Judge Affirms That Triad Violated Campaign Laws

Posted March 31, 2004 at 6:25pm

A long-running dispute between the Federal Election Commission and GOP operative Carolyn Malenick was primarily laid to rest this week when U.S. District Judge James Robertson affirmed the FEC’s conclusion that Malenick violated federal campaign laws by not registering her group Triad as a federal political committee.

“Accordingly, because Triad and then Triad Inc.’s major purpose was the nomination or election of specific candidates in 1996, and because Triad received contributions aggregating more than $1,000 in 1996, I find that Triad and Triad Inc. operated as a ‘political committee’ in 1996,” Robertson stated in a court order issued Tuesday.

Robertson also affirmed the FEC’s assertion that Triad had accepted illegal excessive political contributions.

“It is undisputed that Triad and Triad Inc. received over $5,000 in contributions from Robert Cone in 1996,” Robertson said. “The precise amount of Cone’s ‘contributions’ above the threshold of $5,000 is unclear on this record (the FEC acknowledges that the defendants were ‘involved in a few activities that were not related to the 1996 elections,’) but is important.”

The judge did not find sufficient evidence to support the FEC’s determinations that Triad had knowingly accepted corporate contributions or that the group had failed to report independent expenditures — a finding Robertson said was “moot” because Triad was in fact a political committee, not the sort of non-political committee to which that provision applied.

Moreover, Robertson took a slap at the FEC for pursuing Malenick at a snail’s pace, noting that it wasn’t until more than four years after she was first notified of the filing of the complaint against her that the FEC advised all three defendants that its office of general counsel was “prepared to recommend that the commission found probable cause to believe” that the defendants had violated various provisions of the law.

Malenick — a GOP consultant who worked as a fundraiser on Oliver North’s failed 1994 Senate campaign in Virginia — branched out in 1996 with the establishment of Triad Management Services, a sort of clearinghouse for political donations that also ran issue ads through nonprofit affiliates.

Triad’s stated goals in the 1996 election cycle included the re-election of freshmen House lawmakers, increasing the House Republican majority by 30 and boosting the Senate to a filibuster-proof 60 GOP seats.

To those ends, Triad sent out so-called “fax alerts” to 160 individuals advocating the election of certain candidates including then-Reps. John Thune (S.D.), Bob Riley (Ala.), Mike Pappas (N.J.), and Bob Schaffer (Colo.) — and requesting financial support for those campaigns.

As a result, donors sent checks to Triad and Triad Inc. that were made payable to federal candidates or authorized campaign committees that were then forwarded on to the intended recipient.

According to court documents, Triad forwarded approximately 50 personal checks totaling about $43,000 and Triad Inc. forwarded approximately 180 checks totaling $142,500 to candidates and their campaign committees in 1995 and 1996.

Cone — one of the founders of Koch Industries and instrumental contributor of approximately$465,500 to Triad in 1996, according to court documents — said in a deposition that the objective was “to get major donors involved so that the ideally conservative candidates could be elected” to push a Republican agenda.

But Malenick’s activities came under considerable scrutiny during the Clinton-era Congressional investigations of campaign finance abuses in the 1996 cycle, with Democrats pointing to her operation as evidence of Republican misdeeds.

Acting on a complaint filed in 1997 against Malenick, the FEC in 1998 told Malenick that it had reason to believe Triad had violated federal campaign laws by failing to register as a federal political committee, a distinction that would have made the group subject to detailed disclosure requirements.

Malenick strongly disagreed with those characterizations and the FEC’s findings.

She argued to the media, the FEC and in court that Triad was simply a for-profit marketing company that provided advice to potential political donors in the same way a stockbroker might advise his clients to invest in the market.

The FEC’s wrangling with Triad dragged on for nearly seven years because Malenick refused to enter into a conciliation agreement with the watchdog agency.

FEC lawyers originally suggested that a $4.5 million civil penalty be levied against Triad and affiliated groups.

But the FEC ultimately voted to fine Malenick’s consulting firm $200,000 — a penalty she refused to pay, prompting the FEC to take her to court.

At this point, it’s still unclear whether Malenick will end up paying any sort of civil penalty in the case.