IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA

CAMPAIGN LEGAL CENTER and 

DEMOCRACY 21, 

Plaintiffs, 

v. 

FEDERAL ELECTION COMMISSION, 

Defendant, 

F8, ELI PUBLISHING, and 

STEVEN J. LUND, 

Intervenors-Defendants. 

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Civil Action No: 1:16-cv-00752-JDB 

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 

The plaintiffs, Campaign Legal Center and Democracy 21, by their undersigned counsel, 

and pursuant to Fed. R. Civ. P. 56, the Federal Election Campaign Act (“FECA”), 52 U.S.C. 

§ 30109(a)(8), and the Administrative Procedure Act, 5 U.S.C. § 706(2)(A) & (C), respectfully 

move this Court for a summary judgment declaring that the failure of the Federal Election 

Commission (“FEC”) to find “reason to believe” that F8 LLC/Eli Publishing L.C., et al. (Matter 

Under Review (“MUR”) 6487 and MUR 6488) and Specialty Investments Group, Inc., et al. 

(MUR 6711) violated FECA and the FEC’s subsequent dismissals of plaintiffs’ administrative 

complaints were arbitrary, capricious, an abuse of discretion, and otherwise contrary to law, and 

directing the Commission to conform with such declaration within 30 days consistent with the 

Court’s judgment. 

Support for this motion is set forth in the accompanying Memorandum of Points and 

Authorities in Support of Plaintiffs’ Motion for Summary Judgment, and the joint appendix 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 1 of 57
containing copies of those portions of the administrative record that are cited or otherwise relied 

upon, to be filed no later than November 17, 2017. Plaintiffs’ requested relief is set forth in the 

accompanying Proposed Order. Plaintiffs respectfully request oral argument on this motion. 

Dated this 10th Day of July, 2017. 

Respectfully submitted, 

/s/ Tara Malloy 

Tara Malloy (DC Bar No. 988280) 

 tmalloy@campaignlegalcenter.org 

Lawrence M. Noble (DC Bar No. 244434) 

Megan P. McAllen (DC Bar No. 1020509) 

CAMPAIGN LEGAL CENTER

1411 K Street N.W., Suite 1400 

Washington, DC 20005 

(202) 736-2200 

Fred Wertheimer (DC Bar No. 154211) 

DEMOCRACY 21 

2000 Massachusetts Avenue N.W. 

Washington, DC 20036 

(202) 355-9600 

Donald J. Simon (DC Bar No. 256388) 

SONOSKY, CHAMBERS, SACHSE, 

ENDRESON & PERRY, LLP 

1425 K Street N.W., Suite 600 

Washington, DC 20005 

(202) 682-0240 

Attorneys for Plaintiffs 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 2 of 57
IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA

CAMPAIGN LEGAL CENTER and 

DEMOCRACY 21, 

Plaintiffs, 

v. 

FEDERAL ELECTION COMMISSION, 

Defendant, 

F8, ELI PUBLISHING, and 

STEVEN J. LUND, 

Intervenors-Defendants. 

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Civil Action No: 1:16-cv-00752-JDB 

 

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF 

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 3 of 57
ii 

TABLE OF CONTENTS

Page 

TABLE OF AUTHORITIES ...................................................................................................... iv 

INTRODUCTION..........................................................................................................................1 

STATEMENT OF THE CASE .....................................................................................................5 

I. STATUTORY AND REGULATORY BACKGROUND ..............................................................5 

A. FECA’s Disclosure Provisions ..........................................................................5 

B. The Commission’s Administrative Complaint and Enforcement 

Process ...............................................................................................................6 

II. STATEMENT OF FACTS ....................................................................................................8 

A. Plaintiffs File Five Complaints Alleging Use of Corporate Straw 

Donors in Connection to the 2012 Election .......................................................8 

1. MUR 6485 (W Spann LLC) ....................................................................8

2. MUR 6487 (F8 LLC) and MUR 6488 (Eli Publishing) .......................10

3. MUR 6711 (Specialty Investments Group, Inc., et al.) ........................11

4. MUR 6930 (Pras Michel).....................................................................14

B. The FEC Deadlocks Three-Three and Dismisses All Five of Plaintiffs’ 

Complaints .......................................................................................................14 

1. The FEC’s Office of General Counsel recommends the 

Commission find “reason to believe” section 30122 violations 

occurred ...............................................................................................14

2. The FEC deadlocks three-three on whether to investigate and 

dismisses all complaints; two statements of reasons are issued ..........15

III. PROCEDURAL HISTORY .................................................................................................17 

ARGUMENT ................................................................................................................................18 

I. JURISDICTION ................................................................................................................18 

II. STANDARD OF REVIEW .................................................................................................19 

A. Governing Standards of Law ...........................................................................19 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 4 of 57
iii 

B. Chevron Deference Is Not Warranted Because This Is Not a Case of 

Statutory Interpretation ....................................................................................22 

III. THE DISMISSALS OF PLAINTIFFS’ COMPLAINTS WERE CONTRARY TO LAW ..................24 

A. The Dismissals of Plaintiffs’ Administrative Complaints Were 

Contrary to the Plain Language and Purpose of the Act ..................................25 

1. The straw donor prohibition is vital to the fundamental and 

well-established purposes of FECA .....................................................26

2. The straw donor prohibition unambiguously applies to the 

corporate respondents in this case ......................................................29

B. The Dismissals of Plaintiffs’ Administrative Complaints Were 

Arbitrary, Capricious, an Abuse of Discretion, and Otherwise Contrary 

to Law ..............................................................................................................31 

1. Respondents could not have been “misled” by Commission 

precedents addressing funds deposited in corporate accounts 

because none of these authorities addressed corporate 

disclosure obligations ..........................................................................32

2. The controlling Commissioners’ standard for “similar future 

cases,” which they refused to apply here, is arbitrary, 

capricious, and contrary to law ...........................................................37

3. The controlling Commissioners’ allegations that respondents 

lacked notice are not credible ..............................................................39

IV. THE COURT SHOULD DECLARE THAT THE DISMISSALS OF PLAINTIFFS’

ADMINISTRATIVE COMPLAINTS WERE UNLAWFUL AND DIRECT THE FEC TO 

CONFORM WITH SUCH DECLARATION WITHIN 30 DAYS ...............................................43 

CONCLUSION ............................................................................................................................44

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 5 of 57
iv 

TABLE OF AUTHORITIES 

Page

Cases: 

Adams v. Richardson, 480 F.2d 1159 (D.C. Cir. 1973) (en banc) .................................................41 

Akins v. FEC, 101 F.3d 731 (D.C. Cir. 1996) (en banc) ................................................................23 

Akins v. FEC, 736 F. Supp. 2d 9 (D.D.C. 2010) ............................................................................21 

American Bar Ass’n v. FTC, 430 F.3d 457 (D.C. Cir. 2005) ........................................................22

Ass’n of Irritated Residents v. EPA, 494 F.3d 1027 (D.C. Cir. 2007) ...........................................41 

Auer v. Robbins, 519 U.S. 452 (1997) ...........................................................................................39

Bluewater Network v. EPA, 370 F.3d 1 (D.C. Cir. 2004) ..............................................................21

Buckley v. Am. Const. Law Found., 525 U.S. 182 (1999) .............................................................26 

Buckley v. Valeo, 424 U.S. 1 (1976) ............................................................................4, 5, 6, 26, 27 

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 

467 U.S. 837 (1984) ...........................................................................................................20, 31

Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) .................................................39

Citizens for Responsibility and Ethics in Washington v. FEC, 209 F. Supp. 3d. 77 

(D.D.C. 2016) ....................................................................................................................19, 21 

Citizens United v. FEC, 558 U.S. 310 (2010) ......................................................................1, 26, 30 

City of Arlington v. FCC, 133 S. Ct. 1863 (2013) .........................................................................22

Common Cause v. FEC, 842 F.2d 436 (D.C. Cir. 1988) ...............................................................24

Crossroads GPS v. FEC, 788 F.3d 312 (D.C. Cir. 2015) ..............................................................21

Democratic Cong. Campaign Comm. v. FEC, 831 F.2d 1131 (D.C. Cir. 1987) .....................18, 19 

FEC v. Akins, 524 U.S. 11 (1998) ......................................................................................18, 19, 23 

FEC v. Beaumont, 539 U.S. 146 (2003) ........................................................................................31 

FEC v. Kalogianis, No. 8:06-cv-68, 2007 WL 4247795 (M.D. Fla. Nov. 30, 2007) ....................33 

FEC v. Malenick, 310 F. Supp. 2d 230 (D.D.C. 2004) ..................................................................29 

FEC v. Nat’l Republican Senatorial Comm., 966 F.2d 1471 (D.C. Cir. 1992) .............................19 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 6 of 57
v 

Fogo de Chao (Holdings) Inc. v. U.S. Dep’t of Homeland Sec., 769 F.3d 1127 (D.C. 

Cir. 2014) .................................................................................................................................24 

FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012).....................................................36, 37 

Gen. Elec. Co. v. EPA, 53 F.3d 1324 (D.C. Cir. 1995) .................................................................43 

Heckler v. Chaney, 470 U.S. 821 (1985) .......................................................................................20

In re Carter-Mondale Reelection Committee, 642 F.2d 538 (D.C. Cir. 1980) ........................20, 31 

In re Sealed Case, 223 F.3d 775 (D.C. Cir. 2000) .........................................................................24

McConnell v. FEC, 540 U.S. 93 (2003) .............................................................................26, 30, 31 

McCutcheon v. FEC, 134 S. Ct. 1434 (2014) ................................................................................27 

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 

463 U.S. 29 (1983) .........................................................................................................4, 20, 32

Negusie v. Holder, 555 U.S. 511 (2009) ..................................................................................20, 23 

New York, New York LLC v. NLRB, 313 F.3d 585 (D.C. Cir. 2002) .............................................23 

Orloski v. FEC, 795 F.2d 156 (D.C. Cir. 1986) ..................................................................... passim 

Papachristou v. Jacksonville, 405 U.S. 156 (1972) .......................................................................23

Sea-Land Serv., Inc. v. Dept. of Transp., 137 F.3d 640 (D.C. Cir. 1998) .....................................22

Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005) .................................................................................31 

Skidmore v. Swift & Co., 323 U.S. 134 (1944) .............................................................................20 

SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) ...........................................................3, 29 

United States v. Boender, 649 F.3d 650 (7th Cir. 2011) ................................................................27 

United States v. Mariani, 212 F.3d 761 (3rd Cir. 2000) ................................................................27 

United States v. Mead Corp., 533 U.S. 218 (2001) .................................................................20, 24 

United States v. O’Donnell, 608 F.3d 546 (9th Cir. 2010) ..................................................5, 27, 31 

United States v. Williams, 553 U.S. 285 (2008) ...........................................................................23

Univ. of Great Falls v. NLRB, 278 F.3d 1335 (D.C. Cir. 2002) ...................................................23

W. Minn. Mun. Power Agency v. FERC, 806 F.3d 588 (D.C. Cir. 2015) ......................................22

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 7 of 57
vi 

Statutes and Regulations:

Administrative Procedure Act, 5 U.S.C. §§ 551-706 ....................................................................18 

Federal Election Campaign Act of 1971, 52 U.S.C. § 30101, et seq. ............................................18 

5 U.S.C. § 706(2)(A)......................................................................................................................20 

5 U.S.C. § 706(2)(C) ......................................................................................................................20 

28 U.S.C. § 1331 ............................................................................................................................18 

52 U.S.C. § 30101 ............................................................................................................................1 

52 U.S.C. § 30101(4) .......................................................................................................................6 

52 U.S.C. § 30101(4)(A)............................................................................................................6, 29 

52 U.S.C. § 30101(11) .........................................................................................................5, 29, 30 

52 U.S.C. § 30102 .................................................................................................................. passim 

52 U.S.C. § 30103 .................................................................................................................. passim

52 U.S.C. § 30104 .................................................................................................................. passim 

52 U.S.C. § 30104(b) .......................................................................................................................6 

52 U.S.C. § 30106(c) .......................................................................................................................7 

52 U.S.C. § 30109(a)(1) ...................................................................................................................6 

52 U.S.C. § 30109(a)(2) ...................................................................................................................7 

52 U.S.C. § 30109(a)(3) ...................................................................................................................7 

52 U.S.C. § 30109(a)(4) ...................................................................................................................7 

52 U.S.C. § 30109(a)(6)(A) .............................................................................................................7 

52 U.S.C. § 30109(a)(8) .........................................................................................................1, 2, 18 

52 U.S.C. § 30109(a)(8)(A) .................................................................................................8, 18, 40 

52 U.S.C. § 30109(a)(8)(C) ...............................................................................................19, 25, 43 

52 U.S.C. § 30118 ................................................................................................................3, 22, 33 

52 U.S.C. § 30121(a)(1) .................................................................................................................35 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 8 of 57
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*52 U.S.C. § 30122 ................................................................................................................ passim 

11 C.F.R. § 110.1(g)(2) ..................................................................................................................35 

11 C.F.R. § 110.1(g)(3) ..................................................................................................................35 

11 C.F.R. § 110.1(g)(4) ..................................................................................................................35 

11 C.F.R. § 110.4(b)(2)(i) ................................................................................................................5 

11 C.F.R. § 110.4(b)(2)(ii) ...............................................................................................................5 

11 C.F.R. § 110.11(a)(1) ..................................................................................................................6 

11 C.F.R. § 111.4(b) ........................................................................................................................6 

Administrative Record Materials: 

MUR 6485 (W Spann LLC): 

Compl., MUR 6485 (W Spann) (Aug. 5, 2011) ........................................................................9 

Conard/W Spann Resp., MUR 6485 (Oct. 3, 2011) ................................................................10 

Certification, MUR 6485 (W Spann) (Feb. 23, 2016) .............................................................16 

First General Counsel’s Report, MUR 6485 (W Spann) (Aug. 28, 2012) ..................14, 35, 42 

MUR 6930 (Prazrakel “Pras” Michel, et al.): 

Compl., MUR 6930 (Pras Michel) (Apr.13, 2015) ..................................................................14 

Certification, MUR 6930 (Pras Michel) (Feb. 23, 2016) .........................................................16 

First General Counsel’s Report, MUR 6930 (Pras Michel) (Nov. 19, 2015) ..........................15 

Other FEC Materials: 

Comm’r Ann M. Ravel, Dysfunction and Deadlock: The Enforcement Crisis at the 

Federal Election Commission Reveals the Unlikelihood of Draining the Swamp (Feb. 

