New from the Institute for Free Speech
Petitioner correctly explains the Eighth Circuit’s flawed application of Sarbanes-Oxley and the federal false statements statute. He also correctly analyzes the Eighth Circuit’s incorrect application of those statutes, which improperly expanded criminal liability and creates circuit conflicts that this Court should resolve. Amicus will not repeat those arguments.
Here, Amicus urges the Court to correct the Eighth Circuit’s importation of civil enforcement decisions of the Federal Election Commission (FEC) to impose criminal liability under the Federal Election Campaign Act (FECA).
To properly evaluate the Petition, two fundamental facts should be kept in mind. First, Petitioner is correct that federal law does not expressly prohibit the use of intermediaries to pay vendors, or reporting only the immediate, rather than ultimate, recipients of campaign expenditures. Second, he is also correct that federal law does not prohibit paying an individual for his or her endorsement. Despite these facts, the decision below finds criminal liability by importing concepts from civil enforcement proceedings at the FEC and reading Sarbanes-Oxley and the federal False Statements statute so broadly that it undermines Congress’s intent in enacting FECA. This approach has several problems.
Independent Groups
Politico: D.C. Dems funded super PAC that attacked Ted Cruz
By Maggie Severns
A super PAC that appeared shortly before the November election and spent $2.3 million attacking Sen. Ted Cruz (R-Tex.) was funded by Washington Democrats, election spending disclosures revealed for the first time on Thursday.
The Texas Forever PAC received all but $10,000 of its funding from Senate Majority PAC, a super PAC aligned with Senate Minority Leader Chuck Schumer (D-N.Y.).
But because Texas Forever launched in the days just before the midterms, it was able to avoid naming its donors until a month after the vote, a tactic that became increasingly popular with super PACs this year. Senate Majority PAC declined to comment.
Texas Forever spent its funds helping Cruz’s opponent, Rep. Beto O’Rourke (D-Tex.), a proponent of campaign finance reform who decries the influence of money in politics. O’Rourke swore off taking any money from PACs during his campaign and boasted in his first campaign ad that he was running on “no PACs, just people.” But that didn’t prohibit super PACs – which operate independently of politicians and their campaigns, and are not allowed to coordinate with them – from getting involved in the race…
Texas Forever was created on Oct. 19, after the last deadline for reporting donors and fundraising before the general election had passed. Then it spent money during the run-up to the Nov. 6 midterms. Senate Majority PAC also sent money to super PACs spending in other races, such as the Arizona Senate race and the 2017 Alabama special election, without initially disclosing that it was doing so using similar strategies this cycle.
Online Speech Platforms
Forbes: FTC Must No Longer Ignore Silicon Valley Bias
By Adam Candeub and Mark Epstein
In 2016, the Donald Trump presidential campaign invoked Roosevelt’s trust-busting when it promised to use antitrust law against oligopolies which are “destroying an American democracy that depends on a free flow of information and freedom of thought.”
In contrast, on November 27, Federal Trade Commission (FTC) Chairman Joe Simons, responding to Senator Ted Cruz’s question about the power of the large internet companies to control speech online, stated that he doubted the agency “should be addressing that at all.” Chairman Simons thought the FTC should only play a role if there were a clear “competition issue or it’s unfair or deceptive.” His fellow Republican Commissioner Noah Phillips made similar comments two weeks earlier. The Chairman also likened the Senator Cruz’s suggestion that the agency consider censorship and political bias to the FCC’s long defunct “fairness doctrine.”
The FTC Chairman ignored a key distinction between broadcasters and tech companies. Broadcasters had finite time and resources to host content, sometimes devoting only a few hours a day to public affairs, and many stations explicitly appeal to certain ideological segments. Forcing them to present both sides imposed major practical and financial burdens. In contrast, social networks are platforms, which can accommodate virtually infinite content with negligible marginal costs…
The FTC has no rule-making authority, so it cannot impose public utility status or any quasi-First Amendment type regulations on Silicon Valley. Given the many complex antitrust and privacy questions in the digital age the agency must tackle, some reluctance to tackle politically polarizing issues is understandable. However, that’s no excuse to turning a blind eye when dominant companies deceptively claim to be open platforms and use their market power to exclude free speech competitors.
