FEC Ruling on LLCs May Pave New Way for Donors

Posted September 28, 2009 at 5:28pm

The Federal Election Commission on Monday decided that limited liability companies are not political committees when they team up with political consultants to run television advertisements and other independent expenditures. The decision may provide cover for wealthy Democrats and Republicans to team up with like-minded donors to target candidates in the 2010 election. “It’s going to open up an avenue for individuals who wish to support or oppose federal candidates,— said William McGinley, a Republican campaign finance lawyer at Patton Boggs.This summer, McGinley asked the FEC whether his client, the political consulting firm Black Rock Group, risked running afoul of campaign finance laws by working with individually financed LLCs “for the sole purpose of sponsoring independent expenditures that expressly advocate for the election or defeat of one or more federal candidates.— Typically, allied groups of individuals that raise or spend $1,000 per year are considered political action committees, which are bound by strict contribution limits. In the 2009-10 election cycle, individuals are allowed to give $5,000 per year to PACs. But in a letter released Monday, the FEC gave McGinley’s client permission to work with multiple LLCs, outlining a legal framework under which the companies may operate, including accounting and tax arrangements and its ownership structure.The Black Rock Group is owned by Carl Forti and Michael Dubke. Last cycle, Forti was the executive director of Freedom’s Watch, a conservative advocacy group that spent millions of dollars targeting Democrats in 2008.