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Federal Election Commission | United States of America

FEC v. Arlen Specter 96 (00CV3167)

Summary

On March 12, 2002, the U.S. District Court for the Eastern District of Pennsylvania granted the Commission's request for declaratory and injunctive relief against Koro Aviation, Inc. (Koro). Pursuant to a stipulation between the Commission and Koro, the court held that Koro violated 2 U.S.C. §441b(a) by making in-kind corporate contributions to Arlen Specter '96 in the form of air travel services charged at less than the usual and normal rate. The court permanently enjoined Koro from violating 2 U.S.C. §441b(a) by providing goods or services to any federal candidate at less than the usual and normal charge. The court also ordered Koro to pay a $25,000 civil penalty.

Background

On June 22, 2000, the Commission asked the court to find that Arlen Specter '96, Senator Specter's Presidential campaign committee, and Paul S. Diamond, as treasurer, accepted unlawful in-kind contributions from Koro. The Commission argued that since Koro was an FAA-licensed commercial charter service carrier, Specter '96 should have paid the "usual and normal" rate for the air travel provided by Koro, rather than the first-class fare actually paid by Specter '96. Under Commission regulations, a campaign committee must pay the charter fare for travel on an FAA-licensed commercial charter carrier. 11 CFR. 114.9(e). [1]

Decision

The order entered by the court stated that the first-class fares that Specter '96 paid for air travel were less than the charter fares charged to other Koro customers based on Koro's published hourly rate, and, as a result, Koro made an in-kind contribution to Specter '96 in violation of 2 U.S.C. §441b(a). Both the Commission and Koro stipulated to the entry of the court's judgment, and Koro waived all rights of appeal. Koro was ordered to pay the civil penalty within 10 days of the entry of the court's order and judgment.

FOOTNOTE:

[1] The difference between the usual and normal cost of a service and the amount paid by a candidate or committee represents an in-kind contribution. 11 CFR. 100.7(a)(1)(iii)(A). The Commission argued that Specter '96's payment of the first-class fare rather than the charter rate resulted in an unlawful in-kind corporate contribution from Koro in the amount of $233,768.

Source: FEC Record— May 2002; August 2000

This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public.

The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.