The Intimidation Game

by Kimberley Strassel

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  The Lerner link would play a part in the FEC’s own harassment of conservative groups. That link began in mid-2008, as the Obama-McCain presidential race raged and Democrats filed complaints with the FEC against all and sundry. One of these came from Bauer, as part of his unprecedented campaign against the American Issues Project (AIP) over its ads highlighting ties between Obama and Bill Ayers. Democracy 21, Fred Wertheimer’s speech police outfit, also filed an FEC complaint against AIP.

  The commission tends to work at a slug’s pace, and it wasn’t until February 2009 that an FEC general counsel’s office attorney, William Powers, went sniffing to the IRS about AIP. He found Lerner. FEC documents (dug up by Judicial Watch) show that the bureaucrats were frustrated. They wanted to know what percentage of AIP’s money it was spending on politics, but all it had were figures on the one Obama ad, and AIP hadn’t yet filed any tax forms. Powers wondered to Lerner whether the IRS had issued an exemption letter to AIP? He also requested that the IRS Exempt Organizations chief share “any information” about the conservative group. He appeared to be fishing for Lerner’s opinion on whether the group was out of bounds. He also put in a request about another conservative organization that had been singled out in a complaint, the American Future Fund. Nine minutes after Lerner received this request, she directed IRS attorneys to get on it.

  Lerner shipped back information in March, and Powers happily exclaimed in an e-mail that it “looks as if it will be very useful.” One of Lerner’s deputies would send another 150 pages about the two organizations later that month. By April, the FEC general counsel’s office had recommended that the commission pursue AIP. In total, the general counsel’s office issued three separate reports—each arguing a different legal theory for prosecution—as part of a four-and-a-half-year effort by FEC staff to bring down a group that had been singled out by Bauer for having criticized Obama.

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  Political operatives are a quirky breed. Maybe it’s because they spend days trying to elect people who should be by any measure unelectable. Maybe it’s because they spend too much time worrying about the FEC. Whatever the reason, some of them have fascinating alter egos. When McGahn came in search of his office that 2008 day, he sported shaggy longish hair, in keeping with his off-time persona as an accomplished lead guitarist for a band that covered Guns N’ Roses classics at mid-Atlantic venues. He owns thirty guitars and once told Wall Street Journal reporter Brody Mullins that he’d strum on one as he read election-law filings and complaints.

  McGahn was born into political savvy. He grew up in Atlantic City, and his uncle Joe McGahn in 1971 beat in an election Hap Farley, a thirty-four-year state legislator and the “boss” of the city’s infamous Republican machine. The whole extended family was steeped in politics, and the future FEC chairman stepped into his first campaign headquarters when he was three. His first memories of Thanksgiving were dinner discussions about how to get the senior vote.

  He went to Notre Dame, starting as a “delusional pre-med.” He remembers “dumping Calculus 2 and finding a sudden passion for history.” He ended up at a regional law school, Widener, and after a judicial clerkship landed at the powerhouse D.C. law firm of Patton Boggs. Unlike so many political attorneys, McGahn practiced what he called “real law”—litigation, antitrust, copyright, trademark—but when a senior lawyer asked for some help with a few campaign finance briefs, he jumped at the chance. Given his family background, representing politicians came naturally.

  By 1999 he was the general counsel to the National Republican Congressional Committee, and he kept assisting that operation even when he began his own law practice. He made a name for himself, and is credited with developing many of the techniques still employed by party committees. There were always rumors that McGahn was about to be appointed to the FEC. But the stars didn’t align until 2008, by which point nobody took the rumors seriously anymore. When his nomination finally came through, it sent a little bolt of outrage through some Democratic circles, egged on by the campaign finance “reform” lobbyists, who viewed him as a die-hard partisan Republican. (In reality he’s a die-hard reformer, and a precursor to the more recent and more vocal variants of libertarian-leaning Republicans.) After a fairly brutal confirmation process, he got that office.

  McGahn’s a crack lawyer, and would have known that the American Issues Project complaint was nonsense. His political side would have told him the first general counsel’s report against the group was fishy. But he never had to deal with most of it. The Supreme Court’s Citizens United ruling made most of Bauer’s complaint irrelevant, and the staff withdrew its proposal.

