FEDERAL ELECTION COMMISSION
 

• 

October 1990 999E Street NW 

IXN:STIC SUBSIDIARIES OF FOREIGN NATICtll\LS: 

PROPOSED lllILEI'JAKING 

• 

on August 22, 1990, the Conunission 

published a Notice of Proposed Rulemaking 

seeking comments on whether the agency 

should change its regulations governing 

foreign nationals at 11 CPR 110.4(a). See 

55 Fed. Reg. 34280. The proposed rule 

under consideration would treat a domestic 

corporation as a foreign national if the 

corporation's foreign ownership exceeded 50 

percent. The Commission is also seeking 

comments on the current foreign national 

rules, inclUding suggestions that would 

promote compliance with the law's ban on 

foreign national contributions (2 U.S.C. 

§44Ie) • 

Commission regulations at 11 CPR 

110.4(a)(1), which implement section 441e, 

prohibit foreign nationals from making contributions or expenditures, either directly 

or through another person, in connection 

with any local, state or federal election. 

In a series of advisory opinions, the Commission has permitted domestic subsidiaries, either partially or totally owned by 

foreign nationals, to engage in electionrelated activities as long as two basic 

conditions are met. First, the individuals 

who exercise decision-making authority for 

these activities must be U.S. citizens or 

individuals lawfully admitted for permanent 

residence (Le., "green-card holders," who 

are not considered foreign nationals). 

Second, the funds used for election-related 

activities must not come from the foreign 

national parent or from a foreign citizen. 

The proposed rule would supersede these 

advisory opinions by prohibiting electionrelated activity by a domestic corporation 

if its foreign national ownership exceeded 

50 percent. 

Comments on the proposed rule must be 

submitted by October 12, 1990, and should 

be addressed to Ms. Susan Propper, Assistant General Counsel, 999 E Street, NW, 

Washington, DC 20463. The Commission has 

scheduled a public hearing for October 31. 

(continued) 

Washington DC 20463 Volume 16, Number 10 

REPOR'l'S DUE IN 0C1'0BER: REl!INDER 

Quarterly, mcnthly and pregeneral election reports are due in 

October. To find out what reports 

your committee must file, see the 

charts in the September Record or 

call the Commission (800/424-9530 or 

202/376-3120) • 

TABLE OF CCN1'ENTS 

REGULATIOOS
 

1 Domestic Subsidiaries of Foreign
 

Nationals: Proposed Rulemaking
 

2	 Publicly Financed Presidential Nominating Conventions: Notice of Proposed 

Rulemaking 

INFORMATIW 

3 Prohibition on Contributions Made in the 

Name of Another 

5	 ADVISORY OPINIWS 

axJR'l' CASES
 

7 Miller v , FEC
 

7 FEC v , AFSCME-PQ
 

8 FEC v. Weinberg
 

8 Dolan v , FEC
 

8 DSCC v. FEC
 

9 New Litigation
 

800 LINE 

11 What to Do About Excessive Contributions: Redesigna tions and 

Reattributions 

CCi'Il'LIANCE 

12 MURs Released to the Public 

13 Nonfilers 

13 SmTISTICS: House and Senate Candidates 

15 FEDER1>L REXlISTER ~CE5

15 INDEX 
October 1990 FEDERAL ELEC1l0N COMMISSION Volume 16, Number 10 

persons wishing to testify should so	 Use of ~lic Funds. With minor 

indicate in their written comments. changes, proposed section 9008.7 on the use 

of public funds by convention committees 

PUBLICLY FINlINCED PRESIDENl'IAL tmINATIm 

follows current 11 CFR 9008.6. The Commis­

•

CXHIENl'IWS: OOl'ICE OF PROPOSED RULEMllKIOO 

on August 22, 1990, the Commission 

published a Notice of Proposed Rulemaking 

in the Federal Register seeking comments on 

proposed rules governing publicly funded 

Presidential nominating conventions. See 

55 Fed. Reg. 34267. Written comments on 

the Rule~aking Notice were due September 

2l. 

The proposed rules would reorder the 

regulations to track the logical progression of convention activity from registration to audits and repayments. The draft 

rules would also reorganize the current 

rules by dividing them into Subpart A 

(11 CFR 9008.1-9008.16), focusing on convention committees, and Subpart B (11 CFR 

9008.50-9008.54), governing activity by 

host committees and local governments in 

convention cities. Finally, several proposed changes were made to conform with 

recent revisions to the regulations on 

publicly funded Presidential candidates. 

The paragraphs below briefly summarize 

the major changes proposed in the Notice 

and the issues the Commission has raised 

for comment. 

convention CoDmittees (SUbpart A) 

Reporting. Proposed section 9008.3(b) 

would set forth the registration and 

reporting requirements for convention 

committees now contained in 11 CFR 9008.12. 

Under the draft rules, convention committees would file their first report following the quarter in which the committee 

either began making disbursements for 

convention activity or received its first 

public funding payment, whichever was 

earlier. Reporting requirements would also 

be revised to track the reporting dates for 

other types of political committees filing 

quarterly reports under 11 CFR 104.5. 

sion asked for comments, however, on 

whether to clarify the distinction between 

items that are convention expenses (which 

should be defrayed with public funds and 

which count against the committee's expenditure limit) and expenses that are related 

to the ongoing business of the national 

committee (which should not properly be 

paid with public funds). 

In-kind Donations frOlllBusinesses. 

proposed section 9008.9, like current 

11 CFR 9008.7(c), specifies the circumstances under which convention committees 

may accept in-kind donations from businesses. Based on the experience of the last 

two election cycles, the Commission proposed the following changes: o Proposed	 9008.9(a)(1)(ii) would require 

the vendor to provide documentation to 

demonstrate that a reduction or discount, 

such as a volume discount on hotel rooms, 

was within the vendor's ordinary course 

of business. . 

o Paragraph (a) (2) would permit	 businesses 

to provide free products and services if 

they submitted documentation showing, 

an 

among 

established 

other things, 

practice 

that 

of 

the 

providing, 

business had 

to
 

•

nonpolitical clients, products or ser­


vices on the same scale and on similar
 

terms. The new paragraph would codify
 

the conclusion reached in AD 1988-25.
 

