Fulani v. FEC (97-1466)
On June 23, 1998, the U.S. Court of Appeals for the District of Columbia Circuit denied a petition from Dr. Lenora B. Fulani and the Lenora B. Fulani for President Committee to review the FEC's final repayment determination for the committee's financial transactions during the 1992 Presidential campaign. The FEC had determined that Dr. Fulani and her committee had to repay the U.S. Treasury $117,269 in public matching funds.
Dr. Fulani received about $2 million for the 1992 campaign, under the Presidential Primary Matching Payment Account Act. Under the Matching Payment Act, eligible candidates can use matching funds only for qualified campaign expenses. Committees that receive such funds are also subject to an audit by the FEC and the requirement to make repayments to the U.S. Treasury if the audit reveals that they made nonqualified campaign expenses or received payments in excess of their entitlement. Commission regulations allow a candidate to contest the initial repayment determination by submitting written materials and by requesting an oral hearing before the Commission issues a final repayment determination. The regulations further state that, if the candidate does not contest an initial repayment determination, it becomes final 30 days after a candidate is served written notice of the determination.
Dr. Fulani did not contest the Commission's initial repayment determination, which concluded that Dr. Fulani owed the Treasury $1,394. Dr. Fulani had already repaid this amount. The Commission, however, held its final determination in abeyance after a former Fulani campaign worker came forward to challenge the accuracy of some of the documentation on which the FEC had based its initial repayment determination. The FEC continued to investigate-though hampered by a lack of cooperation from committee staff and vendors-and issued a second initial repayment determination, this time, in the amount of $612,557. Dr. Fulani contested this determination, and, in its final repayment determination, the Commission reduced the amount to $117,269. Dr. Fulani asked for a rehearing, which was denied by the Commission, and then brought the matter before the appellate court. Dr. Fulani challenged the FEC's authority to issue a second repayment determination and, in the alternative, argued that the Commission's findings that she and her committee owed $18,768 in nonqualified disbursements to a vendor and $73,750 in unsubstantiated payments to individuals by check were unreasonable.
Dr. Fulani and the committee first argued that the Matching Payment Act contemplates only one repayment determination and that the FEC had no authority to make a second one in their case. Commission regulations, however, allow additional repayment determinations after a final determination has been made "where there exist facts not used as the basis for a previous final determination." 11 CFR 9038.2(f). The court agreed with the Commission that the statute is silent on this matter and the agency's regulation is a reasonable construction of the Act.
Dr. Fulani also argued that the FEC had no authority to hold its first repayment determination in abeyance because the determination became final when Dr. Fulani did not object to it within the designated 30-day period. The court agreed with the Commission that it makes no difference whether the first initial repayment determination had become final or had been suspended because the FEC's own regulation explicitly authorizes it to make additional repayment determinations on the basis of new facts.
Dr. Fulani also argued that, even if the Commission is authorized to make a second repayment determination, it did not issue that determination within the three-year period the statute requires. Although the Commission, in fact, did issue the second initial determination just before the three-year period ended, Dr. Fulani stated that the determination figure ($612,557) was drawn up just to meet the deadline and was not the product of a thorough examination and audit. But the court found that the obstacles the Commission encountered in investigating the committee understandably led it to draw all inferences against the committee. "When a candidate seeks to frustrate and delay a government investigation, it can hardly be heard to complain that the product is insufficiently thorough," the court stated.
The court affirmed the Commission's determination on the merits and its denial of Dr. Fulani's petition for a rehearing. In regard to the payments to the vendor, the court stated that Dr. Fulani failed to offer a timely explanation of the payments. In regard to the Fulani committee's payments by check to individuals, the court deferred to the Commission's construction of its own regulations even when it found that the "FEC's reading of its regulation admittedly is not obvious."
Source: FEC Record — August 1998. Fulani v. FEC, 147 F.3d 924 (D.C. Cir. June 23, 1998).