Today, the Madison Center asked the Federal Election Commission to strengthen FEC reporting rules to prevent political committees from hiding payments for opposition research and narrative creation as payments for legal work by their lawyers. For example, the Democratic National Committee (“DNC”) and Hillary for America (“HFA”) paid for creation and peddling of the infamous, debunked Steele dossier through the Perkins Coie law firm and generally included such payments on FEC reports as payments to the law firm for legal work.

Federal law requires political committees to report (to the FEC) all payments over $200, providing the payee, address, date, amount, and purpose of the payment. So if DNC and HFA hire Fusion GPS to dig up dirt on presidential candidate Trump, and Fusion GPS hires British national Christopher Steele to create an opposition narrative about Trump, FEC reports should show the amount, date, and purpose of payments to Fusion GPS and Steele. But instead DNC and HFA reported payments to Perkins Coie, primarily described as “legal services,” while that money was used to pay Fusion GPS and Steele on behalf of and for the benefit of DNC and HFA.

So political-committee reporting requirements should be strengthened to address two problems:

1. failure to disclose ultimate payees who should be disclosed and
2. failure to provide adequate purpose descriptions for payments.

Regarding the first problem, the Madison Center supports a proposal that would require political committees to disclosure payments “made by any agent or independent subcontractor, including any vendor or subvendor, on behalf of or for the benefit of the reporting person.” Under that language, DNC and HFA would clearly have been required to record payments to Fusion GPS and Steele, who acted on their behalf and for their benefit.

Regarding the second problem, the Madison Center proposes that the FEC clarify that the purpose-description requirement is not satisfied by including payments for opposition research and narrative creation under the label “legal services.” Rather more specific purpose-description is required, under which opposition research is not legal research and not the practice of law.

The recent indictment of former Perkins Coie partner Michael Sussmann by Special Counsel John Durham provides further evidence of the problems. Sussmann was indicted for lying to the FBI when he took another manufactured Trump-Russia collusion narrative (alleged Alfa Bank-Trump connections) to the FBI and represented that he was not doing so on behalf of any client. Actually, he was doing so on behalf of and for the benefit of HFA, which he was billing for “General Political Advice,” including “work and communications regarding confidential project.” But FEC reports generally described the purpose of such Perkins Coie activity as legal services.

The Madison Center emphasized that the problems identified have involved overt political actors, namely, political party committees, candidate committees, and political action committees. These political committees have assumed the greater burdens for and loss of privacy by political committees. But for other speakers, who simply make “independent expenditures” (communications expressly advocating the election or defeat of a clearly identified candidate) or “electioneering communications” (targeted, broadcast communications mentioning candidates near elections), there should be no additional reporting burdens imposed.

The FEC will consider all the comments regarding the proposed rulemaking (“REG 2021-02”) and decide whether to pursue a full rulemaking, with further opportunity for comments.

James Bopp, Jr., Madison Center General Counsel, comments: “For far too long political committees have concealed payments for political activity that should be reported by funneling it through law firms. The FEC should take this opportunity to carefully consider the problems of nonreporting and misreporting and initiate a full rulemaking to fix these problems.”

The comments are available on the Madison Center website here.