2017), https://assets.documentcloud.org/documents/3474279/Ravelreport-feb2017.pdf .......40 

Comm’r Steven T. Walther, Motion to Set Priorities and Scheduling on Pending 

Enforcement Matters Awaiting Reason-to-Believe Consideration (July 14, 2015), 

https://www.fec.gov/resources/updates/agendas/2015/mtgdoc_15-41-a.pdf ..........................40 

Conciliation Agreement, MUR 3191 (Christmas Farm Inn, Inc.) (June 23, 1995) .......................33 

FEC Advisory Op. 1986-41 (Dec. 5, 1986) ...................................................................................27 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 9 of 57
viii 

FEC Advisory Op. 2006-15 (May 19, 2006) .................................................................................35 

First General Counsel’s Report, MUR 4313 (Coalition for Good Government) (Oct. 

18, 1996) ..................................................................................................................................34 

Notification with Factual and Legal Analysis to John and Ruth Stauffer, MUR 4634 

(Sam Brownback for Congress) (Jun. 8, 1998) .......................................................................33 

Notification with Factual and Legal Analysis to John Shadegg’s Friends et al., 

MUR 5968 (John Shadegg’s Friends) (Nov. 10, 2008) ...........................................................33 

Statement of Policy Regarding Commission Action in Matters at the Initial Stage in 

the Enforcement Process, 72 Fed. Reg. 12545 (Mar. 16, 2007) ................................................7 

Treatment of Limited Liability Companies Under the Federal Election Campaign Act, 

64 Fed. Reg. 37397 (June 12, 1999) ........................................................................................36 

Other Authorities: 

Kim Barker, ProPublica, How Nonprofits Spend Millions on Elections and Call it 

Public Welfare (Aug. 18, 2012), https://www.propublica.org/article/hownonprofits-spend-millions-on-elections-and-call-it-public-welfare ...........................................8 

Louis Brandeis, Other People’s Money (Nat’l Home Library Found. ed. 1933) ..........................26 

Alexander Burns, Romney: Pay no attention to the man behind W Spann LLC, 

Politico (Aug. 8, 2011), http://www.politico.com/story/2011/08/romney-pay-noattention-to-the-man-behind-w-spann-llc-060895 ...................................................................10 

Ctr. for Responsive Politics, 2012 Outside Spending, by Group, 

https://www.opensecrets.org/outsidespending/summ.php?cycle=2012&chrt+D&di

sp=O&type=A (last visited July 7, 2017) ..................................................................................8 

Nancy Cook, He’s Going to Be An Enabler, Politico (Feb. 21, 2017), 

http://www.politico.com/magazine/story/2017/02/trump-mcgahn-white-houselawyer-214801 .........................................................................................................................40 

Dan Eggen, Mystery pro-Romney donor revealed as a former employee at hedge fund 

firm, Wash. Post (Aug. 6, 2011), https://www.washingtonpost.com/politics/ 

mystery-pro-romney-donor-revealed-as-a-former-employee-at-hedge-fundfirm/2011/08/06/gIQArcMlyI_story.html. ...............................................................................10 

FEC Reply Supp. Mot. to Dismiss, Citizens for Responsibility and Ethics in 

Washington v. FEC, No. 14-1419 (D.D.C. Dec. 16, 2014) .....................................................24 

Amy Gardner, FreedomWorks tea party group nearly falls apart in fight between old 

and new guard, Wash. Post (Dec. 25, 2012), http://washingtonpost.com/politics/ 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 10 of 57
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freedomworks-tea-party-group-nearly-falls-apart-in-fight-between-old-and-newguard/2012/12/25/dd095b68-4545-11e2-8061-253bccfc7532_story.html ..............................13 

R. Sam Garrett, Cong. Research Serv., The Federal Election Commission: 

Enforcement Process and Selected Issues for Congress (Dec. 22, 2015), 

https://fas.org/sgp/crs/misc/R44319.pdf ..................................................................................40 

Jack Gillum & Stephen Braun, Shadowy donor behind record ‘super’ PAC checks, 

Seattle Times (Dec. 7, 2012), http://www.seattletimes.com/seattle-news/politics/ 

shadowy-donor-behind-record-super-pac-checks ................................................................... 12 

Michael Isikoff, Firm gives $1 million to pro-Romney group, then dissolves, NBC 

News (Aug. 4, 2011), http://www.nbcnews.com/id/44011308/ns/politicsdecision_2012/t/firm-gives-million-pro-romney-group-then-dissolves ....................................9 

Eric Lichtblau, FEC Can’t Curb 2016 Election Abuse, Commission Chief Says, N.Y. 

Times (May 2, 2015), https://www.nytimes.com/2015/05/03/us/politics/fec-cantcurb-2016-election-abuse-commission-chief-says.html. .........................................................41 

Bradley A. Smith, Disclosure in a Post-Citizens United Real World, 6 U. St. Thomas J.L. & Pub. 

Pol’y 257 (2012) ......................................................................................................................43

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 11 of 57
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TABLE OF ABBREVIATIONS 

BCRA Bipartisan Campaign Reform Act 

FEC Federal Election Commission 

FECA Federal Election Campaign Act 

FGCR First General Counsel’s Report 

KPD Kingston Pike Development, LLC (MUR 6711) 

MUR Matter Under Review 

OGC Office of General Counsel (FEC) 

ROF Restore Our Future 

SIG Specialty Investments Group, Inc. (MUR 6711) 

SOR Statement of Reasons 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 12 of 57
1 

INTRODUCTION 

Plaintiffs Campaign Legal Center and Democracy 21 seek a declaration from this Court 

under 52 U.S.C. § 30109(a)(8) that the Federal Election Commission’s (“FEC” or “Commission”) 

dismissals of their administrative complaints against F8 LLC, Eli Publishing L.C. and Steven J. 

Lund (Matter Under Review (“MUR”) 6487 and MUR 6488), and Specialty Investments Group, 

Inc. (“SIG”), Kingston Pike Development, LLC (“KPD”), William D. Rose, Jr., Freedom Works 

for America, Richard J. Stephenson, and Adam Brandon (MUR 6711) (collectively, 

“respondents”), were arbitrary, capricious, an abuse of discretion, and otherwise contrary to law. 

This is not a hard case. A central purpose of the Federal Election Campaign Act (“FECA” 

or “Act”) is to ensure public disclosure of those persons who make significant campaign 

contributions and expenditures so that “the electorate . . . [can] make informed decisions and give 

proper weight to different speakers and messages.” Citizens United v. FEC, 558 U.S. 310, 371 

(2010). To this end, the Act prohibits persons from funneling contributions through a conduit, or 

“straw donor,” to federal political committees for the purpose of evading public disclosure of their 

identities. 52 U.S.C. § 30122. In other words, FECA forbids money laundering. 

The Act makes explicit that the use of any type of straw donor—whether an “individual, 

partnership, committee, association, corporation, labor organization, or . . . other organization”—

is prohibited. Id. § 30101 (emphasis added). Thus, when news reports arose in 2011 and 2012 of 

several instances in which corporate LLCs appeared to have been used as straw donors for millions 

of dollars of contributions to super PACs, plaintiffs filed five separate complaints with the FEC, 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 13 of 57
2 

alleging that there was reason to believe violations of section 30122 had occurred and asking the 

Commission to initiate an investigation.1 

All six Commissioners readily agreed with the FEC’s Office of General Counsel (“OGC”) 

that “section 30122 applies to closely held corporations and corporate LLCs,” AR86, and the use 

of a corporate LLC as a straw donor would violate this prohibition, AR82. But in the votes on each 

of plaintiffs’ five complaints, the Commissioners deadlocked three-three on whether to find reason 

to believe any violation had occurred. Plaintiffs filed suit under 52 U.S.C. § 30109(a)(8), and this 

Court held that plaintiffs had standing to pursue their claims with respect to three of the five 

complaints: MURs 6487 (F8 LLC), 6488 (Eli Publishing), and 6711 (SIG). 

In their Statement of Reasons (“SOR”), the three Commissioners who voted to dismiss the 

complaints (“controlling Commissioners” or “controlling group”) acknowledged that the clear 

language of section 30122 applied to corporate LLCs. AR82. Nonetheless, they found that it would 

be “manifestly unfair” to enforce the law because—incredibly—they believed that respondents 

lacked sufficient notice that the clear language of section 30122 applied to corporate LLCs. Id. 

This position defies reason and logic. As two dissenting Commissioners wrote, the 

controlling Commissioners had to “tie themselves up in knots” to come up with any rationale for 

why “they failed to enforce the law regarding some of the most crystal-clear violations this 

Commission has seen in recent memory.” AR95. Moreover, the controlling Commissioners’ 

position was not based on any construction of FECA, the statute to which they have been delegated 

interpretative authority, but rather on theories of constitutional due process and “First Amendment 

clarity,” AR77, areas in which they have no particular expertise and receive no deference. 

 

1

 Plaintiffs also argued that some of the corporate entities were required to register as 

political committees under 52 U.S.C. §§ 30102, 30103, and 30104 because it was likely that 

campaign activity was their major, if not sole, purpose. 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 14 of 57
3 

The controlling group’s due process argument boils down to a single observation: prior to 

Citizens United and SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010), corporations, 

including corporate LLCs, were prohibited from making any contributions in connection to federal 

elections, so the complaints presented an “issue of first impression.” AR83. But that does not 

explain why respondents lacked notice. Citizens United did not address section 30122 or change 

its scope: the straw donor prohibition, by its terms, applied to corporations both before and after 

the decision. The corporate respondents here may be relatively new campaign contributors, but 

they had ample “notice” of the applicability of the longstanding prohibition on straw donors—the 

same notice that any “individual, partnership, committee, association, . . . [or] labor organization” 

had of its reach. And respondents themselves did not raise any concerns about notice. See infra 

Part III.B.3. Some actually conceded that their motivation for contributing through corporate 

entities was to avoid public disclosure. Enforcing the straw donor prohibition against all persons 

covered by FECA except respondents would not only be arbitrary, capricious, and contrary to law, 

but also, in the words of the controlling Commissioners, “manifestly unfair.” 

The controlling group also claimed that the respondents may have believed their conduct 

was sanctioned by the “the Commission’s historical treatment of contributions made from funds 

deposited into a corporate account as corporate contributions.” AR85. Again, none of the FEC 

rules or precedents cited by these Commissioners involved section 30122 or purported to analyze 

its scope. Instead, this guidance stood for the proposition that contributions disbursed from 

corporate accounts have typically been deemed “corporate” in origin for the purpose of applying 

FECA’s ban on corporate contributions, 52 U.S.C. § 30118. AR83-85. But this proposition is selfevident: contributions are assumed to come from their most immediate contributor. All straw donor 

contributions appear on their face to come from the straw donor, corporate or otherwise. That does 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 15 of 57
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not relieve the FEC of its responsibility under section 30122 to determine whether the immediate 

source of a contribution is its “true” source when presented with evidence of a straw donor scheme. 

What the controlling Commissioners ignore in their zeal to protect respondents from the 

consequences of their own fraudulent conduct is that the only statutory obligation at issue here is 

disclosure, the “least restrictive means of curbing the evils of campaign ignorance and corruption.” 

Buckley v. Valeo, 424 U.S. 1, 68 (1976). The true donors of the $15 million in contributions at 

issue here were not even personally subject to any reporting requirements. Had they contributed 

directly to the super PACs in question—rather than creating or repurposing shell corporations to 

make contributions on their behalf—they would have had no obligations under FECA whatsoever; 

the recipient super PACs would have borne the responsibility for filing the required disclosures 

with the FEC. See 52 U.S.C. § 30104. It would have been far easier for respondents to comply 

with section 30122 than to violate it. Their effort to evade the law gives lie to the controlling 

group’s notice theory; no reasonable person could maintain that respondents stumbled 

unknowingly into a straw donor scheme. 

