Welcome to the October 2024 edition of the Political Law Playbook, coming to you just days before the November 5th general election. This edition’s federal coverage includes two recent campaign finance court decisions released by the Sixth and Eleventh Circuits, respectively. The first decision upholds federal coordinated campaign expenditure limits, and the second decision vacates a six-figure fine against a former congressman for alleged campaign finance violations. In addition, the Federal Election Commission (“FEC”) announced it will refrain from promulgating new rules governing the use of artificial intelligence (“AI”) in campaign advertisements. This edition also highlights the US Supreme Court’s recent decision to pass on hearing a proposed challenge to San Francisco’s election advertisement disclosure law. On the state-level, this edition features two campaign finance controversies related to Portland, Oregon. The first surrounds allegations that candidates for city council are attempting to illegally gain access to the city’s public campaign financing program, and the other involves a mayoral candidate’s alleged failures to abide by the city’s campaign finance laws. This edition also covers recent bribery indictments involving officials in New York City and Washington, DC.
Federal Elections & Campaign Finance
Sixth Circuit Upholds Coordinated Campaign Spending Limits – In September, the US Court of Appeals for the Sixth Circuit released an en banc opinion upholding the constitutionality of the Federal Election Campaign Act’s (“FECA”) limits on coordinated campaign expenditures, which restrict political parties from spending money on campaign advertising with input from the party’s candidate for office. Ohio senator and vice-presidential candidate J.D. Vance and Republican party organizations brought the suit, arguing that the limits violate the First Amendment. In the opinion, the appeals court recognized and followed a 2001 decision by the US Supreme Court that upheld the coordinated limits on the basis that they serve as an anti-corruption tool to combat attempts to route large donations though party committees in circumvention of the individual contribution limits. The plaintiffs, arguing that party committees should be free to spend unlimited amounts on their candidates’ campaigns, unpersuasively asserted that enough has changed in the legal and political landscape in the two decades since the Supreme Court’s decision to warrant a different ruling by the Sixth Circuit. The National Republican Senatorial Committee’s general counsel has said that the groups plan to appeal the decision to the Supreme Court.
FEC Deadlocks on JFC Ads – Earlier this month, the FEC deadlocked on whether joint fundraising committees (“JFCs”) should be permitted to run television fundraising ads that also advocate for candidate campaigns, effectively letting the practice continue. JFCs are committees that raise money for several participant committees at a time, including party committees and individual campaign committees. Such ads have not traditionally been deployed by JFCs, but instead have been run by party committees, at a higher television ad price, or by candidate committees themselves, at the lower candidate television ad price. By running the ads through JFCs, the scheme presented to the FEC allows the candidate-focused ads to be run at the lower candidate price while most of the costs are borne by the participating party committees (a boost for cash-strapped candidates). In light of the opinion, the National Republican Senatorial Committee has canceled all of its remaining independent expenditure ads buys and redirected them to JFC ads, and the Democratic Senatorial Campaign Committee has said that it will utilize the same tactics. Outside watchdog groups argue that the practice is not within the spirit of federal campaign finance rules, and will pose enforcement issues with the FEC.
Eleventh Circuit Vacates $456K Fine Against Ex-FL Congressman for Alleged Campaign Finance Violations – The US Court of Appeals for the Eleventh Circuit recently vacated a judgment and $456,000 fine against former Congressman David Rivera (R-FL) after determining that the lower court improperly discounted the ex-congressman’s competing testimony. As we reported on in the May Edition of the Playbook, the FEC alleged that Mr. Rivera secretly directed more than $75,000 to a Democrat primary candidate as part of an effort to weaken the campaign of Rivera’s expected general election opponent. The contributions at issue were made during Rivera’s 2012 campaign for re-election to Congress in Florida’s 26th Congressional District. In July, the appeals court vacated the lower court’s final judgment, ruling that the district court erred in granting summary judgment for the FEC because there was a genuine issue of material fact regarding questions that should have gone to a jury. At the end of September, after denying Rivera’s motion to rehear the case on grounds that the federal court lacked jurisdiction and that the FEC did not comply with pre-suit notice requirements, the appeals court remanded the case to the district court for reconsideration.
