the FEC has been 

willing to tnako enforcement-related information available in response to a grandjwy subpoena. 

However) the FEC docs not believe that it has a duty to alert aiminallaw enforcement 

authorities to possible campaign financing crimes about which law enforcement authorities may 

not be aware. 

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'The: Honorable J. Dennis Haslen 

Page4 

Department information sugg~'ting the commission of Federal crimes. 2 The efficient 

administration of the Federal campaign fJ.DaDcing laws demands a requirement that agencies such 

as the FEC bring facts suggesting Federal criminal offenses ro Federal prosecutors for 

appropriate prosecutocial evaluation in a timely fashion. 

In S'W1l, the proposals we transmit will .inc::on:a.sc the coverage and effectiveness of the 

Federal campaiiO .financing laws. They build upon the significant law-enforcement advances 

achieved through the BCRA. We believe that they will enhance tbe scope and effectiveness of 

all oftbe Federal campaign financing laws. 

Ibank you for the opportunity to present our views. We have transmitted an identical 

letter to the President of the Senate. Please do not hesitate to call upon us if we may be of 

additional assistance. The Office ofManagemcnt and Budget bas advised that from the 

standpoint of the Administration's prugcam. there is no objection to the submission of this letter. 

Enclosure 

Sincerely. 

William E. Moschella 

ASsistant Attorney General 

IDENTICAL lEITER $ENT TO THE HONORABLE RICHARD B. CHENEY, PRESIDENT 

OF THE SBNATE 

2

Cf. Misprision of felony at 18 U.S.C. §·4 (subjecting a person who fails to report a crime 

to three years of imprisonment). 

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I. Amendment: 

AMENDMENT ONE: 

COMBINING FECA'S TWO FELONY PROVISIONS 

AND INCllEASlNG CIUMINAL FINES 

Section_. CrlmlDaJ penalties for violations of the Federal Election Campaign Act 

(a) Subsection (A) ofscction 309(cl)(l) of the Federal Election campaign Act (2 U.S.C. 

§ 437g(d)(l)(A)) is amended to read as follows: 

"(A) Any person who knowingly and willfully commits a violation of any 

provision of~s Act which involves the rruslc.ing, receiving, reporting, or non-rcporting1 of 

any contn'bution, donation, or expenditure-

"(i) aggregating S 10,000 or more during a calendar year shall be -

"(I) imprisoned for not more than 5 years, 

.. (II) finc:d not less than .500 percent of the.amount involved in the 

violation and not mo,re than the greater of$100,000 or 2,000 percent of the amount 

involved in the violation, or 

.. (DI) both imprisoned under clause (1) and fined under clause (II); 

or 

"(ii) aggregating $2,000 or more (but less than $1 0,000) during a calendar 

year shall be imprisoned for not more than 1 year, fined under clause (II). or both." 

(b) Subsection (D) of ~>ection 309(dXl) of the Fedenll Election Campaign Act (2 U.S.C. 

§ 43 7g( d)(l)(D)) is repealed and is replaced by the following: 

"(D) Criminal violations of the Act are subject to the fining provisions of 

subsection (A) and are nut ~ubject to the provisions of section 3571(e) of title 18, 

regardless of the amount involved in the violation. .. 

ll. Analysis: 

The 2002 Bipartisan Campaign ~form Act ("BCRA") added two felony penalties to the 

Federal Election Campaign Act's ('FECA ")misdemeanor provision. one for conduit crimes 

(contributions laundered through "straw" people or organizations in violation of2 U.S.C. § 44lf) 

and one for all other PECA crimes. This has resulted in unwarranted sentencing disparities for 

FECA offenses. We believe there should be a single fe1ony provision fur aJl FECA offenses. 

Currently, all FECA felonies other than conduit violations have a $25,000 monetary 

threshold and arc subject to a five-year term of imprisonment and fines imposed pursuant to 

1

We suggest adding the phrase, "or non-reporting'' to remove any doubt that nonreporting 

violations altio are covered. . 