In short, the controlling group’s justifications for its dismissals of the plaintiffs’ complaints 

do not even clear rational basis review, much less the standard for reasoned decisionmaking 

required under Orloski v. FEC, 795 F.2d 156, 161 (D.C. Cir. 1986) and Motor Vehicle Mfrs. Ass’n 

of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29 (1983). Plaintiffs 

respectfully request that this Court reverse the dismissals. 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 16 of 57
5 

STATEMENT OF THE CASE 

I. STATUTORY AND REGULATORY BACKGROUND

A. FECA’s Disclosure Provisions 

To serve the electorate’s compelling interest in knowing “where political campaign money 

comes from,” Buckley, 424 U.S. at 66, FECA contains multiple provisions to ensure accurate 

reporting from individuals, groups and, entities that give and spend money to influence elections. 

One such provision is FECA’s prohibition on contributions in the name of another, i.e., the “straw 

donor” prohibition. See, e.g., United States v. O’Donnell, 608 F.3d 546, 553 (9th Cir. 2010) (noting 

that “congressional purpose” behind straw donor prohibition is “to ensure the complete and 

accurate disclosure of the contributors who finance federal elections”). It 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. In turn, “person” is defined as 

“an individual, partnership, committee, association, corporation, labor organization, or any other 

organization or group of persons.” Id. § 30101(11). 

The Commission regulation implementing section 30122 provides the following examples 

of “contributions in the name of another”: 

 “Giving money or anything of value, all or part of which was provided to the 

contributor by another person (the true contributor) without disclosing the source 

of money or the thing of value to the recipient candidate or committee at the time 

the contribution is made.” 11 C.F.R. § 110.4(b)(2)(i). 

 “Making a contribution of money or anything of value and attributing as the source 

of the money or thing of value another person when in fact the contributor is the 

source.” 11 C.F.R. § 110.4(b)(2)(ii). 

To effectuate its critical disclosure function, FECA also sets forth a comprehensive 

registration and reporting system for “political committees.” A political committee must register 

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with the FEC, file periodic reports for disclosure to the public, and identify itself through 

disclaimers on all of its political advertising, including its websites and mass electronic 

communications. 52 U.S.C. §§ 30102-30104; 11 C.F.R. § 110.11(a)(1)). 

A “political committee” is any “committee, club, association, or other group of persons” 

that receives more than $1,000 in contributions or makes more than $1,000 in expenditures during 

a calendar year, 52 U.S.C. § 30101(4). The FEC employs a two-prong test for determining political 

committee status under the Act. The first prong asks whether an entity or other group of persons 

has made more than $1,000 in “expenditures” or received more than $1,000 in “contributions” 

during a calendar year. Id. § 30101(4)(A). The second prong asks whether the organization has as 

its “major purpose . . . the nomination or election of a candidate.” Buckley, 424 U.S. at 79. 

Any entity that meets the definition of a “political committee” must file a “statement of 

organization” with the FEC, 52 U.S.C. § 30103, comply with organizational and recordkeeping 

requirements, id. § 30102, and file periodic disclosure reports of its receipts and disbursements, 

id. § 30104. The political committee disclosure reports required by FECA must disclose to the 

Commission and the public, including plaintiffs, comprehensive information regarding such 

committee’s financial activities, including the identity of any donor who has contributed $200 or 

more to the committee within the calendar year. Id. § 30104(b). 

B. The Commission’s Administrative Complaint and Enforcement Process 

Any person may file an administrative complaint with the Commission alleging a violation 

of FECA. 52 U.S.C. § 30109(a)(1). A complaint must identify the complainants and be sworn and 

signed, and any allegations in a complaint “not based upon personal knowledge” should identify 

the source of the information that “gives rise to the complainant’s belief in the truth of such 

statements.” 11 C.F.R. § 111.4(b), (d). The Commission, after reviewing the complaint and any 

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responses, may then vote on whether there is sufficient “reason to believe” that a violation has 

occurred to justify an investigation. FECA requires an affirmative vote of four Commissioners to 

undertake most agency actions, 52 U.S.C. § 30106(c), including a “reason to believe” finding 

necessary to initiate an investigation. Id. § 30109(a)(2). 

After the investigation, the OGC can recommend that the Commission vote on whether 

there is “probable cause” to believe the law has been violated. Id. § 30109(a)(3). If the Commission 

determines, by an affirmative vote of at least four Commissioners, that there is probable cause to 

believe that a violation of the law has been committed, it attempts to correct the violation and enter 

a conciliation (settlement) agreement with the respondent, which may include payment of a civil 

penalty. Id. § 30109(a)(4), (5). If the Commission is unable to correct the violation and enter a 

conciliation agreement, it may, by the affirmative vote of at least four Commissioners, institute a 

civil action against the respondent in federal district court. Id. § 30109(a)(6)(A). 

Because it triggers only the initial phase in a Commission enforcement proceeding, the 

“reason to believe” standard is a low threshold. Although “reason to believe” is not defined in 

FECA, the Commission has described its views in a policy statement: “The Commission will find 

‘reason to believe’ in cases where the available evidence in the matter is at least sufficient to 

warrant conducting an investigation, and where the seriousness of the alleged violation warrants 

further investigation or immediate conciliation.” Statement of Policy Regarding Commission 

Action in Matters at the Initial Stage in the Enforcement Process, 72 Fed. Reg. 12545, 12545 (Mar. 

16, 2007). “The Commission finds ‘no reason to believe’ when the complaint, any response filed 

by the respondent, and any publicly available information, when taken together, fail to give rise to 

a reasonable inference that a violation has occurred, or even if the allegations were true, would not 

constitute a violation of the law.” Id. at 12546. 

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“Any party aggrieved by an order of the Commission dismissing a complaint filed by such 

party . . . may file a petition” in this Court seeking review of the Commission’s action. 52 U.S.C. 

§ 30109(a)(8)(A). If the Court finds that the Commission’s dismissal of the complaint was 

“contrary to law,” it may order the Commission to take other action. Id. § 30109(a)(8)(C). If the 

Commission fails to conform to the Court’s order within 30 days, the complainant may bring a 

civil action against respondents to remedy the violation. Id. 

II. STATEMENT OF FACTS

A. Plaintiffs File Five Complaints Alleging Use of Corporate Straw Donors in 

Connection to the 2012 Election. 

As independent spending to influence federal elections surged in the wake of Citizens 

United and SpeechNow, there were also mounting efforts by some would-be contributors to find 

or create corporate entities to conceal their political activity. The most common method was to 

donate to politically active nonprofit organizations organized under section 501(c)(4) of the 

Internal Revenue Code, because those groups were frequently able to avoid public disclosure of 

their donors under both federal tax law and campaign finance law.2

 Between the 2008 election, 

which immediately preceded Citizens United, and the next Presidential election in 2012, the 

amount of money spent by non-disclosing entities, mostly 501(c)(4) groups, more than tripled; 

approximately $308 million in “dark money” was spent in 2012.3

 

1. MUR 6485 (W Spann LLC). In 2011, the media began reporting on what appeared to 

be a new technique for large donors to evade laws requiring public disclosure of campaign 

 

2

 Kim Barker, ProPublica, How Nonprofits Spend Millions on Elections and Call it Public 

Welfare (Aug. 18, 2012), https://www.propublica.org/article/how-nonprofits-spend-millions-onelections-and-call-it-public-welfare. 

3

 Ctr. for Responsive Pol., 2012 Outside Spending, by Group, https://www.opensecrets.org/ 

outsidespending/summ.php?cycle=2012&chrt=D&disp=O&type=A (last visited July 7, 2017). 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 20 of 57
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contributions—namely, the use of LLCs and other corporate entities as straw donors. On August 

4, 2011, NBC News reported: “A mystery company that pumped $1 million into a political 

committee backing Mitt Romney has been dissolved just months after it was formed, leaving few 

clues as to who was behind one of the biggest contributions yet of the 2012 presidential 

campaign.”4

 Reportedly, a Delaware entity called W Spann LLC was created in March 2011; it 

made a $1 million contribution on April 28, 2011 to Restore Our Future (“ROF”), the super PAC 

that supported Romney’s 2012 presidential run; and then, three months later, it dissolved.5

One day after this report, plaintiffs filed an administrative complaint with the FEC alleging 

that W Spann had been used as a conduit to hide the true source of a $1 million contribution to 

ROF. Compl., MUR 6485 (W Spann LLC) (Aug. 5, 2011).6 The complaint asked the FEC to find 

“reason to believe” a violation had occurred and to authorize an investigation into whether (a) the 

true source of the contribution and W Spann had violated 52 U.S.C. § 30122 by making a 

contribution “in the name of another”; and (b) W Spann violated 52 U.S.C. §§ 30102, 30103, and 

30104 by failing to register and file reports as a political committee. 

 

4

 Michael Isikoff, Firm gives $1 million to pro-Romney group, then dissolves, NBC News 

(Aug. 4, 2011), http://www.nbcnews.com/id/44011308/ns/politics-decision_2012/t/firm-givesmillion-pro-romney-group-then-dissolves. 

5

 Id. 

6

 Although this Court found that plaintiffs do not have standing to pursue their claims 

relating to the W Spann complaint, the documents in MUR 6485 were part of the administrative 

record before the Commission, and the controlling group addressed all five matters in their SOR. 

AR75-89. Their rationale must be evaluated in light of all the information they reviewed in 

formulating their position. 

The FEC is in the process of transitioning to a new website, but most of the record 

documents from closed matters are ordinarily made public and can be accessed online. Materials 

from MURs 6485 and 6930 are currently available at https://www.fec.gov/data/legal/matterunder-review/6485 (W Spann) and https://www.fec.gov/data/legal/matter-under-review/6930 

(Pras Michel). 

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Only after the contribution attracted public attention and plaintiffs filed their complaint did 

Edward Conard, Romney’s friend and former business partner, come forward to state publicly that 

he was the true source of the W Spann contribution. Conard did not deny that he had created W 

Spann to avoid disclosure; he conceded that he was concerned that disclosing his contribution 

could jeopardize the security of his family and sought legal advice about how to make the 

contribution without revealing his identity. W Spann/ Conard Resp. at 2, MUR 6485 (Oct. 3, 2011). 

He further claimed he was told by counsel that he could set up an LLC, though “the FEC might 

seek to look through the contributing entity to the underlying contributor.” Id. 

After Conard came forward, the W Spann contribution “set off a furor over secrecy in 

politics.”7

 Even Mitt Romney, then a candidate for the Republican nomination for President and 

the perceived beneficiary of the contribution, felt compelled to weigh in on the controversy. In an 

attempt to allay public concerns, he stated that “[Conard] came out and discussed who he is, so 

there’s not much question anymore—no controversy because he said, ‘Hey, it’s me, and I’ve given 

to Mitt many times before.’”8 Conard ultimately asked ROF to amend its disclosure reports with 

the FEC to list him instead of W Spann as the donor. See Conard Resp. at 5. 

2. MUR 6487 (F8 LLC) and MUR 6488 (Eli Publishing). On the same day the W Spann 

story broke, a Utah television station reported that ROF “received two separate $1 million 

donations from companies located in Provo, but the companies don’t appear to do any substantial 

business.” AR202 (Compl., MUR 6488); AR2 (Compl., MUR 6487). The station identified the 

 

7

 Dan Eggen, Mystery pro-Romney donor revealed as a former employee at hedge fund firm, 

Wash. Post (Aug. 6, 2011), https://www.washingtonpost.com/politics/mystery-pro-romneydonor-revealed-as-a-former-employee-at-hedge-fund-firm/2011/08/06/gIQArcMlyI_story.html.

8

 Alexander Burns, Romney: Pay no attention to the man behind W Spann LLC, Politico, 

(Aug. 8, 2011), http://www.politico.com/story/2011/08/romney-pay-no-attention-to-the-manbehind-w-spann-llc-060895. 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 22 of 57
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companies as Eli Publishing L.C. and F8 LLC, which share an address in Provo, AR202, and stated 

that the companies “don’t seem to do any business. They incorporated with the state, but they have 

no presence on the internet and when Fox 13 went to their address, we found only an accounting 

firm whose employees weren’t aware of the companies’ activities.” AR203. Available public 

information indicated that the gross annual sales of Eli Publishing were only $72,000 in 2011 and 

$70,000 in 2012. AR41 (First Gen. Counsel’s Rep. (“FGCR”), MURs 6487 and 6488). 

The news reports identified Steven J. Lund as the registered agent of Eli Publishing and 

suggested he may be the true source of the two $1 million contributions. AR202, 203. Lund then 

admitted to the public that he made the contribution through a corporation because it had 

accounting advantages, and because “he did not want ‘to be real public about being a part of the 

campaign.’” AR36. 

Plaintiffs filed two administrative complaints on August 11, 2011 alleging that F8 LLC 

and Eli Publishing were used as conduits to hide the true source of two $1 million contributions to 

ROF, and asking the FEC to find reason to believe that Lund, Eli Publishing, and F8 had violated 

the straw donor prohibition, 52 U.S.C. § 30122, and the political committee registration and 

reporting requirements, id. §§ 30102, 30103, and 30104. AR7, 207. In their responses to the 

complaints, none of the respondents raised concerns about notice or contested whether section 

30122 applied to corporate entities; instead, the responses argued that the “allegations in the 

complaint [were] insufficient” and plaintiffs’ reliance on news reports inappropriate. AR28, 222. 