Alternatively, the Commission asked
 

whether the rules should require that
 

products and services be provided at no
 

less than the vendor's cost. Compare AO
 

1975-1.
 

The Commission also asked whether 

convention committees should be required to 

report their receipt of in-kind donations 

from businesses. 

A related point concerns whether the 

Commission should retain the current 

distinction between "local businesses," 

Federal Election COIIIIlission, 999 E street, NIi, Washington, DC 20463 

800/424-9530 202/376-3120 202/376-3136 (TOO) 

Lee linn Elliott, Chairman Walter J. Stewart, Secretary of the Senate, 

John Warren McGarry, Vice Chairman Ex Officio Commissioner 

Joan O. Aikens Donnald K. Anderson, Clerk of the House of 

'lbomas J. Josefiak Representatives, Ex Officio Commissioner 

Danny L. McDonald 

Scott E. 'lbomas 

2
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

• "retail businessesII and "local retail for the nominating convention or any 

businesses" in describing the types of other particular activity. 

businesses that may make in-kind donations. 

If the Commission permits only local retail Donations to Host CClIIIIIittees. Proposed 

businesses to offer discounts and dona­ section 9008.53 (b), based on current 11 CFR 

tions, how should franchisees and national 

chains be regarded under the rule? Also, 

what factors would cause a business to be 

considered "retail" as opposed to 

"wholesale"? 

Host Conmittees; Expenses Incurred by 

Government Agencies, Municipal Corporations 

(SUbpart B) 

Reporting by Host CClIIIIIittees. Proposed 

section 9008.51 would contain the rules on 

registration and reporting now found at 

11 CFR 9008.12(a) but would also make 

several revisions: 

o Host committees would begin	 reporting 

with the first quarter of the election 

year. 

o The filing deadlines for quarterly 

reports would be the same as those for 

other types of committees. 

• 

o Host committees would be required to 

itemize their receipts and disbursements 

to the extent required by 11 CFR Part 

104. 

Reporting by Government Agencies and 

Municipal Corporations. Proposed section 

9008.5l(c) would require disclosure by 

municipal corporations and other government 

agencies providing services and facilities 

to a national nominating convention. These 

entities would file two statements with the 

Commission broadly describing their convention-related activity. The first statement 

would be due 10 days after the city was 

selected as the convention site; the second 

would be due after the convention. 

Establishment of Municipal Funds. The 

Commission asked for comments on the inclusion of new,section 9008.53(a)(2), which 

would codify AOs 1982-27 and 1983-29. 

Based on these advisory opinions, the proposed rule would permit convention cities 

to establish municipal funds to receive 

donations and make disbursements in connection with nominating conventions, provided 

certain conditions were met: 

o The fund was created to attract conven9008.7(d)(3), concerns donations by local 

retail businesses (excluding banks), municipal corporations and government agencies 

to convention committees to help defray 

certain convention expenses. (The Commission wishes to make clear that, under this 

rule, banks do not qualify as local retail 

businesses.) Under the proposed revision, 

the requi rement that the amount of the 

donation be proportionate to the donor's 

commercial return would apply only to local 

businesses, since municipal corporations 

and government agencies may defray these 

expenses on their own, without limit. 

PROIIIBITI~ COOTlUBUTIOOS 

l'IlIDE IN '!HE NAl'IE OF AN:l'lHER 

A contribution made by one person in 

the name of another is prohibited. 

2 U.S.C. §44lf. Commission regulations 

specifically prohibit: 

o	 Making a contribution in the name of 

another; 

o Knowingly	 permitting one's name to be 

used to effect such a contribution; 

o Knowingly	 helping any person in making 

such a contribution; and 

o Knowingly	 accepting such a contribution. 

11 CFR 110.4(b)(1). 

For example, a person may not give 

money to another person to make a contribution in that person's name; nor may a 

person provide another person's name as the 

source of his or her own contribution. 

11 CFR ll0.4(b)(2). A corporation is 

prohibited from using bonuses, expense 

accounts or other methods of reimbursing employees for their contributions. 11 CFR 

114.5(b)(1). Similarly, parents may not 

make contributions in the name of a minor 

child. 11 CFR 110.l(i)(2). 

Enforcement cases 

The Commission has pursued violations 

•
 

tions and other events to the locality­


not just the nominating convention.
 

o	 The fund was necessitated by a local law 

prohibiting the use of tax revenue for 

these purposes. 

o Donations to the fund were not designated 

of 2 U.S.C. §44lb and 11 CFR 110.4(b) in a 

number of administrative enforcement cases 

(Matters Under Review or MURs) and in the 

courts. Selected cases are summarized 

below. 

(continued) 

3
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

MUR 2036; FEe v. Lee. In MUR 2036, a mission identified the corporate employees 

corporation reimbursed at least 15 employ­ who had permitted their names to be used to 

ees for their contributions to a federal effect contributions made in the name of 

personal 

candidate. 

check of $250 

Each employee 

to the 

wrote 

candidate 

out a 

and 

another. One employee agreed to pay a $350 

•

later received repayment from the corporation in a bonus check or an expense account 

reimbursement. The corporation agreed to 

pay a $4,000 civil penalty for making 

corporate contributions (in violation of 

2 U.S.C. §441b(a)) and contributions in the 

names of other persons. Corporate executives involved in the case agreed to pay 

civil penalties ranging from $1,000 to 

$4,500. Employees who allowed their names 

to be used for corporate contributions each 

agreed to pay a $250 civil penalty. 

A civil suit, filed by the Commission 

against the president of the company, 

resulted in a consent order involving a 

$5,000 civil penalty against the president. 

(FEC v. Roger Lee, U.S. District Court for 

the Central District of California, Civil 

Action No. 88-02640.) 

MUR 2104. In this MUR, several 

corporate officers created a plan whereby 

$30,000 from the treasury of a subsidiary 

would be used to reimburse them for their 

contributions to federal and state candidates. Company funds totaling $11,600 were 

distributed, in cash payments, to the 

officers as advances or reimbursements for 

their contributions to federal candidates, 

which were made by personal check. The 

officers involved in the scheme paid civil 

penalties of.up to $5,000. They also 

repaid the torporation in the amount of 

their contributions. The corporation paid 

an $8,500 civil penalty. 