Candidates and Campaigns
U.S. News & World Report: Missouri’s McCaskill Spent $40M on Unsuccessful Campaign
Campaign finance reports show Missouri’s Democratic U.S. Sen. Claire McCaskill spent roughly $40 million on her unsuccessful bid to keep her seat.
McCaskill’s campaign on Thursday reported spending about $5.6 million in the final weeks before and after the November election.
McCaskill was unable to fend off Republican challenger Attorney General Josh Hawley despite her significant financial advantage.
Hawley spent about $11 million on his campaign. But he managed to defeat McCaskill by nearly 6 percentage points in the increasingly Republican state.
Dallas News: How much of the record $80 million Beto O’Rourke raised to beat Ted Cruz is left for another run?
By Tom Benning
Rep. Beto O’Rourke ended up raising an astonishing $80 million in his failed bid to unseat Republican Sen. Ted Cruz, putting an exclamation point on the El Paso Democrat’s record-setting Senate fundraising haul…
O’Rourke’s latest campaign finance report, filed with the Federal Election Commission, showed he hauled in $10.1 million from Oct. 18 to Nov. 26, a period that covers roughly the three weeks before and the three weeks after the Nov. 6 election.
That final push only upped the dollar figure on O’Rourke’s Senate campaign record, a sum that came despite his decision to reject donations from political action committees.
O’Rourke instead built his war chest with individual contributions, collecting more than $61 million alone via ActBlue, an online portal that has made it easy for Democrats across the country to make recurring, small-dollar gifts to their favorite candidates.
He also had little trouble spending his bounty, ending the campaign with just $477,000 cash on hand…
O’Rourke ended up far outpacing Cruz in the money race, even though the Republican raised a substantial amount in his own right.
Cruz brought in $5.5 million in the most recent reporting period, according to new filings for his campaign account and two affiliated political action committees. That tally, which included a $260,000 loan, increased his haul to $37 million since O’Rourke joined in the race in early 2017.
The Republican ended the campaign with a combined $2.1 million cash on hand.
Mother Jones: Documents Point to Illegal Campaign Coordination Between Trump and the NRA
By Mike Spies
The National Rifle Association spent $30 million to help elect Donald Trump-more than any other independent conservative group. Most of that sum went toward television advertising, but a political message loses its power if it fails to reach the right audience at the right time. For the complex and consequential task of placing ads in key markets across the nation in 2016, the NRA turned to a media strategy firm called Red Eagle Media.
One element of Red Eagle’s work for the NRA involved purchasing a slate of 52 ad slots on WVEC, the ABC affiliate in Norfolk, Virginia, in late October 2016. The ads targeted adults aged 35 to 64 and aired on local news programs and syndicated shows like Jeopardy! and Wheel of Fortune. In paperwork filed with the Federal Communications Commission, Red Eagle described them as “anti-Hillary” and “pro-Trump.”
The Trump campaign pursued a strikingly similar advertising strategy. Shortly after the Red Eagle purchase, as Election Day loomed, it bought 33 ads on the same station, set to air during the same week. The ads, which the campaign purchased through a firm called American Media & Advocacy Group (AMAG), were aimed at precisely the same demographic as the NRA spots, and often ran during the same shows, bombarding Norfolk viewers with complementary messages.
The two purchases may have looked coincidental; Red Eagle and AMAG appear at first glance to be separate firms. But each is closely connected to a major conservative media-consulting firm called National Media Research, Planning and Placement. In fact, the three outfits are so intertwined that both the NRA’s and the Trump campaign’s ad buys were authorized by the same person: National Media’s chief financial officer, Jon Ferrell.
The States
New Boston Post: Liberal Good Government Group Says Scrap Union Loophole
By Matt Murphy, State House News Service
Two groups who sometimes battle each other on Beacon Hill over fairness and transparency in elections both urged state campaign finance regulators on Thursday to scrap a legal interpretation that allows unions to donate up to $15,000 to a single candidate.
Common Cause Massachusetts and the Massachusetts Fiscal Alliance agreed at a hearing before Office and Campaign and Political Finance director Michael Sullivan that a 1988 bulletin exempting unions from contribution limits that apply to individuals and political action committees should be reconsidered.
The controversial bulletin is now part of a rule-making process requested by Common Cause after the Massachusetts Supreme Judicial Court questioned the legal strength of the so-called “union loophole” in a ruling against Mass Fiscal earlier this year upholding the state’s ban on corporate political donations.