3. MUR 6711 (Specialty Investments Group, Inc.). More than a year after the “furor” 

surrounding the straw donor contributions to ROF, reports surfaced of a “mystery Tennessee firm,” 

which was founded shortly before it made over $5 million in contributions to the super PAC 

FreedomWorks for America. AR303 (Compl., MUR 6711). On October 27, 2012, the Knoxville 

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News Sentinel reported that FreedomWorks “received seven donations totaling $5.28 million from 

Knoxville-based Specialty Group Inc.,” which accounted for about 90% of the contributions 

received by FreedomWorks during the first 15 days of October. Id. The report explained that 

“Specialty Group filed its incorporation papers on September 26, less than a week before it gave 

several contributions to [FreedomWorks] worth between $125,000 and $1.5 million apiece.” Id. 

The registered agent of Specialty Investments Group, Inc. (“SIG”), William S. Rose, “did not 

respond to requests for comment. He did not answer a knock on the door . . . at his Knoxville 

home, which shares the same address registered to Specialty Group.” Id.

On December 7, 2012, the Seattle Times reported that Rose, a “lawyer in Tennessee who 

is mysteriously linked to millions of dollars in campaign contributions steered to congressional 

candidates[,] doubled his investments in the weeks before Election Day and quietly funneled $6.8 

million more” to FreedomWorks.9

 Rose “told The Associated Press that his business was a ‘family 

secret’ and he was not obligated to disclose the origin of what now amounts to more than $12 

million that he routed [to FreedomWorks] through two companies he recently created,” SIG and 

Kingston Pike Development, LLC (“KPD”), which Rose also “registered and owns.”10 The 

recipient political committee, FreedomWorks, reported receiving 17 contributions totaling 

$10,575,000 from SIG between October 1 and November 1, 2012, as well as three contributions 

totaling $1.5 million from KPD between October 25 and October 30, 2012. 

 

9

 Jack Gillum & Stephen Braun, Shadowy donor behind record ‘super’ PAC checks, Seattle 

Times (Dec. 7, 2012), http://www.seattletimes.com/seattle-news/politics/shadowy-donor-behindrecord-super-pac-checks. 

10 Id. Business records on file with the Tennessee Secretary of State’s office indicate that 

Rose created Specialty Group Inc. (later renamed Specialty Investments Group, Inc.) on September 

26, 2012, and created Kingston Pike Development LLC on September 27, 2012. AR304. 

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Later stories reported that Richard J. Stephenson may have been the source, or one of the 

sources, of the $12 million contributed to FreedomWorks in the names of SIG and KPD. AR344-

45 (Am. Compl., MUR 6711). According to the Washington Post, Stephenson, a FreedomWorks 

board member, had attended a FreedomWorks retreat in Jackson Hole, Wyoming, at which 

FreedomWorks prepared a budget in anticipation of a large influx of money. AR345.

11 At the 

retreat, Stephenson reportedly dictated some of the terms of how the money would be spent. 

AR345. Adam Brandon, FreedomWorks’s executive vice president, was also reported to have met 

repeatedly with members of Stephenson’s family who were involved in arranging the donations. 

Plaintiffs filed an administrative complaint on December 20, 2012, alleging that SIG, KPD, 

Rose, and any other persons who made contributions in the names of SIG and KPD, had violated 

52 U.S.C. § 30122, and that SIG and KPD violated 52 U.S.C. §§ 30102, 30103, and 30104. 

AR301-11. Plaintiffs filed an amendment to their complaint on April 24, 2013 to add Stephenson, 

Brandon, and FreedomWorks as respondents. AR343-48. The amendment further alleged that that 

by arranging the contributions, FreedomWorks and Brandon may have violated section 30122 by 

knowingly accepting contributions from Stephenson in the names of SIG and KPD. AR345-46. 

None of the respondents denied—much less refuted—the allegations made in plaintiffs’ 

administrative complaint, nor did they raise concerns about notice or contest whether section 

30122 applies to corporate entities like SIG and KPD. Instead, their responses “rel[ied] exclusively 

on arguments about the sufficiency of the Complaint.” AR387. For instance, Stephenson argued 

that the complaint was “legally and factually insufficient” because it relied on news reports and 

 

11 See also Amy Gardner, FreedomWorks tea party group nearly falls apart in fight between 

old and new guard, Wash. Post (Dec. 25, 2012), http://www.washingtonpost.com/ 

politics/freedomworks-tea-party-group-nearly-falls-apart-in-fight-between-old-and-newguard/2012/12/25/dd095b68-4545-11e2-8061-253bccfc7532_story.html. 

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not on plaintiffs’ personal knowledge. A376-78. FreedomWorks argued that the complaint was 

“legally deficient” because it lacked “factual allegation[s]” and rested “entirely on unverifiable 

allegations” in news reports. AR370. 

4. MUR 6930 (Pras Michel). Plaintiffs filed a fifth administrative complaint in April 2015, 

alleging that there was reason to believe that Prakazrel “Pras” Michel, SPM Holdings LLC/SPM 

2012 Holdings LLC, Black Men Vote, and the Treasurer of Black Men Vote, William Kirk Jr., 

violated 52 U.S.C. § 30122. Compl., MUR 6930 (Pras Michel) (Apr. 13, 2015). The complaint 

cited FEC reports that showed that the super PAC Black Men Vote reported receiving a total of 

$1.325 million in itemized individual contributions during the 2012 election cycle. These 

contributions were reported as coming from only three donors: SPM Holdings ($875,000), Pras 

Michel ($350,000) and Earl Stafford ($100,000). Id. at 2-3. 

B. The FEC Deadlocks Three-Three and Dismisses All Five of Plaintiffs’ 

Complaints. 

1. The FEC’s Office of General Counsel recommends the Commission find 

“reason to believe” section 30122 violations occurred. 

In August 2012, the OGC issued its first report on these matters, presenting to the 

Commission its findings of fact and legal analysis in the W Spann MUR. FGCR, MUR 6485 (Aug. 

28, 2012). Based on the complaint and the responses, the OGC recommended the Commission 

find reason to believe that Conard and W Spann violated the straw donor prohibition, 52 U.S.C. 

§ 30122, but no reason to believe W Spann violated the political committee requirements, 52 

U.S.C. §§ 30102, 30103, and 30104. Id. at 19. 

On June 6, 2012, the OGC issued its FGCR in the Eli Publishing/F8 MURs. AR31-49. 

Again, it concluded that “there is ample ‘reason to believe’ that, in violation of the Act, Lund was 

the true source of the $1 million contribution made by Eli Publishing,” and that “there is also 

‘reason to believe’ that F8 was a conduit and not the true source of the $1 million contribution by 

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F8 to ROF.” AR41. The OGC recommended the Commission find reason to believe that F8, Eli 

Publishing, and Lund violated 52 U.S.C. § 30122, but not 52 U.S.C. §§ 30102, 30103, and 30104. 

On June 6, 2014, the OGC issued its FGCR in MUR 6711. AR385-469. It recommended 

that the Commission find reason to believe that Stephenson made twenty contributions totaling 

over $12 million to FreedomWorks using the names of SIG and KPD. AR397-99. It also found 

that the available information demonstrated FreedomWorks executive Adam Brandon helped to 

arrange the contributions. Id. Based on the complaint and responses, the OGC recommended 

finding “reason to believe that respondents violated [52 U.S.C. § 30122],” but not 52 U.S.C. 

§§ 30102, 30103, and 30104. AR402-403. 

On November 9, 2015, the OGC issued its FGCR in the Pras Michel MUR. FGCR, MUR 

6930 (Nov. 9, 2015). It recommended that the Commissioners not find “reason to believe” that 

those respondents violated FECA, reasoning that it did not appear that Michel sought to elude the 

reporting provisions of the Act by using SPM Holdings as a pass-through for the funds contributed 

to Black Men Vote. 

2. The FEC deadlocks three-three on whether to investigate and dismisses all 

complaints; two statements of reasons are issued.

Although the OGC recommended that the Commission investigate four of the five “straw 

donor” administrative complaints, in a series of votes in 2015 and 2016, the Commission 

deadlocked, three to three, on whether to find “reason to believe” with respect to each of the 

complaints. Unable to proceed, the Commission voted five to one to close the file in MURs 6485, 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 27 of 57
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6487, 6488, 6711, and 6930, and to dismiss the cases.12 Almost five years had elapsed between 

the filing of plaintiffs’ first complaint and the FEC’s first vote to find “reason to believe.” 

The three Commissioners who refused to find “reason to believe” a violation had occurred 

in any of the five MURs subsequently issued a single Statement of Reasons that addressed all five 

MURs. AR75-89. The three Commissioners who voted to find “reason to believe” that respondents 

in each of the MURs had violated FECA (“dissenting Commissioners”) also issued a single 

Statement of Reasons addressing all five MURs. AR90-94 (SOR of Vice Chair Ravel and 

Comm’rs Walther and Weintraub).13 

The controlling Commissioners took an extraordinary position. They acknowledged that 

“section 30122 applies to closely held corporations and corporate LLCs,” AR86, and that the use 

of an LLC as a straw donor violates this prohibition “in certain circumstances.” AR82. But “in an 

exercise of the Commission’s prosecutorial discretion,” and citing “principles of due process, fair 

notice, and First Amendment clarity,” the three controlling Commissioners nonetheless concluded 

that all five of the administrative complaints should be dismissed because the respondents were 

not “on notice of the governing norm.” AR77. To justify their conclusion that respondents lacked 

sufficient notice, the Commissioners asserted that: 

 Judicial decisions concerning unrelated FECA provisions—including Citizens 

United and SpeechNow—made FECA’s longstanding prohibition on straw 

donors unclear as applied to LLCs and other corporate entities. AR83. 

 LLCs and other corporate entities “could have been” “misled or confused” by 

Commission precedent analyzing when funds deposited into a corporate 

 

12 AR65-66 (Am. Certification, MURs 6487 and 6488); AR539-44 (Certifications, MUR 

6711); see also Certification, MUR 6485 (W Spann LLC) (Feb. 23, 2016); Certification, MUR 

6930 (Pras Michel) (Feb. 23, 2016). 

13 Commissioners Ravel and Weintraub released a second dissenting statement, AR95-97, 

and the controlling group subsequently issued a supplemental statement in response. AR98-101. 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 28 of 57
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account and then used for contributions would be attributed to the corporation 

for the purpose of the statutory contribution restrictions. AR83-85. 

 Application of section 30122 to respondents according to the standard 

recommended by the dissenting Commissioners would raise First Amendment 

concerns. The controlling group alleged that according to the “analysis of our 

colleagues, section 30122 makes all closely held corporations or corporate LLC 

contributions unlawful,” which would “countermand Citizens United with 

respect to the First Amendment rights of these entities.” AR82 n.48. 

The controlling group also announced a standard for “enforcing section 30122,” but only 

with respect to “future cases.” AR86. These Commissioners would only find reason to believe a 

violation of section 31022 has occurred if they were presented with direct evidence that funds were 

“intentionally funneled through a closely held corporation or corporate LLC for the purpose of 

making a contribution that evades the Act’s reporting requirements.” AR86. In the absence of such 

evidence, they would require a showing that the LLC did not have sufficient business income to 

make the contribution or was created for the sole purpose of making campaign contributions. Id. 

But they declined to apply this standard to the MURs under review, see, e.g., AR87 n.70, because 

to do so would be “unfair” given the “First Amendment rights . . . at stake.” AR86, 88. 

III. PROCEDURAL HISTORY

A series of letters from the FEC in March 2016 informed plaintiffs that the Commissioners 

had deadlocked on whether to find reason to believe that the parties named in plaintiffs’ five 

administrative complaints had violated section 30122, and accordingly, the Commission had 

dismissed all of the complaints. AR70-71, 73-74, 546-47, 550-51. Plaintiffs filed this action on 

April 22, 2016, seeking declaratory and injunctive relief. 

 The FEC moved to dismiss this action on July 1, 2016 for want of jurisdiction, arguing that 

plaintiffs lacked Article III standing to obtain review of the Commission’s dismissals of their 

complaints. FEC Mot. to Dismiss (July 1, 2016) (Doc. 13). 

Case 1:16-cv-00752-JDB Document 30 Filed 07/10/17 Page 29 of 57
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On March 29, 2017, this Court granted the FEC’s motion in part and denied it in part (Doc. 

22), holding that plaintiffs have standing to pursue their claims with respect to their administrative 

complaints in MURs 6487 (F8 LLC), 6488 (Eli Publishing), and 6711 (Specialty Investments 

Group, Inc.). Thus, although this memorandum discusses the Commission’s actions with respect 

to all five complaints insofar as this material is relevant, plaintiffs seek relief only as to their 

complaints against F8 LLC/Eli Publishing L.C., et al., and Specialty Investments Group, Inc., et 

al. 