U.S. v. Brinkman; MUR 1861. In a 

criminal case pursued by the Department of 

Justice, U.S. v. Brinkman, et al., two 

corporate officers used employees as 

conduits to conceal the corporate source of 

apprOXimately $25,000 in contributions to 

federal candidates. The corporation and 

the two officers pleaded guilty to conspiracy charges arising from knowing and 

willful violations of 2 U.S.C. §441b(a) 

(the prohibition on corporate contributions). In October 1984, the U.S. District 

Court for the Northern Division of Illinois 

fined the corporation $100,000. In November 1984, one of the officers was given 

civil penalty; each of the other 21 employees paid a $100 penalty. 

MUR 2465. In MUR 2465 (merged with MUR 

1616), an Indian tribe used $119,400 of the 

tribe's funds to reimburse the tribe chairman and other individuals for their contributions to federal candidates. Some of the 

reimbursements for the contributions exceeded the limits (in violation of 2 U.S.C. 

§441a(a)(1)(A)). Moreover, the tribe 

failed to register and report as a political committee (in violation of §§433 and 

434 (a)) when it made contributions in 

excess of $1,000 dur~ng 1986. The tribe 

and its chairman agreed to pay a $32,000 

civil penalty. 

Refund of Contribution 

Made in the Name of Another 

In AOs 1989-5 and 1984-52, the Commission said that if a committee discovers 

that it has received a corporate contribution made in the name of another, the 

committee must refund the contribution to 

the actual source of the contribution (the 

corporation), not the person in whose name 

these 

the contribution 

opinions, the 

was made. In 

committees 

both 

became 

of 

aware 

•

of the violation as a result of criminal 

cases against either the corporation or the 

conduit of the contribution. 

PUBLIC APPEARIINCES 

10/10	 The American University
 

Washington, DC
 

Chairman Lee Ann Elliott
 

11/15-16 National Association of 

Business	 Political Action 

Committees 

Scottsdale, Arizona 

Chairman Lee Ann Elliott 

11/16-17	 Association of State 

Democratic Chairs 

Miami Beach, Florida 

Commissioner Scott E. Thomas 

four years probation, a $35,000 fine and Susan E. Propper, 1,000 hours of community service. The Assistant General Counsel 

other officer was given two years proba­ for Regulations tion, a $1,000 fine and 250 hours of Roberta B. Werfel, communi

The Department 

ty service. 

of Justice referred the Chief, Information Services 

•

matter to the FEC. In MUR 1861, the Com4 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

• 

ADVISORY OPINIW ~TS

The following chart lists recent 

requests for advisory opinions (AORs). The 

full text of each AOR is available for 

public review and conunent in the FEC's 

Public Records Office. 

AOR 1990-16 

Establishment of separate segregated fund 

by federal credit union. (Date Made 

Public: August 15, 1990; Length: 37 

pages) 

AOR 1990-19 

Fundraising items sold to (and repurchased 

from) committee by corporation. (Date Made 

Public: August 29, 1990; Length: 10 

pages) 

• 

AOR 1990-20 

Federal contractor status of law partnership that represents the Federal Deposit 

Insurance corporation and the Resolution 

Trust· Carporation. (Date Made Public: 

August 29, 1990; Length: 2 pages) 

AOR 1990-21 

Congressional campaign's expenditures for 

speeches made by candidate's wife in 

Congressional district. (Date Made Public: 

September 11, 1990; Length: 5 pages) 

NJ 1990-12:	 Volunteer services by Fonner 

Potential Candidate Who 

Received Opinion Poll Results 

David Hochberg's knowledge of the results 

of a poll he commissioned when he was a 

potential candidate will not, by itself, 

cause his volunteer services on behalf of a 

candidate for the same seat to result in a 

contribution as long as he does not impart 

the information to anyone on the campaign 

or use the information as the basis for 

giving campaign advice. 

• 

Mr. Hochberg, who was going to run for 

New York's 22nd Congressional District 

seat, paid for a survey concerning demographics, public opinion and name recognition. Deciding not to run, he offered to 

volunteer for the campaign of Sean Strub, a 

candidate for the same seat, by setting up 

interviews with the media and soliciting 

contributions. Mr. Hochberg did not inform 

Mr. Strub of the survey results, although 

that information could be strategically 

helpful to the Strub campaign. 

The acceptance of an opinion poll by a 

candidate's campaign is a contribution in 

kind by the purchaser to the campaign. 

Poll results are considered "accepted" if 

the candidate or campaign agent requests 

the poll results; uses the poll results; or 

fails to notify the contributor that the 

results are refused. 11 CFR 106.4(b). 

In this case, Mr. Hochberg commissioned 

the poll for his own potential candidacy 

prior to working for Mr. Strub. He did not 

enter into the transaction in contemplation 

of working for the Strub campaign, and his 

receipt of the poll was merely a completion 

of the transaction. In such circumstances, 

his knowledge of the poll results by itself 

is not treated as a contribution and does 

not preclude his volunteering on behalf of 

the campaign. If, however, Mr. Hochberg 

imparts poll results to campaign staff or 

uses them to advise the campaign on matters 

such as campaign strategy or media messages, the poll information will constitute 

an in-kind contribution from Mr. Hochberg 

to the Strub campaign. 11 CFR 106.4(b). 

The amount of such a contribution must be 

determined under sections 106.4(e) and (g), 

which explain the allocation and valuation 

of in-kind contributions of poll results. 

(Date issued: August 3, 1990; Length: 

3 pages) 

NJ 1990-13:	 Reporting Exemption for 

Minor Party 

The Socialist Workers Party (SWP) National 

Campaign Committee and committees supporting SWP candidates are exempt from disclosing the identify of contributors and 

persons to whom expenditures are made 

because of the likelihood of harassment to 

those persons. The exemption extends until 

December 31, 1996. The SWP may seek a 

renewal of the exemption through another 

advisory opinion. 

Background 

The SWP was originally granted a disclosure exemption by the court in Socialist 

Workers 1974 National Campaign Committee v. 

FEC, Civil Action No. 74 1338 (D.D.C.). 

