Source: https://de.scribd.com/document/403961016/4-1-19-Cruz-v-FEC-Complaint
Timestamp: 2019-05-21 04:07:50
Document Index: 547174280

Matched Legal Cases: ['§ 30116', '§ 116', '§ 30116', '§ 116', '§ 30116', '§ 116', '§ 30106', '§ 1331', '§ 403', '§ 2284', '§ 30110', '§ 30110', '§ 30116', '§ 116', '§ 116', '§ 116', '§ 116', '§ 30109', '§ 30109', '§ 30109', '§ 30109', '§ 110', '§ 116', '§ 706', '§ 706', '§ 30116', '§ 706', '§ 30116', '§ 116', 'art 5']

4-1-19 Cruz v FEC Complaint | Federal Election Commission | First Amendment To The United States Constitution
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James L. Bowley v. City of Uniontown Police Department Herald Standard City of Uniontown, a Municipal Corporation Officer Fred Balsley, Individually and in His Capacity as a Police Officer James L. Bowley, a Minor, by and Through, James C. Bowley, Guardian Ad Litem, His Natural Father, 404 F.3d 783, 3rd Cir. (2005)
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Brief on the Merits filed on behalf of Judy A. Jennings and Rebecca Bell-Metereau.
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 1 of 13
TED CRUZ FOR SENATE, )
815 A Brazos, PMB 550 )
Austin, TX 78701, and )
RAFAEL EDWARD (“TED”) CRUZ )
Austin, TX 78701, )
) Civil Action No. 19-908
FEDERAL ELECTION COMMISSION, )
and ELLEN L. WEINTRAUB, MATTHEW )
S. PETERSEN, CAROLINE C. HUNTER, )
and STEVEN T. WALTHER, in their )
official capacities as Commissioners of the )
Federal Election Commission )
1050 First Street, N.E. )
Washington, D.C. 20002, )
1. The First Amendment commands that “Congress shall make no law . . . abridging
the freedom of speech.” This bedrock liberty was designed to ensure the full and free political
debate that is the hallmark of our democratic form of government. At its core, it protects the
rights of citizens to engage in political speech. Since the founding of the republic, much of that
speech has originated with candidates for public office in the context of elections.
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 2 of 13
2. Section 304 of the Bipartisan Campaign Reform Act (“BCRA”), which amended
the Federal Election Campaign Act of 1971 (as amended, “FECA”), abridges political speech at
the very core of the First Amendment’s guarantee. Specifically, Section 304 of BCRA provides
that if a candidate “incurs personal loans . . . in connection with the candidate’s campaign for
election,” his or her authorized campaign committee “shall not repay (directly or indirectly), to
the extent such loans exceed $250,000, such loans from any contributions made to such
candidate or any authorized committee of such candidate after the date of such election.” 52
U.S.C. § 30116(j). The FEC has interpreted this statute to restrict repayment not only of loans
secured or guaranteed by the candidate for his or her campaign, but also of loans made to the
campaign from the candidate’s personal funds. See 11 C.F.R. § 116.11. BCRA and its
implementing regulation thus effectively restrict a candidate’s ability personally to fund his or
her own campaign for federal office by capping at $250,000 the amount of money raised after an
election that an authorized campaign committee may use to discharge a pre-election debt owed to
the candidate. Sanctions for violating Section 304 include substantial civil fines and, for a
knowing and willful violation, criminal penalties of up to five years in prison.
3. The $250,000 post-election loan-repayment limitation violates the fundamental
First Amendment rights of candidates, their authorized campaign committees, and their donors.
It restricts the political speech of candidates and their campaign committees by limiting the time
period in which the candidate may raise money to communicate his or her political message and
by effectively limiting the candidate’s ability to lend the campaign necessary funds.
Criminalizing this basic means of financing political communication infringes a candidate’s
“fundamental . . . right to spend personal funds for campaign speech.” Davis v. FEC, 554 U.S.