Bill Introduced to Close Loophole Regarding Campaign Coordination with Outside Groups – In September, Representative Jill Tokuda (D-HI) introduced legislation that attempts to end the common political practice of making approved campaign content available to outside groups through the strategic public release of such materials on committee websites. Current federal campaign finance law prohibits candidate committees from coordinating their messaging and communications with outside groups like Super PACs that can raise and spend unlimited amounts of money from corporations. However, according to Tokuda’s press release, campaigns skirt around these laws through a practice known as “redboxing” in which they publish data and content – such as messaging points and pictures – aimed at supportive outside groups. If enacted, the bill, titled “Stop Illegal Campaign Coordination Act,” would amend FECA to treat expenditures by outside groups as coordinated with a political candidate, campaign, or party if those expenditures are materially consistent with instructions, direction, guidance, or suggestions from campaigns. The legislation also establishes factors for the FEC to assess and determine coordination. The bill has been referred to the House Committee on Administration.
FEC Votes to Not Open Rulemaking Regarding AI in Campaign Ads – On September 19, the FEC voted not to open a rulemaking on the use of AI in campaign ads. Instead, the Commission adopted an Interpretive Rule that explains how its existing regulations on fraudulent misrepresentation apply to AI-generated content. Essentially, it is already illegal for candidates to fraudulently misrepresent communications as coming from their opponents, regardless of the technology used. Thus, fraudulent misrepresentation “may be accomplished using AI-assisted media, forged signatures, physically altered documents or media, false statements, or any other means.”
Consultant Fined $6 Million for Using AI in New Hampshire Robocalls – In previous editions of the Playbook, we covered robocalls received by New Hampshire primary voters that allegedly used AI to mimic President Joe Biden’s voice to discourage voters from coming to the polls during the state’s presidential primary election. In September, the Federal Communications Commission (“FCC”) announced that it finalized a $6 million fine for a political consultant that previously acknowledged his participation in the creation of the robocall campaign. In May, the consultant, Steven Kramer, was indicted in New Hampshire for his alleged involvement. The FCC said the calls were generated using an AI-generated audio recording meant to sound like President Biden’s voice. FCC rules prohibit transmission of inaccurate caller ID information. Mr. Kramer will be required to pay the fine within 30 days or the matter will be referred to the Justice Department for collection.
Federal Lobbying & Ethics
Congressional Travel Rule Exception for Nonprofits May Serve as a Loophole for Lobbyists – Congressional travel rules generally bar lobbyists from playing a significant role in organizing or participating in trips provided to Members of Congress that are sponsored by corporate entities. Such free trips are limited to no more than one day, with few exceptions. None of these restrictions, however, apply to nonprofits. A recent report by POLITICO, in partnership with the Howard Center for Investigative Journalism at the University of Maryland, revealed that between 2012 and 2023, Capitol Hill staff members and one lawmaker took more than 4,200 trips paid for by a nonprofit organization called the Congressional Institute. The reporting alleges that during these trips, Hill staffers mingled with private-sector Institute members who paid as much as $27,500 annually for access to the invite-only retreats. Of the organization’s dozen board members, 11 are current or former federal lobbyists. However, the reporting highlights that the Congressional Institute is not an outlier. Rather, the Howard Center found that nine of the top 10 sponsors of privately funded congressional travel throughout the last decade have had current or former registered lobbyists on their boards or in leadership. Describing the exception for travel sponsored by nonprofits, Anna Massoglia, editorial and investigations manager at OpenSecrets told POLITICO that “[i]t provides a way to really get around the intent of the law.”
Complaint Alleges that Congressional Candidate Withheld Required Personal Financial Information – A federal complaint filed in September by an Oregon voter alleges that Monique DeSpain, an Oregon Republican congressional candidate, illegally omitted information on her required federal financial disclosure reports. The complaint, filed with the US Department of Justice’s Public Integrity Division, alleges that DeSpain broke federal ethics laws by failing to disclose required information about her investments. Specifically, the complaint alleges that she failed to disclose certain required underlying assets. The Ethics in Government Act of 1978 requires members of Congress and candidates for federal office to file reports detailing their personal finances so that the public may assess whether any potential conflicts of interest exist. In response to the complaint at issue, DeSpain stated that she followed all rules in submitting her financial disclosures, and that she confirmed with the House Ethics Committee that she may only need to move some information from one section of the disclosure report to another to ensure full compliance with applicable law.