ARGUMENT 

I. JURISDICTION

This action arises under FECA, 52 U.S.C. § 30101 et seq., and the APA, 5 U.S.C. §§ 551-

706. This Court has jurisdiction pursuant to 52 U.S.C. § 30109(a)(8) and 28 U.S.C. § 1331. When 

the FEC’s OGC recommends that the Commission pursue an administrative complaint, but the 

complaint is dismissed because of a deadlock vote among the Commissioners, the Commission’s 

dismissal of the complaint is reviewable by this Court under 52 U.S.C. § 30109(a)(8)(A). 

Democratic Cong. Campaign Comm. v. FEC, 831 F.2d 1131, 1132 (D.C. Cir. 1987) (“DCCC”). 

Plaintiffs CLC and Democracy 21 have standing under FEC v. Akins, 524 U.S. 11 (1998), 

because they have been deprived of specific information subject to disclosure under FECA and 

critical to their organizational activities. See Ryan Decl. (Aug. 2, 2016) (Doc. 18-1); Wertheimer 

Decl. (Aug. 2, 2016) (Doc. 18-2). The dismissals of plaintiffs’ complaints effectively sanctioned 

the ongoing and unlawful “use of straw donors to make contributions ‘in the name of another,’” 

and relieved the respondents from any obligation to disclose their donors fully and accurately—

depriving the plaintiffs of information about the true sources of contributions to super PACs, 

impeding their activities in many programmatic areas, and “prevent[ing] them from carrying out a 

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central part of their mission.” Compl. ¶ 16 (Apr. 22, 2016) (Doc. 1). As confirmed in Akins, that 

“is injury of a kind that FECA seeks to address.” 524 U.S. at 20. 

Plaintiffs’ injury would be redressed by an order declaring that the FEC’s decision to 

dismiss their administrative complaints was arbitrary, capricious, an abuse of discretion, based on 

an impermissible interpretation of FECA, and contrary to law, and ordering the FEC to conform 

to such declaration. 

II. STANDARD OF REVIEW

A. Governing Standards of Law 

The standard to be applied by this Court in reviewing the FEC’s dismissals of plaintiffs’ 

administrative complaints is whether the Commission acted “contrary to law.” See Orloski, 795 

F.2d at 161; 52 U.S.C. § 30109(a)(8)(C). When a complaint is dismissed due to a deadlock vote 

among the Commissioners, the three Commissioners who voted to dismiss “constitute a controlling 

group for purposes of the decision, [and] their rationale necessarily states the agency’s reasons for 

acting as it did.” FEC v. Nat’l Republican Senatorial Comm., 966 F.2d 1471, 1476 (D.C. Cir. 

1992). The Commission’s dismissal of a complaint is therefore “contrary to law” if the controlling 

Commissioners’ rationale for voting to dismiss (1) rests on an impermissible interpretation of law, 

or (2) is “arbitrary or capricious, or an abuse of discretion.” Orloski, 795 F.2d at 161. When “the 

FEC does not act in conformity with its General Counsel’s reading of Commission precedent, it is 

incumbent upon the Commissioners to state their reasons why.” DCCC, 831 F.2d at 1132. 

As to Orloski’s first prong, the Court evaluates whether the FEC’s interpretation of a law 

used to justify dismissal, as set forth in the controlling SOR, is a permissible interpretation of that 

law. In certain circumstances, the FEC’s interpretations of FECA may warrant deference under 

Chevron USA, Inc. v. NRDC, 467 U.S. 837 (1984). See Citizens for Responsibility and Ethics in 

Wash. (CREW) v. FEC, 209 F. Supp. 3d. 77, 86 (D.D.C. 2016). But such deference is only called 

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for when an agency is construing ambiguities in a statute as to which Congress has delegated it 

interpretive authority. United States v. Mead Corp., 533 U.S. 218, 229-30 (2001). Where, by 

contrast, the FEC interprets the Constitution or judicial precedent, no such deference is due. See,

e.g., Negusie v. Holder, 555 U.S. 511, 518-23 (2009). 

Absent a basis for Chevron deference, an agency’s legal interpretation is due only that 

deference warranted by the persuasiveness of its reasoning. See Mead, 533 U.S. at 234-35; 

Skidmore v. Swift & Co., 323 U.S. 134 (1944). The Court should weigh the interpretation provided 

by the agency against the court’s independent interpretation of the law to determine whether the 

agency’s interpretation is “[]permissible.” Orloski, 795 F.2d at 161. 

As to the second Orloski prong—whether the FEC’s dismissal of the complaint was 

arbitrary, capricious, or an abuse of discretion—the Court should apply a standard analytically 

similar to the “arbitrary [or] capricious” standard applied under the APA, 5 U.S.C. § 706(2)(A). 

See In re Carter-Mondale Reelection Comm., Inc., 642 F.2d 538, 550-51, 551 n.6 (D.C. Cir. 1980) 

(Wald, J., concurring). A court must set aside an agency action “if the agency has relied on factors 

which Congress has not intended it to consider, entirely failed to consider an important aspect of 

the problem, offered an explanation for its decision that runs counter to the evidence before the 

agency, or is so implausible that it could not be ascribed to a difference in view or the product of 

agency expertise.” State Farm, 463 U.S. at 43. 

The FEC’s invocation of prosecutorial discretion does not change the standard of review 

to be applied. To be sure, the FEC is entitled to exercise its enforcement discretion by dismissing 

matters that, in its considered judgment, do not justify the use of agency resources relative to the 

magnitude of the violation at issue. That is not this case. “[A]n agency’s decision not to take 

enforcement action . . . is only presumptively unreviewable,” and that “presumption may be 

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rebutted [by the applicable] substantive statute.” See Heckler v. Chaney, 470 U.S. 821, 832-33 

(1985). FECA provides for private complainants to play an enforcement role alongside the FEC, 

and expressly authorizes judicial review of dismissals. Any FEC dismissal justified as an “exercise 

of discretion” therefore remains subject to review under the statutory “contrary to law” standard. 

Orloski, 795 F.2d at 161; see also CREW, 209 F. Supp. 3d at 88 n.7 (noting “FECA’s express 

provision for the judicial review of the FEC’s dismissal decisions” requires “apply[ing] the 

contrary-to-law standard, as Congress has instructed”). 

Moreover, the FEC must base its decision to exercise prosecutorial discretion on 

“reasonable grounds.” Akins v. FEC, 736 F. Supp. 2d 9, 21 (D.D.C. 2010); see also CREW, 209 F. 

Supp. 3d at 88 (“[T]he court should also insist on a ‘reasonable explanation of the specific analysis 

and evidence upon which the agency relied’” (quoting Bluewater Network v. EPA, 370 F.3d 1, 21 

(D.C. Cir. 2004)). An impermissible interpretation of law or an arbitrary and capricious rationale 

do not provide “reasonable grounds.” A decision based on an error of law is by definition an “abuse 

of discretion.” See Crossroads GPS v. FEC, 788 F.3d 312, 321 (D.C. Cir. 2015). 

B. Chevron Deference Is Not Warranted Because This Is Not a Case of 

Statutory Interpretation. 

Although the FEC’s authority lies in the interpretation of FECA, the reasons proffered for 

the dismissals here do not appear to be based on an interpretation of this statute. The controlling 

group concedes that the relevant provisions of FECA are clear and unambiguous and apply to 

closely held corporations and corporate LLCs, like the respondents here. AR82, 86. The dismissals 

of the complaints instead turned on their conclusion that respondents did not have sufficient notice 

that the statute applied to their conduct, and this conclusion in turn was founded on constitutional 

considerations of due process and “First Amendment clarity.” 

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Chevron deference is thus not appropriate here. As the Supreme Court and D.C. Circuit 

have repeatedly explained, “[Chevron] deference comes into play, of course, only as a 

consequence of statutory ambiguity, and then only if the reviewing court finds an implicit 

delegation of authority to the agency.” Sea-Land Serv., Inc. v. Dept. of Transp., 137 F.3d 640, 645 

(D.C. Cir. 1998); see also City of Arlington v. FCC, 133 S. Ct. 1863, 1868, 1874 (2013); W. Minn. 

Mun. Power Agency v. FERC, 806 F.3d 588, 591-93 (D.C. Cir. 2015).14 The controlling 

Commissioners did not dismiss the complaints based on their “interpretation” of section 30122, 

nor did they claim that this provision was ambiguous. Similarly, they do not claim that the political 

committee requirements at 52 U.S.C. §§ 30102, 30103, and 30104 are ambiguous. And the FEC 

precedents they cite, see AR83-85, do not “fill any gaps” in these provisions, but rather implement 

entirely separate sections of the Act, principally the corporate contribution ban, 52 U.S.C. § 30118. 

To be sure, the controlling group announced a standard for applying the straw donor 

prohibition to corporate LLCs and other corporations in “similar future cases.” AR86 (emphasis 

added). But they declined to apply that standard to the respondents and made clear that they would 

dismiss the complaints regardless of whether the respondents violated their prospective standard 

for the enforcement of section 30122. AR87 & n.70. Thus, even insofar as the controlling 

Commissioners claim that they were interpreting FECA in formulating their standard, it did not 

have any apparent effect on the outcomes of the MURs at issue here. 

Instead of applying an interpretation of FECA, the controlling group appears to be driven 

by its interpretation of rights protected by the Constitution and judicial decisions reviewing those 

 

14 Insofar as the controlling Commissioners indeed believe that the relevant provisions of 

FECA are ambiguous or unconstitutionally vague, deference to that belief is still not appropriate. 

Even in circumstances where the Chevron framework applies, agencies receive no deference on 

the question of whether statutory ambiguity exists because that question is properly reserved for 

the courts. American Bar Ass’n v. FTC, 430 F.3d 457, 468 (D.C. Cir. 2005). 

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rights. But to the extent that the controlling Commissioners acted based on their understanding of 

Citizens United or considerations of “First Amendment clarity,” Chevron deference does not 

apply. See, e.g., AR75-76 (discussing impact of Citizens United and nature of the First Amendment 

rights it recognized). By the same token, the FEC’s interpretation of Fifth Amendment due process 

rights does not fall within its statutory authority. See, e.g., AR86-88, AR88 n.73 (discussing due 

process rights protected by the Fifth Amendment, and citing Papachristou v. Jacksonville, 405 

U.S. 156 (1972) and United States v. Williams, 553 U.S. 285, 304 (2008)). 

Chevron, which is premised on congressional delegation of authority to give authoritative 

constructions to ambiguous statutory language, does not require deference to an agency’s 

interpretation of judicial opinions, and still less to its views of the constitutional issues underlying 

them. In Negusie, for example, the Supreme Court rejected a plea for deference to an agency 

decision that was based not on the agency’s construction of ambiguous statutory language, but on 

its interpretation of a prior Supreme Court decision. 555 U.S. at 521. Likewise, the D.C. Circuit 

has repeatedly held that courts “are not obligated to defer to an agency’s interpretation of Supreme 

Court precedent under Chevron or any other principle.” Univ. of Great Falls v. NLRB, 278 F.3d 

1335, 1341 (D.C. Cir. 2002) (quoting Akins v. FEC, 101 F.3d 731, 740 (D.C. Cir. 1996) (en banc), 

vacated on other grounds, 524 U.S. 11 (1998)); accord New York, New York LLC v. NLRB, 313 

F.3d 585, 590 (D.C. Cir. 2002). 

Finally, even if the controlling group’s SOR turned on matters of statutory construction, 

their reasoning would not receive Chevron deference because it commanded the votes of only three 

Commissioners, and therefore lacks the force of law. In Mead, the Supreme Court significantly 

clarified the parameters of Chevron deference by limiting it to circumstances where “Congress 

delegated authority to the agency generally to make rules carrying the force of law, and . . . the 

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agency interpretation claiming deference was promulgated in the exercise of that authority.” 533 

U.S. at 226-27. The D.C. Circuit has interpreted Mead to hold that “the expressly non-precedential 

nature” of a decision “conclusively confirms” that it is not an exercise of authority “to make rules 

carrying the force of law” that are entitled to deference. Fogo de Chao (Holdings) Inc. v. U.S. 

Dep’t of Homeland Sec., 769 F.3d 1127, 1137 (D.C. Cir. 2014). A tie three-three vote by the FEC 

lacks the precedential effect essential to actions with the force of law under Mead and Fogo de 

Chao. The FEC has admitted as much: “[S]tatements from declining-to-go-ahead Commissioners 

in three-three dismissals are ‘not law’ and . . . such statements ‘would not be binding legal 

precedent or authority for future cases.’” FEC Reply Supp. Mot. to Dismiss, at 4, CREW v. FEC, 

No. 14-cv-1419 (D.D.C. Dec. 16, 2014) (emphasis added by FEC) (quoting Common Cause v. 

FEC, 842 F.2d 436, 449 & n.32 (D.C. Cir. 1988)). Because a three-three dismissal is “not law”—

as all parties concede—the dismissals under review here are not entitled to Chevron deference.15 

III. THE DISMISSALS OF PLAINTIFFS’ COMPLAINTS WERE CONTRARY TO LAW. 

The issue that must be ultimately decided in this case is whether the Commission has 

adequately justified its failure to investigate potential violations of two key federal disclosure 

measures: the straw donor prohibition at 52 U.S.C. § 30122 and the political committee disclosure 

requirements at 52 U.S.C. §§ 30102, 30103, and 30104. Because the Commission failed to proceed 

with any investigations, none of these disclosure obligations—despite their clear centrality to the 

FEC’s statutory mission—will be applied to respondents. There will be no disclosure of the true 

donors who funneled more than $15 million through the respondent corporations to super PACs 

that spent huge sums in the 2012 federal elections. 

