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For Immediate Release
April 9, 2004
Contact: George Smaragdis
Bob Biersack
Ian Stirton
Kelly Huff
PARTY MISUSE OF SOFT MONEY TO PAY FOR ISSUE ADS RESULTS IN $280,000 CIVIL PENALTY
WASHINGTON -- 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.

The investigation stemmed from a complaint filed by David Plouffe, Executive Director of the Democratic Congressional Campaign Committee.

1. MUR 4953  
     
  RESPONDENTS: (a) National Republican Congressional Committee, Christopher J. Ward, treasurer

(b) U.S. Family Network

(c) Americans for Economic Growth

(d) Republican Majority Issues Committee, Inc.

(e) Americans for a Republican Majority Political Action Committee, Corwin Teltschik, treasurer

(f) Honorable Tom DeLay

(g) Honorable Tom Davis

(h) Honorable Dennis Hastert

(i) Honorable Dick Armey

(j) Honorable J.C. Watts, Jr.

(k) Ed Buckham

(l) Bob Mills

(m) Dan Mattoon

(n) Jim Ellis

(o) Karl Gallant

(p) Dick DeVos

(q) Betsy DeVos

  COMPLAINANT: David Plouffe, Executive Director, Democratic Congressional Campaign Committee
  SUBJECT: Use of nonfederal funds to finance federal election activity; failure to allocate shared federal-nonfederal expenses
  DISPOSITION: (a) Conciliation Agreement: $280,000 civil penalty

(a-d) No reason to believe [re: excessive contributions due to affiliation]

(b-c) Take no action

(d-q) No reason to believe [re: any provision of the Act]

  DOCUMENTS ON PUBLIC RECORD: Documents from this matter are available from the Commissionís web site at http://eqs.sdrdc.com/eqs/searcheqs by entering 4953 under case number. They are also available in the FECs Public Records Office at 999 E St. NW in Washington.

*There are four administrative stages to the FEC enforcement process:

1. Receipt of proper complaint 3. "Probable cause" stage
2. "Reason to believe" stage 4. Conciliation stage

It requires the votes of at least four of the six Commissioners to take any action. The FEC can close a case at any point after reviewing a complaint. If a violation is found and conciliation cannot be reached, then the FEC can institute a civil court action against a respondent.