  McGahn nonetheless noted that the level of “chatter” within the FEC about Citizens United increased dramatically. Maybe the FEC needed more coordinated investigations with other agencies? Maybe it could force more disclosure? McGahn noticed, too, that the “commissioners on the other side of the aisle became much more vocal about these nonprofit groups, and started mirroring the talking points that were being circulated by self-styled ‘reform’ lobbyists at Public Citizen and similar groups.” The chatter increased in the early part of 2011, when House Democrat Chris Van Hollen, smarting over his DISCLOSE Act loss, filed a lawsuit to try to force the FEC to require more donor disclosure. “I call it ‘disclosure-mania,’ where Democrats and the leftists decided to use the pretext of disclosure to undo Citizens United and intimidate and silence opponents,” says McGahn.

  McGahn would only later find out about the staff’s early, unauthorized dealings with the IRS about AIP. The staff hadn’t received permission to commence an investigation, and shouldn’t have had that contact. And he’d only later discover that this was just the start of the staff’s behind-the-scenes efforts to get conservative groups.

  Citizens United should have ended the whole AIP affair; Bauer’s complaint was no longer valid. Instead, the general counsel’s office went digging. E-mails show that only a few weeks after Obama started complaining about Citizens United, in early 2010, Powers got back in touch with Lerner to see if she had any new AIP information. She responded the next day that the group hadn’t filed anything more. More digging. It took the staff eighteen months, but it concocted a new rationale for prosecuting the group, circulated in a second report in September 2011.

  Further changes in the law made that report moot. It too was withdrawn. The general counsel nonetheless made one last, novel attempt to nail AIP. Its third report, another eighteen months on, in March 2013, contained an entirely new theory about how such nonprofits should be judged. Taking cues from the disclosure-mania Democrats, it declared that AIP should have filed voluminous disclosure reports.

  The FEC, for the purpose of measuring nonprofit spending, looks at the overall spending of a group. That makes sense. An organization might spend $50,000 during an election year on direct campaign activity, but $100,000 the following, nonelection year on education. Looked at over the span, the group is only spending 33 percent of its money on direct campaigning, well below half. Looked at in a single year, it’s spending 100 percent of its money on campaigning.

  And yet that’s precisely the standard the FEC staff now wanted to impose on AIP. The nonprofit clearly had spent the majority of its money from 2007 to 2010 on its primary purpose of “educating and informing the public of conservative principles.” It poured money into an online advocacy project designed to promote grassroots outreach, and on a national education program on taxes, national defense, and climate change. Over two years, it spent less than one-third of its money on direct campaign expenditures—well below the bar. Even the staff couldn’t argue otherwise. So instead they invented the brand-new “calendar year” theory, under which AIP broke the caps. The FEC staff really wanted to get this group.

  The Republican commissioners were appalled. McGahn wrote for all three in their statement opposing prosecution in July 2013, in a scathing takedown of the staff’s reasoning. He essentially accused them of malpractice and political
bias. McGahn pointed out that the FEC staff had always taken a multiyear view, especially when it came to evaluating liberal groups such as the League of Conservation Voters or the MoveOn.org Voter Fund. “Here,” he wrote in the statement, FEC staff “could be seen as manipulating the timeline to reach the conclusion that AIP is a political committee.…Such after-the-fact determinations create the appearance of impropriety, whether or not such impropriety exists.”

  He also shellacked the staff for attempting to impose this standard after the fact. “Due process ought to prevent such shenanigans,” he railed. Had AIP thought or known it would be subject to a different standard than the rest of the universe, it would undoubtedly have operated differently. And McGahn excoriated the staff for thinking it could implement such a dramatic change without asking any input from its bosses, the commissioners.

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  The FEC bureaucracy spent nearly five years trying to take down AIP. But it was hardly an isolated case. McGahn had been keeping track of other examples of unauthorized staff actions.

