Ignoring FEC Fines

Scofflaw Political Groups Are Ignoring FEC Fines

Wait long enough, many are finding, and the federal government usually gives up.

By DAVE LEVINTHAL

In July 2016, the Federal Election Commission slapped the 60 Plus Association with a $50,000 fine, charging that it hadn’t revealed its donors as legally obliged.

The penalty — along with fines assessed to two other politically active nonprofit groups likewise connected to billionaire brothers David and Charles Koch — represented one of the most decisive decisions this decade at an FEC best known for intramural bickering and ideological gridlock. Government reformers rejoiced.

But 15 months later, the Virginia-based 60 Plus Association has only paid one-tenth of its fine. Chairman Jim Martin says the senior advocacy group, which backs “free enterprise, less government” while supporting conservative politicians, has no plans to pay more. The FEC, meanwhile, isn’t forcing the 60 Plus Association’s compliance — or anything close.

The 60 Plus Association has plenty of debt-dodging company: More than 160 political committees and similar groups together owe the government more than $1.3 million worth of unpaid fines, according to a Center for Public Integrity analysis of Federal Election Commission and U.S. Treasury records since 2000.

Some of those unpaid fines amount to as little as $10 while others soar into five figures. Many cases concern all-but-forgotten also-ran political candidates, but others involve political luminaries — the Rev. Al Sharpton, MSNBC host Joe Scarborough and Green Party presidential nominee Jill Stein, among them. Super PACs and politically active nonprofits have joined the nonpayment parade of late. And there’s little evidence any of that cash will soon begin to roll in.

Uncooperative political committee leaders, bureaucratic bumbling and flaccid fine enforcement efforts all contribute to election law breakers outrunning penalties during a time when campaign shenanigans — from Russian advertisements to government contractors bankrolling super PACs — are increasingly brazen and sophisticated.

The situation “reinforces the view of many political actors that there really isn’t a sheriff in town,” said Adam Rappaport, chief counsel for Citizens for Responsibility and Ethics in Washington, which filed a complaint against the 60 Plus Association that prompted the FEC’s fine. “Political actors feel confident and comfortable that the FEC will not enforce campaign finance laws against them.”

Commissioners argue — and agency records confirm — that the FEC collects on the vast majority of fines it doles out for election law violations great and small. This decade, the FEC has, on average, assessed about $997,000 in fines each year.

Besides, FEC Chairman Steve Walther said, most political committees want to do what’s right, including those ruled in violation of one federal law or another.

“We’re pretty diligent in our offices on how we handle fines — and overall, we’ve been pretty effective,” said Walther, an independent whose one-year chairmanship expires in December.

Nevertheless, some political committees simply won’t comply.

And when they don’t, they have little to fear.

How to beat an FEC fine

A Center for Public Integrity review of dozens of political committees’ election violation case files and interviews with FEC, U.S. Treasury and political committee officials shows how political committees typically avoid payment:

· Offenders often just begin by waiting 180 days after the FEC makes its final ruling on the fine, and ignoring the FEC’s strongly-worded letters. The FEC has no unilateral power to seize a political committee’s assets, and it rarely sues in federal court. Generally, Walther says, such legal action is too costly and time-consuming. The FEC isn’t allowed to pocket fine money derived from its own enforcement actions — cash it collects goes straight to the U.S. government’s general fund. “We can’t justify the expense,” Walther said.

· If there’s no payment after 180 days, the FEC itself gives up and refers the debt to its de facto collection agent, the U.S. Treasury’s Bureau of the Fiscal Service.

· Officials at the Bureau of the Fiscal Service typically try to compel payment with more phone calls, demand letters or even referral to a private collection agency. But many offenders just ignore these efforts as well. And why wouldn’t they? Despite having the power to do so, the bureau “has not referred any debts originating with FEC to [the Department of Justice] for litigation,” said Alyssa Riedl, director of the Bureau of the Fiscal Service’s Debt Collection Program Management Directorate.

· The Bureau of the Fiscal Service then often declares the debt “uncollectable” and refers it back to the FEC. “Fiscal Service may return a debt to an agency if it determines that the cost of additional collection efforts will exceed anticipated collections,” Riedl said.

· The FEC then typically mothballs the debt, keeping it on the books but making no substantive effort to collect. “If Treasury, which has greater collection resources than the FEC, was unsuccessful, the commission has no reason to believe it would be more successful in collecting the second time around,” Walther said.

The case of three-term New York State Assembly member Kieran Lalor, R, is illustrative.

A U.S. Marine Corps veteran and avowed fiscal hawk, Lalor boasts in his website biography that he’s “refused per diem allowances, taxpayer-funded travel expenses and a taxpayer-funded pension.”

But a federal PAC Lalor operated, Warriors for Liberty, has eluded a $7,150 fine stemming from FEC commissioners’ unanimous ruling late 2015 that it didn’t properly disclose hundreds of thousands of dollars of income, expenditures and debt — thereby violating federal law.

Months passed. Warriors for Liberty’s fine went unpaid despite Lalor’s signed agreement to pay it.