Under a consent decree entered into by the 

plaintiffs and the Commission in 1979, 

committees supporting SWP candidates were 

exempt from Federal Election Campaign Act 

provisions requiring disclosure of the 

names and addresses (and, if applicable, 

the occupations and principal places of 

business) of: 

o Contributors to SWP committees; 

o Candidates and political committees 

supported by	 SWP committees; 

(continued) 

5
 
October 1990 FEDERALELECTION COMMISSION Volume 16, Number10 

o Lenders, endorsers and	 guarantors of Facts. Presented by SWP 

loans to SWP committees; and In its advisory opinion request, the 

o Persons	 to whom SWP committees made SWP described a long history of FBI and 

expenditures. 

The decree required the committees to 

other government harassment of the SWP set •

maintain records in accordance with the Act 

and to file reports on time. 

In 1985, the court approved an updated 

settlement agreement with the same exemptions. In view of the 1979 amendments to 

the Act, the court also exempted the SWP 

from reporting the identification of 

persons providing rebates, refunds and 

other offsets to operating expenditures and 

of persons providing dividends, interest 

and other receipts. 

The exemptions expi red at the end of 

1988. The SWP missed the deadline for reapplying for the exemptions with the court 

and, instead, asked the Commission to 

determine whether SWP committees remain 

entitled to the exemptions. 

Applicable Law 

Although the Commission may not grant a 

renewal of an exemption granted by the 

court, the agency may consider whether it 

should grant a new exemption based on facts 

presented by the requester. See 11 CFR 

112.1(b) • 

In Buckley v. Valeo, 424 U.S. 1 (1976), 

the U.S. Supreme Court recognized that the 

Act's disclosure requirements as applied to 

a minor party would be unconstitutional in 

cases where the threat to the exercise of 

First Amendment rights resulting from disclosure would outweigh the state interest 

furthered by disclosure. 424 U.S. at 71. 

The Court stated that the evidence offered 

by a third party to support its claim for a 

reporting exemption "need show only a 

reasonable probability that the compelled 

disclosure of a party's contributors' names 

will subject them to threats, harassment, 

or reprisals from either Government officials or private parties." 424 U.S. at 74. 

The Court reaffirmed this standard in 

Brown v. Socialist Workers '74 Campaign 

Committee (Ohio), 459 U.S. 87 (1982), in 

which the court granted the SWP an exemption from state disclosure requirements. 

The Court in Brown also clarified that the 

exemption included the disclosure of the. 

names of recipients of disbursements as 

well as the names of contributors. 459 

U.S. at 95. 

In agreeing to the 1979 and 1985 

consent decrees that granted exemptions to 

SWP committees, the Commission considered 

both recent and historical incidents of 

harassment, as did the court in Brown when 

it rendered its decision. 

out in SWP v. Attorney General, 642 F. 

Supp. 1357 (S.O.N.Y. 1986). The SWP maintained that federal government hostility 

towards the party has continued, as documented by affidavits submitted in a second 

case, SWP v. Attorney General, 666 F. Supp. 

621 (S.O.N.Y. 1987). 

The SWP also documented a number of 

incidents over the past five years involving harassment of the SWP and those 

associated with it by private parties and 

local government in various parts of the 

country. 

COIIIIU.ssion Determination 

Based on the information provided by 

the SliP indicating continued harassment, 

the Commission granted the reporting exemptions provided for in the previous consent 

agreements. The exemptions will last until 

December 31, 1996. At least 60 days before 

that date, the SWP may submit a new advisory opinion request seeking a renewal of 

the exemption. 

The SWP, however, must still comply 

with all of the remaining requirements of 

the Act and Commission regulations, including the 

(Date 

recordkeeping 

issued: August 21, 1990; Length: 

requirements. •

9 pages.) 

l\{) 1990-15: Administrative Termination 

of COIIIIU.ttee Involved in 

Disputed Debt 

Ken Kramer '86, the principal campaign committee for Mr. Kramer's 1986 Senate race, 

may qualify for administrative termination 

by the FEC if it applies for such and submits information to verify that the committee's only debt, currently under dispute, 

does not present a possible violation of 

the contribution limits or prohibitions. 

Administrative Termination 

The committee wishes to terminate but 

is involved in one unsettled obligation, a 

disputed debt. Under the Federal Election 

Campaign Act and FEC regulations, a political committee may terminate its reporting 

status only when it has no outstanding 

debts and obligations and when it no longer 

intends to receive contributions or make 

disbursements. 2 U.S.C. §433(d)(1); 11 CFR 

102.3. 

The Commission, however, on its own or 

may 

at the 

terminate 

request 

a 

ofa 

committee's 

political 

reporting 

committee, 

•

6
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

• obligations based on eight factors lisied 

in FEC regulations at 11 CFR 102.4(a). 

The materials submitted by the Kramer committee and its recent FEC reports indicate 

that the committee has satisfied all of the 

factors with the possible exception of 

factor six: the committee's outstanding 

debts, as disclosed in the last report, 

must "not appear to present a possible 

violation of the prohibitions and limitations of 11 CFR Parts 110 and 114." 11 CFR 

102.4(a)(6) • 

With regard to this one factor, the 

advisory opinion request did not offer 

complete information on the initial extension of credit by the vendor or the 

vendor's corporate status. If the initial 

extension of credit was not made in the 

ordinary course of business and on terms 

substantially similar to credit extended to 

nonpolitical clients, a excessive contribution could result or, in the case of an 

incorporated vendor, a prohibited contribution. See 11 CFR 114.10(c). 

Concluding that the committee may apply 

for administrative ter.mination, the Commis­

• 

sion advised the committee to provide 

information enabling the Commission to 

review its compliance with factor six. 

Application should be made by letter to the 

Assistant Staff Director for the Commission's Reports Analysis Division. 

statute of Limitations on Debts 

Concerning the effect of the Colorado 

statute of limitations on the requested 

termination, the state law would apply to 

the enforceability of the creditor's debt 

claim in Colorado courts. Although the 

running of the statute of limitations on 

the debt claim would not, by itself, remove 

the committee's reporting obligations, it 

might nonetheless be an additional factor 

considered by the Commission in reviewing a 

request for administrative termination. 

(Date issued: August 24, 1990; Length: 

6 pages) 

• 1For the past several years, the Commission 

has had a policy of not initiating administrative terminations. See AO 1988-44, note 

3.
 

