FEC Fines Liberal 527 Group $775,000

Posted August 29, 2007 at 3:54pm

The Federal Election Commission handed down its third-largest penalty ever on Wednesday, slapping liberal 527 America Coming Together with a $775,000 fine for violating federal campaign finance laws.

During the 2004 election cycle, the group raised $137 million for get-out-the-vote and voter registration activities in 17 states. Of that total, the FEC found that only about $34 million raised by the group complied with federal fundraising limits. The bulk of the group’s contributions were limit-free, sometimes multimillion-dollar gifts from liberal financiers such as George Soros, Progressive Insurance founder Peter Lewis and the Service Employees International Union.

The Bipartisan Campaign Reform Act of 2002 sought to end soft money gifts to political committees — cash that was used primarily in advertising blitzes and other supporting roles in the runup to battleground showdowns. Following BCRA’s passage, most of that money and responsibility shifted to outside 527s such as ACT and the conservative group Swift Boat Veterans and POWs for Truth, whose activities are overseen by the Internal Revenue Service.

Swift Boat Veterans and POWs for Truth was fined nearly $300,000 by the FEC in December. Last year, the FEC pinched the Federal Home Loan Mortgage Corp. for making illegal corporate contributions. Freddie Mac, as the quasi-government agency is known, was handed a $3.8 million fine, the agency’s largest penalty ever.

According to an agency statement Wednesday, the agency decided that roughly $70 million in disbursements were mischaracterized by ACT and “were required either to be paid with 100 percent federal funds or to be allocated between federal and non-federal candidates based on the time or space devoted to the candidates.”

Campaign finance watchdogs, which originally alerted the FEC to the group’s questionable financing structure more than three years ago, said they were encouraged by the agency’s unanimous decision. Still, the FEC’s fine is perhaps too little, too late, according to the groups, which used the FEC’s announcement Wednesday to argue why the agency should require 527s to register as federal political committees.

“Both the long delay in resolving the ACT case and the relatively small fine imposed on ACT for almost $100 million in illegal expenditures make a powerful case for why case-by-case enforcement by itself will not work and why without proper regulations and prohibitive fines the illegal activities of 527 groups in federal elections will continue to undermine the nation’s campaign finance laws,” according to a joint statement by Democracy 21 and the Campaign Legal Center. “The bottom line here is that almost all of ACT’s voter drive activities in the 2004 election were required by federal law to be financed with federally legal funds, and ACT, instead, financed almost all of these voter drive activities with federally illegal soft money.”

A case pending before the U.S. District Court of the District of Columbia would require the FEC to force 527s to register as political committees with the agency and comply with federal contribution and spending limits.