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For Immediate Release

Contact: 

Bob Biersack

November 19, 2007

George Smaragdis

Michelle Ryan

 

Media Fund to Pay $580,000 Civil Penalty

Washington – The Federal Election Commission (FEC/Commission) announced today that it has reached a settlement with The Media Fund, a 527 organization charged with violating federal campaign finance laws during the 2004 Presidential election. The Media Fund (TMF) agreed to pay $580,000, the seventh largest civil penalty in Commission history, to settle charges that it failed to register and file disclosure reports as a federal political committee and knowingly accepted contributions in violation of federal limits and source prohibitions. The Commission unanimously approved the conciliation agreement.*

This is the eleventh settlement the Commission has entered into in the past year with organizations exempt from taxation under either section 527 or 501(c)(4) of the Internal Revenue Code.  The Commission determined all of these organization violated election laws during the 2004 campaign, most by failing to register as political committees.  The Commission collected more than $3,000,000 in civil penalties from these cases.

If an organization receives contributions or makes expenditures in excess of $1,000, and its major purpose is involvement in campaign activity, it must register with the Commission as a federal political committee and abide by the contribution restrictions and reporting requirements of the Federal Election Campaign Act (FECA/the Act).

Facts of the Case

TMF is an unincorporated entity organized in November of 2003 under Section 527 of the Internal Revenue Code.  TMF has not registered as a political committee with the Commission. 

From its inception through 2004, TMF raised $59,414,183.  Approximately 93% of its receipts during that time period– over $55 million – came from labor organizations or corporations prohibited from contributing to political committees, or from individuals who gave in amounts that exceeded the $5,000 limit established under the Act for contributions to political committees.  The Commission concluded that the language used in fundraising solicitations sent by TMF or its joint fundraising committee, the Joint Victory Campaign, clearly indicated that the funds received would be targeted to the election or defeat of a specific federal candidate.  Most of the solicitations targeted the defeat of George W. Bush, and some of the solicitations targeted the election of John Kerry.  Funds received in response to these solicitations constituted contributions under the Act and caused TMF to surpass the $1,000 statutory threshold by December 2003.  TMF’s former president made direct solicitations to donors, which included messages such as “Bush can be beaten,” “The Race for 270; The fight for the White House is a state-by-state battle,” “270 Electoral Votes (Evs) Needed to Win,” and “17 Key States Will Decide the 2004 Election.”  

TMF spent approximately $53,389,856 – or more than 92% of its reported disbursements during that time period – on 37 television advertisements, 24 radio advertisements, nine newspaper advertisements and 20 mailers that referenced President George Bush or Senator John Kerry in the context of the 2004 Presidential election.  TMF broadcast or disseminated some of these communications in “battleground states,” including Florida, Missouri, Nevada, New Hampshire, Ohio, Pennsylvania, Wisconsin and West Virginia. 

A TMF mailer on education contained express advocacy, referring to the “need” for a particular kind of President, followed by identification of John Kerry as that type of candidate. 

Other TMF mailers contained express advocacy because the advertisements attacked the character, qualifications and fitness for office of George Bush, or supported the character, qualifications and fitness for office of John Kerry to a degree that reasonable minds could not differ as to whether the communications encouraged actions to elect or defeat the candidates. 

The Commission concluded that TMF’s statements and activities demonstrate that its major purpose was to elect John Kerry and defeat George Bush.  From its inception, TMF presented itself to donors as a destination for “soft money” to support the Democratic Presidential nominee.  The Commission concluded that TMF’s communications to the public further establish its major purpose of federal campaign activity—specifically the defeat of George Bush.  The vast majority of TMF’s advertisements—34 out of 36 television advertisements, 20 out of 24 radio advertisements and 26 out of 29 print advertisements—mention either George Bush or John Kerry.  TMF’s self-proclaimed goal in producing and running these advertisements was to decrease public support for Bush and to increase public support for Kerry. 

The conciliation agreement was reached after the Commission had determined that there was probable cause to believe that the Media Fund had violated the Act.  The Media Fund was the first respondent in an FEC investigation to request and be granted a “probable cause hearing” under the Commission’s pilot program for such hearings, which became effective February 16, 2007.  TMF’s hearing was held on March 21, 2007.  Documents from the case, including a transcript of this hearing, are available on the FEC’s website at www.fec.gov.

*FEC Chairman Robert Lenhard was recused in this matter.

This release contains only summary information.  For additional details, please consult publicly available documents for each case in the Enforcement Query System (EQS) on the FEC website at http://eqs.fec.gov/eqs/searcheqs .

1.

MUR 5440

RESPONDENTS:

The Media Fund

COMPLAINANT:

The Republican National Committee and Bush-Cheney ’04, Inc.; Bush-Cheney ’04, Inc.; Democracy 21, the Campaign Legal Center, and the Center for Responsive Politics

SUBJECT:

Failure to register as a political committee; failure to report contributions and expenditures; knowingly accepting excessive contributions from individuals; knowingly accepting contributions from prohibited sources.

DISPOSITION:

Conciliation agreement: $580,000 civil penalty

DOCUMENTS ON PUBLIC RECORD:

Documents from this matter are available from the Commission’s web site at http://www.fec.gov by entering 5440 under case numbers in the Enforcement Query System. They are also available in the FEC’s Public Records Office at 999 E St. NW in Washington.

The Federal Election Commission (FEC) is an independent regulatory agency that administers and enforces federal campaign finance laws. The FEC has jurisdiction over the financing of campaigns for the U.S. House, the U.S. Senate, the Presidency and the Vice Presidency. Established in 1975, the FEC is composed of six Commissioners who are nominated by the President and confirmed by the U.S. Senate.

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