MILLER v : FE<: 

On April 25, 1990, the U.S. Court of 

Appeals for the District of Columbia Circuit granted the FEC's motion for summary 

affirmance of the district court's decision 

in favor of the FEC. (Civil Action No. 89­

5394. ) 

Mr. Miller filed suit in January 1989 

with the U.S. District Court for the 

District of Columbia. (Civil Action No. 

89-0094.) He claimed that the FEC acted 

contrary law in dismissing his administra~

tive complaint. In that complaint, he had 

alleged that several Texas state officials 

had conducted fraudulent activities on 

behalf of the Bush-Quayle 88 campaign. The 

Commission found no reason to believe that 

the violations had occurred (the respondents' denying any knowledge of the alleged 

violations) and accordingly dismissed the 

complaint. 

On June 29, 1989, the district court 

found that the FEC's dismissal of the complaint was reasonable, stating that plaintiff Miller failed to show any evidence of 

illegal activity. (See the September 1989 

Record for a summary of the district court 

suit. ) 

For the reasons stated in the district 

court opinion, the appeals court granted 

the FEC'S motion for summary affirmance of 

the lower court decision, stating: "The 

merits of the parties' positions are so 

clear as to justify summary action." 

FE<: v , AFSCME-PQ (88-3208) 

On July 10, 1990, the U.S. District 

Court for the District of Columbia granted 

the FEC's motion for summary judgment, 

ruling that the American Federation of 

State, County and Municipal EmployeesP.E.O.P.L.E., Qualified (AFSCME-PQ), the 

separate segregated fund of AFSCME, and its 

treasurer, William Lucy, violated the law 

when they delayed the disclosure of in-kind 

contributions to the 1982 and 1984 Indiana 

House campaigns of Representative Frank 

MCCloskey. (Civil Action No. 88-3208.) 

During September of 1982 and 1984, 

AFSCME-PQ established telephone banks that 

were used in part to advocate the election 

of Representative McCloskey. Instead of 

reporting these in-kind contributions at 

the time they we re made (1. e , , when the 

services were provided on behalf of the 

(continued) 

7
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

candidate), AFSCME-PQ reported them after 

it paid the bills for the services, some 

months after the services were provided. 

Although AFSCME-PQ claimed that the inkind contributions were reported on time 

(i. e., when the funds were disbursed), the 

court disagreed, citing the statutory 

requirement that a committee must disclose 

the name and address of "each political 

committee which has received a contribution 

from the reporting committee during the 

reporting period, together with the date 

and amount of any such contribution." 

2 U.S.C. §434(b)(6 )(B)( L) , Because AFSCMEPQ reported on a monthly basis, the contributions should have been disclosed in the 

months immediately following the making of 

the contributions, i.e., the operation of 

the phone banks. 

The court has not yet ruled on the 

relief to be awarded. 

FEe v , l'IElNBERG 

on August 15, 1990, the U.S. District 

Court for the District of Columbia granted 

the FEC's petition to hold Mark R. Weinberg 

in contempt of court for failing to pay 

civil penalties included in a conciliation 

agreement and an earlier court order. 

In a September 1989 default judgment, 

the court had ordered Mr. Weinberg to pay a 

$17,000 civil penalty included in a conciliation agreement (MUR 2073). The court 

also ordered him to pay 6 percent interest 

on the penalty; an additional $5,000 for 

violating the agreement; and the Commission's court costs. (Civil Action No. 89­

0416(RCL». Penalties and costs imposed by 

the september 1989 judgment totaled 

$22,906. 

Under the terms of the court's August 

1990 order, defendant weinberg must pay: 

o An additional fine of $10,000 and $500 

per day until he complies with the 

court's prior order of September 1989; 

o Post-judgment	 interest to the Commission 

(at a rate of 8.27 percent) until he 

complies with the September 1989 order; 

and 

o Court	 costs and attorneys' fees incurred 

by the Commission in prosecuting the 

contempt proceeding. 

DOLAN v , FEe 

By agreement of both parties, the U.S. 

District Court for the District of Columbia 

dismissed this case on August 17, 1990. 

(Civil Action No. 90-0542.) Robert E. 

Dolan had asked the court to declare that 

2 U.S.C. §438(a)(4), referred to as the 

"sale and use restriction, II was unconstitu8
 

tional as applied to his efforts to solicit 

individuals identified as contributors in 

FEC reports. (See the New Litigation 

summary, (on July May 

13, 1990, 

1990 Record.) 

the Commission filed 

•

suit in the same court, asking the court to 

declare that Mr. Dolan knowingly and willfully violated the sale and use restriction. See the summary of FEC v. International Funding Institute, Inc., American 

Citizens for Political Action, Inc., and 

Dolan, September 1990 Record. on September 

5, 1990, the Commission filed a motion to 

amend its complaint by requesting a court 

declaration that the "sale and use restriction" is constitutional insofar as it 

curtails the sale or use of contributor 

data for commercial purposes. The Commission also asked the court to certify the 

constitutional issue to the U.S. Court of 

Appeals for the District of Columbia 

Circuit under 2 U.S.C. §437h.) 

DEltJCRATIC SENATORIAL CAMPAIGN 

COI'IMITTEE v : FEe (90-1504) 

on August 27, 1990, the U.S. District 

Court for the District of Columbia granted 

the FEC's motion for summary judgment, 

ruling that the agency did not act contrary 

to law when it dismissed a portion of an 

administrative complaint filed by the 

Democratic Senatorial Campaign Committee 

•

(DSCC). (Civil Action No. 90-1504.) 

Background

In its administrative complaint (MUR 

2766), DSCC alleged that $325,000 in media 

expenditures made by the Auto Dealers and 

Drivers for Free Trade political Action 

Committee (Auto Dealers PAC) in support of 

1988 Florida Senate candidate Connie Mack 

were not independent and thus violated the 

PAC's $5,000 contribution limit for a 

candidate under 2 U.S.C. §441a(a)(2)(A). 

DSCC contended that, because the Auto 

Dealers PAC and the Mack campaign (Friends 

of Connie Mack) both used the services of 

two key campaign consultants, the independence of the PAC's expenditures was compromised, resulting in excessive contributions 

by the PAC. The consultants, two media 

firms, provided services to the Mack 

campaign in Florida and to the Auto Dealers 

PAC for expenditures in other states. 