With the support of the Fiscal Alliance, two business owners and the Goldwater Institute asked the U.S. Supreme Court this week to hear an appeal of that case, but the group is also hoping it can prevail with the state Office of Campaign and Political Finance in striking down the union donation rule.
Bridge Michigan: Michigan Republicans advance bills on campaign finance, voting, education
By Lindsay VanHulle
The Senate voted 25-11, along mostly party lines, to pass Senate Bills 1248-52. They would shift responsibility for campaign finance oversight away from the Secretary of State to a newly created, bipartisan commission appointed by the governor from lists of candidates provided by the two major political parties.
Republican state Sen. Dale Zorn, R-Ida, joined all Democrats in opposing the bills.
The bills, sponsored by state Sen. Dave Robertson, R-Grand Blanc, would create the “Fair Political Practices Commission.” The commission would consist of three Republicans and three Democrats, a model similar to the Federal Election Commission.
The bill was amended to include more details about how the lists of candidates would be developed by the parties.
“We are attempting to put together a board here that would have to act in a bipartisan fashion,” Robertson told reporters earlier this week. “We have heard a lot from the other side over the years about the need for bipartisanship in all things. Here is an opportunity for them to embrace it.”
Arizona Republic: Judge voids key pieces of Arizona law gutting campaign finance rules
By Dustin Gardiner
Maricopa County Superior Court Judge David Palmer ruled that the changes are unconstitutional and cannot be enforced.
The ruling is the latest twist in a fight over Senate Bill 1516, a major rewrite of campaign- finance laws that the Republican-controlled Legislature and Gov. Doug Ducey pushed in 2016.
At the center of the dispute is the voter-approved Clean Elections Act of 1998.
Voters approved the act to limit the influence of money in politics. The act created the Clean Elections Commission, which runs a public financing system for candidates and enforces financial reporting rules.
SB 1516 significantly shrank the commission’s power so it could police only candidates who receive public financing…
Palmer’s ruling also overturned a controversial provision of SB 1516 that allowed political parties to spend unlimited amounts of money in coordination with candidate campaigns…
The ruling also strikes down a portion of SB 1516 that allowed unlimited contributions if they specifically paid for a campaign’s legal or accounting services.
Palmer ruled that the disputed portions of the act violated a portion of the Arizona Constitution that prohibits changes to voter-approved initiatives unless the changes are supported by three-fourths of the Legislature and further the purpose of the act…
However, the ruling didn’t undo a portion of SB 1516 that largely ceded Arizona’s authority to police anonymous campaign spending, or so-called “dark money,” to the federal government.
CT Post: Judge vacates Newton’s campaign fraud conviction
Newton’s current legal troubles originated with his failed attempt in 2012 to return to the state Legislature. Newton’s campaign at that time was collecting the small contributions needed for him to qualify for $80,550 from Connecticut’s so-called clean elections public campaign grants program.
He was accused of submitting five contribution cards of $100 a piece to meet the grant program’s threshold that were signed by five people who had not actually given that money.
As explained the Supreme Court ruling, faced in 2012 with a $490 shortfall, Newton’s campaign suddenly received $500 and “either on his own or through the assistance of another, (Newton) had approached the five signors and instructed them to sign the ($100 contribution) cards (and) assured them that they would not be required to donate money to the campaign.”
Newton is charged with first-degree larceny and campaign finance fraud. The state accuses Newton, 62, of having five campaign workers sign contribution forms saying they each gave $100 to his senate campaign in 2012, although they did not actually donate any money. The aim, the state claims, was to reach a $15,000 threshold necessary for the campaign to qualify for $85,550 in matching funds through the state’s public financing program.
On Jan. 16, 2015, a jury found Newton guilty of three of the charges and acquitted him of witness tampering. Jurors were unable to reach a verdict on the remaining charges.
Newton’s attorneys appealed to the Supreme Court and argued, according to the justices’ ruling, that the trial court “improperly failed to instruct the jury that, in order to find him guilty of an illegal campaign financing practice, it must find that he (Newton) acted with the specific intent to violate” campaign financing laws by making a payment to a campaign in another person’s name.
The Supreme Court concluded, “it was reasonably possible that the jury was misled … and the defendant was entitled to a new trial.”
