On September 6, 2007, the U.S. District Court for the District of Columbia approved an agreement between the FEC and Citizens Club for Growth, Inc. (formerly known as Club for Growth, Inc.), ending a lawsuit pending before the court. Filed on September 5, 2007, the agreement asked the court to enter a consent judgment requiring Club for Growth to pay a civil penalty of $350,000 for failing to register with the Commission as a political committee and to report its contributions and expenditures.
Under the Federal Election Campaign Act (the Act) and Commission regulations, organizations that make expenditures or receive contributions in excess of $1,000 must register with the Commission and file periodic financial disclosure reports. 2 U.S.C. §§431(4)(A), 433 and 434 and 11 CFR 100.5, 102.1 and 104.3. The Act also prohibits these organizations from receiving contributions from corporations or labor organizations and limits contributions from individuals to no more than $5,000 per year. 2 U.S.C. §441b(a) and 11 CFR 114.1(a)(1), and 2 U.S.C. §441a(f) and 11 CFR 110.1(d).
Registering and Reporting as a Political Committee. Following the investigation of a complaint filed with the FEC in 2003, the Commission determined that Club for Growth spent at least $1.28 million between 2000 and 2004 expressly advocating the election or defeat of clearly identified federal candidates. In addition, Club for Growth mailed at least five fundraising solicitations during that period that clearly indicated that funds received would be targeted to the election or defeat of specific federal candidates. Club for Growth received well in excess of $1,000 in contributions in response to these solicitations. Because Club for Growth both made more than $1,000 in expenditures and received over $1,000 in contributions, it met the statutory definition of a political committee and was required to register and report with the Commission, provided that its major purpose was to influence federal elections.
Major Purpose. The FEC found that Club for Growth’s major purpose was influencing federal elections. According to numerous fundraising solicitations from 2000 to 2004, its goals at the time were to "elect more pro-growth leaders to Congress," "help Republicans keep control of the House and take back the Senate," "elect pro-growth congressmen who will fight to cut taxes and limit government," "help Republicans retain control of the House and Senate in the upcoming elections," "help Republicans keep control of Congress" and "defeat status quo incumbents."
Disbursements. Further, supporting the FEC’s findings as to Club for Growth’s major purpose, the FEC found the vast majority of its disbursements, which totaled about $15.1 million between August of 2000 and the end of 2004, were made in connection with federal elections. Club for Growth’s spending focused on candidate research, polling and ads and other public communications referencing clearly identified federal candidates. In 2004, it spent approximately 88 percent of its disbursements on advertising supporting or criticizing clearly identified federal candidates.
Receipts from Individual in Excess of $5,000 and Prohibited Corporate Contributions. From 2000 through the end of 2006, Club for Growth accepted approximately $10.78 million in contributions from individuals that exceeded the $5,000 contribution limit. Between 2000 and 2004, it also accepted more than $93,000 in corporate contributions.
The Court entered the consent judgment proposed by the parties, which includes a permanent injunction against future violations by the defendant and its successors, officers and employees and requires that Club for Growth file disclosure reports with the FEC and pay to the U.S. Treasury any funds over $5,000 remaining in its bank account after payment of legal expenses, up to the amount of excessive and prohibited contributions the Club originally accepted.
U.S. District Court for the District of Columbia, CV 05-01851 (RMU)