The PAC denied using either media firm 

in connection with the Florida Senate 

race, identifying a third firm as its media 

consultant for Florida. The PAC's director 

explained in an affidavit that, when the 

presidents 

that they were 

of the 

retained 

two media 

by the 

firms 

Mack 

disclosed 

cam­

•

paign, he told them "not to say anything at 
October1990 FEDERALELECTION COMMISSION Volume 16, Number10 I

all" about the Florida race to anyone Counsel's recommendation was not unreason­

• associated with the PAC. The PAC subni tted able. Citing Commissioner Josefiak's 

affidavits by the two presidents consistent Supporting Memorandum for the Statement of 

with the PAC director's affidavit•. The Reasons, the court stated: "In refusing to 

Mack campaign also denied any consultation order an investigation, the Conmission 

or coordination with the PAC and provided applied a minimum evidentiary threshold 

supporting affidavits. that required at least 'some legally signi­ The FEC's General Counsel recommended ficant facts' to distinguish the circum-­

that the Commission authorize an investi­ stances from every other independent 

gation of the matter because of "unanswered expenditure .••• [O]therwise eve1

y 'independquestions. II However, the Commission, by a ent expenditure' complaint wou d demand 

vote of 3-2 (and one abstention), failed to investigation." The court said that "the 

find "reason to believe" that a violation only record of fact offered in support of 

had occurred with respect to the independ­ DSCC's allegations was the use of 'common 

ent expenditure portion of the c£mplaint, consultants.' If In the court's view, howthereby dismissing that portion. (The ever, the affidavits suggested that "the 

Commission did find reason to believe that Florida Auto Dealers PAC built a 'Chinese 

the Mack campaign had failed to comply with Wall' between itself and the two Mack 

the 48-hour notice requirement for last­ consultants. II 

minute contributions and later entered into With regard to the affidavits, the 

a conciliation agreement with the campaign court found it "entirely reasonable to read 

with respect to that violation.) [them] as precluding, rather than raising, 

On June 26, 1990, DSCC filed suit an inference of coordination. 'I 

seeking summary judgment that the FEC had Accordingly, the court entered summary 

acted contrary to law in dismissing DSCC's judgment in favor of the FEC and against 

allegation of coordination between the Auto DSCC. 

Dealers PAC and the Mack campaign with 

respect to the PAC's independent expenditures. Nmf LITIGI\.TIQI 

Court Decision FEe v. Speelman c The court found that the Commission's The Commission asks the district court 

decision to dismiss the independent expen­ to declare that Harry Speelman made excesditure allegation was not contrary to law, sive conttibutions to a political commitgiven the "totality of the circumstances" tee, in violation of 2 U.S.C. §441a(a)(1) 

of the case. (C). The FEC claims that in 1987 Mr. 

OSCC had argued that the "totality of Speelman made $11,470 in contributions to
 

the circumstances" compelled an investi­ American Citizens for Political Action,
 

gation to determine whether the PAC's thereby exceeding the $5,000 per year limit
 

expenditures were independent. These on contributions to an unauthorized politi­


circumstances included: (1) the two common cal committee. The FEC therefore asks the
 

consultants used by the Auto Dealers PAC court to assess a civil penalty against Mr.
 

and the Mack campaign; (2) the General Speelman, enjoin him from further viola­


Counsel's recommendation to find "reason to tions of the contribution limits and award
 

believe" and authorize an investigation; the FEC court costs.
 

and (3) the affidavits subni tted by the PAC U.S. District Court for the District of
 

and the Mack campaign, which OSCC claimed Maryland, Civil Action No. JFM-90-2190,
 

raised substantial guestions. The court, August 19, 1990.
 

however, was not persuaded by OSCC' S
 

arguments.


Wi th respect to the commmon consul­ FEe v : National Republican tants, the court found that "there was no senatorial COIIIIlittee 

reason to presume 'coordination' as the The Commission asks the district court 

consultants were retained by the PAC to to find that the National Republican Senawork on elections only outside the state of torial Committee (NRSC) and its treasurer, 

Florida. 11 James L. Hagen, violated 2 U.S.C. §441a(h) The court also found that the Commis­ by making contributions to Senatorial 

sion's decision not to follow the General candidates that exceeded the contribution 

limits by over $2.6 million and by failing -------------- to report approximately $2.7 million in 

contributions made by NRSC. I Four affirmative votes are necessary to (continued) find "reason to believe." 

9 
_--,OU.Ctob<:>L1DDO~ _ 

October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

• 

o The first part of the memo entry discloses information on the contribution as 

originally reported on Schedule B. 

o	 The second part of the memo entry discloses information on the redesignation, 

including the date it )"as made and the 

redesignated election. 11 CFR 104.8(d) 

(2)(ii) .3 

I'IURS RELEASED TO '.lRE PUBLIC 

Listed below are MURs (FEC enforcement 

cases) recently released for public review. 

The list is based on the FEC press releases 

of August 21 and september 13, 1990. Files 

on closed MURs are available for review in 

the Public Records Office. 

Unless otherwise noted, civil penalties 

resulted from conciliation agreements 

reached between the respondents and the 

Commission. 

MUR 2128/2190/2210/2211 

Bespondents: (a) Populist Party, Willis 

Carto (DC); (b) Blayne E. Hutzel (MO); (c) 

Liberty Lobby, Inc. (DC); (d) Cordite 

Fidelity Service, Inc. (DC); (e) The 

Spotlight (DC); (f) Willis Carto (CA) 

Complainant: FEC initiated (2211/2128/ 

2190); Populist Party of the U.S. (2210) 

Subject: Failure to report on time; failure to amend Statement of Organization on 

time; failure to disclose name of treasurer; failure to designate and disclose 

campaign depositories; knowingly making and 

accepting corporate contributions; failure 

to report or adequately itemize contributions, expenditures and debts 

Disposition: (a)-(f) U.s. District Court 

Consent Order: $20,000 civil penalty 

MllR 2406 

Bespondents: (a) Carl Russell Channell 

(DC); (b) National Endowment for the 

Preservation of Liberty (DC); (c) American 

Conservative Trust, Carl R. Channel, treasurer (DC); (d) American Conservative Trust 

State Election FUnd (DC); (e) Anti-Terrorism American Committee, Carl R. Channell, 

treasurer (DC); (f) Anti-Terrorism American 

Committee State Election Fund, carl R. 

