ACT, which received a significant amount of its funding from billionaire George Soros, paid for much of the Democrats’ voter registration and voter mobilization activities in battleground states such as Ohio, Pennsylvania and Florida during the 2004 race, while another 527 group, the Media Fund, paid for much of the party’s political advertising. Soros and his associate Peter Lewis pumped nearly $40 million into the two groups.
The FEC has since determined that ACT violated election law by funding too much of its activity with money raised outside federal restrictions.
“For most of the 2004 election cycle, ACT used an allocation ratio of 2 percent federal funds and 98 percent non-federal funds for its administrative expenses and generic voter drives,” the FEC stated in a public release. “ACT was required to use a substantially higher proportion of federal funds than that reflected in either the estimated or adjusted funds expended allocation ratio for administrative expenses used by ACT in 2003-2004.”
“Today’s action against ACT continues the FEC’s aggressive enforcement posture against 527 organizations,” said Michael Toner, a former FEC chairman who advocated stricter rules for 527 groups. “All told, the agency has imposed more than a million dollars in fines against 527 groups based on their activities in the 2004 election.
“The agency has also set up some clear precedents for the 2008 presidential election and it will be interesting to see how political actors adapt to these new decisions,” Toner added.
The largest fine ever imposed by the FEC on a 527 group may persuade political strategists to funnel their resources into different types of organizations.
ACT and other 527 groups have eschewed spending so-called federal funds because they must be raised in limited increments. Non-federal funds, also known as soft money, are much easier to generate because they can be collected in unlimited amounts.
Proponents of stringent fundraising regulations welcomed the settlement between the FEC and ACT.
“We are pleased that the FEC has taken action to hold ACT accountable for its illegal expenditures in the 2004 presidential election and that the FEC found most of the expenditures made by ACT in 2004 involved the illegal spending of soft money to influence the 2004 election,” said Fred Wertheimer, president of Democracy 21, and Gerry Hebert, executive director of the Campaign Legal Center.
The FEC’s settlement with ACT stems from two complaints the two groups and the Center for Responsive Politics filed in 2004.
But the watchdogs criticized the FEC for taking so long to resolve the complaints.
“We are concerned, however, that this action comes more than three years after our FEC complaints were filed and nearly three years after the 2004 presidential election was held,” wrote Wertheimer and Hebert.
They also criticized the size of the fine, even though it is the third largest civil penalty in an enforcement matter in the FEC’s 33-year history.
“We similarly are concerned that the amount of the penalty imposed against ACT in this case represents only a tiny fraction of the nearly $100 million that the FEC found ACT illegally spent to influence the 2004 election,” they wrote.