724, 738 (2008). In addition, the post-election repayment limitation restricts the speech of those
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 3 of 13
potential donors who would otherwise support a candidate financially by contributing after an
election to fund pre-election political speech.
4. In short, Section 304 of BCRA and its implementing regulation are precisely the
sort of laws that the First Amendment was designed to prevent and that the Supreme Court has
consistently held unconstitutional. These arbitrary restrictions on core political speech by
candidates, their campaign committees, and their supporters are invalid and must be struck down.
5. This is an action for declaratory relief invalidating Section 304 of BCRA, 52
U.S.C. § 30116(j), and its implementing regulation, 11 C.F.R. § 116.11, and for injunctive relief
against enforcement of those provisions by the Defendants, on the grounds that: (1) Section 304
and its implementing regulation infringe Plaintiffs’ freedom of speech in violation of the First
Amendment to the Constitution of the United States; (2) those provisions infringe the First
Amendment rights of potential post-election donors to Plaintiffs’ federal election campaign; and
(3) the implementing regulation, Section 116.11, is not in accordance with BCRA itself.
6. On March 27, 2002, President George W. Bush signed BCRA into law, thereby
enacting a comprehensive revision and enlargement of the Nation’s campaign finance regulatory
regime. This revision and enlargement sought to implement sweeping new restrictions on the
rights of corporations, individuals, and other entities to participate in the political process and to
exercise their constitutional right to express their political views.
7. The Supreme Court has repeatedly invalidated provisions of BCRA that restricted
core political speech. See, e.g., McCutcheon v. FEC, 134 S. Ct. 1434 (2014); Citizens United v.
FEC, 558 U.S. 310 (2010); FEC v. Wisc. Right to Life, Inc., 551 U.S. 449 (2007); McConnell v.
FEC, 540 U.S. 93 (2003). Most pertinently, in Davis v. FEC, 554 U.S. 724 (2008), the Court
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 4 of 13
struck down the so-called “Millionaires’ Amendment,” which effectively penalized a self-
financing candidate by raising contribution limits for his opponent when the self-financing
candidate’s campaign expenditures exceeded a certain amount. And in Arizona Free Enterprise
Club’s Freedom Club PAC v. Bennett, the Court reaffirmed Davis and applied its reasoning to
invalidate a state public-financing scheme that similarly “force[d] [a] privately financed
candidate to ‘shoulder a special and potentially significant burden’ when choosing to exercise his
First Amendment right to spend funds on behalf of his candidacy.” 564 U.S. 721, 737 (2011)
(quoting Davis, 554 U.S. at 739).
8. Although the statutory loan repayment limitation “is in the same statutory
subsection of BCRA (section 304(a)) as other provisions that the Supreme Court in Davis held to
be unconstitutional,” Defendant FEDERAL ELECTION COMMISSION (“FEC”) has concluded
that “the Davis decision did not invalidate the personal loan provision in BCRA.” Notice 2008-
14, 73 Fed. Reg. 79597-01, 79600. (Dec. 30, 2008).
9. The FEC has also concluded that the loan repayment restriction challenged here is
severable from the provision of Section 304 struck down in Davis and that it therefore is valid
and enforceable notwithstanding the Davis decision. Id.
10. Like the other provisions of BCRA that the Supreme Court has invalidated, the
loan repayment limitation of Section 304 and its implementing regulation infringe the
fundamental First Amendment rights of candidates, their authorized campaign committees, and
their supporters to engage in political speech.
11. For this reason, and for the reasons set forth in the allegations below, Plaintiffs
seek a declaration that the loan repayment restrictions of Section 304, 52 U.S.C. § 30116(j), and
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 5 of 13
its implementing regulation, 11 C.F.R. § 116.11, are unconstitutional, and an order enjoining
Defendants from enforcing them.