Channell, treasurer (DC); (g) Sentinel (DC) 

Complainant: Beryl Anthony, Chairman, 

Democratic Congressional Campaign Committee 

(DC) 

Subject: Failure to register, file disclosure reports, report change of treasurer 

and accurately disclose information; 

prohibited contributions and expenditures; 

federal disbursements from nonfederal 

account 

Disposition: (a)-(g) Reason to believe but 

closed the file following Mr. Channell's 

death. 

MIJR 2618 

Bespondents: (a) American Council for a 

Conservative Consensus, Sharlee Dodd, 

treasurer (AZ); (b) Arthur M. Jackson (AZ); 

(c) Nathan O. Rosenberg (CA); (d) Nathan
 

Rosenberg for Congress, David R. White,
 

treasurer (CA); (e) David w. Vaporean (CA)
 

Complainant: David W. Syrne; Gary C.
 

Huckaby (CA)
 

Subject: Independent expenditures;
 

disclaimer
 

Disposition: (a) $1,500 civil penalty; (b)
 

and (c) no reason to believe; (d) no
 

probable cause to believe; (e) no .eason to
 

believe
 

IIIJR 2800
 

Bespondents: (a) League of Conservation
 

Voters, Tina Hobson, treasurer (DC); (b)
 

NaHnda J. Kehoe (MO); (c) Alden M. Meyer
 

(MO)
 

Complainant: FEe initiated
 

SUbject: Excessive contributions
 

Disposition: (a) $2,250 civil penalty; (b)
 

$1,375 civil penalty; (c) $1,375 civil
 

penalty
 

MlJR 2844
 

Bespondents: Nevada Sportsmen and out­


doorsmen Association, Max Christiansen,
 

secretary (NV)
 

Complainant: Bill Vincent, Citizen Alert
 

(NV) 

SUbject: Failure to .egister and report as 

political committee; failure to disclose 

independent expenditures; disclaimer 

Disposition: $2,500 civil penalty 

MlJR 2905 

Bespondents, American Association of 

Physicians from India PAC, Vinod K. 

Sawhney, treasurer (TX) 

Complainant: FEC initiated 

Subject: Failure to report on time; failure to report change of treasurer on time 

Disposition: $3,250 civil penalty 

1 ? 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

• MUR 3036 FEe PUBLISHES lU'WILERS 

Respondents: (a) David L. Thomas (SC); (b) The Commission recently published the 

Thomas for Congress, David L. Thomas, names of authorized committees that failed 

treasurer (SC) to file required financial disclosure 

Complainant: Richard M. Bates, Executive 

Director, Democratic Congressional Campaign 

Committee (DC) 

Subject: Failure to register as candidate 

and designate principle campaign committee; 

failure to file statement of organization 

and disclosure reports on time; disclaimer; 

corporate contributions 

Disposition: (a) and (b) Reason to believe 

but took no further action 

MUR 3040 

Respondents: (a) Savings Association Political Action Committee, Marion A. Mallia, 

treasurer (NY); (b) C.F.S. Service Corporation (NY); (c) Yonkers Savings and Loan 

Association (NY) 

Complainant: FEC initiated 

Subject: Corporate contributions; failure 

to file change of treasurer on time 

Disposition: (a) $1,000 civil penalty; (b) 

$1,000 civil penalty; (c) reason to believe 

but took no further action 

•
 MUR 3071
 

Respondents: (a) Homeshield Insurance Com­


pany (OK); (b) Gary R. Peterson (OK); (c)
 

Betty L. Rodgers (OK); (d) George J.
 

Records (OK) 

Complainant: Bill Viner (OK) 

Subject: Contribution in the name of 

another 

Disposition: (a)-(d) No reason to believe 

MUR 3083 

Respondents: Enron Political Action 

Committee (FKA HNG/Internorth PAC), Robbie 

Leaver, treasurer (TX) 

Complainant: FEC initiated 

Subject: Failure to report on time 

Disposition: $825 civil penaltlty 

•
 

reports. See chart below. 

Nonfilers·are published pursuant to 

2 U.S.C. §438(a)(7). Enforcement actions 

against nonfilers are pursued on a case-bycase basis. 

Nonfiler 

Office 

Sought 

Report 

Not Filed 

Anscher, B. 

Cook, J. 

Fish, H. 

R.1 Fletcher, 

Owens, M. 

Puca, A. 

Udall, M. 

Young, N. 

House-FL/18 

House-WI/4 

House-NY/21 

House-FL/5 

House-NY/l2 

House-MD/6 

House-AZ/2 

House-RI/2 

Pre-primary 

Pre-primary 

Pre-primary 

Pre-primary 

Pre-primary 

Pre-primary 

Pre-primary 

pre-primary 

1Thi s candidate's committee filed the preprimary report after the date the Commission was required to publish the name. 

EIGllTEEN-l'Ofl'H ACTIVITY OF HCUSE AND 

SENATE CANDIDM'ES 

During the first 18 months of the 1990 

election cycle (from January 1989 through 

June 1990), U.S. House and Senate candidates raised $279 million, spent $191.8 

million and had remaining cash of $158.8 

million, according to an FEC press release 

of August 5, 1990. Compared with the same 

18-month period of the 1988 election cycle, 

House and Senate receipts rose 3.3 percent 

(or $9 million) and spending increased by 

5.8 percent (or $10 million). 

As is typical, incumbents of both 

political parties commanded sizable financial leads over their challengers: four 

out of every five dollars received by 

Congressional campaigns went to incumbents. 

The FEC report attached to the press 

release provides race-by-race statistics, 

candidate rankings and comparisons of 1990 

activity with previous election cycles. 

The charts on the following page show 

the median 18-month activity of 1990 House 

and Senate candidates by party affiliation 

and type of candidate (challenger, incumbent, open seat). 

(continued) 

13
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

Candidate Median Activity 1 _ Receipts 

(January 1, 1989, through June30, 1990) _ Disbursements • 

Senate Republican Candidates	 Senate Democratic Candidates 

Millions of Dollars	 Millions of Dollars 

2.5 2.5 " ---------------­

2.01--------------­

1.51----­

1.01-----­

0.5 

0.4 

0.3 

•

0.2 

0.1 

0	 

2.

1.

1.

