FEC v. Malenick, et al. (02CV1237)
On March 30, 2004, the U.S. District Court for the District of Columbia granted partial summary judgment to the FEC in this case, and denied defendant Carolyn Malenick's cross-motion for summary judgment. The court found that Triad Management Services (Triad), which subsequently became Triad Management Services, Inc. (Triad Inc.), was a political committee under the Federal Election Campaign Act (the Act) in 1996, that it failed to register and report with the Commission and that it accepted contributions in excess of the Act's limits.
According to its 1996 promotional materials, Triad was a consulting firm devoted to keeping the Republican majority in Congress. From 1995 to 1996, Carolyn Malenick operated Triad as a sole proprietorship, and she became the president, sole director and owner of Triad Inc. when Triad incorporated in May 1996. Robert Cone was the primary source of funding for Triad and Triad Inc. in 1996, and provided the organization with well over $1,000 in funding.
The Commission began its investigation of Triad/Triad Inc. in response to a series of administrative complaints filed between 1996 and 1998. After failing to reach a conciliation agreement with the defendants, the Commission filed a court complaint on June 21, 2002, alleging that Miss Malenick, Triad and Triad Inc. violated the Act by, among other things, failing to register and file as a political committee and accepting and making excessive and prohibited contributions. 2 U.S.C. § § 433, 434, 441a(a)(1), 441a(f) and 441b.
District court decision
Under the Act, a political committee is defined in part as "any committee, club, association, or other group of persons which receives contributions aggregating in excess of $1,000 during a calendar year." 2 U.S.C. § 431(4)(A). A contribution includes any gift, loan or deposit of money, or any thing of value, given for the purpose of influencing a federal election. 2 U.S.C. § 431(8)(A)(i). An organization that is regulated under the Act as a "political committee" must also have as its major purpose the nomination or election of a federal candidate. See FEC v. Massachusetts Citizens for Life, 479 U.S. 238 (1986), and Buckley v. Valeo, 424 U.S. 1, 79 (1976).
The court found that Triad/Triad Inc.'s major purpose was the nomination or election of specific federal candidates in 1996. The court also found that the funds Mr. Cone provided to Triad/Triad Inc. were contributions under the Act and exceeded $1,000. Triad/Triad Inc. thus became a political committee under the Act, but failed to register and file reports as required by the Act. 2 U.S.C. § § 433 and 434. The court additionally found that, while the total amount of contributions Triad/Triad Inc. received from Mr. Cone is uncertain, these contributions certainly exceeded the $5,000 limit on contributions that a political committee may permissibly receive from an individual. 2 U.S.C. § 441a(f). The court granted the Commission a declaratory judgment on these points.
The FEC also alleged in its court complaint that Triad Inc. accepted prohibited corporate contributions and that Triad/Triad Inc. made excessive contributions to federal candidates through its contributions combined with the contributions of two affiliated committees, the American Free Enterprise PAC and the Citizens Allied for Free Enterprise PAC. 2 U.S.C. §§ 441b and 441a(a). The court, however, found that the record was not sufficient on these two issues to grant summary judgment to the FEC; it did find that American Free Enterprise PAC was affiliated with Triad/Triad Inc., but stated that further information would be needed to determine the amount of excessive contributions.
The court declined to impose penalties by way of summary judgment or to grant injunctive relief without further action first being taken in this case.
 The court also found two of the FEC's causes of action, presented as an alternative theory if Triad/Triad Inc. was not adjudged to have been a political committee, to be moot based on its other rulings in this case.