FEC v. NCPAC (84-0866)
On May 16, 1986, the U.S. District Court for the Southern District of New York granted the FEC's motion for summary judgment in FEC v. National Conservative Political Action Committee (NCPAC). (Civil Action No. 84 Civ. 0866 (GLG).) The court ruled that expenditures made by NCPAC in its campaign to defeat Senator Moynihan's 1982 reelection effort constituted excessive in-kind contributions to Bruce Caputo. The court found that NCPAC had further violated the election law by failing to properly report these expenditures as "in-kind" contributions. Accordingly, on June 13, 1986, the court imposed a $15,000 civil penalty on NCPAC and ordered the PAC to file amended reports with the FEC within 30 days of the court's order.
During the 1981-82 election cycle, as part of its strategy to defeat Senator Moynihan, NCPAC established a political action committee, "New Yorkers Fed Up with Moynihan." NCPAC also hired Arthur J. Finkelstein Associates, a polling and political consulting firm, to develop a media strategy to advocate Senator Moynihan's defeat, conduct and analyze polls, and select election issues on which Senator Moynihan was most vulnerable. From April 1981 until August 1982, NCPAC spent $73,755 on its anti-Moynihan campaign. During this time, the Finkelstein firm also worked for Bruce Caputo's campaign.
In March 1981, Mr. Caputo announced that he would seek the Republican Party's nomination for Mr. Moynihan's Senate seat, and he retained Mr. Finkelstein as a paid political consultant. By March 1982, when Mr. Caputo withdrew from the Senate race, his campaign committee had paid Mr. Finkelstein's firm $28,000 to assist in all aspects of Mr. Caputo's Senatorial primary campaign.
In January 1982, the FEC received a complaint from the New York State Democratic Committee alleging that independent expenditures reported by NCPAC for its anti-Moynihan campaign were actually in-kind contributions to the Caputo campaign. In September 1983, the FEC found probable cause to believe that NCPAC's expenditures were, in fact, contributions. NCPAC had therefore exceeded the election law's contribution limits and had violated the disclosure requirements. After failing to reach a conciliation agreement with the respondent, the FEC filed suit against NCPAC on February 6, 1984.
NCPAC did not deny that, on its face, the election law limits the amount of such contributions. NCPAC claimed, however, that, in making the expenditures, it had relied in good faith on an FEC advisory opinion issued to the PAC in March 1980.
The court's ruling
The district court concluded that NCPAC could not rely on the FEC's advisory opinion because "the distinctions between the facts as they actually unfolded and the facts addressed in the FEC's advisory opinion are patent." The court found that Moynihan and Caputo were "for all practical purposes, opponents" during the primary season. The court also noted that the Finkelstein firm's role in both "the NCPAC and Caputo efforts was far more significant than that of a vendor of advertising services or a polling company. Finkelstein was NCPAC's key strategist. He formulated and directed the execution of NCPAC's plan to defeat Senator Moynihan.... Simultaneously, he served as the chief architect of Bruce Caputo's campaign." The court concluded that NCPAC's coordination with the Caputo campaign "far exceeded the "communication' sanctioned by the FEC" in its advisory opinion. Under these circumstances, the court concluded that "NCPAC's anti-Moynihan expenditures must be deemed contributions to the Caputo campaign" rather than independent expenditures.
On July 17, 1986, the defendants filed an appeal with the U.S. Court of Appeals, 2nd Circuit. (Civil Action No. 86-6139) Both parties filed a Stipulation for Withdrawal of Appeal on August 27, 1986. The defendants were ordered to pay the FEC's taxation of costs and on February 3, 1987, the district court issued an Acknowledgment of Satisfaction of Judgment, thereby closing the matter.