0f----­

51----­

01----­

0.5

0.4

0.3

0.2

0.1 

0 

Incumbents Challengers	 Open seat Incumbents Challengers Open Seat 

Candidates Candidates 

No. of Candidates 15 26 5 No. of Candidates 17 23 8 

House Republican Candidates	 House Democratic Candidates 

Millions of Dollars	 Millions of Dollars 

0.5,-------------­

0.41---------------­

0.3f-------------­

~I 0.21---­ Ii-------­ 0.11---­

0'----- 0'----­

Incumbents Challengers Open Seat Incumbents Challengers Open Seat 

Candidates Candidates 

No. 01 Candidates 160 154 72 No. 01 Candidates 248 116 66 

that only

, Medianactivitymeansthat an equal numberof

candidates who raisedover $5,000are included 

candidates

in these 

had activityabove and belowthe amountsshown. Note 

charts. See the definitionof candidate at 2 U.S.C.§431 (2) 

•

and 11 CFR 100.3(a). 

14 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number10 

•
 

FEDERAL RffiISTER ICl'ICES 

Copies of Federal Register notices are 

available from the Public Records Office. 

1990-11 

11 CFR Part 110: Domestic Subsidiaries of 

Foreign Nationals; Notice of Proposed 

Rulemaking (55 Fed. Reg. 34280, August 22, 

1990) 

1990-12 

11 CFR Parts 107, 114 and 9008: Presidential Election Campaign Fund and Federal 

Financing of Presidential Nominating 

Conventions; Notice of Proposed Rulemaking 

(55 Fed. Reg. 34267, August 22, 1990) 

• 

The first number in each citation 

refers to the "number" (month) of the 1990 

Record issue in which the article appeared; 

the second number, following the colon, 

indicates the page number in that issue. 

ADVISORY OPINICfiS 

1989-21: Fundraising by sole proprietor in 

cooperation with candidates, 1:9 

1989-25: Preemption of state law limiting 

party spending on behalf of candidates, 

1:10 

1989-26: Automatic bank transfers from 

contributor's account to candidate 

committee's account, 1:11 

1989-27: Act's preemption of state law 

governing solicitations by state 

employees, 2:2 

1989-28: Voter guides distributed by nonprofit corporation, 3:9 

1989-29: PAC established by company owned 

by foreign principal, 2:3 

1989-30: Payment to Senator for teaching 

course, 2:4 

1989-32: Foreign national contribution to 

state ballot measure committee "controlled" by candidate, 8:6 

1990-1: corporation'S sale of 900-line 

1990-4: Use of credit cards to charge combined dues/contribution payments, 7:1 

1990-5: Newsletter published by candidate, 

6:4 

1990-6: Preemption of Oregon law prohibiting charitable matching plan for PAC 

contributions, 7:2 

1990-7: Transfer from candidate's former 

Presidential exploratory committee to 

1990 House committee, 8:6 

1990-8: Establishment of PAC by corporation 

majority-owned by foreign bank, 8:7 

1990-9: Newsletter published by candidate 

as sole proprietor, 8:8 

1990-11: Publicly funded campaign's donation of fundraising items to staff and 

charity, 8:8 

1990-12: Volunteer services by former 

potential candidate who received opinion 

poll results, 10:5 

1990-13: Reporting exemption	 for minor 

party, 10:5 

1990-15: Administrative termination of 

committee involved in disputed debt, 

10:6 

CWRT CASES 

Austin v. Michigan State Chamber of 

Commerce, 5:5 

FEC v. - AFS~ (88-3208), 10:7 - Chipman C. Bull for Congress, 8:11 - Franklin, 1:13 - Friends of Isaiah Fletcher Committee, 

7:4 - Furgatch (83-0596-GT(M», 2:7 - International Funding Institute, Inc., 

American Citizens for Political Action, 

Inc., and Dolan, 9:7 -	 Life Amendment PAC, Inc. (89-1429), 4:7 -	 Mann for Congress Committee, 7:5 -	 National Republican Senatorial Committee, 10:9 - National Right to Work Committee, Inc., 

5:7 -	 NY State Conservative Partyj1984 

Victory Fund (87 3309), 6:7 

- Speelman, 10:9 

- Weinberg, 10:8 

- Working Names, Inc. (87-2467-GAG), 7:4 

- Working Names, Inc. (90-1009-GAG), 7:4 

v. FEC 

--=-Common Cause (89-0524), 3:11 - Common Cause (89~5231), 8:11 - Democratic Senatorial Campaign 

Committee (90-1504), 8:12; 10:8 

• 

fundraising service to candidates, 4:3 - Dolan, 5:7; 10:8 

1990-2: Candidate's use of excess campaign - FaUCher and Maine Right to Life 

funds to secure loan for party committee, Committee, Inc. (90 0112 B), 6:7; 9:5 

4:5 - Galand, 8:9
 

1990-3: PAC's sale of advertising space in - Kripke, 9:7
 

newsletter, 5:3	 (continued) 

15
 
October 1990 FEDERAL ELECTION COMMISSION Volume 16, Number 10 

- Miller, 10:7
 - National Rifle Association (89-3011),
 

2:7 

MUR SUM!lARIES 

MUR 2823: Excessive contribution received 

by candidate committee, 2:4 

MUR 2599: Reporting errors by Congressional 

campaign, 4:6 

MUR 3009: Excessive coordinated expenditures by state party committee, 6:5 

800 LINE 

Basic recordkeeping rules, 4:8 

Combined dues/solicitation statements, 1:17 

Coordinated party expenditures, 3:6 

Designating a principal campaign committee, 

1:19 

Disclaimer 

Exempt party 

notices, 

activities, 

5:8 

5:10 

•

Faxing reports, 9:4 

Last-minute contributions: 48-hour reporting, 7:8 

Last-minute independent expenditures: 24­

hour reporting, 7:9 

New treasurer, 2:9 

Transfers from candidate's nonfedera1 

committee to federal committee, 6:8 

What to do about excessive contributions: 

redesignations and reattributions, 10:11 

When reimbursements are required in SSF 

fundraising, 2:8 

FEDERAL 

999 E Street, 

ELECTION COMMISSION 

NW Bulk Rate Mail 

•

Washington, DC 20463 Postage and Fees Paid
 

Federal Election Commission
 

Permit Number G-31
 

Official Business 

•