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For Immediate Release
Corrected January 6, 2006*
PAC AND FUNDRAISERS PENALIZED FOR ILLEGAL PRACTICES
Washington -- The Federal Election Commission (FEC) today announced conciliation agreements with Conservative Leadership Political Action Committee (CLPAC), American Target Advertising, Inc. (ATA), The Viguerie Company (TVC), ConservativeHQ.com (CHQ), and two individuals in which they agreed to pay more than $100,000 in civil penalties for violating the Federal Election Campaign Act (the Act). In the agreements, CLPAC did not contest the Commission's finding that it accepted corporate and excessive contributions and violated the Act’s reporting requirements, while the companies and individuals did not contest findings that they made corporate or excessive contributions to CLPAC.
An FEC audit of CLPAC showed that as of June 30, 2000 the committee reported $646 cash on hand. Six days later, on July 6, 2000, it entered into a “no risk” contract with ATA for a fundraising program that cost approximately $8 million and resulted in contributions of only approximately $4 million. The contract provided that CLPAC would not be responsible for costs of the program that exceeded the amount of money raised, and that vendors who worked on the fundraising program would have no recourse against CLPAC for fundraising program losses. CLPAC’s failure to pay the corporate vendors for the goods and services they provided resulted in prohibited contributions from those vendors to CLPAC.
As part of the conciliation, ATA, TVC, and CHQ will cease and desist from using “no-risk” contracts in future agreements with political committees, and CLPAC will cease and desist from using “no-risk” contracts in future agreements with vendors. In addition, the Conciliation Agreement similarly prohibits these respondents from using third-party, non-bank lenders to finance the cost of postage for political committee mailings.
The program examined by the FEC included direct mail, telemarketing and Internet fundraising during the four months before the 2000 election. The direct mail portion of the program involved 39 mailings, 28 of which-- containing over 10.8 million pieces of mail--opposed Democratic Presidential and Senatorial candidates.
Despite the fact that the fundraising failed to bring in enough money to pay the costs of solicitations, ATA disbursed $465,000 to CLPAC. CLPAC used these funds to pay for approximately $350,000 worth of advertising opposing Democratic Presidential and Senatorial candidates.
ATA engaged a number of third-party vendors to work on the CLPAC fundraising program, among them its parent company TVC and CHQ. ATA’s chairman is Richard Viguerie, and he serves as the moderator and commentator on the Internet website operated by CHQ. ATA incurred net losses as a result of the CLPAC fundraising program. It also negotiated with vendors it had engaged and persuaded them to reduce or forgive debt associated with the program.
The Act prohibits corporations from making contributions or expenditures from general treasury funds in connection with any election for federal office. The Act also prohibits any officer or director of any corporation from consenting to any such expenditure or contribution by the corporation.
Edward Adams and Benjamin Hart made loans to fund the purchase of postage for the fundraising program’s direct mail solicitations. Adams loaned a total of $176,152 to third party vendors to pay for postage and list rental for the CLPAC fundraising program. In addition, when the returns were insufficient to pay the bills, Adams paid other third-party vendors a total of $25,727 for work they did on the CLPAC fundraising program. Hart loaned a total of $133,021. Because the Act defines contributions to include loans, Adams’ and Hart’s postage loans constituted contributions to CLPAC. Adams’s payment of the CLPAC bills constituted an additional contribution to CLPAC. The two men were ultimately repaid in full for their postage loans. The Adams and Hart Conciliation Agreements include admissions of violations of the Act, prohibitions on future violations, civil penalties of $10,000 and $4,000, respectively, and prohibitions on postage loans to political committees.
*The original release stated that respondents had admitted violations of the Act. A careful reading of the conciliation agreements shows that in some cases, without admitting or denying the Commission’s conclusions they do not contest the Commission’s finding that they violated the Act.
*There are four administrative stages to the FEC enforcement process:
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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