  In March 2012, a Democratic operative filed an FEC complaint against Rick Santorum’s presidential campaign. McGahn noted that the complaint was “scant at best”—a whole two pages. It claimed that Santorum had received an impermissible “in kind” contribution from the Michigan Faith & Freedom Coalition (MFFC), since the coalition had allowed Santorum to appear at one of its forums. It also claimed illegal “coordination” between that organization and Santorum’s campaign, since the president of the MFFC had volunteered for the Santorum campaign. FEC staff recommended prosecution.

  McGahn and a fellow GOP commissioner later dismantled the accusations one by one, in a document rejecting action. It turns out the MFFC had invited all the GOP candidates to speak at an event, but the candidates did not want to speak together. So the group had arranged different venues and invited each separately. Santorum was the only one who agreed to this arrangement. The event was about faith issues, it featured other speakers (clergy members and a doctor), and it did not allow any campaign signs or campaign literature. It was the furthest thing from a Santorum campaign rally. As such, it was entirely legal.

  The invitation to all the candidates had meantime been sent out prior to MFFC head Glenn Clark’s endorsement of Santorum. Clark endorsed in a personal capacity, not as the head of the group. And he volunteered his time for the campaign, receiving no compensation. There was also no evidence of any coordination.

  “Scant” was a polite way of describing the complaint. And “flimsy” was a polite way to describe the staff’s recommendation of prosecution. The case wasn’t even a close call. Yet McGahn discovered that the staff had in fact spent five months and gone to extraordinary lengths to nail the Santorum campaign with something, anything. And it had once again engaged in an investigation without permission from the commissioners.

  As McGahn wrote in his statement opposing prosecution, the staff had “performed extensive research during an extra-statutory investigation,” in which it dug up left-wing news articles that were critical of the Santorum campaign. These included a posting from a blog associated with the far-left Talking Points Memo Muckraker website. Staff nonetheless compiled these into a thirty-five-page dossier and shipped them to the Santorum campaign, demanding a response to the accusations.

  The counsel for the Santorum campaign (who happened to be Cleta Mitchell) responded to the FEC that she was flummoxed as to why she’d been sent a pile of left-wing talking points. McGahn wasn’t so much flummoxed as annoyed. As he wrote, “For almost five years we have asked [the FEC general counsel’s office] to provide the authority, even a scintilla of information that would authorize what has become their ever-growing habit of gathering news clips and other materials (that now includes openly biased blog posts) in an effort to supplement the complaint and sending them to respondents long before the Commission considers the matter. Simply put, OGC has been unable to provide authority for their actions.”

  These extralegal investigations always seemed to revolve around complaints against conservatives. So too did the unauthorized FEC staff reach-outs to Lerner and the IRS. And so too another form of interaction. McGahn during his time discovered that the FEC staff maintained a policy—undisclosed to the commissioners—that granted itself at-will authority to interact with the Justice Department.

  That connection really got rolling after September 2011, after Tony Herman was hired as FEC general counsel. He was joined in early 2012 by Dan Petalas, who was appointed head of the agency’s enforcement section. Petalas had spent nearly a decade at the Justice Department. FEC rules make clear that a bipartisan majority of commissioners must vote to refer unlawful conduct to law enforcement. Yet it appears that information was increasingly shipped to Justice without informing the commissioners, much less asking permission.

  Much of this content arrived at Justice in the form of confidential reports. As noted, when a complaint is filed against a political actor, the general counsel’s office is tasked with writing a report for the commissioners advising them on whether it believes there is a violation. These reports are never made public until a case is closed. Yet FEC staffers blithely handed them over to Justice. On at least one occasion, they sent the report to Justice before they had even sent it to the FEC commissioners.

  McGahn publicly highlighted another case, in which Herman’s office tipped off Justice to a potential criminal violation by a Louisiana trucking company owner named Arlen Cenac Jr. Cenac was indeed found to have made illegal campaign contributions in other people’s names. It was nonetheless up to the commissioners as to whether to refer him to Justice. Instead, the staff made that decision on its own.