Foreign Agents Registration Act
Justice Department Urges DC Circuit to Revisit Retroactive FARA Registration Issue – As highlighted in the July Edition of the Playbook, the US Court of Appeals for the DC Circuit earlier this year upheld a lower court’s dismissal of the Department of Justice’s (“DOJ”) suit against casino magnate Steve Wynn, asserting that the Foreign Agents Registration Act (“FARA”) does not permit the Department to bring suit against an individual who allegedly failed to comply with the law in the past but is no longer under a legal obligation to register. In its petition for a rehearing en banc filed in September, the DOJ pressed the appeals court to reconsider the ruling, arguing that the precedent behind it wrongly hamstrings the Department’s ability to enforce FARA. Specifically, the petition asserted that the court relied on wrongly decided precedent. That decades-old precedent, U.S. v. McGoff, held that, in the criminal context, a person’s obligation to register under the Act ends when their foreign influence efforts end. The DC Circuit’s June ruling extended the case’s holding to civil enforcement. FARA states that “termination of such [foreign agent] status shall not relieve such agent from his obligation to file a registration statement for the period during which he was an agent of a foreign principal.” This language, the Department argued, directly anticipates, and rejects, the claim that an agent is no longer required to register once the agent has ceased acting as such.
Activists Convicted of Conspiring to Act as Illegal Agents of the Russian Government but Acquitted of FARA Charges – Last month, a federal jury found leaders of the activist arm of the African People’s Socialist Party guilty of conspiracy to act as agents of a foreign government, but not guilty of violating FARA. The federal indictment had alleged that the defendants worked on behalf of the Russian government to spread pro-Russian propaganda and to influence local elections in the US while failing to register as foreign agents under FARA. The defendants asserted that the government was trying to criminalize their support of Russian ideology, which they argued was protected political speech. Three of the defendants and their lawyers said after the verdict was announced that they considered the acquittal on the FARA charges a victory. Each defendant faces a maximum penalty of five years in prison for the conspiracy charges. A sentencing date has not yet been set.
The Courts & Free Speech
Supreme Court Declines to Take Up San Francisco Campaign Finance Disclosure Law Case – Recently, the US Supreme Court declined to grant certiorari on a challenge to San Francisco’s “Sunlight on Dark Money” disclosure law. Approved by San Francisco voters in 2019, the law requires election ads to include a disclaimer naming the top three donors to the group running the ad. If the donor is another committee, then the committee’s top two donors and the dollar amounts given by both need to be disclosed. The plaintiffs in the underlying appeal at issue challenged the secondary disclosure requirement, characterizing it as overly burdensome. Both the US District Court for the Northern District of California and the US Court of Appeals for the Ninth Circuit held that the disclosure requirement was substantially related to the governmental interest in informing voters of the source of funding for election-related communications, and thus did not create an excessive burden on the plaintiffs’ First Amendment rights relative to that interest.
Non-Federal Elections & Campaign Finance
Austin Mayoral Candidate Sues City to Challenge Campaign Finance Rule – Austin, Texas Mayoral candidate Doug Greco and his campaign filed suit in federal court challenging a provision of the Austin City Charter that prevents City Council candidates from accepting more than $47,000 in contributions from people who live outside of the Austin city limits. The plaintiffs argue that the section of the charter limiting contributions from nonresidents is unconstitutional, and have requested a temporary injunction and then a permanent injunction against its enforcement. “I should be able to run a grassroots fundraising campaign from friends, colleagues, supporters and families from inside and outside of Austin,” Greco said in a news release. In response to a request for comment by the Austin Monitor, a city spokesperson said, in part, that “The City of Austin is aware of the recent federal lawsuit challenging its Charter provision limiting campaign contributions from donors outside the city limits. The city will respond to the lawsuit through the appropriate court process.”
