CORTEZ MASTO CALLS ON FEC TO CLAW BACK ILLEGAL & FOREIGN DONATIONS TO POLITICIANS & PACS

Letter

Dear Commissioners:

I submit this comment urging the Federal Election Commission ("FEC" or "the Commission") to move forward with rulemaking on the disgorgement of illegal campaign contributions. The laws that safeguard the fairness of our elections must be fully enforced and those who seek to circumvent the law should be held accountable. Recent events, however, show that time and again, those making illegal campaign contributions have done so without fear of meaningful penalties.

The Commission routinely instructs campaign treasurers to return illegal contributions to their donors.[1] While the FEC does impose fines on those who clearly disregard the law, legislative limits ensures that the fines assessed are typically smaller than the donations themselves. When illegal donations are then returned to the donor, this allows individuals who have violated the law to walk away in the black, having recouped more money than they paid in fines. Illegal campaign contributions returned to their donors can even be used to pay the fines imposed by the FEC. The practice of returning illegal donations clearly undermines the Commission's ability to hold violators of the law accountable through the assessment of fines. Requiring the disgorgement of illegally contributed funds to the U.S. Treasury--rather than their return to donors--will create material consequences that will help deter illegal behavior.

One major source of illegal contributions is domestic companies that contract with the federal government. Federal contractors are barred from making political donations to guard against the potential for elected officials to direct contracts--and taxpayer money--to their campaign contributors.[2] The FEC has identified several violations of this law in recent years, including illegal donations from Marathon Petroleum, SIG Sauer, Ashbritt, Inc., and Alpha Marine Services. In each of these cases, the illegal contributions were returned and the civil penalties assessed were more than offset by the return of the donation.

Campaign finance laws also prohibit foreign actors from making contributions themselves and from directly or indirectly participating in the contributions of others to U.S. campaigns.[3] The intention of the law is to ensure that American voters, rather than foreign interests, direct the course of American democracy. Violators of the law should receive a strong signal that the FEC will not turn a blind eye to foreign interference in our elections. The current policy of returning illegal donations fails to provide that signal.

The case of Barry Zekelman's illegal $1.75 million contribution to the America First Action super PAC in 2018 exposes the need for stronger penalties for foreign actors who seek to influence U.S. elections. As you know, Mr. Zekelman is a Canadian billionaire who funneled contributions to the super PAC through a Pennsylvania-based subsidiary of his steel business.[4] While the FEC imposed one of the largest fines in the Commission's history on Mr. Zekelman--$975,000--the illegal donation was also returned in full. The fine was easily offset by the refund of Mr. Zekelman's illegal contribution. Fines simply cannot function as a deterrent when violators of the law are allowed to recoup their illegal donations.

The FEC must take a strong stand against illegal donations. I strongly support the creation of a rule outlining the circumstances in which the Commission can require the disgorgement of illegal campaign contributions to the U.S. Treasury. The Commission's rules currently allow the FEC to require disgorgement and this penalty has been imposed by the Commission in the past.[5] I encourage the Commission to clarify the instances in which disgorgement can be required going forward, and to make use of this tool as both a penalty and a deterrent for violations of election law. The federal government has an obligation to ensure that our election laws are upheld. Violators of the law should face strong penalties and real accountability--not receive a refund.

Sincerely,

Catherine Cortez Masto

United States Senator

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