Jim Lacy To aboniewicz@fec.gov, jmiiier <jmlller@fec.gov> 

<ianies.l8cy@weweriacy.coin 

y ^ CO Barry Garcia <barrettgarcia@hotmail.com>, alex Tomescu 

<alex@wewerlacy.com> 

05/16/2012 12:28 PIVI bcc 

Subject Final audit response - NCF 

I History: fhis message lias been forwarded. ~j 

Dear Mr. Boniewicz: 

We are not requesting a hearing on the Final Audit but we are submitted the attached letter 

supplemental to our prior letter in this matter. We will also send the attached by regular mail. 

Thank you. 

Sincerely, 

James V. Lacy 

Wewer & Lacy, LLP 

Wewer&LacyLLP '^f^-i'M^. 

Leaders in Nonprofit and Election Lav; - ; -^ -v 

Visit our website at www.wewerlacv.com 

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NCF.supplemental.5.16.12.PDF 
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OVCRNieHT DELIVCRlEa 

May 11.2012 

To: Tom Hintermister 

Assistant Staff Director 

Audit Division 

Federal Election Commission 

999 E Street, NW, Washington, D.C. 20463 

Re: Response to Draft Final Audit Report on National Campaign Fund (LRA 847) 

The National Campaign Fund ("The Committee') has received the Draft Final Audit 

Report of the Audit Division of the Office of General Counsel, and we would like to present this 

supplemental letter In response to the Memorandum. Initially, The Committee would like to 

express our strong opinion that The Committee demonstrated through clear and objective facts, 

and the Audit Division agreed, that The Committee's intention was to raise funds via direct-mail 

letters. Furthermore. The Committee continues to believe that the occasional Inclusion of 

express advocacy language in fund-raising direct-mall letters should not automatically lead to a 

finding that the letters meet the definition of an independent expenditure. The communications 

were fund-raising letters and not intended to influence a vote, clearly evidenced by the fact that 

the letters were not timed to a particular election and sent only to those on donor lists. 

The Committee offered several objective markers that clearly indicate that the direct-mall 

letters were not independent expenditures. First, The Committee stated, and the Audit Division 

agreed, that the timing of all the mailings had no reference to the timing of primary elections 

during 2008. The timing of the distribution of the mailings makes this point abundantly clear. For 

comparison, the Internal Revenue Service Revenue Ruling 2004-6 applied a "facts and 

circumstances" test to determine whether a communication by a tax-exempt organization is 

subject to a penalty for engaging In political campaigns on behalf of or opposition to candidates 

for public or party office. 
One of the factors considered under the lacts and circumstances" test is whether "the 

timing of the communication coincides with an electoral campaign". This, the ruling goes on to 

explain, is dependent on whether the timing of the communication coincides with a specific 

event outside the control of the organization that the organization hopes to Influence. In the 

present controversy. The Committee has shown that the direct-mail letters were not timed to 

coincide with the primary election during 2008, and therefore could not have expressly 

advocated for the election or defeat of a clearly Identified candidate. As such, the direct-mall 

letters sent out for the purpose of political fund-raising could not conceivably be considered an 

independent expenditure. 

Another objective marker that The Committee put forth to demonstrate to the Audit 

Division that the communications did not meet the definition of an Independent expenditure is 

that The Committee did not target voters in a particular election; rather. The Committee sought 

and obtained lists of proven donors to Republican and conservative causes, without regard to 

whether the lists had any propensity to vote, or were even registered voters. The facts 

demonstrate the intended audience for the direct-mall letters were selected for Its fund-raising 

value, not its electoral value. Again, Revenue Ruling 2004-6 proves instructive in the type of 

communications that should not subject tax-exempt organizations to penalty. 

One of the factors listed in the 'facts and circumstances" test is whether the 

communication "targets voters In a particular election". Already, The Committee has clearly 

shown that no recipient of the communication was targeted "in a particular election". 

Furthemriore, Revenue Ruling 2004-6 states that the tax-exempt organization is prohibited from 

an advocacy communication that identifies a candidate in an election, appearing shortly before 

that election, 'and targets the voters in that elecliorf. The Committee has proven, and no 

contrary finding of fact contradicts, that The Committee obtained lists of proven donors, not 

voter lists, to serve as the audience for the communications. 

The Committee strongly believes that direct-mall fund-raising letters, sent with no regard 

to the timing of the primary elections of 2008, to an audience sought out only for Its fund-raising 

value, cannot be Interpreted as "a communication expressly advocating the election or defeat of 

a clearly identified candidate", as an independent expenditure is defined. The Audit Division 

2 
does not dispute that The Committee's intention was to raise funds, yet the FEC staff states that 

"express advocacy language" exists in the communications and the regulation does not exclude 

direct-mail fund-raising letters from the definition of independent expenditure, so the letters must 

be independent expenditures. However, The Committee has shown, with no contrary statement 

from the Audit Division, that the letters were not timed to any particular election, nor were the 

letters targeted to voters in a particular election. It logically follows that there is no express 

advocacy in favor of or In opposition to a candidate, since the letters are sent to donors with no 

consideration to the timing of an election. 

The Committee urges the Commission to discount the conclusions of the Audit Division 

of the General Counsel's office that our legal position is that you just need trust our "subjective 

intent" that the direct-mail fund raising letters are not independent expenditures. To the 

contrary, the facts objectively establish, consistent with the markers published and recognized 

by a another Federal agency under a different statute, the internal Revenue Service no less, 

that The Committee has presented facts and reasoning which clearly show the communications 

to be what they are: direct-mall letters sent to proven donors to Republican and conservative 

causes for the express purpose of fund-raising, and not independent expenditure election 

activity. The Commission should so find. 

Sincerely, 

James V. Lacy 

For The National Campaign Fund