FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

January 24, 2012 

MEMORANDUM 

TO: 

FROM: 

Patricia Carmona 

Chief Compliance Officer 

Tom Hintermister 

Assistant Staff Director 

Audit Division 

Christopher Hughey 

Deputy General Counsel 

Lawrence L. Calvert, Jr.^ 

Associate General Co 

General Law and Adv' 

Lorenzo Holloway 

Assistant General Counsel 

Public Finance and Audit Advice 

Margaret J. Forman " ^ 

Attomey 

SUBJECT: Draft Final Audit Report on The Legacy Committee Political Action Committee 

(LRA #815) 

L INTRODUCTION 

The Office of General Counsel ("OGC") has reviewed the Draft Final Audit Report 

("Proposed Report") on The Legacy Committee Political Action Committee ("LCP" or 

"Committee"). We concur with Findings 1 (Misstatement of Financial Activity) and 2 (Failure 

to File Notices and Properly Disclose Independent Expenditures) in the Proposed Report. In its 

response to the Interim Audit Report, the Committee primarily addressed Finding 2. This 

memorandum analyzes the Committee's arguments about this finding. If you have any questions, 

please contact Margaret J. Forman, the attomey assigned to this audit. 
Memorandum to Patricia Carmona 

The Legacy Political Action Committee DFAR 

Page 2 

IL BACKGROUND 

LCP made expenditures for 60 separate direct mail fundraising appeals, a number of 

which included express advocacy. LCP originally reported these expenditures as operating 

expenditures. LCP admitted, after discussions with RAD, that a number of the fundraising 

letters "included content which contained some words of express advocacy." ETEXT 

ATTACHMENT, Dec. 18,2008 (FEC Image #28935204773). LCP then disclosed over $1 

million in independent expenditures on Schedule E of its amended reports, and filed some, but 

not all, ofthe 24/48-hour notices where such notices would have been required. 

The Audit Division determined that some of the letters disclosed as independent 

expenditures in the amended reports contained express advocacy and should have been timely 

disclosed through 24/48-hour notices; in our comments on the Interim Audit Report, we 

generally concurred.^ However, the Audit Division and Office of General Counsel determined 

that many ofthe letters disclosed as independent expenditures in the amended reports did not, in 

fact, contain express advocacy. The interim audit report ultimately concluded that $412,891 of 

the expenditures were in fact independent expenditures, in that the underlying communications 

contained express advocacy pursuant to 11 C.F.R. § 100.22. The interim audit report 

recommended that LCP provide evidence demonstrating that the disbursements were not 

independent expenditures and therefore did not require 24/48-hour notices, and submit and 

implement revised procedures for reporting independent expenditures. 

LCP responded to the interim audit report by acknowledging that some of the 

communications contained express advocacy. LCP asserts, however, that it "never intended to 

engage in any independent expenditures," that these "communications were all just fundraising 

letters sent to proven donors with no consideration at all to whether the recipient was even a 

voter," that the timing of the letters "had absolutely no reference to the timing of primary 

elections during 2008," and the content of the letters "did not urge the recipient audience to vote 

for any particular candidate."^ 

' The Office of General Counsel analyzed the communications, providing a detailed chart of whether the 60 

types of communications included express advocacy. 

^ LCP states that the fundraising letters were not made in reference to any primaiy election; 

however, LCP reported the independent expenditures associated with these underlying communications as 

being made for the 2008 general election, not the primaiy. 
Memorandum to Patricia Carmona 

The Legacy Political Action Committee DFAR 

Pages 

III. ANALYSIS 

In our analysis of the Draft Interim Audit Report, we concluded that fundraising 

letters can be independent expenditures as a matter of law, so long as the underlying 

communication meets the definition of express advocacy. We reach the same conclusion 

in the following comments on the Draft Final Audit Report. Contrary to LCP's position, 

the regulation defining express advocacy does not permit an examination of the speaker's 

intent when making the communication. We believe a test that incorporates the speaker's 

subjective intent would not be workable. 

