A divided Federal Election Commission cannot agree to investigate whether super PAC donors used corporations to mask their identities in the 2012 campaign, effectively giving a green light to contributors writing checks through limited-liability companies in this year's elections.
FEC Assistant General Counsel William Powers wrote in letters to the nonprofit advocacy group Campaign Legal Center last week that the six-member panel was split about whether to look into corporate donations that were made in 2011 to Restore Our Future, a super PAC backing then-GOP presidential nominee Mitt Romney. At least four commissioners must agree that there is a basis for an investigation before the agency's lawyers can proceed. Absent that consensus, the FEC closed the cases, he wrote.
At issue were three $1 million donations that Restore Our Future received from corporate entities in 2011. Among the donors was W Spann LLC, a company that had been incorporated in Delaware in March 2011 and was dissolved that July. The Campaign Legal Center and Democracy 21 filed a complaint alleging that W Spann's contribution violated a federal ban on straw donors. Shortly afterward, former Romney business associate Edward Conard came forward and admitted he set up the LLC and made the donation through it.
Paul S. Ryan, deputy executive director of the Campaign Legal Center, said Conard appeared to have violated a federal law that prohibits an individual or entity from making a donation in the name of another entity.
"The FEC was not able to muster four votes to even open an investigation," he said. "It took them almost five years to get to it, and then they deadlocked."
The Campaign Legal Center is now considering suing the FEC over the case, Ryan said, noting that the Supreme Court endorsed the robust disclosure of donors in its 2010 Citizens United decision, which allowed corporations to spend unlimited sums on independent political activities.
FEC Chairman Matthew Petersen, a Republican appointee, declined to comment. Democratic Commissioner Ann Ravel also declined to comment, saying the panel could not discuss the case until the agency makes all related documents public in the coming weeks.
Charlie Spies, the attorney for Restore Our Future, said in a statement that the super PAC "fully complied with all FEC rules and regulations here, and the FEC’s resolution of these matters is consistent with Constitutional free speech protections articulated in Citizens United."
While donations from limited-liability companies were still novel in 2012, super PACs now routinely report receiving money from hard-to-trace or recently formed corporations.
"We’ve seen an increase in contributions from LLCs and other business entities to super PACs, with no disclosure of the human or humans behind these contributions," Ryan said. "Unless the FEC is reconstituted with commissioners willing to do their job, straw donors will continue to get away with laundering their money into federal elections."