OR Secretary of State Seeks to Open Investigation Into Candidate Donation Swapping – In September, Oregon Secretary of State LaVonne Griffin-Valade directed her elections office to open an investigation into donation-swapping agreements allegedly made by nearly a dozen candidates running for public office in the City of Portland. The investigation stems from the Willamette Weekly obtaining and publishing emails, which reveal that several candidates running for Portland City Council agreed in writing to make reciprocal contributions to one another in an effort to meet public financing standards under municipal law. Under the city’s Small Donor Elections program, candidates running for office must raise a certain number of contributions from individuals living in Portland to qualify for city matching funds. Some campaign experts have opined that reciprocal donations—where one candidate agrees to contribute to another candidate so long as they also contribute to their campaign—likely violate the state’s campaign finance law. The Secretary of State’s office declined to say whether the donation-swapping agreements violate the law but will weigh in on the legality of the practice following the completion of its investigation.
City Auditor Alleges Portland Mayoral Candidate Violated City’s Campaign Finance Laws – In other Portland, Oregon news, the current city auditor determined that Portland mayoral candidate Rene Gonzalez, a city commissioner, violated the city’s campaign finance law by failing to disclose who paid for a campaign banner. Under the city’s campaign finance law, certain communications to voters costing $250 or more must prominently disclose the true original sources of the contributions used to fund the communication. Because Gonzalez’s campaign paid over $250 to create the banner at issue, and the banner was not otherwise exempt from the city’s disclaimer requirements, the city auditor determined that it was required to include a disclaimer. The city auditor was also separately investigating whether Gonzalez violated the city’s campaign finance law by using city funds to pay for edits to his Wikipedia page in connection with his mayoral campaign. Shortly before publication of this edition of the Playbook, the city auditor announced that it had determined that Gonzalez had violated the city’s campaign finance law by accepting an unlawful contribution. The contribution was city staff time, money, and services spent in researching, developing, drafting, reviewing, and posting an edit to Gonzalez’s Wikipedia page. Gonzalez has indicated that he plans to appeal the decision.
Michigan Legislation Aims to Crack Down on Campaign Finance Violations – The Michigan House recently passed a bill that would make campaign finance violations easier to address as they occur. The legislation, HB 5583, would, if enacted, amend the Michigan Campaign Finance Act to allow the Secretary of State to seek immediate court injunctions against campaign finance law violators, rather than go through the standard court process. The bill would, if passed, also require that the Secretary of State notify the alleged violator and allow that person to respond. The bill is one of seven making up the Bringing Reforms in Integrity, Transparency and Ethics (“BRITE”) Act, which a group of House Democrats introduced earlier this year. The six other bills in the BRITE Act cover a variety of political law issues, including lobbying limits on former office holders, limits and disclosure requirements on gifts and services received by a legislative member, and financial reporting requirements for certain nonprofits. HB 5583 has been referred to the Senate Committee on Elections and Ethics.
Judge Blocks California’s New Deepfake Law – In the September Edition of the Playbook, we covered a new California law prohibiting the distribution of deceptive campaign ads or election communications within 120 days of an election. Earlier this month, a federal judge granted a preliminary injunction blocking the state from enforcing a large portion of the law. The plaintiff in the suit, an individual who creates digital content about political figures, argued that the law infringes on his right to free speech and is unconstitutionally vague. The court largely agreed. “Most of [the law] acts as a hammer instead of a scalpel,” Senior US District Judge John A. Mendez wrote, calling it “a blunt tool [that] hinders humorous expression and unconstitutionally stifles the free and unfettered exchange of ideas.” However, the order carves out an exception for a “not unduly burdensome” portion of the law that requires verbal disclosure of digitally altered content in audio-only recordings. A spokesperson for Governor Newsom said in a statement that the governor’s office was “confident” the courts would uphold California’s ability to regulate digitally altered videos and photos.
Non-Federal Lobbying & Ethics
Businessman’s Federal Indictment Suggests New Orleans Mayor Committed Ethical Violations – Earlier this month, a businessman from New Orleans was charged in a 25-count indictment of fraud and conspiracy to commit fraud with Public Official 1, who, while not named in the indictment, is alleged to be New Orleans Mayor LaToya Cantrell. The indictment asserts that the businessman bought Public Official 1 tickets to a New Orleans Saints championship game in January 2019, lunch at Ruth’s Chris Steakhouse in August 2019, and a new iPhone in December 2019, gifts which totaled more than $9,200. Prosecutors also allege that Public Official 1 had a city official fired who had been investigating the businessman for alleged wrongdoing. Mayor Cantrell’s criminal defense attorney declined to comment on the case. The indictment also outlines gifts the businessman allegedly bought for Public Official 2, who is alleged to be the mayor’s second in command, Chief Administrative Officer Gilbert Montano. Montano has denied engaging in any wrongdoing.