  It’s still unclear exactly what drove some of these abuses at the FEC. They were happening at the same time that the IRS was building its scandal. There are e-mails showing that IRS and FEC staff were talking about similar cases, and Lerner kept ties back at the commission. Once the IRS scandal was exposed, a lot of investigators began wondering just how much unsanctioned, two-way cooperation between Obama agencies was taking place in opposition to conservatives. If the FEC staff was funneling tips to Justice, was Justice influencing FEC staff reports? Was Lerner influencing FEC staff?

  McGahn explains that what makes the situation even murkier is the basic character of FEC staff. They are naturally biased. “The place in its early days was staffed by followers of Ralph Nader—Naderites who believed that all politicians are corrupt, and that both parties are awash in too much money,” he says. A younger generation is now in town, but the ghosts still linger. Says McGahn, “Much of that early thinking is still baked into the fabric of the FEC.” The FEC general counsel’s office still tends to only hire a “certain kind of person,” he notes. These aren’t people “who have practiced law in private practice for any length of time. They aren’t people who served as an in-house corporate counsel. They aren’t people who have had to help real clients. They certainly aren’t people who have campaign experience. They are people coming out of fancy law schools, where they had written an article or two on campaign finance reform and the evils of money. They’d already signed up for a certain way of thinking, and they are true believers.” McGahn recalls, “I didn’t see any counterpoint whatsoever. Put them in the right environment, and they’d go and go.”

  Evidence of this popped up in later documents that showed the FEC staff had in 2010 reached out to the IRS to provide it formal comments on the FEC’s (then) proposed regulations on charitable 501(c)(3) groups. An IRS employee in an e-mail noted that her colleagues were “not aware of a prior instance in which we have sent a formal written comment to the FEC on proposed regulations.” The IRS chief counsel’s office nonetheless worked directly with Lois Lerner to draft the document. A majority of FEC commissioners might not have been willing to target certain nonprofits, but a majority of FEC staff was clearly interested in going the same route as the IRS.

  Because FEC staff were true believers, they also refused to accept
the changed legal environment. “There were cases, like FEC v. Wisconsin Right to Life that severely limited the reach of what the FEC could do,” says McGahn. “And there were other cases, in my early years there, that strongly suggested what was going to come in Citizens United. But it was like operating in a flat-earth society. Folks at the FEC weren’t even close to understanding what was going on, and how much of what they believed was being rejected by the courts. The staff was clinging to a lot of things that had since been thrown out, like a guy in 1982 thinking disco was going to come back.”

  Far from embracing reality, McGahn said the staff viewed themselves as a “plaintiffs’ advocacy shop, whose job it was to push the envelope, test the law, expand the reach of the statute. If they lost in one court, they’d just go to the next circuit and try again. It was so wholly inappropriate for a federal agency to be doing that. It’s not our job to be forging new law.”

  The background is why McGahn to this day remains unclear how much of what happened to conservatives at the FEC was deliberate targeting like that at the IRS, and how much of it was plain institutional bias against groups that push for more free speech. “When 99.9 percent of the bureaucracy is obviously Democrat, it’s tough to figure out if what they are doing is for partisan gain as opposed to some deep-seated ideological bent. But as a practical matter, it all becomes one and the same, since the ideological policy choice seems to always tilt left and silences the right,” he says.

  He’s undoubtedly got his stats right. In 2014, the Office of Special Counsel, which investigates illegal political activity by federal employees, settled a case with an FEC lawyer named April Sands, who had spent 2012, according to the OSC, posting “dozens of partisan political tweets, including many soliciting campaign contributions to President Obama’s 2012 reelection campaign.” She’d done this despite federal laws against such fund-raising. She’d also “participated in a Huffington Post Live internet broadcast via webcam from an FEC facility, criticizing the Republican Party and then–Presidential candidate Mitt Romney.” Hans von Spakovsky, the former FEC commissioner, would point out that Sands had once worked for Lerner at the FEC. “Quite a ‘coincidence’ that an FEC lawyer who was illegally using government facilities to try to get Barack Obama reelected used to work for the lawyer who headed the IRS office that apparently tried to stomp on conservative organizations critical of the same president’s policies,” wrote von Spakovsky in the National Review. “If there is any agency in the government where employees need to take extra steps in being nonpartisan and politically circumspect, it is the Federal Election Commission.”