12. Plaintiff RAFAEL EDWARD “TED” CRUZ (“CRUZ”) was first elected United
States Senator from the State of Texas in 2012, and he was re-elected to that same position in the
2018 general election. During the 2018 election cycle, CRUZ’S campaign was funded in large
part by contributions from individual supporters. Prior to the 2018 general election, CRUZ’s
authorized campaign committee also received loans originating from CRUZ’s personal bank
account funds and CRUZ’s margin-approved brokerage account that is secured with CRUZ’s
13. Plaintiff TED CRUZ FOR SENATE (“CRUZ COMMITTEE”) is the official
authorized campaign committee for the 2018 primary and general election campaigns of CRUZ.
14. Defendant FEDERAL ELECTION COMMISSION was established by 52 U.S.C.
§ 30106 and is an independent agency with regulatory authority over federal elections and
campaigns of candidates for federal office. The duties of the FEC include the collection, review,
and audit of campaign finance disclosures by regulated entities, the enforcement of the
provisions of FECA, including as amended by BCRA, and oversight of the public funding of
Presidential elections. The FEC has exclusive jurisdiction with respect to the civil enforcement
of FECA.
15. Defendant ELLEN L. WEINTRAUB is a Commissioner and the Chair of the
FEC. As a Commissioner, she is responsible for administering and enforcing FECA, as amended
by BCRA. She is sued in her official capacity.
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 6 of 13
16. Defendant MATTHEW S. PETERSEN is a Commissioner and the Vice Chair of
the FEC. As a Commissioner, he is responsible for administering and enforcing FECA, as
amended by BCRA. He is sued in his official capacity.
17. Defendant CAROLINE C. HUNTER is a Commissioner of the FEC. As a
Commissioner, she is responsible for administering and enforcing FECA, as amended by BCRA.
She is sued in her official capacity.
18. Defendant STEVEN T. WALTHER is a Commissioner of the FEC. As a
Commissioner, he is responsible for administering and enforcing FECA, as amended by BCRA.
He is sued in his official capacity.
19. This Court has jurisdiction under 28 U.S.C. §§ 1331, 2201, and 2202, and § 403
of BCRA.
20. Plaintiffs request that a three-judge court be convened pursuant to 28 U.S.C.
§ 2284, and section 403(a)(1) of BCRA, 52 U.S.C. § 30110 note.
21. Venue in this Court is proper pursuant to section 403 of BCRA, 52 U.S.C.
§ 30110 note.
FACTUAL BASIS FOR CLAIMS
22. Section 304 of BCRA imposes a $250,000 limit on an authorized campaign
committee’s use of post-election campaign contributions to repay a candidate’s personal
campaign loans:
Any candidate who incurs personal loans made after the effective date of the
Bipartisan Campaign Reform Act of 2002 in connection with the candidate’s
campaign for election shall not repay (directly or indirectly), to the extent such
loans exceed $250,000, such loans from any contributions made to such candidate
or any authorized committee of such candidate after the date of such election.
52 U.S.C. § 30116(j).
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 7 of 13
23. While the text of Section 304 reaches only personal loans that a candidate
“incurs” in connection with his campaign, id. (emphasis added), the FEC’s implementing
regulation applies not only to loans incurred by the candidate for the benefit of his campaign, but
also to loans that a candidate makes directly to the campaign from his personal funds. 11 C.F.R.
§ 116.11(a).
24. When it promulgated 11 C.F.R. Section 116.11, the FEC acknowledged that this
interpretation is difficult to square with the ordinary meaning of the term “incur,” and that by its
text Section 304 “arguably” applies only to “loans that are made to candidates rather than loans
made by candidates.” Increased Contribution and Coordinated Party Expenditure Limits for
Candidates Opposing Self-Financed Candidates, 68 Fed. Reg. 3970, 3974 (Jan. 27, 2003). But
the FEC nonetheless interpreted Section 304 as reaching loans made by candidates to their
committees because it thought that interpretation justified by BCRA’s “legislative history” and
the “practical consequences” of adopting the narrow interpretation. Id.