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18 U.S. C. § 3S71 (with maximum tines of$250,000 for individuals and $500,000 for 

organizations; there is no mandatory minimum .fine). 2 U.S.C. § 437g(dXl)(A). In contrast, 

conduit offenses have a lower threshold, varying prison tenns, and generally higher fines. See 2 

U.S.C. § 437g(d)(l)(D). SpecificalJy, conduit offenses involving amounts between $10,000 and 

$24,999 are felonies subject to a two-year term ofimprisonment, while those aggregating $25,000 

or more are subject to five-year terms. Conduit violations also have a special fining provision, 

which provides for a mandatory minimum fine of300% oftbc amount ofthe violation and a 

tnaJtimum fino of the greater of $50,000 or l,OOOOA of the amount of the violation. Conduit 

misdemeanors, on the other hand, are fined under title 18 of the United States Code, as are FECA 

misdemeanors not involving conduits (maximum ,fines of $100,000 for individuals and S200,000 

for organizations, with no mandatory minimum fine). Thus, not only are conduit crimes treated 

differently than all other FECA offenses. the fining provisions for conduit felonies and conduit 

misdemeanors ditrer. 

Conduit violations arise when the donor attempts to dis81lise a substantive FECA violation, 

such as a contribution :frOlJl a corporation or foreign national. In other words, they are a means to 

an illegal end. Treating these violations differently than the substantive vjolation they are used to 

achieve is both confusing and, in our view, unwarranted We recommend eliminating the 

sentencing inconsistencies resulting from these two felony provisions by combining them into a 

single provision providing for aS 10,000 tbrcsbold, a five-year tenn of incarceration. and the fming 

structure that, under current law, is Jimited to conduit felonies. We note that Sentencing 

Commlssian also made this recommendation. 

We also recommend increasing the mandatory minimum fine for all FECA offenses to 

500% of the amount involved in the violation and the maximum fine to the greater of$100JOOO or 

2,000GA of the amount of the violation. We believe these increases are warranted. In addition, 

they would decrease the number of eases in which the correct crimioal fine for conduit violations 

was unclear. See 18 U.S.C. § 357l(e) (requiring fines under title 18 where the substantive statUte 

provides for a lower fine. unless the statute expressly exempts the title 18 .fines). 

The FECA's felony conduit provision does not exempt the title 18 fmes. As a result, these 

fines would apply to some- but not all - conduit crimes, depending on the amount involved in the 

violation. For example, if the violation was under $25,000, the FECA fine would be lower than 

the title 18 fine, arguably triggering application of subsection 357l(e), which would trump the 

FECA fine. However, in such cases, another issue arises: whether the mandatozy minimum fine 

for conduit felonies also is trumped. If it is, the result is a fining anomaly. Some conduit felonies 

would be subject to a mandatory minimum fine and some would not This is not a rational 

set1tencing result. 

We believe the applicable flning formulae should be the same for alJ FECA crimes. To 

achieve this result, the FECA • s criminal provision should expressly exempt the title 18 fines. The 

amendment we propose would ensure fining consistency for campaign financing offenses and also 

resolve current issues regarding the applicable line in particular cases. 

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The= amcndm.enL would subject all FECA o.ffcoses to the same felony and fming provisions, 

it would resolve issues regarding the applicable criminal fines, and it would eliminate the existing 

sentencing disparities and inconsistencies. 

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· AMENDMENT 'IWO: 

CONFORMING THE CONDUIT PROBIBiTION TO PROHIBITIONS BARRING 

NON-FEDERAL DONATIONS BY FOREIGN NATIONALS, NATIONAL BANKS, 

FEDERAL CORPORATIONS, AND NATIONAL PARTIES 

I. Amendment. 

Section _. Strengthening ban on contrlbutiou in the name of another. 

Section 320 of the Federal Election Campaign Act ( 2 U.S.C. § 441 f) is amended to li'tate 

the foJlowing: 

"Sec. 320. Contributions and Donations In Name of Another Prohibited • 

.. (a) Federal Contributions. No person shall make a contribution in the 

oaw~ of another person, or knowingly permit his or her name to be used to effect 

such a contribution, and no person shall knowingly accept a contnbution made by 

one person in the name of another person. 

"(b) Non-Federal Donations . 

.. (1) No foreign national, national bank, federally chartered 

corporation, or national committee of a political party (incJuding a national 

congressional campaign committee of a political party), shall make a donation in 

the name of a.n.other person, or knowingly pemrit his or her namt: to be used to 

effect such a donation, and no person shall knowingly accept a donation from a 

foreign national, nationaJ bank, federally chartered corporation, or national 

committee of a political party (including a national congressional campaign 

committee of a political party) in the name of another person . 

.. (2) As used in this subseCtion, the tenn "donation" means a 

donation as defined by section 308(27) of this Act (2 U.S.C. § 431(27))." 

11. Analysis: 

The FBCA prohibits the use of straw people or organizations, or conduits to disguise illega) 

''contributions," such as those from illegal sources orthosoin excess oftheAct's limits. 2 U.S.C. 