On Aug. 16, 2016, the FEC transferred Warriors for Liberty’s $7,150 debt to the Bureau of Fiscal Service for collection.

Six weeks later, Warriors for Liberty filed a request with the FEC to terminate itself. The FEC could have said no. Instead, the agency approved Warriors for Liberty’s request — all but guaranteeing that Lalor’s now-defunct PAC will never pay up.

Lalor did not respond to multiple emails and messages left on his cell phone and with his New York State Assembly office staff. The FEC also declined to comment on Lalor’s case.

Sharpton’s 2004 Democratic presidential campaign still owes $2,150 from three fines the FEC issued from 2004 to 2005. The Bureau of the Fiscal Service has deemed Sharpton’s debt “uncollectable” even though Sharpton, whose old campaign committee owes numerous other debts to public and private creditors, remains omnipresent in U.S. politics — President Barack Obama enshrined Sharpton as a key, if informal adviser, and Sharpton even has his own MSNBC television show.

Sharpton’s longtime spokeswoman, Rachel Noerdlinger, referred questions to attorney Michael Hardy, who did not respond to messages.

Then there’s former Rep. Jesse Jackson Jr., D-Ill., who resigned in 2012 before federal authorities charged him with stealing hundreds of thousands of dollars from his campaign account. (Jackson, who could not be reached for comment, pleaded guilty and spent nearly two years in a federal prison or halfway house.)

Jackson’s defunct campaign committee has stiffed taxpayers for more than $25,000 in connection with three FEC election law violation rulings from earlier this decade.

And what about the 60 Plus Association, which spent more than $3.2 million during the 2012 election cycle on ads advocating for Republican presidential nominee Mitt Romney and against Obama?

President Jim Martin said former 60 Plus Association President Amy Frederick, who could not be reached for comment, agreed to pay the fine without approval of the association’s board of directors. It last year paid $5,000 of the $50,000 it owed “on advice of counsel,” Martin said. But the 60 Plus Association board then “decided to contest the remainder of the unprecedented large fine given the situation …. We continue to work with Treasury and FEC on this matter.”

Several former FEC officials are skeptical these and other political committees will ever pay up.

“People are emboldened because they know the commission isn’t enforcing much,” said David Kolker, the FEC’s former chief of litigation and current attorney at the nonpartisan Campaign Legal Center.

Said Ann Ravel, a Democrat who served as FEC chairwoman in 2014: “The FEC is pretty powerless to make them pay other than to use its moral authority, if you can call it that.”

‘Soon as possible’

Some political committees say they will pay their months- or years-old fines.

They just won’t say when.

One such committee is Mississippi Conservatives. A gaggle of prominent political players — former New York City Mayor Michael Bloomberg, former Facebook President Sean Parker, former Mississippi Gov. Haley Barbour and the U.S. Chamber of Commerce among them — bankrolled this super PAC, which spent about $3.3 million during 2014 to help Sen. Thad Cochran, R-Miss., survive a GOP primary challenge from upstart conservative Chris McDaniel.

But the pro-McDaniel Tea Party Patriots Citizens Fund had in mid-2014 filed a complaint with the FEC alleging Mississippi Conservatives failed to disclose the true identity of a donor. The FEC ultimately concurred — in October 2016 — and Mississippi Conservatives settled the case by agreeing to pay a $19,000 fine within 30 days.

Except it never did.

“The super PAC intends to pay the fine,” said Henry Barbour, Haley Barbour’s nephew and current treasurer of Mississippi Conservatives. “However, the fact that the federal government waited almost two years to assert their position pertaining to 2014 disclosures makes this a bit more challenging on top of the fact that we never anticipated any fine. That said, it is what it is and we will have to convince some donors to help us put this to rest.”

Mississippi Conservatives reported having less than $1,500 cash on hand as of June 30.

In 2013, Chicago Alderman Anthony Beale, D, ran for Congress in hopes of replacing Jackson upon his resignation. Beale finished third in a Democratic primary. His campaign also failed to file reports on time, and it earned $32,230 in fines from 2013 to 2015 across several different FEC enforcement cases.

More than four years later, Beale’s congressional committee, which is broke, still hasn’t paid the fines.

“He aims to retire this debt as soon as possible,” Beale spokesman Brian Berg explained.

Steve Salazar’s story is similar: An attorney and former Dallas City Council member, Salazar finished sixth in a 2012 Democratic congressional primary — then amassed more than $34,000 in FEC-issued fines across five election violation cases.

“It’s something I’m intending to take care of,” said Salazar, whose committee’s most recent financial disclosure report, filed in 2012, indicated it had no money.

Pleading ignorance

Other political candidates said they had no idea their congressional committees owe the FEC money until informed by the Center for Public Integrity.

Among them: MSNBC “Morning Joe” host Joe Scarborough, who before becoming a TV personality served as a Republican congressman from Florida. In the course of running for Congress, Scarborough’s Friends of Joe Scarborough congressional committee ran afoul of the FEC, which fined the group $6,031.25 during 2002 and 2003 for a pair of election law violations.

