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Federal Election Commission v. Swallow

United States District Court, D. Utah, Central Division

April 5, 2018




         In this case, the Federal Election Commission accuses two individuals of violating the Federal Election Campaign Act's prohibition on making contributions in the name of another. Defendant Jeremy Johnson is accused of making approximately twenty contributions to the 2010 senatorial campaign of Mike Lee in the names of other people. Defendant John Swallow is not accused of making any contributions himself but of assisting Defendant Johnson in doing so. The motion now before the Court is Defendant Swallow's motion to dismiss the case against him because what he is accused of is not against the law. His position is straightforward: the Federal Election Campaign Act applies to only three types of people and he is not one of them. He claims that the case against him only charges him with secondary liability and that Congress clearly did not include a ban against secondary actors in the Act. The case against Defendant Swallow rests entirely on 11 C.F.R. §110.4(b)(1)(iii), which he argues is a regulation beyond the Commission's authority to adopt. In Mr. Swallow's view, the provision is unauthorized law-making in violation of the United States Constitution, which vests legislative power solely in the United States Congress.

         The Commission admits that its case against Mr. Swallow is based on the CFR, which was adopted in 1989. It claims that the CFR is a proper exercise of the Commission's authority to enforce FECA. It claims that a person such as Mr. Swallow, who assists another person in violating the Act, is just as liable as the person who made the improper contribution. The Commission goes so far as to say that a person who does not part with his own money and whose only role is to assist another to make a contribution in someone else's name qualifies as a person who actually “makes” the contribution. On this basis, the Commission both opposes Mr. Swallow's motion and asks the Court to grant its own motion for partial judgment on the pleadings.

         Oral argument was heard on the motions on March 27, 2018. Ms. Sana Chaudhry and Mr. Harry Summers appeared on behalf of the Commission, with Ms. Chaudhry making the argument. Mr. Allen Dickerson, Mr. Tyler Martinez, and Mr. Scott Williams appeared on behalf of Mr. Swallow, with Mr. Dickerson making the argument.


         Congress passed the Federal Election Campaign Act in 1971 (“FECA”). 52 U.S.C. §§30101-46. The Act placed limits on the amount of money a person is allowed to contribute to a candidate for federal office. In 2010, the amount was $2, 400.00 per election cycle. Section 30122 states as follows:

No person shall make a contribution in the name of another person or knowingly permit his name to be used to effect such a contribution, and no person shall knowingly accept a contribution made by one person in the name of another person.

52 U.S.C. §30122.

         In 1974, Congress created the Federal Election Commission (“FEC” or “the Commission”) as an independent agency to civilly enforce FECA's monetary limits and disclosure requirements. In 1976, the Commission promulgated a regulation regarding FECA's ban on contributions made in the name of another, which made specific reference to the two most common forms of such contributions: false name and conduit contributors. 11 C.F.R. §110.4(b). A false name contribution occurs when a person contributes to a candidate but falsely attributes another person as the source of the contribution. A conduit contribution reaches the same result when a person provides funds to another person (the conduit) who contributes the funds to the candidate.

         For 13 years after 11 C.F.R. §110.4(b) was established, it was the only regulation adopted by the Commission that dealt with section 30122's ban against making contributions in the name of another. There is no question this 1974 regulation is a proper reflection of the law passed by Congress. In 1989, however, the Commission decided to add a new regulation which for the first time declared that “no person shall knowingly help or assist any person in making a contribution in the name of another.” 11 C.F.R. §110.4(b)(1)(iii) (emphasis added). The Commission's basis for adopting the new “helping and assisting” provision was an unpublished case from the United States District Court for the Middle District of Florida, Federal Election Commission v. Rodriguez, No. 86-687 Civ-T-10 (M.D. Fla. Oct. 28, 1988), in which the court held that a defendant had violated FECA's section 30122 by “knowingly assisting in the making of contributions in the name of another.” (Dkt. 103, Ex. A at 2.) Apparently impressed with what the district judge did to a pro se defendant in Rodriguez, the Commission felt justified to adopt the new provision. In its “interpretive guidance” for the new regulation, the Commission explained that it applies to: “those who initiate or instigate or have some significant participation in a plan or scheme to make a contribution in the name of another, including those who solicit or act as go-betweens to third parties whose donations are reimbursed.” 11 C.F.R. 110.4(b)(1)(iii); 54 Fed. Reg. at 34, 104-05 (1989).

         Thus, for the first time, secondary actors, what the criminal law calls “aiders and abettors, ” and what the new regulation calls “helpers and assisters, ” were brought into the realm of persons who face civil liability under FECA.

         The question framed by the parties' cross motions, as outlined above, asks simply whether the Federal Election Commission had the right to promulgate section 110.4(b)(1)(iii). The answer is no. The Commission, as an independent agency created by Congress for the sole purpose of enforcing FECA had no authority to write a regulation that went beyond the Act itself. The Court finds FECA's language to be unambiguous. It is limited to a prohibition on three types of persons and only those three: 1) a person who makes a contribution in the name of another; 2) a person who knowingly allows his name to be used by the contributor; and 3) a candidate who knowingly accepts such a contribution. Nowhere in the language of section 30122 is there any room for adding a fourth category consisting of secondary actors. While it may, or may not, be a good idea to expand the reach of FECA in such a way, such expansion may happen only through an Act of Congress, pursuant to Article I of the United States Constitution. Such power does not exist in an independent agency comprised of six unelected commissioners.

         The Commission makes several arguments in an effort to persuade the Court that it had the authority to pass 11 C.F.R. §110.4(b)(1)(iii). First, it cites the Rodriguez case as judicial precedent. This district court case from the middle district of Florida is neither binding on this Court nor persuasive. This 1988 case involved the FEC's claim that Mr. Rodriguez had violated FECA by knowingly assisting Mr. Alan Wolfson in making contributions to the Carter/Mondale campaign through conduits. Mr. Rodriguez did not respond to the complaint and a default judgment was entered against him. He was ordered him to pay a $5, 000 civil penalty. When he failed to pay the penalty he was held in contempt of court. There was no written opinion addressing the merits of the case, nor was there any effort by the defendant to challenge the Commission's, or the court's, unprecedented expansion of FECA into secondary liability.

         Next, the Commission argues that the language of section 30122 that states: “[N]o person shall make a contribution in the name of another person” should be construed to include as prohibited “persons” not only the person who is the source of the contribution but also those who help or assist the actual contributor. The Commission claims the word “make” means “to cause (something) to happen” and therefore ...

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