Crossroads GPS probably broke election law, FEC lawyers concluded

The legal staff of the Federal Election Commission concluded in a just-released document that Crossroads GPS, a nonprofit organization backing conservative causes, probably violated campaign finance rules with its political spending in the 2010 midterm elections.

The law department’s 2012 conclusion, first reported by the Sunlight Foundation on Tuesday, shows the FEC staff’s reasoning in recommending an in-depth investigation of Crossroads GPS, which was founded by Karl Rove and others in 2010.

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The recommendation, released quietly by the FEC on Friday afternoon, will have no effect on the organization because the FEC did not act on it. The commission deadlocked 3 to 3 when considering the proposal in December.

The six-member panel of commissioners is split ideologically, a divide that has stymied its ability to take action on many major campaign-finance issues in recent years.

Crossroads and its allies said the FEC’s deadlocked vote effectively dismissed a meritless, politically motivated case and affirmed that the group was abiding by the law.

But some outside observers say the findings in the legal staff report — based on an analysis of 2010 spending — are unusual.

“It is significant that the staff concluded that there was sufficient evidence to either investigate or settle the matter,” said Lawrence Noble, a former general counsel to the FEC who is now a lawyer advocating for campaign-finance reform in the private sector.

Crossroads GPS and an affiliated super PAC were among the biggest forces in the 2012 election cycle. Crossroads GPS pulled in $208 million, according to tax filings. Its sister organization, the super PAC American Crossroads, raised $117 million.

Crossroads GPS spent $74.2 million to direct political activity, according to a statement by spokesman Jonathan Collegio in November. Using that figure, the tax-exempt group devoted 38.8 percent of its spending to campaign-related activity.

But the FEC counsel’s office calculated that the group’s political spending in 2010 went beyond that, accounting for more than 50 percent of the total raised. That is significant because federal rules require that if an organization’s “primary purpose” is electing federal candidates, it must register with the FEC as a political action committee, not a nonprofit social welfare organization. Becoming a political committee requires that the organization report the identity of its donors, which is not required of social welfare organizations.

If Crossroads was required to file as a political committee, it would have to reveal its donor list, which includes some of the biggest givers on the right. One single donation received by the group in 2012 was for $22.5 million.

Many Republicans, including Crossroads GPS lawyer Tom Josefiak, a former general counsel to the Republican National Committee who served as FEC chairman in the 1980s, hailed the commission’s tie vote last month as a sign the case had no merit.

“I am not surprised that the Commission lacked the votes to find that Crossroads GPS is a political committee, because the law, court decisions, and Commission precedent are clear,” he said in a prepared statement. “Frankly, if the case had dealt with any other organization, and not GPS, the Commission would have unanimously dismissed the complaint a long time ago. Still, I’m pleased that the Commission decided that GPS is not a political committee, and now we can move on from this politically motivated complaint.”

Jan Baran, an election lawyer at Wiley Rein law firm, said that “FEC deadlocks and overruled staff recommendations are not new.” However, Trevor Potter, a reform advocate who represented the past campaigns of Sen. John McCain (R-Ariz.) and television satirist Stephen Colbert, said the FEC staff statement was unusually strong.

“The Office of General Counsel made some very strong arguments here,” Potter said in an e-mail. “The Commission’s inability to proceed to investigate whether the donors . . . should have been required to be disclosed, as the Supreme Court assumed in Citizens United they would, is another example of the FEC’s failure.”

 
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