FEC Fines 527 Group $750,000

Posted February 28, 2007 at 6:52pm

The Federal Election Commission on Wednesday hit a conservative political group with the agency’s third-largest fine ever for its role in attacking Sen. John Kerry (D-Mass.) in the runup to the 2004 presidential election.

The agency fined the Progress for America Voter Fund $750,000 after determining that the group had functioned like a political action committee without registering to become one.

“This settlement demonstrates once again that the commission is serious about enforcing the campaign finance law,” said Robert Lenhard, the FEC’s Democratic-nominated chairman. “It should now be clear to organizations that want to be active in the 2008 cycle that the activities we saw in this case are prohibited under the law.”

Progress for America raised roughly $45 million during the 2004 cycle from Alexander Spanos, Bob Perry, T. Boone Pickens and other prominent Republican donors. The group, which ranked fourth in size among 527s that cycle, used the money to purchase more than $30 million worth of radio, television, direct mail and Internet advertising — some of it questioning Kerry’s ability to lead the military.

Such ads may have been allowed, according to the commission’s ruling Wednesday, but only if the group had registered as a political action committee.

“If an organization receives contributions or makes expenditures in excess of $1,000, and its major purpose is involvement in campaign activity, it must register with the Commission as a Federal political committee and abide by the contribution restrictions and reporting requirements of the Federal Election Campaign Act,” according to an agency explanation of Wednesday’s ruling. “Progress for America Voter Fund registered with the Internal Revenue Service as a section 527 organization — a tax exempt group whose function is to influence the selection, nomination, election, or appointment of any individual to Federal, State, or local public office or office in a political organization.”

“Through its public statements, activities, and solicitations for contributions, PFA-VF clearly established that it was a Federal political committee during the 2004 campaign,” the agency concluded. As the group itself claimed, “it was formed to ‘focus primarily on TV and radio in key battleground states serving as [a] counter-balance to liberal 527 committees.’”

The agency fined two liberal and one conservative 527 about $600,000 collectively in December for similar infractions.

Wednesday’s FEC decision comes amid rumors that House and Senate Democrats may move this year on legislative fixes to bring outside political groups into the regulated fold. Also, reform groups and some lawmakers will continue to request that the courts require the FEC to regulate all political groups registered under section 527 of the federal tax code, not just groups that register as political action committees with the FEC. Wednesday’s ruling, they claim, is not enough.

“We’re happy the FEC has taken this action, although it comes two and one half years after we filed the complaint,” said Fred Wertheimer, president of Democracy 21. “We certainly will very aggressively pursue the legislative efforts.”

“These are ad hoc decisions, they come well after the election is over,” Wertheimer continued. “They are case by case so they don’t provide a clear regulation for 527s.”