25. When “the aggregate outstanding balance of the personal loans exceeds $250,000
after the election,” the FEC’s regulations establish a post-election time limit on a campaign
committee’s ability to use cash on hand as of the date of the election to repay pre-election debts
owed to the candidate. 11 C.F.R. § 116.11(c) “If [a candidate’s] authorized committee uses the
amount of cash on hand as of the day after the election to repay all or part of [the candidate’s]
personal loans, it must do so within 20 days of the election.” Id. § 116.11(c)(1). Any outstanding
loan balance in excess of the $250,000 cap must be treated “as a contribution by the candidate.”
Id. § 116.11(c)(2).
26. The FEC may seek civil penalties, including the greater of $5,000 or the amount
of the contributions or expenditures at issue, for any violation of FECA. 52 U.S.C.
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 8 of 13
§ 30109(a)(5)(A). If a violation is knowing or willful, the FEC may seek civil penalties of up to
$10,000 or double the amount of the contributions or expenditures at issue. Id. § 30109(a)(5)(B).
27. Criminal penalties attach to any knowing and willful violation of FECA that
involves the making, receiving, or reporting of any contributions, donations, or expenditures
totaling $2,000 or more during a calendar year. Id. § 30109(d)(1)(A). An individual or
corporation that knowingly commits such a violation is subject to fines under Title 18 of the
United States Code, and imprisonment for up to five years, depending on the amount of the
repayment. Id. § 30109(d)(1)(A)(ii).
28. Prior to the November 6, 2018 general election, two loans totaling $260,000 were
made to CRUZ’s authorized campaign committee to help finance his campaign for the United
States Senate. Of the $260,000 lent to CRUZ COMMITTEE, $5,000 originated from CRUZ’s
personal bank accounts and $255,000 originated from a margin loan that is secured with CRUZ’s
29. CRUZ COMMITTEE had approximately $2.2 million on hand as of 11:59 p.m.
on November 6, 2018; however, CRUZ COMMITTEE also incurred nearly $2.5 million in debts
in connection with the 2018 general election, leaving it with approximately $406,194 in “net
debts outstanding,” as that term is defined and calculated pursuant to 11 C.F.R. § 110.1(b)(3).
CRUZ COMMITTEE accordingly used the funds it had on hand to pay vendors and meet other
obligations instead of repaying CRUZ’s loans.
30. As of November 27, 2018, the day following the 20-day deadline for repaying any
personal loans in excess of the $250,000 limit under Section 116.11(c)(1), CRUZ COMMITTEE
owed CRUZ $260,000 on the general election loans. CRUZ COMMITTEE subsequently made
four repayments on the margin loan secured by CRUZ’s assets totaling $250,000: (i) $25,000 on
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 9 of 13
December 4, 2018; (ii) $100,000 on December 11, 2018; (iii) $75,000 on December 18, 2018;
and (iv) $50,000 on December 24, 2018. CRUZ COMMITTEE has not repaid any portion of
CRUZ’s $5,000 personal loan.
31. Since CRUZ COMMITTEE has repaid the statutory maximum of $250,000 from
money raised after the election toward the various loans originating from CRUZ’s personal bank
accounts and CRUZ’s margin-approved brokerage account, CRUZ COMMITTEE continues to
owe CRUZ $10,000 on the general election loans: the remaining $5,000 balance of the margin
loan secured by CRUZ’s assets and CRUZ’s $5,000 personal loan.
32. Because more than 20 days have now passed since the general election, the
challenged statute and its implementing regulation prevent CRUZ COMMITTEE from making
any additional payments toward the remaining balance due on the debts originating from
CRUZ’s personal bank accounts or the margin loan secured with CRUZ’s personal assets, even
if such payments are from contributions specifically raised, received, and designated for the
retirement of debts in accordance with FEC regulations.
33. Absent the restrictions of Section 304 and the Commission’s corresponding
regulation, Plaintiffs would solicit debt-retirement funds from potential donors and would use
post-election contributions to defray the remaining $10,000 loan balance.
34. Plaintiffs hereby reallege and incorporate each of the foregoing allegations as if
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 10 of 13
35. By its terms, Section 304 of BCRA restricts the use of post-election contributions
to repay loans incurred by a candidate for his or her campaign in order to disseminate the
candidate’s political message.
