April 12, 2004
NRCC fined

The National Republican Congressional Committee has agreed to pay a $280,000 fine for soft-money violations in 1999.

The FEC has entered into a conciliation agreement with the National Republican Congressional Committee (NRCC) resulting from its 1999 transfer of $500,000 in soft money to the U.S. Family Network (USFN) to pay for issue advertisements. The NRCC violated the Act by making the transfer to USFN knowing that USFN planned to transfer at least some of the funds to a third party to pay for issue ads in the 2000 election cycle. As part of the conciliation agreement, the NRCC agreed to pay a $280,000 civil penalty.

Under the law in effect at the time, the NRCC was required to pay for issue ads with a minimum of 65% hard money. A party committee could not give nonfederal funds to a third party to pay for such an ad, and could not simply transfer funds to another group to run the ads.

In the fall of 1999, USFN solicited $500,000 in soft money from the NRCC to pay for "media and grassroots." After initially denying these requests, the NRCC donated $500,000 to USFN without following its usual procedures to approve and process large donations. Prior to the donation, Ed Buckham, the founder of USFN, had agreed with Jim Ellis, who was affiliated with Americans for Economic Growth (AEG), that AEG would run radio ads accusing Democrats of planning to raid the Social Security Trust Fund surplus. After receiving the NRCC's $500,000 donation, USFN transferred $300,000 to AEG. AEG then spent approximately $260,000 for two sets of radio ads criticizing Democratic efforts to spend portions of the Social Security surplus on "foreign aid and big government programs."

The NRCC knew through its agents that USFN planned to pass all or part of the $500,000 to a third party to pay for party issue advertisements. Therefore, the NRCC violated the Act by using only soft money to pay for activity that should have been allocated between their hard and soft money accounts.

Roll Call has a little bit more background on this.

News of $500,000 donation, first reported by Roll Call in early December 1999, was loudly criticized at the time by House Democrats.

Democrats charged that USFN, AEG and another group, the Republican Majority Issues Committee, were secretly controlled by DeLay and run by his operatives as part of the Texas Republican’s political network. RMIC was going to raise as much as $25 million to help elect GOP candidates and incumbents, but took in only a fraction of that amount before ceasing operations.

“It’s all too rare when DeLay and company are held accountable for their blatantly illegal schemes,” said David Plouffe, the former executive director of the Democratic Congressional Campaign Committee who filed the original complaint with the FEC. “That they have to pay the fine in all hard dollars for their soft-money shenanigans is all the more satisfying.” Soft-money donations are now illegal under federal law.

DeLay and other senior House Republicans, including Speaker Dennis Hastert (Ill.), were named in the DCCC’s complaint, but they were later dropped from the case. Carl Forti, the NRCC’s communications director, said his committee is pleased the matter is finally resolved.

“It would have cost us twice as much to litigate the case, and the new administration here wanted to just put it behind us and move on,” Forti said. Rep. Tom Reynolds (N.Y.) took over as NRCC chairman from Davis at the beginning of this cycle.

Davis, Buckham and Ellis could not be reached for comment. Buckham is now a lobbyist with the Alexander Strategy Group.

The controversy over the $500,000 donation shed new light on what became known as “DeLay Inc.,” and helped spur the DCCC to file a civil racketeering lawsuit against DeLay in June 2000. That suit was later dropped, but not before DeLay ran up hundreds of thousands of dollars in legal bills defending himself.

As you might imagine, the DCCC is pretty happy about this result.

On a tangential note, the BBC will be airing a special on Bacardi and its longstanding feud with Pernod Ricard over the use of the Havana Club brand name. It'll be interesting to see what they dredge up about DeLay and his role carrying water for Bacardi. I'll have to see if BBCA is showing this so I can TiVo it.

Thanks to AJ Garcia for the links.

Posted by Charles Kuffner on April 12, 2004 to Scandalized! | TrackBack