§ 441 f. Because the term "contribution" is limited to funds to influence Federal elections (see 2 

U.S.C. § 431 (8)), this prohibition docs not reach schemes to launder funds to State or local 

candidates. However, three important FECA prohibitions extend to non-Federal donations: 

Section 441 e and subsection 44 l b(a) prohibit foreign nationals, and national banks or Federal 

corporations, respectively, from making donations to any Federal, State, or l~ candidate or 

committee, and Section 441 i prohibits national party committees from accepting so-ca1led "soft 

A·4 

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money" donations, i.e., "non·Pederal" funds that are given osteMibly {or State or local candidates. 

The current cnnduit statute does not apply to funds laundered from these entities to non-Federal 

candidates. 

Thus, for a.a.mple. if a foreign national used "straws" to disguise donations to a State 

candidate, this would violate section 441 e,2 but it would not violate section 44Jf. Where a 

substantive }''BCA prohibition reaches non-Federal donations, the use of conduits to circumvent 

that prohibition should be a FECA offense. The failure of the conduit statute to reach these 

donations should be rcmcdjed. 

The amendment would close the existing gap in the conduit statute and make the use of 

con:duits to violate a FECA prohibition addressing non-Federal donations a separate offense, as is 

Lhe case: now for conduit violations relating to Federal elections. 

2 Section 441 e prohibits indirect donations as weD as dircot donations, and hence the 

conduit donation would be a prohibited indirect donation by a foreign national. 

A-S 

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AMENDMENT THREE: 

PROHIBITING T.HE RECEIPT OF CA.SB CONTRIBUTIONS IN EXCESS OF $100 

I. Amendment: 

Section _. StrengthCJling ban on cub contributions. 

Section 321 oflheFederaJ Election Campaign Act {2 U.S.C. § 44Ig) is amended by-

(a) inserting ''(a)" before the existing text and adding the following text at the end thereof: 

"(b) No candidate, agent of a candidate, or authorized political 

committee or a candidate shall knowingly accept any contribution in excess 

of the Jim.it imposed by this section:·; and 

(b) ioserting the phrase "and acceptance .. in the caption after the word "contribution". 

IT. Analysis: 

The PECA prohibits a person from coutn"buting cash to the c~gn of a Federal 

candidate aggregating in excess of$100. 2 U.S.C. § 44lg. The limit is cumulative and applies to 

the entire campaign, including the pritnal}' Uld general election. However, the statute does not 

prohibit the campaign from receiWtg such cash contributions. 

The limitation on cash contributions is intended to decrease circumvention of the Act's 

contribution limits, prohibitions, and reporting requirements. 2U.S.C. § 441a. § 441b, § 44lc, 

§ 441e, § 434(b). We see no reason why the acce~ce of cash contributions in excess of the 

$ J 00 limit should not also be a substantive violation. 

The a.mendmeDt would oriminalizc the actions of a candidate or agent of a candidate who 

accepted a cash contribution aggregating over S 100 during the candidate's campaign for Federal 

office, as the FECA currently criminalizcs the actions of the donor. 

A-6 

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AMENDMENTS FOUR THROUGH NINE: 

FACILITATING THE R£PORTlNG OF CRIMINAL lNTELLIGENCE 

BY THE FEDERAL ELECTION COMMISSION 

I. Amendments aud EJ:planations3 

Amendment Four: 

Subsection 307(a) oftheFcdcralEJ.ection Campaign Act ('"Powers of the 

Commission, Specific authorities," 2 U.S.C. § 437d(a)(9)) is amended by repealing 

the phrase .. , and to report apparent violations to the appropriate law enforcement 

authorities:· 

Explanation: This amendment would elim.iDate the discretionary authority of the Federal Election 

Commission ("FBC") to refer criminal matters4 to the Department of Justice. See Amendment 5, 

below, which would make such referrals mandatory. 

Amendment Five: 

Subsection 3ll(a) of the Federal :Election Campaign Act routies of the 

Commission," 2 U .S.C. § 43 S(a)) is amended by in,serting the following as a new 

Subsection (a)(ll ): 

"(a}(ll) report information suggesting thai a criirrinal 

violation of the Act has occurred to appropriate law enforcement 

authorities." 

Exp1211ation: This amendment would provide lhat the FBC has a duty to report criminal FECA 

matters to appropriate law enforcement authorities, namely, to the Justice Department, which has 

exclusive jurisdiction over criminal violations of the FECA. 