36. In addition, the FEC has interpreted this statute to restrict the repayment of loans
made by a candidate from personal funds to his or her campaign for this purpose.
37. A candidate’s political message is core political speech.
38. Regardless of whether Section 304 applies only to loans incurred by a candidate
or also extends to loans made by a candidate from personal funds, the Government has no
interest that can justify the challenged loan repayment restriction’s infringement of Plaintiffs’
First Amendment right to freedom of speech.
39. Because the Government has no interest that can justify the challenged statute’s
infringement of Plaintiffs’ First Amendment rights to freedom of speech, the statute is
unconstitutional on its face and as applied to Plaintiffs.
40. Even if Section 304’s loan repayment restriction could be justified as applied to
Plaintiffs and other winning candidates, the statute would have no justifiable application to
losing candidates. Therefore, the loan repayment restriction is in any event unconstitutionally
overbroad and is thus invalid in its entirety.
41. Accordingly, BCRA’s loan repayment restriction is an unconstitutional
abridgement of Plaintiffs’ First Amendment right of free speech.
42. Plaintiffs hereby reallege and incorporate each of the foregoing allegations as if
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 11 of 13
43. Contributions to political campaigns are protected speech, whether made before
or after an election.
44. Regardless of whether Section 304 applies only to loans incurred by a candidate
or also extends to loans made by a candidate from personal funds, BCRA’s loan repayment
restriction is an unconstitutional infringement on the First Amendment rights of potential post-
election donors to Plaintiffs and to the campaigns of all candidates for federal office.
45. Plaintiffs hereby reallege and incorporate each of the foregoing allegations as if
46. Because the challenged statute is unconstitutional, the FEC’s regulation
implementing that statute, 11 C.F.R. § 116.11, is likewise unconstitutional and is, therefore, “not
in accordance with law.” 5 U.S.C. § 706(2)(a).
47. Plaintiffs hereby reallege and incorporate each of the foregoing allegations as if
48. The FEC’s 20-day regulatory limit on using cash on hand as of the date of the
election to repay the candidate’s personal campaign loans after an election violates the First
Amendment, is not in accordance with law, and is arbitrary and capricious in violation of 5
U.S.C. § 706(2)(c)(1).
49. Plaintiffs hereby reallege and incorporate each of the foregoing allegations as if
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 12 of 13
50. Section 304 encompasses only personal loans that a candidate “incurs . . . in
connection with the candidate’s campaign.” 53 U.S.C. § 30116(j) (emphasis added).
51. The FEC’s regulatory inclusion of loans not only “incurred” by a candidate in
connection with his campaign but also loans the candidate directly makes to his campaign from
his personal funds is contrary to the plain text of Section 304, and it is thus not in accordance
with law and is arbitrary and capricious in violation of 5 U.S.C. § 706(2)(c)(1).
52. Wherefore, Plaintiffs respectfully pray that a three-judge district court be
convened and that said three-judge court hear this action, and upon such hearing:
a. Declare that Section 304’s loan repayment restriction, 52 U.S.C. § 30116(j),
violates Plaintiffs’ rights under the Constitution of the United States;
b. Declare that 11 C.F.R. § 116.11 violates Plaintiffs’ rights under the Constitution
of the United States or is arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law;
c. Permanently enjoin and restrain Defendants, their agents, and assistants from
enforcing, executing, and otherwise applying the challenged provisions; and
d. Grant and order such further relief as the Court may deem just and proper,
together with the costs and expenses, including attorney’s fees, of this action.
Case 1:19-cv-00908 Document 1 Filed 04/01/19 Page 13 of 13
Dated: April 1, 2019 Respectfully submitted,
(D.C. Bar No. 248070)
(D.C. Bar No. 1024544)
(202) 220-9601 (facsimile)
(D.C. Bar No. 975981)
3595 RR 620 S., Suite 200
(512) 354-1787
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