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      FEC Record: Advisory opinions
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      AO 2011-03: National party committees may fund litigation expenses using recount funds

FEC Record: Advisory opinionsAO 2011-03: National party committees may fund litigation expenses using recount fundsMay 1, 2011 Several requesting national party
committees may use recount funds
to pay costs associated with a lawsuit,
filed under Texas law, which
seeks disgorgement of contributions
and donations that were allegedly
the proceeds of a Ponzi scheme. Background The Democratic Senatorial
Campaign Committee (DSCC), the
National Republican Congressional
Committee (NRCC), the Republican
National Committee (RNC), the
Democratic Congressional Campaign
Committee (DCCC) and the
National Republican Senatorial
Committee (NRSC) (collectively
the national party committees) were
sued in the U.S. District Court for
the Northern District of Texas by Mr.
Ralph Janvey, who was appointed
receiver over the property, assets and
records of Allen Stanford. Mr. Stanford,
together with others, is alleged
to have run a Ponzi scheme. Mr.
Janvey claims that proceeds from
this scheme were donated and contributed
to the national party comnessee, mittees, and he seeks disgorgement
of those donations and contributions
along with payment of interest and
attorney’s fees. Prior to the enactment of the
*Bipartisan Campaign Reform Act of
2002* (BCRA), national party committees
were allowed to accept funds
outside of the limits and prohibitions
of the *Federal Election Campaign
Act* (the Act) into their nonfederal
accounts. Mr. Janvey’s litigation
principally concerns whether
nonfederal, also called “soft money,”
donations to the national party committees
made prior to the BCRA’s
effective date constitute fraudulent
transfers under applicable state law.
Nearly all of Mr. Stanford’s donations
to the national party committees
were “soft money” contributions
made to the parties’ nonfederal
accounts prior to the enactment of
BCRA. Thus, for the most part, Mr.
Janvey seeks disgorgement of funds
that the national party committees
have been prohibited from raising
and spending since 2002. 11 CFR
300.12(a) and (c). The national party committees
have moved to dismiss the Janvey
litigation and wish to draw on their
respective recount funds to finance
expenses associated with that litigation.
A recount fund is a separate
fund maintained by a national party
committee that may be used to pay
expenses incurred in connection
with recounts and election contests
of federal elections. See AO 2009-04. Analysis Under the circumstances presented
in this request, the Commission
concluded that the national party
committees may use their recount
funds to defray expenses for defending
against the Janvey litigation. AO 2011-03: *Date issued: April 7, 2011; Length: 4 pages.*
 Author
          Myles MartinIcon of email being sentPublic Affairs Specialist


Read next: National parties may establish new accounts
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This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


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