JWe have grouped together our proposals relating to enforcement issues concermng the 

FEC. Bach amendment is followed by a brief explanation. A more detailed explanation is 

provided after the amendments. 

•subsection 437d(a)(9) states: "[The Commission bas the power] to conduct 

investigations and hearings expeditiously, to cucouragc voluntary compliance, and to report 

apparent violations to appropriate law enforcement authorities" (emphasis added). 

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Amendment Six: 

Subsection 309(a) of the Federal Election Campaign Act ("Administrative 

and judicial practice and procedure," 2 U.S.C. § 437g(a)) is amended by repealing 

Subsection 437g(aXS)(C). 

Explanation: Subparagraph 437g(a)(5)(C) provides that the FEC "may'' formally refer criminal 

matters to the Justice Department, but only after the Commission pursues a time-consnming and 

uncertain administrative process. This provision D:O longer would be necessary if subsection 

43 8(a) were amended, as propostld in AmendmentS, $Upra, to change this discretionary referral 

power to a statutory duty. 

Amendment Seven: 

Subsection 309(c) of the Federal Election Campaign Act ("R.epons by 

Attorney General of apparent violations," 2 U.S.C. § 437g(c)) is repealed. 

Explanation: Subsection 309(c) oftbe Federal Election Campaign Act requires that the Justice 

Department periodically report back to the FBC on the status of matters referred to the Department 

by the Commission. Such reports are unnecessazy as well as inconsistent with the Department•s 

long-standing policy of not commenting on pending criminal investigations. The amendment 

would repeal this reporting requirement. 

Am~ndment Eight: 

Subsection 309(a) of the Federal Election Campaign Act (" Adm.inistrativc 

and judicial practice and procedure," 2 U.S.C. § 437g(a)) ia amended by adding the 

following text to subsection (12)(A) thereof 

"This subsection shall not apply to the Commission's duty to report 

information suggesting that a criminal violation has occurred to the 

appropriate law enforcement authorities pursuant to subsection 311 (a)(ll)." 

Expla.oatioh: Subsection 437g{a)(l2)(A) states that any notification of an investigatjon by the 

FEC shall not be "made public" by the FEC or any other person without the written consent of the 

perSon receiving the notification. The proposed amcndmcnl would <:larify that this provision does 

not bar the FEC from providing criminal intelligence in.fo.cmation to law enforcement authorities. 

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Amendment Nine: 

Subsection 306(c) ofthe Federal Election Campaign Act ("Voting 

requirements; delegation of authorities," 2 U.S.C. § 437c(c)) is amended by adding 

the fo11owing to the end thereof: 

"The provisions of this section shall n~t apply to the discharge of the 

Commission • s duty to report information suggesting that a criminal 

violation of the Act has occurred to appropriate law enforcement authorities 

a.s required by subsection 31l(a)(Il).', 

Explanation: Subsection 437c(c) requires that at least four of the six P.EC Commissioners vote in 

favor in order to talce substantive action. The amendment would require the Commission to refer 

infocmation suggesting a Federal crime to law enfoxc:ement authorities, including the Justice 

Departnient, without making the discharge of that duty contingent upon a vote by the Commission. 

ll. Analysis: 

During the past 30 years, the statutory provisions discussed above have presented 

unwananted obstacles to the exchange of criminal intelligence between the Commission and 

criminal law enforcement authorities. 

As an initial matter, the Commission believes that it can bring to the Justice Department 

infonnation in its possession that suggests a FECA crime has occ\UTed only after the FEC: (I) has 

delennined that there is ''reason to believe" a FECA violation has occurred; (2) has conducted an 

jnvestigation of the matter; (3) has detennined that the investigation indicates there is 1'probable 

cause to believe" a FECA violation has occurred and that the violation was "knowing and willful;" 

and (4) has detmnined that the matter should be referred to the Department of Justice. 2 U.S. C. 

§§ 437g(a)(2), (SXC). Not only do these multiple determinations take considerable time, each 

must be made by the affirmative votes of at least four of the six Commissioners. 2 U.S.C. § 

437c(c). As a result, some potential criminal matters never get referred to the Department and 

others may be referred too late for effective prosecution. 