Ninth Circuit Upholds Chinese Developer’s Conviction for Bribing LA Councilman – In September, the US Court of Appeals for the Ninth Circuit rejected an attempt by a Chinese real-estate developer to overturn a conviction for bribing a Los Angeles city councilman to gain his support for building a 77-story skyscraper in downtown Los Angeles. As we covered in the February Edition of the Playbook, in January, former Los Angeles City Councilmember Jose Huizar was sentenced to 13 years in prison for his role in a series of criminal bribery schemes. According to his plea agreement, Huizar repeatedly accepted bribes from downtown developers eager to win city approval for their projects. One of these developers, Shen Zhen New World, was convicted in 2022 of three counts of honest services mail and wire fraud, one count of federal-program bribery, and four counts of interstate and foreign travel in aid of racketeering. On appeal, the company unsuccessfully argued that the more than dozen lavish, all-expenses-paid trips that its owner provided to Huizar did not amount to bribery under federal law. According to the court, a public official is guilty of bribery if they agree to receive a thing of value knowing that it was given with the expectation that the official would perform an “official act” in return. However, in the case of an accused bribe-giver, a bribery offense does not require an agreement to enter into a quid pro quo with the public official. Rather, all that the law requires is a defendant’s specific intent to receive future official acts on a specific matter at the time the defendant pays or offers something of value in return.
New York City Mayor Federally Indicted on Bribery and Campaign Finance Offenses – The US Attorney’s Office for the Southern District of New York announced in September that New York City Mayor Eric Adams has been federally charged with bribery, campaign finance, and conspiracy offenses. The indictment alleges, in part, that Adams used his prominent positions in New York City government to obtain illegal campaign contributions and luxury travel, that he solicited and accepted these benefits from foreign nationals, businessmen, and others, and that he pressured the New York City Fire Department to facilitate the opening of a Turkish consular building that had not passed a fire inspection. To conceal this criminal conduct, it is alleged that Adams took steps to hide his receipt of improper benefits from the public and law enforcement. If convicted, Adams could face decades of jail time. Mayor Adams has denied the allegations.
DC Contractor Allegedly Bribed City Officials – Newly unsealed court documents show that a DC contractor recently plead guilty to bribing a contract specialist at the DC Child and Family Services Agency in exchange for help rigging $2 million in contracts in his favor. Prosecutors allege that the contractor, Allieu Kamara, made bribes for at least the past five years. The trail of alleged bribes led to a widening probe of alleged pay-to-play schemes in the DC government, which has implicated DC Council Member Trayon White Sr. and a child-protection agency employee. As part of his plea deal, Kamara agreed to cooperate with other federal investigations in exchange for potential leniency at sentencing. White has plead not guilty to federal bribery charges. DC Council Member Brooke Pinto will hold a hearing examining how contracts and grants were awarded at the Office of Neighborhood Safety and Engagement — an agency that had millions in agreements with two of Kamara’s companies.
Practice Pointers
As this is the final edition before the November general election, this month’s Practice Pointers serve as a reminder that any policies that your organization has instituted regarding voting should be promptly reviewed to ensure they are compliant with current laws concerning political activity. For example, generally an organization may help facilitate voting by providing employees with paid time off to vote and/or mail processing equipment for mail-in ballots. Organizations may also engage in nonpartisan voter registration drives. However, providing gifts or other incentives to employees to encourage voting may raise significant legal concerns under laws designed to prohibit “vote buying.” The Dentons Political Law Team regularly advises corporations, political committees, and nonprofit organizations across the country on how to develop sound compliance policies governing corporate and employee political activity. Please do not hesitate to contact a member of our team should you have any last-minute questions surrounding your organization’s ability to encourage civic engagement this November.
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