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For Immediate Release
December 5, 2002
Contact: Kelly Huff
Ron Harris
Bob Biersack
Ian Stirton
FEC INVESTIGATION OF CORPORATE REIMBURSEMENT ASSESSES $477,000 IN CIVIL PENALTIES
WASHINGTON – The Federal Election Commission today announced the completion of an investigation resulting in civil penalties of $477,000, one of the highest cumulative civil penalties in the history of the Commission.

On December 3, 2002, the FEC entered into conciliation agreements with Mattel, Inc., former Mattel Senior Vice President Fermin Cuza, and former Mattel consultant Alan Schwartz. The conciliation agreements settle violations of the Federal Election Campaign Act (FECA) resulting from Mattel’s reimbursement to individuals of $120,714 in federal political contributions to 23 candidates, two party committees, and five PACs between 1996 and 2000. The agreement provides that respondents Mattel, Inc. will pay $94,000, Fermin Cuza will pay $188,000, and Alan Schwartz will pay $195,000 in civil penalties.

The FECA prohibits corporations from making contributions or expenditures from their general treasury funds in connection with any election of any candidate for federal office. In addition, FECA prohibits making a contribution in the name of another, knowingly permitting one’s name to be used to effect such a contribution, and knowingly accepting such a contribution. Further, no person may knowingly help or assist any person in making a contribution in the name of another. This prohibition also applies to any person who provides the money to others to effect contributions in their names.

The investigation stemmed from a complaint filed with the FEC by Mattel. In the complaint, Mattel voluntarily disclosed that it had discovered that a former senior executive, Fermin Cuza, had caused Mattel to reimburse various individuals for federal political contributions.

Cuza, who was in charge of Government Affairs at Mattel, directed the hiring of Alan Schwartz (the sole proprietor of Asset Management Systems (AMS)), as a consultant to Mattel.

According to the conciliation agreements, beginning in 1996, at Cuza’s direction, Mattel made payment to AMS for various consulting services and for other purposes. In consultation with Cuza, Schwartz used these funds to make contributions to federal candidates and political committees. Schwartz also used funds received from Mattel to reimburse other individuals, including Cuza, for contributions to various federal political committees. Reimbursed contributions totaling $120,714 were made to federal political committees by Cuza, Schwartz, their spouses and family members, and other individuals.

The FEC acknowledged that there was evidence that Cuza concealed these payments from his superiors at Mattel. The Commission found no evidence that any of the recipient political committees were aware that Mattel was the true source of the contributions or that any Mattel executive other than Cuza was aware that the payments to Schwartz and AMS were for the purpose of reimbursing federal political contributions.

Cuza, in his conciliation agreement, admitted to "knowing and willful" violations by consenting to prohibited corporate contributions by Mattel; allowing his name to be used to make contributions in the name of another; and assisting Mattel in making contributions in the name of another. Similarly, Schwartz and AMS admitted to "knowing and willful" violations by allowing Schwartz’s name to be used to make contributions in the name of another; making contributions in the name of another; and assisting Mattel and Cuza in making contributions in the name of another. Mattel admitted to violations by making prohibited corporate contributions and by making contributions in the name of another.

Mattel, Inc., Cuza and Schwartz are required to pay a civil penalty, to cease and desist from violating these sections of FECA, waive their right to a refund of all political contributions from the recipient committees, and will instruct each recipient to disgorge all illegal contributions that have not been previously refunded or disgorged to the U. S. Treasury.

 

COMPLIANCE CASE MADE PUBLIC

WASHINGTON -- The Federal Election Commission has recently made public its final action on a matter previously under review (MUR). This release contains only disposition information.

Specific released documents placed on the public record within the following closed MURs are cited following DISPOSITION heading. Release of these documents is consistent with the district court opinion in the December 19, 2001, decision of AFL-CIO v. FEC, now on appeal to the D.C. Circuit Court of Appeals. Once an appellate decision is rendered, the Commission will review documents related to cases released in the interim.

1. MUR 5187
RESPONDENTS: (a) Mattel, Inc.

(b) Fermin Cuza, former Senior Vice President of Mattel, Inc.

(c) Alan Schwartz, AMS, former Mattel consultant

(d) AMS Consulting Services, LLC aka Asset Management Systems, LLC

(e) Ines Cuza

(f) Kathleen Wilcox

(g) Mattel, Inc. PAC, Bryan Stockton, treasurer

(h) Alida Plascencia

(i) Gephardt in Congress Committee, John R. Tumbarello, treasurer

(j) Menedez for Congress, Donald Scarinci, treasurer

(k) Friends of Barbara Boxer, Michael Ohleyer, treasurer

(l) Becerra for Congress, Robert J. Herrera, treasurer

(m) Friends of Lois Caps, David Powdrell, treasurer

(n) Committee to Re-Elect Loretta Sanchez, Kinde Durkee, treasurer

(o) DNC Services Corporation/Democratic National Committee, Andrew Tobias, treasurer

(p) Jacqueline Balestra

(q) John Balestra

(r) Sheryl Green

(s) Gloria Zwinak

(t) Katherine Walker

(u) Frank Gomez

(v) Frank Orozco

(w) Tammy Orozco

(x) Ella Schwartz

(y) Anthony Willoughby

(z) Carol Aminoff

(aa) Laxmi Group, Inc.

(bb) Shankar Ram

(cc) Friends of Jane Harman, Michael Gordon, treasurer

(dd) Dilip Keswani

COMPLAINANT: Mattel, Inc.
SUBJECT: Corporate contributions/contributions in the names of others; non-federal contributions
DISPOSITION: (a) Conciliation Agreement: $94,000 civil penalty*

[re: corporate contributions/contributions in the names of others]

No reason to believe*

[re: non-federal contributions]

(b) Conciliation Agreement: $188,000 civil penalty*

[re: (knowing and willful) corporate contributions/contributions in the names of others]

No reason to believe*

[re: non-federal contributions]

(c-d) Conciliation Agreement: $195,000 civil penalty*

[re: (knowing and willful) corporate contributions/contributions in the names of others]

No reason to believe*

[re: non-federal contributions]

(e-f) Reason to believe, but took no further action*

(g-n) No reason to believe*

[re: any provision of the Federal Election Campaign Act with regard to this matter]

(o) No reason to believe*

[re: non-federal contributions]

(p-z) Took no action*

Sent admonishment letters.

(aa-bb) No reason to believe*

[re: non-federal contributions]

Took no action*

[re: corporate contributions/ contributions in the names of others]

(cc-dd) Took no action*

[re: corporate contributions/ contributions in the names of others]

DOCUMENTS ON PUBLIC RECORD: First General Counsel’s Report (dated February 19, 2002); certification of vote by Commissioners (dated March 7, 2002); General Counsel’s Report #3 (dated November 23, 2002); certification of vote by Commissioners (dated November 29, 2002); Conciliation Agreement (Mattel, Inc.); Conciliation Agreement (Fermin Cuza); Conciliation Agreement (Alan Schwartz, et al)

 

*There are four administrative stages to the FEC enforcement process:

1. Receipt of proper complaint 3. "Probable cause" stage
2. "Reason to believe" stage 4. Conciliation stage

 

It requires the votes of at least four of the six Commissioners to take any action. The FEC can close a case at any point after reviewing a complaint. If a violation is found and conciliation cannot be reached, then the FEC can institute a civil court action against a respondent.

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