These numerous statutory impcdjments to the reporting of criminal intelligence have been 

aggravated by the FEC's paSt intetpretation of·a FECA provision that bars certain enforcementrelated disclosures to the public, see 2 U.S.C. § 437g(a)(l2)(A) ("any notification or investigation 

made under [FECA's administrative enforcement provisions] shall not be made public by the 

Commission or by any person"). Since its inception, the FEC has intetpreted the words "made 

public" to include sharing information wjtb Justice Department prosecutors.5 Recently, the H!C 

5

We disagree with the FEC's interpretation .. We believe the provision was inlended 

merely to prevent the Commission or its staff .from leaking facts regarding its pending civil 

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has begun to modify its past intt:tpretation on an infonnal case-by-case basis. However, the 

existing statutory text remains an obstacle ·to useful law enforcement communications and should 

be darified. 

Fjnally. the Commission does not believe it bas a duty to alert law enforcement authorities 

to possible campaign financing crimes about which law enforcement authorities may be unaware, 

although it has been willing to make certain enforcement-related information available ln response 

to a grand jury subpoena. We are aware of no other circumstance where a Federal law 

enforcement agency may be shielded by statute from the usual duty to report infonnation 

suggesting Federal crimes to the Justice Department.' 

The amendments are ·designed to increase the efficient administration of the Federal 

campaign financing laws. by eliminating unwmanted obstacles to Justice Department 

communications with the FEC and by requiring the Commission to bring facts suggesting Federal 

criminal offenses to Federal prosecutors for appropriate criminal evaluation in a timely fashion. 

enforcement matter& to the media or the general public. 

6

CJ 1 8 U.S.C. § 4 (misprision of felony). 

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AMENDMENT TEN: 

ELIMINATING MISDEMEANOR PENALTY FOR CAMPAIGN 

MISREPRESENTATION AND FRAUDULENT SOUCJTATIONS 

I. Amendment: · 

Section 309(d)(l) of the Federal Election Campaign Act (2 U.S.C. § 

437g(d)(l)) is amended by striking section 309(dXl)(C) (§ 437g(d)(I)(C)) and 

inserting the following: 

0. Analysis: 

"(C) In the ca.c;e of a knowing and willful violation of section 

44lb of this title, the penalties set forth in subsection (A)(i) shall 

apply without regard to the amount involved in the violation." 

In addition to its contribution limitS and source-prohibitions, the FECA contains a statute 

that addresses fraudulent activities involving campaigns and fundraising, 2 U.S. C. § 44lh. 

Because the focus of section 44lh is on fraudulent conduct and not on monetary limitations, 

criminal violations of the statute have no n1onetary floor. In contrast, all of the other YECA 

offenses have a monetary floor that must be satisfied before a violation may constitute a potential 

crime. 

As a result of the BCRA, section 44lb now contains two prohibitions, one addressing socalled campaign "dirty tricks,'~ and. the other fraudulent solicitations. Subsection 44th( a) prohibits 

the misrepresentation of authority by a candidate or an agent of a candidate in a manner that is 

damaging to any other candidate or political party. In light ofthe substantial damage that can 

occur to the campaign of a candidate who is the target of this type of offense, the United States 

Sentencing Commission recommended in its May 2003 Report to Congress that this offense be a 

felony, regardless of the amount involved in the violation. We agree with this recommendation. 

Section 44lh's second provision, enacted by the BCRA, probibjts a person from 

fraudulently misrepresenting himself or herself as acting on behalf of a candidate or political party 

for the purpose of soliciting contributions or donations. 2 U.S.C. § 441h(b). We believe the 

rationale behind the Sentencing Commission's recommendation regarding the penalty for 

campaign misrepresentations also applies to the statute's new prohibition against fraudulent 

soHcitations. In both cases, the amount oftwm occasioned by the defendant's fraudulent conduct 

is not dependent upon the amount of funds the defendant obtains or spends. 

The amendment would remove the misdemeanor penalty for misrepresentation of 

campaign authority in violation of subsection 44lh(a) and for misrepresentation of authority to 

solicit contributions in violation of subsection 441h(b), so that all such violations would be 

felonies. 

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AMENDMENT ELEVEN: EXTENDING THE FRAUDULENT SOLICITATION 

PROBJBITION TO CONTRIB'Vl'IONS TO POLITICAL COMMITTEES 

I. Amendment: 

Section 322(b) of the Federal Election Campaign Act (2 U.S.C. § 44lh(b)) 

is amended by adding the phrase", political committee," after the phrase "on behalf 

of any candidate ... 

H. Analysis: 

As noted above, subsection 441h(b) is a new FECA provision that prohlbits fraudulent 

solicitations on behalf of a candidate or political party. However, the statute does not apply to 

fraudulent solicitations on behalf of a political committee. We believe it should. The amendment 

would extend the statute to reach fraudulem solicitations by an agent of a political committee, so 

that all fraudulent solicitations, whether ostensibly on behalf of a candidate, politic31 party, or 

political committee, would be covered by the statute. 

