The scenario raised at least two possible legal problems for Conard and W Spann. First, federal law prohibits making a political contribution “in the name of another”—i.e., federal law prohibits a human from making a contribution to a Super PAC in the name of a shell company. In other words, federal law prohibits using straw donors.
Second, federal law requires a group that has the major purpose of influencing elections, that receives contributions or makes expenditures exceeding $1,000 in a calendar year, to register with the FEC as a “political committee” and to file periodic disclosure reports regarding where the group gets its money and how it spends that money.
The reason for these laws is simple. The Supreme Court has long recognized the right of voters to know the true identity of those funding our electoral process. Accurate disclosure advances two compelling government interests: fostering a well-informed electorate and preventing corruption.
Had W Spann been used as a straw company to hide the identity of the true donor, violating the federal law prohibition on making contributions “in the name of another”? Was W Spann’s major, or even sole, purpose of existence influencing federal elections and did it receive a $1 million contribution, meeting the federal law definition of “political committee” and violating federal law by failing to register and report as a “political committee”?
In his statement last Friday, Ed Conard said, “I am the individual who formed and funded W Spann LLC. I authorized W Spann LLC’s contribution to Restore Our Future PAC.”
Conard’s acknowledgement that he “funded” W Spann and “authorized” the contribution to Restore Our Future might reasonably be interpreted as an admission that he violated the federal law prohibition on making a contribution “in the name of another.”
Remarkably, Romney’s ready to sweep this seeming violation of federal law under the proverbial rug, telling reporters on Monday: “I think the whole controversy with regards to his contribution certainly sort of disappears when he came forward and said he was the contributor.” Really, Mitt? When a person seemingly admits to breaking the law the “controversy . . . sort of disappears”? Talk about soft on crime. And talk about a flip-flop. During his 2008 campaign, Romney himself extolled the importance of disclosure, lamenting: “Political spending has been driven into secret corners, and more power and influence has been handed to hidden special interests.”
Notwithstanding Romney’s encouragement of federal law enforcers to look the other way, the FEC and DOJ will still have to determine whether the actions to date violated federal law and, if so, pursue appropriate penalties to deter such conduct in the future. And the Campaign Legal Center is prepared to vigorously seek legal redress against any similar schemes to hide the true sources of funding of political organizations active in the 2012 election.
Indeed, we are now looking into two other $1 million donors to Restore Our Future—Eli Publishing and F8 LLC. According to a recent report by a Fox television affiliate in Utah, Fox 13, the companies share an address in Provo, UT and “don’t seem to do any business.” Eli Publishing was founded by Steve Lund, who told Fox 13 that “[h]e made [the donation] through a corporation he created to publish a book years ago because donating through a corporation has accounting advantages.” Regardless of his motivation, this sure sounds like Lund illegally made a contribution in the name of his publishing company. F8 LLC was founded by Jeremy Blickenstaff, who did not respond to Fox 13’s interview request.
The American people should not have to put up with such schemes to evade disclosure of money in our elections. Both donors and recipient committees, and the candidates they support, should be aware that the Campaign Legal Center will be seeking enforcement of the law in every case.
Paul S. Ryan is FEC Program Director and Associate Legal Counsel at the Campaign Legal Center in Washington.