MUR 5635: No-risk contract results in corporate contributions
On January 4, 2006, the Commission announced conciliation agreements with Conservative Leadership Political Action Committee (CLPAC); American Target Advertising, Inc. (ATA); The Viguerie Company; ConservativeHQ.com; Edward J. Adams, former Chief Financial Officer for ATA; and Benjamin Hart, a former creative consultant at ATA, in which they agreed to pay more than $100,000 and to change their business practices to prevent future violations of the Federal Election Campaign Act (the Act).
Background
Under the Act, a “contribution” is any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any federal election. Contributions are subject to limits; a political action committee (PAC) may accept up to $5,000 per year from an individual, another PAC or party committee. Corporations may not make a contribution — monetary or in-kind — in connection with any federal election, nor may any PAC or individual accept such contributions.
No-risk contract
ATA — a direct mail marketing company chaired by Richard Viguerie — is owned by The Viguerie Company, a corporation that specializes in fundraising for nonprofit entities. Mr. Viguerie also serves as the moderator on an internet web site ConservativeHQ.com.
CLPAC is a small nonconnected PAC that averages $40,000 in receipts and disbursements per year. In reports it filed with the FEC, CLPAC stated that as of June 30, 2000 it had $464 cash on hand. Six days later, CLPAC engaged in a “no-risk” contract with ATA for an $8 million direct mail, telemarketing and internet fundraising campaign during the four months before the 2000 election. Several million pieces of mail were sent in connection with that fundraising effort advocating the defeat of Democratic Presidential and Senatorial candidates.
ATA contracted with other vendors, including The Viguerie Company and ConservativeHQ. com, to conduct the campaign. They also arranged for Adams and Hart to make postage loans to advance the money needed to pay for postage for the campaign’s mailings. The contract between CLPAC and ATA was a “no-risk” contract, which relieved the PAC of debt responsibility if receipts failed to cover the cost of the campaign. Pursuant to the contract, ATA retained the mailing list that it generated during the campaign. When the fundraising generated only about $4 million, as of December 31, 2000, ATA forgave the resulting CLPAC debt and negotiated with the other vendors, including ConservativeHQ.com and The Viguerie Company to reduce or eliminate all the PAC’s outstanding debts. In addition, ATA disbursed $465,000 to CLPAC, which the PAC used to fund independent expenditures in connection with the Presidential and New York Senate campaigns. The debt write-offs and the $465,000 disbursement resulted in prohibited contributions from ATA, The Viguerie Company and ConservativeHQ. com to CLPAC.
Conciliation agreement
In addition to paying $100,000, CLPAC, ATA, The Viguerie Company, and ConservativeHQ.com agreed to cease and desist from using “no-risk” contracts and postage lending in connection with federal elections. They neither admitted nor denied making or accepting corporate or excessive contributions, however, they agreed not to contest the Commission’s findings of violations. Adams and Hart admitted to making excessive contributions to CLPAC by lending it money to pay for postage and agreed to make no more postage loans to political committees and to pay civil penalties totaling $14,000.