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AMENDMENT TWELVE: EXTENDING PROBIBITION AGAINST CONVERTING 

CONTRlBUTIONS TO CANDIDATES TO REACH 

CONTRlBUTIONS TO POLITICAL CO.MMlT'I'El!:S 

1. Amendment: 

Section 314(a) of the Federal Election Campaign Act (2 U.S.C. § 439a) is 

amended by inserting the phrase", or by a political committee,'" after the phrase 

.. accepted by a candidate." 

II. A.n.alysis: 

The .FECA regulates, inter alia, contributions that are made to an:y candidate for Federal 

office as weli as contributions that arc made to any political committee thai ra,jses or spends funds 

to influence a Federal election. Su, e.g., 2 U.S.C. § 431(2) (definition of"candidate"}, § 431(4) 

(definition of "political committee"), § 434 (reporting reqwrements), § 441 a( a) (contribution 

limits). In addition, in the case of contributions to a Federal candidate, FECA prohibits the 

candidate or any other person from convcrling such contributions to his or her personal use. 

2 U.S.C. § 439a. However, section 439a does not apply to contributions that are made to a 

political committee that is not an authorized committee of a. Federal candidate. 

Thus, if an official or agent of a political committee that was not a candidate's campaign 

committee- or any other person- embezzled funds that were contributed to the political 

comminee, section 4391 would not be violated. 7 Although in such cases the conduct might be 

prosecuted under other legal theories (such as mail :fraud). we believe that the FECA's conversion 

statute also should reach embeWemenl of funds that have been contributed to a political 

committet. The amendment would accomplish this. 

7

We cur.rently have such a matter under investigation. 

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AMENDMENT TBIR.TEEN: ADDING A DEFINITION OF THE TERM "DONATION" 

J. Amendment: 

Section 301 of the Federal Election Campaign Act ( .. Definitions." 2 U.S.C. 

§ 431) is amended by adding the following at the end thereof: 

II. Analysis: 

"(27) the term "donation•• means a gift, subscription, Joan, 

advance, deposit of money, or anything of value made for the 

pmpose of influencing or in connection with an election other than 

an election for Federal office, but such tenn does not include those 

items set forth in section 301{8)(B) of the Act (2 U.S.C. § 

431(8)(B))." 

Several important provisions of the FBCA, including its criminal provision. utilize the term 

"donation.'• While this term generally is underStood to mean a political gift that is made for a nonFederal political purpose- in other words, for the benefit of a State or local candidate or political 

committee- the term is not defined in the Act. As a result of the BCRA, campaign financing 

violation$ involving "donations" now may be subject to prosecution. We believe it would assist 

law enforcement to have a statutc>I)' defmition of the term. Our proposal would add a definition of 

"donation" to the Act. 

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AMENDMENT FOURTEEN: EXTENDING PERIOD FOR RETENTION 

O:F RECORDS TO FlVE YEARS 

I.. Amendment: 

Section 302(d) of the Federal Election Campaign Act ( .. Preservation of records and 

copies of reports," 2 U.S.C. § 432(d)) 1s amended by deleting t~ phrase, "for 3 years" and 

inserting the phrase .. for S years." 

II. Analysis: 

The campaign refonns contained in tbe Bipartisan Campaign Refonn Act of2002 included 

a number of significant tools to assist the Department's dforts to prosecute campaign financing 

crimes. Most notably, the BCRA created two new felony penalties for FECA crimes, and <lirected 

Lbe Sentencing Commission to promulgate a strong sentencing guideline for these crimes, which is 

nc>w in place, U.S.S.G. §2C1 .8. 2 U.S.C. § 437g(d); BCRA, § 314. 

The BCRA also assisted criminal law enforcement efforts by extending fue FECA's special 

three-year statute of limitations to prosecute FECA crimes to five years. 2 U.S.C. § 455 (2003). 

However, the BCRA did not similarly extend FECA 's three-year retention period for FECA 

records to five years. 2 U.S.C. § 432(d) (2003). 

Hence, although the Department now has five years to prosecute ·FECA crimes - many of 

which are punishable as felonies- records relating to two of these five years are not required to be 

maintained. these campaign r~cords play an imponant pan in the investigation and prosecution of 

FECA crimes. and the three-year retention period has presented problems for us in the past. The 

amendment would harmonize the FECA's records retention period with its criminal statute of 

limitations. · 

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