 

15 In re Sealed Case, 223 F.3d 775 (D.C. Cir. 2000) does not counsel otherwise. It was 

decided before the shift in Chevron deference doctrine worked by Mead’s holding that agency 

legal interpretations that lack the force of law are “beyond the Chevron pale.” 533 U.S. at 234. 

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The three Commissioners who voted to find “no reason to believe” did not base that 

decision on their interpretation of ambiguous statutory language. Instead, they voted to dismiss the 

complaints “in an exercise of the Commission’s prosecutorial discretion” because they believed 

the respondents did not have adequate notice that corporate straw donors were prohibited. AR77. 

The queston before this Court is whether the controlling Commissioners provided a reasoned 

justification for their belief that respondents lacked sufficient notice, despite the unambiguous 

language of the statutory provisions at issue. 

The controlling group has not even come close to such a justification. Because their theory 

of inadequate notice appears to be grounded in constitutional concerns, their conclusions are owed 

no deference, and this Court should instead conduct a de novo review of the relevant law and 

judicial precedents. Orloski, 795 F.2d at 161. But even under a far more deferential level of review, 

the controlling Commissioners do not present reasonable, or even rational, grounds for their failure 

to authorize an investigation of “some of the most crystal-clear violations this Commission had 

seen in recent memory.” AR95. See 52 U.S.C. § 30109(a)(8)(C); Orloski, 795 F.2d at 161. 

A. The Dismissals of Plaintiffs’ Administrative Complaints Were Contrary to the 

Plain Language and Purpose of the Act. 

In their SOR, the controlling Commissioners acknowledge that “closely held corporations 

and corporate LLCs may be considered straw donors in violation of section 30122,” AR82, 86, 

and that the straw donor prohibition specifically covers “partnerships, corporations and other 

organizations.” AR81 (emphasis added). Their contention that FECA failed to provide respondents 

with sufficient notice is thus contrary to law and wholly irrational. 

Application of section 30122 to corporate straw donors is not only mandated by the plain 

language of the statute, but is also necessary to effectuate Congress’ interest in preventing the 

laundering of campaign money through political entities whose names do not reflect the true 

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sources of their funds. Any review of the adequacy of the FEC’s reasons for its decision in this 

case must consider that the decision has the effect of depriving the public of critical information 

concerning millions of dollars of expenditures aimed at influencing the 2012 elections. 

1. The straw donor prohibition is vital to the fundamental and well-established 

purposes of FECA. 

Disclosure has been a “cornerstone” of American campaign finance law for more than a 

century. See Buckley v. Am. Const. Law Found., 525 U.S. 182, 222-23 (1999) (O’Connor, J., 

dissenting). As Justice Brandeis famously recognized nearly a century ago, “Sunlight is . . . the 

best . . . disinfectant,” and “electric light the most efficient policeman.” See Buckley, 424 U.S. at 

67 (quoting Louis Brandeis, Other People’s Money 62 (Nat’l Home Library Found. ed. 1933)). 

The Supreme Court has repeatedly acknowledged that political disclosure laws both reflect 

and advance important First Amendment values. Three “important state interests” served by 

disclosure have been repeatedly recognized: “providing the electorate with information, deterring 

actual corruption and avoiding any appearance thereof, and gathering the data necessary to enforce 

more substantive electioneering restrictions.” McConnell v. FEC, 540 U.S. 93, 196 (2003). 

The first of these, the public’s informational interest, is “alone . . . sufficient to justify” 

disclosure laws. Citizens United, 558 U.S. at 369. Disclosure laws ensure that voters are “fully 

informed about the person or group who is speaking” and “able to evaluate the arguments to which 

they are being subjected.” Citizens United, 558 U.S. at 368 (citations and internal quotation marks 

omitted). “The sources of a candidate’s financial support also alert the voter to the interests to 

which a candidate is most likely to be responsive and thus facilitate predictions of future 

performance in office.” Buckley, 424 U.S. at 67. 

Importantly, disclosure serves these goals while only minimally burdening the exercise of 

First Amendment freedoms. Id. at 68. As the Supreme Court recently reaffirmed in McCutcheon 

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v. FEC, 134 S. Ct. 1434 (2014), disclosure does not “impose a ceiling on speech” and “[f]or that 

reason, . . . often represents a less restrictive alternative to flat bans on certain types or quantities 

of speech.” Id. at 1434, 1459-60 (citations omitted). 

FECA’s ban on making contributions in the name of another promotes this crucial 

informational interest. United States v. Boender, 649 F.3d 650, 661 (7th Cir. 2011). It was 

“originally enacted . . . as part of the Federal Election Campaign Act of 1971, which overall sought 

to regulate campaign finance through a regime of disclosure requirements.” O’Donnell, 608 F.3d 

at 553. “[T]he congressional purpose behind § 441f—to ensure the complete and accurate 

disclosure of the contributors who finance federal elections—is plain.” Id. The Third Circuit 

discussed the importance of section 30122 to political transparency at length: 

Buckley carefully considered the danger posed by compelled disclosure. It held that 

the state interests promoted by the FECA’s reporting and disclosure requirements 

justified the indirect burden imposed on First Amendment interests, and that the 

compelled disclosure requirements were constitutional . . . . Proscription of conduit 

contributions (with the concomitant requirement that the true source of contributions 

be disclosed) would seem to be at the very core of the Court’s analysis. 

United States v. Mariani, 212 F.3d 761, 775 (3rd Cir. 2000) (emphasis added); see also O’Donnell, 

608 F.3d at 554. And the FEC has long recognized that disclosure is a central and distinct purpose 

of the straw donor prohibition. See, e.g., FEC Advisory Op. 1986-41, at 2 (Dec. 5, 1986) (noting 

that section 30122 “serves to [e]nsure disclosure of the source of contributions to Federal 

candidates and political committees as well as compliance with the Act’s limitations and 

prohibitions.” (emphasis added)). 

FECA’s political committee disclosure requirements at 52 U.S.C. §§ 30102, 30103, and 

30104—which plaintiffs’ administrative complaints also alleged were violated—similarly advance 

the compelling governmental interests in “providing the electorate with information, deterring 

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actual corruption and avoiding any appearance thereof, and gathering the data necessary to enforce 

more substantive electioneering restrictions.” McConnell, 540 U.S. at 196. 

Congress’s longstanding concern about contributions made in the name of another is in no 

way limited to individual straw donors. Indeed, contributions anonymously funnelled through 

entities like corporate LLCs are precisely the type of undisclosed “dark money” that Congress has 

sought to eliminate through the passage of federal disclosure laws. For instance, in upholding a 

federal disclosure requirement enacted in 2002 by the Bipartisan Campaign Reform Act 

(“BCRA”), the Supreme Court cited evidence of organizations with “misleading” or “mysterious” 

names that participated in elections while disguising their funding sources. Id. at 128 & n.23 

(“‘Citizens for Better Medicare’ . . . was not a grassroots organization of citizens, as its name might 

suggest, but was instead a platform for an association of drug manufacturers.”). This is precisely 

the problem described in plaintiffs’ administrative complaints. The donors of over $15 million in 

campaign contributions are hidden behind groups with “misleading” or “mysterious” names like 

“F8” and “Specialty Investments Group.” Like the plaintiffs challenging the BCRA disclosure 

requirements, the controlling Commissioners here apparently “want to preserve the ability” of big 

donors to “hid[e] behind dubious and misleading names.” Id. at 197 (internal quotation marks 

omitted). But the controlling Commissioners “never satisfactorily answer the question of how 

uninhibited, robust, and wide-open speech can occur when organizations hide themselves from the 

scrutiny of the voting public.” Id. (internal quotation marks omitted). 

2. The straw donor prohibition unambiguously applies to the corporate 

respondents in this case. 

The language of section 30122 is clear and unambiguous: “[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 

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name of another person.” 52 U.S.C. § 30122. In turn, FECA defines “person” as “an individual, 

partnership, committee, association, corporation, labor organization, or any other organization or 

group of persons . . . .” Id. § 30101(11) (emphasis added). 

 The applicability of the straw donor prohibition to the corporate respondents here was thus 

plain on the face the law. Similarly, the controlling Commissioners do not even attempt to argue 

that the federal political committee registration and reporting requirements were unclear. Any 

“committee, club, association, or other group of persons” that receives more than $1,000 in 

contributions or makes more than $1,000 in expenditures “during a calendar year” is a political 

committee. 52 U.S.C. § 30101(4). The Commissioners do not deny that a corporation could qualify 

as a political committee, and indeed the Commission had found in the past that certain corporations 

were required to register as political committees. See, e.g., FEC v. Malenick, 310 F. Supp. 2d 230, 

237 (D.D.C. 2004) (finding that Triad Management Services, Inc. “operated as a ‘political 

committee’ in 1996” and illegally failed to register as a political committee). 

 The controlling Commissioners instead suggest that because corporations could not make 

contributions to super PACs prior to Citizens United and SpeechNow, the respondent LLCs could 

not be expected to understand the potential application of section 30122 to their conduct. These 

decisions, in tandem, authorized corporations to make independent expenditures, and to make 

contributions to certain federal political committees that made only independent expenditures, 

often called “super PACs.” See FEC Advisory Op. 2010-11, at 2 (July 22, 2010). But neither case 

altered the scope of the straw donor prohibition, which has always applied to corporations, see 52 

U.S.C § 30101(11).16 Corporate LLCs had ample “notice” of the applicability of the longstanding 

 

16 Indeed, far from unsettling the principle that contributions must be made in the name of 

the true contributor, both cases reaffirmed the compelling interest in disclosure that underlies the 

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prohibition on straw donors; indeed, they had precisely the same notice of the law as did an 

“individual, partnership, committee, association . . . [or] labor organization” subject to its terms. 

Id. If it is appropriate for the FEC to enforce section 30122 against the straw donors in this latter 

group, it is appropriate to enforce it against the corporate respondents in this case. 

Furthermore, it is not even true that corporations had never made contributions under 

FECA before Citizens United. During the “soft money” era prior to BCRA’s enactment, 

corporations gave huge sums to political party committees under the pretext that such funds were 

not given “for the purpose of influencing any election for Federal office,” but instead to finance 

“issue advocacy” or non-federal activities in the states. McConnell, 540 U.S. at 122-26. Indeed, 

BCRA’s strict limits on soft money contribution to federal party committees were in part motivated 

by the desire to shut down these corporate contributions. Id. at 124-25 (noting that largest corporate 

donors “often made substantial contributions to both parties” giving rise to concerns that “many 

corporate contributions were motivated by a desire for access to candidates . . . rather than by 

ideological support for the candidates and parties”). Before BCRA, it was certainly possible for 

disclosure-averse contributors to funnel huge amounts of money through corporate straw donors 

to political parties. Given the abuses of the soft-money era, it is not far-fetched to assume that 

some probably did so, even though it was illegal. 

There is thus no reason to assume that Congress “did not contemplate that corporations 

could violate the prohibition against giving in the name of another by acting as straw donors for 

contributions.” AR83. The federal ban on corporate contribution has historically been far from 

airtight, and Congress has long expressed concerns about the use of the corporate form to evade 

 

straw donor ban. Citizens United, 558 U.S. at 368; SpeechNow, 599 F.3d at 698 (“[T]he public has 

an interest in knowing who is speaking about a candidate and who is funding that speech”). 

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federal campaign law and defeat disclosure. See McConnell, 540 U.S. at 128 n.23 (listing 

“mysterious groups,” including corporate entities such as American Seniors, Inc., as examples of 

a disclosure loophole addressed by BCRA); FEC v. Beaumont, 539 U.S. 146, 160 (2003) 

(explaining that corporations were “susceptible . . . to misuse as conduits for circumventing” 

FECA). 

Further, as multiple courts have reiterated, the important informational interest animating 

section 30122 is clear. See, e.g., O’Donnell, 608 F.3d at 553 (noting that “congressional purpose” 

was “plain”—“to ensure the complete and accurate disclosure of the contributors who finance 

federal elections”). To suggest, as the controlling group does, that Congress would have wished to 

exempt corporations from the prohibition on straw donors is absurd. As the dissenting 

Commissioners noted, “Congress certainly did not intend for donors to be able to conceal their 

identities by routing their personal contributions through corporate entities.” AR94 & n.22. 

The controlling Commissioners ignored clear evidence that respondents not only violated 

the letter of the law, but also intentionally sought to frustrate the statutory purpose served by 

section 30122—“complete and accurate disclosure of the contributors who finance federal 

elections.” O’Donnell, 608 F.3d at 553. The controlling group’s refusal to enforce the straw donor 

provision thus was contrary to both the clear language and well-recognized purpose of the law. 

B. The Dismissals of Plaintiffs’ Administrative Complaints Were Arbitrary, 

Capricious, an Abuse of Discretion, and Otherwise Contrary to Law. 