A. Fundraising Communications as Independent Expenditures 

The Commission has found that fundraising solicitations containing express advocacy 

should be reported as independent expenditures. In MUR 5809, the Christian Voter Project 

("CVP") failed to file independent expenditure notices for the costs of fundraising letters that 

expressly advocated the election/defeat of candidates. The Commission found reason to believe 

that CVP's failure to file independent expenditure notices violated the Act, and accepted a 

conciliation agreement with the committee based on that violation. In MUR 5518 (Hawaii 

Democratic Party), a party communication contained at least three messages: an invitation to 

precinct meetings, express advocacy of the defeat of a clearly identified Federal candidate, and a 

fundraising appeal. The Office of General Counsel concluded the communication should have 

been reported either as an independent expenditure or as federal election activity, and 

recommended that the Commission find reason to believe. The Commission rejected our 

recommendation, not on grounds that solicitations could not be independent expenditures but on 

grounds that invitations to precinct meetings permitted treatment as a federal/non-federal 

allocated administrative expense under the exception to the definition of federal election activity 

for costs of local political conventions, 2 U.S.C. § 431(20)(B)(iii). In particular, Commissioners 

von Spakovsky and Weintraub stated in their Statement of Reasons that "had this invitation been 

mailed more bnroadly than it was, and in sufficient numbers to raise questions about whether it 

was a bona fide invitation, or if it was really just a fundraising or advocacy piece masquerading 

as an mvitation, this would be a different case." MUR 5518 (Hawaii Democratic Party), 

Statement of Reasons of Commissioners Hans A. von Spakovsky and Ellen L. Weintraub, at 3 

(Feb. 23,2007); cf. MURs 5511 and 5525 (Swift Boat Veterans for Truth) (fundraising 

solicitations containing express advocacy were expenditures that counted towards organization's 

threshold for political committee status).^ 

B. Express Advocacy Analysis Does Not Allow for Subjective Intent 

In its response to the interim audit report, LCP repeatedly asserts that it never intended 

the fundraising letters to expressly advocate the election or defeat of a clearly identified 

' Some commissioners have expressed concems, in other pending matters, about the extent to which 

fundraising letters necessarily constitute express advocacy. 
Memorandum to Patricia Cannona 

The Legacy Political Action Committee DFAR 

Page 4 

candidate.^ The Commission's regulations, however, do not provide any consideration for the 

speaker's subjective intent, when considering whether the conununication expressly advocates 

the election or defeat of a clearly identified candidate. 11 C.F.R. 100.22. Rather, the regulations 

provide two possibilities when considering whether a conmnmication contains express advocacy: 

(1) the communication uses phrases such as "vote for the President," "Smith for Congress," 

"defeat" accompanied by a picture of one or more candidates, etc.; or (2) when taken as a whole 

and with limited reference to extemal events, the communication could only be interpreted by a 

reasonable person as advocating the election or defeat of a clearly identified candidate because 

the electoraJ portion of the communication is immistakable, unambiguous and suggestive of only 

one meaning, and reasonable minds could not differ as to whether it encourages actions to elect 

or defeat one or more clearly identified candidates. Id. Moreover, the Explanation and 

Justification for the express advocacy regulations, following FEC v. Furgatch, 807 F. 2d 857 (9^ 

Cir. 1987), specifically states that '*the subjective intent of the speaker is not a relevant 

consideration" under section 100.22. 60 Fed. Reg. 35291,35295 (July 6,1995). See also MUR 

5635 (Sierra Club), General Counsel's Report # 2 at Note 7 (July 3,2006) (subjective intent of 

speaker is not relevant consideration under section 100.22(b)). Thus, even if LCP did not intend 

to expressly advocate the election or defeat of a clearly identified candidate, its subjective intent 

is not a factor pursuant to 11 C.F.R. § 100.22. 

Legacy appears to argue that communications should not be considered independent 

expenditures if the subjective intent of the speaker is somehow not to urge the reader to vote for 

or against a candidate — even those commimications that otherwise contain expiess advocacy as 

defined in 11 C.F.R. § 100.22(a), such as the ones here that urge the reader to "make sure John 

McCain is elected in November," to "help stop [Hillary] Clinton," and that "John McCain needs 

your vote," or that simply state "John McCain for President." 

It is our view that a communication that tells the reader that "John McCain needs your 

vote" does, contrary to the Committee's response, "urge the recipient to vote for any particular 

candidate." Beyond that, however, the introduction of a subjective intent test into express 

advocacy analysis would tum the question into a loosely governed inquiry into the speaker's 

"purpose." But, with respect to independent expenditures, the Supreme Court in Buckley v. 

Valeo, 424 U.S. 1,79-80 (1976), constmed the term "expenditure" as limited to "express 

advocacy" precisely because the term "for the purpose of influencing" would otherwise have 

been unconstitutionally vague. 

* LCP states that it ''never intended to engage in any independent expenditures." Rather, LCP states that it 

simply "tested various different content appeals in the letters." LCP further states that purpose ofthe letters that 

"included content with references to elected officials and Presidential candidates" was "to clue the recipient 

'audience that [LCP] was a conservative Republican PAC worthy of their support, but the purpose ofthe mailings 

themselves ... was not to intervene in any election by engaging in a true independent expenditure (i.e., an election 

communication intended to influence a vote in an election for or against a candidate)."