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NRCC Faces Fine

After more than four years of legal wrangling, the National Republican Congressional Committee has agreed to a $280,000 fine for improperly using soft money to pay for issue ads run by an organization controlled by former aides to House Majority Leader Tom DeLay (R-Texas).

The NRCC transferred $500,000 in soft money to the U.S. Family Network in October 1999. USFN had ties to Ed Buckham, DeLay’s former chief of staff.

The U.S. Family Network then gave $300,000 to Americans for Economic Growth. Jim Ellis, who currently oversees DeLay’s leadership PAC — Americans for a Republican Majority (ARMPAC) — was affiliated with AEG at the time.

According to the FEC, Ellis had already agreed to run radio ads bashing Democrats for raiding Social Security to pay for other federal programs. AEG also ran ads bolstering several vulnerable House Republicans. AEG spent $260,000 overall on the two sets of ads.

Then-NRCC Chairman Tom Davis (Va.) never sought approval for the $500,000 donation to USFN from the organization’s executive committee before transferring the money, the largest single donation by the NRCC that entire cycle.

According to the FEC, the NRCC should have used a mix of hard and soft money to pay for the ads, instead of soft money alone, and could not give soft money to another organization to run issue ads as a way to avoid that prohibition.

“The NRCC knew through its agents that USFN planned to pass all or part of the $500,000 to a third party to pay for the issue advertisements,” the FEC said in a statement announcing the fine.

“Therefore, the NRCC violated [federal election law] by using only soft money to pay for activity that should have been allocated between their hard and soft money accounts.”

News of $500,000 donation, first reported by Roll Call in early December 1999, was loudly criticized at the time by House Democrats.

Democrats charged that USFN, AEG and another group, the Republican Majority Issues Committee, were secretly controlled by DeLay and run by his operatives as part of the Texas Republican’s political network. RMIC was going to raise as much as $25 million to help elect GOP candidates and incumbents, but took in only a fraction of that amount before ceasing operations.

“It’s all too rare when DeLay and company are held accountable for their blatantly illegal schemes,” said David Plouffe, the former executive director of the Democratic Congressional Campaign Committee who filed the original complaint with the FEC. “That they have to pay the fine in all hard dollars for their soft-money shenanigans is all the more satisfying.” Soft-money donations are now illegal under federal law.

DeLay and other senior House Republicans, including Speaker Dennis Hastert (Ill.), were named in the DCCC’s complaint, but they were later dropped from the case.

Carl Forti, the NRCC’s communications director, said his committee is pleased the matter is finally resolved.

“It would have cost us twice as much to litigate the case, and the new administration here wanted to just put it behind us and move on,” Forti said.

Rep. Tom Reynolds (N.Y.) took over as NRCC chairman from Davis at the beginning of this cycle.

Davis, Buckham and Ellis could not be reached for comment. Buckham is now a lobbyist with the Alexander Strategy Group.

The controversy over the $500,000 donation shed new light on what became known as “DeLay Inc.,” and helped spur the DCCC to file a civil racketeering lawsuit against DeLay in June 2000. That suit was later dropped, but not before DeLay ran up hundreds of thousands of dollars in legal bills defending himself.

Meanwhile, Ellis has recently become caught up in another legal flap involving DeLay. Ellis helped start up and later worked for Texans for a Republican Majority PAC, a Lone Star State version of DeLay’s federal PAC.

TRMPAC has been sued by Texas Democrats over its handling of $600,000 in corporate donations that it raised during the 2001-02 cycle. Corporate and union funds cannot be spent on state races in Texas.

With help from TRMPAC and allied business groups, Republicans were able to win control of the state Legislature in November 2002 for the first time since Reconstruction and forced a new round of redistricting, which could result in a pickup of five seats by House Republicans, further cementing DeLay’s status as Majority Leader.

Democrats charge that TRMPAC and the Texas Association of Business illegally spent soft money on behalf of GOP state candidates.

Democrats have also raised questions about a $190,000 swap between TRMPAC and the Republican National Committee. That money ended up in the campaign treasuries of state candidates, even though it began as corporate donations given directly to TRMPAC.

A Travis County grand jury is looking into the case to see if there were any criminal violations. Ellis, DeLay and TRMPAC have all denied any allegations of wrongdoing, with Ellis even disputing whether he even can be sued in Texas.

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