Under State Farm’s “arbitrary and capricious” standard,17 the Court must determine 

whether the FEC has “articulate[d] a satisfactory explanation for its action including a rational 

 

17 For the reasons stated in Part II, Chevron deference is not warranted in this case. But to the 

extent it may apply, the Chevron Step Two inquiry, as applied under Orloski to FEC dismissals of 

administrative complaints when they rest on constructions of ambiguous statutory language, 

overlaps with the APA “arbitrary and capricious” standard applied under In re Carter-Mondale 

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connection between the facts found and the choice made.” State Farm, 463 U.S. at 43 (internal 

quotation marks and citation omitted). Under Orloski, this Court should also consider whether the 

FEC’s dismissals of plaintiffs’ administrative complaints “unduly compromise[s] the Act’s 

purposes” or “create[s] the potential for gross abuse.” 795 F.2d at 165. Applying these standards 

here, the Court should conclude that the controlling Commissioners’ dismissals of plaintiffs’ 

administrative complaints were arbitrary, capricious, an abuse of discretion, and contrary to law. 

1. Respondents could not have been “misled” by Commission precedents 

addressing funds deposited in corporate accounts because none of these 

authorities addressed corporate disclosure obligations. 

The fiction at the heart of the controlling SOR is that respondents, surveying the legal 

landscape after Citizens United and SpeechNow, could have reasonably concluded “that 

contributions made by their closely held corporations and corporate LLCs were lawful and not 

contributions in the name of another” because of “the Commission’s historical treatment of 

contributions made from funds deposited into a corporate account as corporate contributions.” 

AR85. But any such conclusion would have been illogical, irreconcilable with FECA’s plain text, 

and unsupported by any precedent from the courts or the FEC. 

The controlling SOR contends that plaintiffs’ administrative complaints were novel 

because the alleged straw donors were corporate entities, whereas the FEC had previously 

“considered alleged violations of section 30122 almost exclusively in contexts where individuals 

were the purported straw donors.” AR83. As discussed in the foregoing section, the terms of 

section 30122 explicitly covered “corporations” and “any other organization or group of persons,” 

 

Reelection Committee, 642 F.2d at 550-551, “for whether a statute is unreasonably interpreted is 

close analytically to the issue whether an agency’s actions under a statute are unreasonable.” Shays 

v. FEC, 414 F.3d 76, 96 (D.C. Cir. 2005) (internal quotation marks, citation, and brackets omitted). 

A federal agency interpretation of a statute is impermissible if it is “arbitrary, capricious, or 

manifestly contrary to the statute.” Chevron, 467 U.S. at 844. 

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and thus gave clear notice of the provision’s applicability to non-individuals, like the corporate 

respondents here. But the controlling group also fails to mention that in prior enforcement efforts, 

the FEC has scrutinized various straw donors who were not individuals—specifically, political 

action committees. For example, the FEC found reason to believe that two individuals violated 

section 30122 (formerly 2 U.S.C. § 441f) by making disguised contributions that were “funneled 

through” various PACs to a candidate. See Notification with Factual and Legal Analysis to John 

and Ruth Stauffer at 10, MUR 4634 (Sam Brownback for Congress) (Jun. 8, 1998); see also

Notification with Factual and Legal Analysis to John Shadegg’s Friends et al. at 7-8, MUR 5968 

(John Shadegg’s Friends) (Nov. 10, 2008) (proceeding from the premise that a contribution 

knowingly funneled to a candidate through a PAC would violate § 441f, but finding no reason to 

believe a violation occurred). Given these precedents, regulated parties could not have reasonably 

believed that the FEC would regard non-individual entities as categorically incapable of being 

straw donors under FECA. 

 Nor was there anything in the FEC’s precedents to suggest that corporate entities would 

be treated differently from PACs or individuals for section 30122 purposes, despite the controlling 

Commissioners’ attempt to conjure up ambiguity on this point. The controlling Commissioners 

observe that contributions disbursed from corporate accounts have historically been held to violate 

FECA’s ban on corporate contributions, 52 U.S.C. § 30118, irrespective of whether the 

corporation was controlled by a single shareholder. AR83-85 (citing, inter alia, FEC v. Kalogianis, 

No. 8:06-cv-68, 2007 WL 4247795 (M.D. Fla. Nov. 30, 2007); Conciliation Agreement at 2, 4, 8, 

MUR 3191 (Christmas Farm Inn, Inc.) (June 23, 1995); FGCR at 33, MUR 4313 (Coalition for 

Good Government) (Oct. 18, 1996)). 

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Relying on these authorities, the controlling Commissioners speculate that “the 

Commission’s historical treatment of contributions made from funds deposited into a corporate 

account as corporate contributions” might have misled the respondents into thinking their conduct 

would not violate section 30122. AR85. But determining that funds in corporate accounts are 

“corporate” for the purpose of applying the ban at section 30118, does not mean that the original 

source of those funds is the corporation for the purpose of applying section 30122. Contributions 

are always assumed to come from their immediate sources; that presumption is not unique to 

corporations. As the OGC explained, “[e]very contribution made ‘in the name of another’ appears 

‘on its face’ to have been made from that source.” AR39; see also AR399 (“[T]hat SIG or KPD 

may have transmitted the money to FreedomWorks—that is, ‘made’ the contribution in the literal 

sense—does not refute the allegation that SIG and KPD were merely intermediaries for the 

contributions of others.”). If the FEC’s refusal to enforce section 30122 could be justified simply 

by stating that the FEC generally assumes that the immediate donor is the original source of the 

funds, section 30122 would be rendered a nullity. 

 By way of analogy, suppose that Simon gives money to Garfunkel, who then, acting on 

Simon’s instructions, transfers the money from his bank account to a political committee. This 

contribution would appear on its face to be Garfunkel’s money, in the same way that a contribution 

disbursed from a corporate account would appear to be the corporation’s money. But it would be 

plainly absurd to argue that just because the money was Garfunkel’s, Simon could not have been 

using Garfunkel as a straw donor in violation of section 30122. And it would be equally absurd to 

make that argument if Garfunkel were replaced with a corporate entity. Contrary to the controlling 

Commissioners’ speculation, the regulated community was perfectly capable of understanding that 

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FEC precedents applying the corporate contribution ban did not imply that section 30122 condones 

the laundering of money through corporate accounts for the purpose of evading disclosure laws.18 

 Similarly, no FEC regulation could have misled respondents about the application of 

section 30122 to corporate straw donors. As the controlling group points out, the FEC declined to 

adopt a per se rule treating all “contributions by closely held corporate LLCs as contributions from 

their individual owners,” but instead promulgated a rule that “treat[s] corporate LLCs as distinct 

from their individual owners, including single-member corporate LLCs.” AR85.19 The controlling 

group suggests that this regulation could lead to reasonable misunderstandings about section 30122 

because the regulation, like the FEC’s section 30118 precedents, treats money in corporate 

accounts as distinct from the personal funds of controlling shareholders. Id. This argument suffers 

 

18 There is nothing strange or unfamiliar about the idea of the FEC looking behind a corporate 

veil to examine the true source of corporate funds. The FEC has applied analogous reasoning in 

examining political activity by U.S. subsidiaries of foreign corporations. 

Federal law prohibits foreign nationals from “directly or indirectly” making “a contribution 

or donation of money or other thing of value . . . in connection with a Federal, State, or local 

election” or “an expenditure, independent expenditure, or disbursement for an electioneering 

communication.” 52 U.S.C. § 30121(a)(1). The FEC has found that this prohibition does not bar a 

domestic subsidiary owned by a foreign corporation from spending money in connection with an 

election, but “the donations and disbursements [must] derive entirely from funds generated by the 

Subsidiaries’ U.S. operations” rather than from foreign persons. FEC Advisory Op. 2006-15, at 2 

(May 19, 2006). Therefore, the fact that funds are deposited into the account of a domestic 

subsidiary corporation does not end the analysis; the FEC will look into the derivation of the funds 

to make sure their true source is not a foreign corporation. Considered alongside this approach to 

the foreign-money issue, there was no reason for regulated parties to assume that the mere fact that 

money was disbursed from a corporate LLC’s account would preclude inquiry into where that 

money came from and whether it constituted a straw donor contribution. 

19 The FEC’s LLC regulation provides, in relevant part: “A contribution by an LLC that elects 

to be treated as a partnership by the [IRS] . . . , or does not elect treatment as either a partnership 

or a corporation pursuant to that section [of IRS rules], shall be considered a contribution from a 

partnership.” 11 C.F.R. § 110.1(g)(2). An LLC “that elects to be treated as a corporation” by the 

IRS, or that has “publicly-traded shares, shall be considered a corporation” by the FEC. Id.

§ 110.1(g)(3). Finally, a contribution “by an LLC with a single natural person member that does 

not elect to be treated as a corporation” by the IRS “shall be attributed only to that single member.” 

Id. § 110.1(g)(4). 

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from the same glaring flaw as the controlling group’s reliance on the section 30118 precedents: it 

conflates the question of whether particular funds are “corporate” with the question of whether the 

corporation is the true source of those funds. Cf. FGCR at 8, MUR 6485 (explaining that an LLC’s 

“[tax] treatment as a corporation or partnership only affects the [section 30122] analysis if the 

contribution was from the LLC itself,” not if the true contributor was the LLC’s shareholder). 

Moreover, the purpose behind the LLC regulation provides no support for the view that the 

regulation could have created misperceptions about section 30122. As the FEC explained at the 

time of the regulation’s promulgation, the Commission intended to protect the electoral process 

from unrestricted corporate LLC money, in accordance with the congressional purpose behind 

FECA’s prohibition on corporate contributions. Nowhere in the regulation’s explanatory preamble 

did the FEC suggest any intent to shield corporate LLCs from disclosure requirements or exempt 

them from the straw donor prohibition. Treatment of Limited Liability Companies Under the 

Federal Election Campaign Act, 64 Fed. Reg. 37397, 37399 (June 12, 1999) (Explanation & 

Justification). Given the text and purpose of the LLC regulation, no one could have rationally 

interpreted the regulation to suggest that section 30122 would not prohibit corporate straw donors. 

In light of FECA’s plain text and the relevant FEC precedents, the respondents had more 

than sufficient advance notice of their legal obligation not to launder money through corporate 

straw donors.20 The controlling Commissioners fail to articulate any rational basis for their 

conjecture that regulated parties were misled or confused about the application of section 30122. 

 

20 The controlling Commissioners also suggest that a vote to investigate respondents would 

violate their due process rights under the Fifth Amendment. But the FEC has no particular authority 

to interpret the Fifth Amendment, and the controlling group’s fair notice argument is no more 

persuasive when dressed up in constitutional garb. 

As the controlling group correctly notes (AR76-77), the Supreme Court in FCC v. Fox 

Television Stations, Inc., 567 U.S. 239, 253 (2012), recognized a “due process concern[] . . . that 

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2. The controlling Commissioners’ standard for “similar future cases,” which 

they refused to apply here, is arbitrary, capricious, and contrary to law. 

In addition to asserting their meritless argument for insufficient notice, the controlling 

Commissioners also purported to announce a standard for “enforcing section 30122,” but only 

with respect to “future matters.” AR86. The Commissioners declined to apply this standard to the 

MURs under review, however, see, e.g., AR87 n.70, stating this would be “unfair” in light of the 

“First Amendment rights . . . at stake.” AR86, 88. Although the Commissioners’ refusal to apply 

this standard was dispositive of the MURs in question, the standard itself is overly narrow, and as 

such, arbitrary, capricious, and contrary to law. 

The controlling Commissioners stated they would only find “reason to believe” a violation 

of section 31022 has occurred if they were presented with “direct evidence” that funds were 

“intentionally funneled through a closely held corporation or corporate LLC for the purpose of 

making a contribution that evades the Act’s reporting requirements.” AR86. In the absence of such 

evidence, they would also consider 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.” AR86. They also 

 

regulated parties should know what is required of them so they may act accordingly” before being 

subjected to enforcement action. But the facts in Fox Television were nothing like this case. There, 

the FCC sanctioned Fox and ABC for broadcasting indecent content in violation of 18 U.S.C. 

§ 1464, even though prior FCC decisions applying § 1464 had found that equivalent broadcasts 

were not indecent. Id. at 255-57. Because of this change of direction, the FCC “fail[ed] to provide 

a person of ordinary intelligence fair notice of what is prohibited.” Id. at 254 (citation omitted). In 

contrast, there was no risk of trapping the respondents here in a regulatory bait-and-switch. Unlike 

the FCC precedents that misled the broadcasters in Fox Television, the FEC precedents invoked 

by the controlling Commissioners here did not interpret section 30122. Because the controlling 

group cites guidance that interprets entirely different statutory provisions—e.g., the corporate 

contribution ban—that guidance could not have misled any reasonable person about the 

application of the straw donor ban, as discussed in Part III.B.1, nor effected a change of direction. 

No due process concern was implicated because the regulated parties knew “what [was] required 

of them.” 567 U.S. at 253. 