Scarborough’s committee paid most of the fine. But $80.56 remained on the FEC’s books — for more than 14 years. In an email, Scarborough said he was “unaware” his committee owed any money but would “quickly resolve the issue.” Scarborough paid the fine that day, FEC records indicate.

Jill Stein’s associates also pleaded ignorance, saying they had no idea the 2012 and 2016 Green Party presidential nominee still owed the FEC $120.31 after otherwise paying off a couple of relatively minor FEC violations.

“We will immediately connect with the FEC and pay it if it’s something we owe,” said David Cobb, Stein’s 2016 campaign manager. FEC officials said they had not yet received payment as of this week.

For Louisiana state Sen. Dan Claitor, R, tragedy — two weeks before Election Day 2014, a car crash killed his mother and injured his father — led to his congressional campaign unraveling in the days before voters cast their ballots. (Claitor finished fourth out of 12 candidates.)

His committee failed to file a post-election financial disclosure report on time, according to the FEC, and the agency in mid-2015 dinged it with a $4,950 fine.

Claitor, who remains a state senator, said he wasn’t aware of the debt and isn’t sure what his committee owes: “I cannot confirm whether the debt(s) you question is/are actually owed or not, whether it’s valid or not, or what it may be for,” he said in an email. He added that he’s now consulting with his campaign’s old accounting firm to determine how to address the FEC fine.

When the Center for Public Integrity told fellow Louisianan Craig Romero that FEC records show his congressional committee had never paid a $5,000 fine settlement from 2009, he didn’t believe it.

“There’s nothing owed. It was resolved,” insisted Romero, a former state senator and current executive director of Louisiana’s Port of Iberia. But said he’d check with his former campaign treasurer to make sure.

That treasurer, Bill Potter, acknowledged the debt, recalling that FEC officials even visited Louisiana while conducting an audit of Romero’s campaign committee. But Romero’s committee ran out of cash, and Potter hasn’t heard from the FEC since the dawn of the Obama administration, so nobody ever paid the fine, he said.

Cindy Sheehan earned international attention last decade for camping outside then-President George W. Bush’s Texas ranch in protest of U.S. military involvement in Iraq. In 2008, she ran as an independent against Rep. Nancy Pelosi, D-Calif. Pelosi easily defeated Sheehan, whose campaign failed to file a mandatory campaign finance disclosure report on time. The FEC fined it $10,000; Sheehan’s committee paid part of the fine, and a $3,125 balance has lingered for eight years.

Asked if she was aware of this fine balance, Sheehan said she wasn’t. Now that she is, will she pay it?

“No,” Sheehan replied.

Riedl of the Bureau of the Fiscal Service says her bureau sends all political debtors “at least one demand letter” notifying them that that the bureau is seeking payment. If a debt is referred to a private collection agency, at least one more demand letter is sent.

If the bureau believes a political committee it’s pursuing has a new address or no address at all, it’ll perform “skip tracing” — collecting public and private information about a person to determine his or her whereabouts — in order to contact the committee, Riedl said.

What can be done?

If the federal government spends months or even years attempting to collect — to no avail — a political committee’s fine, is there anything left to do but quit?

Yes and no, according to interviews with former FEC officials.

First, what the agency can’t do: In most instances, candidates by law are not personally liable for their campaign committees’ debts, meaning the FEC cannot garnish candidates’ bank accounts.

And to be sure: The FEC is a civil law enforcement agency. As such, it has no judicial authority and no uniformed service. While some municipalities employ marshals who round up people for skipping out on matters as minor as traffic tickets, there’s no pistol-packing FEC cop hauling politicians off to campaign debtor detention.

“Right now, the FEC does not have a great deal of recourse,” said Daniel Petalas, an attorney at law firm Garvey Schubert Barer who served as the FEC’s acting general counsel from 2015 to 2016 and led the agency’s enforcement division from 2012 to 2015.

The FEC and U.S. Treasury could, however, choose to more regularly sue problem political committees in federal court, if only to make examples out of them. The FEC could also decide to more frequently void payment agreements violated by fined political committees, potentially causing the committees additional legal headaches.

Each year, the FEC also asks Congress for various changes in campaign finance laws to help it better administer those laws.

Congress usually ignores these requests. Nevertheless, the agency could ask Congress to give it more power or resources to punish the most troublesome political committees. For example, it could ask to keep fines it collects to bolster litigation efforts. Congress could also increase the FEC’s modest budget — just north of $71 million during fiscal year 2017 — to include, for example, more collection and enforcement specialists. (The agency began the decade with an annual budget of $66.5 million.)

But no matter what additional abilities the FEC obtains, there’s one certain way to beat an FEC fine.

Die.

That’s what eccentric real estate mogul and former U.S. Senate candidate “Honest” Abe Hirschfeld did in August 2005, months after running as a minor-party candidate in 2004 against Sen. Chuck Schumer.

Hirschfeld lived to see the FEC hit his campaign with six separate fines. Total penalty: more than $105,000.

He went to his grave without paying.