FEC v. Dear for Congress (03CV2897)
On June 7, 2004, the parties solely, for the purpose of settling this case, stipulated that the court could enter a consent judgment, with the defendants neither admitting nor denying the findings included in the judgment. In the consent judgment, the U.S. District Court for the Eastern District of New York provided declaratory, injunctive, and monetary relief in favor of the Commission. The court decreed that one or more of the defendants violated the Federal Election Campaign Act's:
- Contribution limits (2 U.S.C. § 441a(a)(1)(A));
- Reporting requirements (2 U.S.C. §§ 434(a)(6)(A), 434(b)(2), 434(b)(4), 434(b)(4)(F) and 434(b)(8));
- Prohibition on contributions made in the name of another (2 U.S.C. § 441f); and
- Prohibition on corporate contributions (2 U.S.C. § 441b(a)).
The court ordered Dear for Congress, Dear 2000 and Friends of Noah Dear to pay to the Commission all funds remaining in their accounts as of the date that the parties entered into the stipulated agreement, and the court ordered Abraham Roth, as treasurer, to pay a $45,000 civil penalty to the FEC. In addition, the court enjoined the defendants from committing further such violations of the Act.
This complaint arose from FEC administrative Matters Under Review (MURs) 4935 and 5057. The Federal Election Campaign Act (the Act) limits the aggregate amount that a person may contribute to a federal candidate, and it prohibits any person from making a contribution in the name of another person and any person from knowingly accepting such a contribution. 2 U.S.C. §§441a(f) and 441f. The Act also bars corporations and unions from making contributions from treasury funds to influence a federal election and any person from knowingly receiving such a contribution. 2 U.S.C. §441b(a). Committees and their treasurers are also required to file timely and accurate campaign finance disclosure reports. 2 U.S.C. §§434(b)(4)(F), 434(b)(8) and 434(a)(6)(A). On May 1, 2003, the Commission found probable cause to believe that the defendants had violated these provisions of the Act, and it filed this suit after failing to reach a conciliation agreement with the defendants. 2 U.S.C. §§437g(a)(4)(A) and (a)(6)(A).
On June 5, 2003, the Commission filed a complaint in the U.S. District Court for the Eastern District of New York against Dear for Congress, Inc., Dear 2000, Inc., Friends of Noach Dear '93 and these committees' treasurer Abraham Roth. The complaint alleged, among other things, that:
- Dear for Congress, Dear 2000 and Mr. Roth accepted hundreds of thousands of dollars in prohibited contributions;
- Dear for Congress, through Mr. Roth, filed FEC reports showing that more than $300,000 in excessive contributions had been refunded to contributors when, in fact, none of the refunds had been made when the report was filed, and over $200,000 remains to be refunded; and
- Dear for Congress and Mr. Roth accepted numerous money orders, purportedly from individual contributors, that were not made by the persons identified on the money orders.
The Commission asked the court for a civil penalty, declaratory and injunctive relief and for the maximum civil penalty for each violation.
Mr. Dear was an unsuccessful House candidate in the 1998 New York primary, and Dear for Congress was his campaign committee. During the campaign, Dear for Congress and Mr. Roth accepted several sets of sequentially numbered money orders, purportedly from some 47 individuals, totaling approximately $40,000. However, the Commission alleged that Dear for Congress campaign staff executed at least some of these money orders. Several money orders were signed in the same handwriting, and many of the individuals whose names appear on the money orders deny making contributions to the committee or contributions via money order. Moreover, the Commission alleged that in accepting these contributions, Mr. Roth failed to comply with the statutory requirement to examine the legality of each of these facially irregular contributions. 2 U.S.C. §432(b)(1).
The Commission also alleged that during the 1998 election cycle, Dear for Congress and Mr. Roth accepted approximately $564,000 in excessive contributions and did not refund or redesignate the contributions within the 60-day period set by Commission regulations. 11 CFR 103.3(b)(3). Dear for Congress and Mr. Roth also accepted impermissible campaign contributions from several corporations, totaling about $12,000. Moreover, the committee and Mr. Roth had still not refunded approximately $200,000 in excessive contributions, and the complaint described a number of reporting violations by Dear for Congress and Mr. Roth, including falsely reporting refunds of impermissible contributions.
The complaint further alleged that Mr. Dear's nonfederal campaign committee made an excessive contribution to one of his federal campaign committees. In addition to running for the House in 1998, Mr. Dear also campaigned for a New York City council seat. Friends of Dear was his campaign committee for that election, and Mr. Roth served as treasurer. In December 1999, Mr. Dear established Dear 2000 to serve as his principal campaign committee for his campaign to win a House seat in the 2000 primary. Mr. Roth again served as treasurer. During 1999 Friends of Dear purchased an opinion poll for $40,000 and contributed the results to Dear 2000. The Commission alleged that once Mr. Dear became a candidate for federal office, the donation of the opinion poll resulted in an excessive in-kind contribution from Friends of Dear, which could only contribute $1,000 per election to Dear 2000. The Commission alleged that Mr. Roth knowingly accepted this excessive contribution on behalf of Dear 2000 and also failed to report the contribution on the committee's first financial disclosure report, due January 1, 2000.
The Commission asked the court to:
- Declare that the defendants violated these provisions of the Act;
- Assess appropriate civil penalties;
- Order Dear for Congress and Mr. Roth to disgorge to the U.S. treasury all unrefunded excessive contributions, prohibited corporate contributions and contributions in the name of another; and
- Permanently enjoin the defendants from further similar violations of the Act.