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criticized the alternative standard formulated by the dissenting Commissioners, suggesting that it 

would “make[] all closely held corporations or corporate LLC contributions unlawful, even if the 

LLC was formed for and conducted other legitimate business activities.” AR82 n.48. 

As an initial matter, the controlling Commissioners made no attempt to apply their new 

standard to the facts alleged in plaintiffs’ complaints—except to suggest in a footnote that even if 

they had applied their standard to W Spann, “other factors” would have still supported their 

decision to dismiss. AR87 n.70. Their standard appears to be entirely prospective in nature. 

Although the parameters of the controlling group’s standard have not been tested, it appears 

to be unduly narrow and absolute. Its intent prong requires evidence that “funds used to make a 

contribution were intentionally funneled through a closely held corporation or corporate LLC for 

the purpose of evading the Act’s reporting requirements.” AR86 (emphases added). As the 

dissenting group pointed out, this may be “virtually impossible to prove” because donors can 

simply “claim[] publicly that they funneled contributions through a single member or closely held 

LLC for any reason other than evading disclosure.” AR96. Further, in the absence of any evidence 

of intent, the controlling Commissioners suggest they would permit schemes wherein the corporate 

straw donor was “multipurpose” in nature—where the corporation had some business income or 

an incidental non-campaign purpose, even if its campaign contributions exceeded its business 

income. For instance, it is unclear whether their standard would capture use of Eli Publishing as a 

straw donor because it had been established as a publishing company and had approximately 

$70,000 in 2012 revenue. Arguably, then, Eli Publishing was not “created and operated for the 

sole purpose of making political contributions,” AR86, although the overwhelming majority of the 

funds comprising its contribution to ROF came from an undisclosed donor. 

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The controlling group also suggested that the dissenting Commissioners’ standard would 

subject all contributions from closely held corporations to suspicion under the straw donor 

prohibition. They imply that had they agreed to investigate plaintiffs’ complaints, this would have 

created a “presumption” that all corporate contributors are straw donors, rendering the “speech 

rights recognized in Citizens United” “hollow.” AR76. But this is a straw man. No one—not 

plaintiffs, the OGC, or the dissenting Commissioners—have suggested that all, or even most, 

contributions from closely-held corporations to super PACs should be subject to investigation or 

even scrutiny. The dissenting Commissioners merely stated that “[w]here an individual is the 

source of the funds for a contribution and the LLC merely conveys the funds at the direction of 

that person, the Act and Commission regulations require that the true source—the name of the 

individual rather than the name of the LLC—be disclosed as the contributor.” AR93. Only where 

there is evidence that (1) “an individual is the source of funds,” and (2) an LLC “conveys the funds 

at the direction of” that individual, would section 30122 even come into play. 

There is no justification for the controlling Commissioners’ introduction of a “post hoc 

subjective intent standard.” AR96. And insofar as they rested their dismissals on the concern that 

investigation of plaintiffs’ complaints would have created a presumption that all closely held 

corporations were straw donors, their reasoning was arbitrary, capricious, and based on a distortion 

of plaintiffs’ position and the standards articulated by OGC and the dissenting Commissioners. 

3. The controlling Commissioners’ allegations that respondents lacked notice are not 

credible. 

This Court should not accept an administrative decision “when there is reason to suspect 

that the agency’s interpretation ‘does not reflect the agency’s fair and considered judgment on the 

matter in question.’” Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 155 (2012) (quoting 

Auer v. Robbins, 519 U.S. 452, 462 (1997)). The controlling Commissioners could have issued 

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guidance on section 30122 if they believed its application to corporate entities was unclear. 

Instead, they repeatedly delayed consideration of plaintiffs’ complaints over the course of more 

than four years—needlessly prolonging any “uncertainty” by withholding guidance as wellpublicized violations continued to mount. That unjustifiable delay casts doubt on the sincerity of 

their “acute” notice concern, which was entirely a problem of their own making. See, e.g., AR95. 

They cannot now rely on their own obstinacy as the justification for further inaction. 

There are other reasons to question the validity of the controlling group’s ostensible desire 

to put the regulated community “on notice of the governing norm.” AR76. The recent history of 

the FEC is one of mounting dysfunction, deadlock, and delay. Since 2008, a three-Commissioner 

bloc has increasingly voted in lockstep to thwart enforcement of campaign finance law.21

Complaints languish for years, and deadlocked votes prevent the Commission from taking action 

even in cases with clear evidence of a violation, like this one.22 Deadlock rates have accelerated 

dramatically over the last decade. The FEC deadlocked at least once on 37.5% of MURs closed in 

 

21 In 2008, a three-member bloc began “to vote in lockstep,” “essentially deadlocking the 

agency’s decision-making” and “[grinding] the FEC to a slow crawl.” Nancy Cook, He’s Going 

to Be An Enabler, Politico (Feb. 21, 2017), http://www.politico.com/magazine/story/2017/02/ 

trump-mcgahn-white-house-lawyer-214801. 

22 Though FECA contemplates that a complaint will trigger a response within 120 days, 52 

U.S.C. § 30109(a)(8)(A), recent enforcement times have greatly exceeded this limit. A 2015 

analysis found “the FEC had ‘a backlog of 191 serious enforcement cases, with more than a quarter 

of these still unresolved more than two years after’” a complaint was filed. R. Sam Garrett, Cong. 

Research Serv., The Federal Election Commission: Enforcement Process and Selected Issues for 

Congress 11 (Dec. 22, 2015), https://fas.org/sgp/crs/misc/R44319.pdf (“CRS Report”) (citation 

omitted). 

 Another report by Commissioner Steven Walther identified 78 pending cases, of which 

50% had been pending for more than a year, and 23% for more than two years. Comm’r Steven T. 

Walther, Motion to Set Priorities and Scheduling on Pending Enforcement Matters Awaiting 

Reason-to-Believe Consideration 2, app. 1-6 (July 14, 2015), https://www.fec.gov/resources/ 

updates/agendas/2015/mtgdoc_15-41-a.pdf. 

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2016, and, while no MURs were closed due to a deadlocked vote in 2006, 12.5% were by 2016.23

The MURs at issue in this case were among them. 

This three-Commissioner bloc has all but admitted that delay and deadlock are part of a 

concerted effort to reduce enforcement, based on their contested views about issues beyond the 

scope of their statutory mandate. “No action at all, they say, is better than overly aggressive steps 

that could chill political speech.”24 This nullification campaign has led the no-action 

Commissioners to take positions at odds with FECA itself, resulting in “lack of disclosure and 

political committee registration, employer coercion, candidates’ personal use of campaign funds, 

and foreign national contributions.”25 

This Court should not reward the FEC for refusing to enforce the laws as Congress wrote 

them, nor should it treat three Commissioners’ blanket refusal to carry out their statutory mandate 

as a permissible exercise of discretion. These Commissioners have “consciously and expressly 

adopted a general policy that is so extreme as to amount to an abdication of its statutory 

responsibilities.” Ass’n of Irritated Residents v. EPA, 494 F.3d 1027, 1035 (D.C. Cir. 2007) 

(internal quotations omitted). When this happens, even where prosecutorial discretion is invoked, 

 

23 Comm’r Ann M. Ravel, Dysfunction and Deadlock: The Enforcement Crisis at the Federal 

Election Commission Reveals the Unlikelihood of Draining the Swamp 10 (Feb. 2017), 

https://assets.documentcloud.org/documents/3474279/Ravelreport-feb2017.pdf (“Ravel Report”). 

The Congressional Research Service found that the FEC deadlocked on 13% of matters in 2008-

2009, and 24.4% in 2014. CRS Report at 9-10. Commissioner Ravel found further deterioration: 

deadlock accounted for 30% of all enforcement votes for MURs that closed in 2016, compared to 

only 2.9% for MURs closed in 2006. Ravel Report at 9. 

24 Eric Lichtblau, FEC Can’t Curb 2016 Election Abuse, Commission Chief Says, N.Y. Times 

(May 2, 2015), https://www.nytimes.com/2015/05/03/us/politics/fec-cant-curb-2016-electionabuse-commission-chief-says.html. 

25 Ravel Report at 2, 12-20. 

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meaningful judicial review is crucial. Id.; Adams v. Richardson, 480 F.2d 1159, 1163 (D.C. Cir. 

1973) (en banc). 

Moreover, real-world events undercut the controlling group’s claim that respondents had 

insufficient notice. The straw donor contribution from W Spann to ROF was widely reported in 

national newspapers. See supra Part II.A. Indeed, it drew enough attention to trigger comment 

from the candidate who would become the 2012 Republican Presidential nominee. Id. It strains 

credulity that the respondents here—million-dollar donors who were sophisticated enough to 

create corporate entities to conceal their campaign activity—were unaware of these events, or 

confused about the law’s requirements. 

The Specialty Investments Group respondents hatched their straw donor scheme over a 

year after these widely reported events. And although the Eli Publishing/F8 respondents made 

their contribution at the same time as W Spann, Lund and any other donors associated with the 

effort had years to come forward while plaintiffs’ complaints were pending and to correct the 

reporting at issue. Moreover, many of the persons involved in the straw donor schemes conceded 

their intent to evade FECA disclosure requirements. Lund admitted to the public that he made the 

contribution through his LLCs because “he did not want ‘to be real public about being a part of 

the campaign.’” AR41. Conard was even more explicit, conceding that “he set up the business 

entity for the sole purpose of conveying his funds to ROF without disclosing his identity,” FGCR 

at 9, MUR 6485, and that he “did not want to disclose his name when making the contribution 

because he feared for the safety and security of his family,” id. at 11 n.6. 

Finally, none of the respondents claimed to lack familiarity with the law or its requirements 

in their responses to plaintiffs’ administrative complaints. All respondents overwhelmingly 

focused their defenses on the evidentiary foundations of the claims against them, characterizing 

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the complaints as “factually inadequate” and “weakly based,” AR28-30, or “unadorned 

speculation,” AR377. But they said nothing whatsoever about the law being unclear. Nor could 

they; the statute provides, in clear and broad terms, that “[n]o person shall make a contribution in 

the name of another.” Indeed, even one of the most outspoken critics of campaign finance 

regulation acknowledged—in early 2012—that the W Spann “contribution was almost certainly

an illegal contribution given in the name of another.” Bradley A. Smith, Disclosure in a PostCitizens United Real World, 6 U. St. Thomas J.L. & Pub. Pol’y 257, 270 (2012) (emphasis added). 

The theory of insufficient notice was an invention of the controlling Commissioners, who made 

no attempt to consider whether these respondents were actually aware of the law’s requirements. 

Cf. Gen. Elec. Co. v. EPA, 53 F.3d 1324, 1329 (D.C. Cir. 1995) (“[A] regulated party acting in 

good faith would be able to identify, with ‘ascertainable certainty,’ the standards with which the 

agency expects parties to conform.” (citation omitted)). 

The controlling group’s unsupported and unreasonable “fair notice” rationale lacks any 

foundation in law or in the facts of this case, and is belied by the plain and unambiguous language 

of section 30122. Crediting it here would frustrate the vital transparency purposes of FECA and 

all but guarantee continued inaction at the agency charged with FECA’s enforcement. 

IV. THE COURT SHOULD DECLARE THAT THE DISMISSALS OF PLAINTIFFS’

ADMINISTRATIVE COMPLAINTS WERE UNLAWFUL AND DIRECT THE FEC TO CONFORM 

WITH SUCH DECLARATION WITHIN 30 DAYS. 

The Court has the authority to declare that the FEC’s dismissal of plaintiffs’ administrative 

complaints was contrary to law and direct the FEC to conform with such declaration within 30 

days. 52 U.S.C. § 30109(a)(8)(c). 

The question before this Court is not whether the FEC should have found that respondents 

violated the law. Instead, this Court must determine whether the FEC’s rationale for refusing to 

even investigate that possibility, based on the law and on the record before it, was arbitrary and 

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capricious, or contrary to law. In light of the foregoing discussion, the Court should answer that 

question in the affirmative, and issue a declaration to that effect. 

CONCLUSION 

For the reasons stated, we respectfully urge the Court to grant plaintiffs’ motion for 

summary judgment; declare that the FEC’s dismissals of plaintiffs’ administrative complaints are 

contrary to law, arbitrary and capricious, and an abuse of discretion; and direct the Commission to 

conform with such declaration within 30 days consistent with the Court’s judgment. 

 

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Dated: July 10, 2017 

Respectfully submitted, 

/s/ Tara Malloy 

Tara Malloy (DC Bar No. 988280) 

 tmalloy@campaignlegalcenter.org 

Lawrence M. Noble (DC Bar No. 244434) 

Megan P. McAllen (DC Bar No. 1020509) 

CAMPAIGN LEGAL CENTER

1411 K Street N.W., Suite 1400 

Washington, DC 20005 

(202) 736-2200 

Fred Wertheimer (DC Bar No. 154211) 

DEMOCRACY 21 

2000 Massachusetts Avenue N.W. 

Washington, DC 20036 

(202) 355-9600 

Donald J. Simon (DC Bar No. 256388) 

SONOSKY, CHAMBERS, SACHSE, 

ENDRESON & PERRY, LLP 

1425 K Street N.W., Suite 600 

Washington, DC 20005 

(202) 682-0240 

Attorneys for Plaintiffs 

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