FEC v. Orton

On April 27 and 28, 1997, the U.S. District Court for the District of Utah, Central Division, approved the parties' settlement that required Utahns for Ethical Government (UEG) to pay a $9,000 civil penalty to the FEC for violations of the Federal Election Campaign Act (the Act) and to amend their termination report so that all of their expenditures would be reported as in-kind contributions to Orton for Congress. UEG also had to either refund $1,800 in impermissible corporate contributions or remit that same amount to the U.S. Treasury.

The violations resulted from UEG's involvement in the 1990 general election campaign for the 3rd Congressional District seat in Utah. UEG, a single-candidate political committee registered with the FEC, supported William Orton over his opponent, Karl Snow.

The settlement states that UEG accepted corporate contributions and contributions in the name of another, in violation of the Act. 2 U.S.C. §§441b(a) and 441f. The committee reported receipts of in-kind contributions of $1,000 from Sherman Fugal and of $800 from Jayson Fugal. In fact, these contributions were actually from Fugal & Fugal, Inc., a corporation, d/b/a Peggy Fugal Advertising.

The settlement also states that, although UEG included disclaimers on its advertisements that opposed Mr. Orton's opponent, the disclaimers failed to include a statement indicating whether the ads had been authorized by a candidate or candidate committee. Additionally, UEG failed to file a statement of organization with the Commission within 10 days of becoming a political committee, as required by 2 U.S.C. §433(a).

The settlement includes no judicial determination as to whether expenditures of $11,452, made by UEG to pay for ads opposing Mr. Orton's opponent, were in fact excessive contributions to Mr. Orton. The Commission, in its administrative proceedings, had found probable cause that UEG's expenditure had been coordinated with the Orton campaign, based on the fact that a former Orton campaign volunteer had participated in some UEG activities. Under the law, any expenditure made in cooperation with or at the suggestion of a candidate or his campaign is considered a contribution. 2 U.S.C. §441a(a)(7)(B)(i). In prior enforcement matters, the Commission had interpreted this provision to cover situations where the spender's activity was based on knowledge of official campaign strategy, the source of which was the candidate or the campaign. The defendants disagreed with the finding, arguing that the Commission had no direct evidence of the alleged violation.

The claims against all the defendants, including Mr. Orton and his campaign committee, will be dismissed with prejudice once UEG pays the fine and amends its reports.

Source:   FEC Record — June 1997