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FEC May Increase Penalties

Political fundraisers may be cheering the recent increase in campaign contribution limits, but it appears the cost of doing business — at least among those who break the rules — could also face a hike when the Federal Election Commission re-examines its civil penalties structure this summer.

The campaign watchdog is required to review its fines every four years under the Debt Collection Improvement Act of 1996, which amended the Federal Civil Penalties Inflation Adjustment Act to require agencies to periodically adjust their penalties for inflation.

The inflation adjustment is tied to the percent change in the Consumer Price Index since the last time the civil penalties were adjusted.

That said, it’s still unclear exactly how much the FEC will raise its penalties.

Since the agency declined to make any increases in 2002 — because the formula used to calculate the increase resulted in no change — any adjustments will be based on inflationary changes occurring since 1996.

In 1997, the first year the Debt Collection Improvement Act went into effect, the FEC hiked by 10 percent the fines that it imposed on campaign lawbreakers to catch up with inflation.

That year, maximum fines were upped from $5,000 to $5,500 and from $10,000 to $11,000 for violations that are “knowing and willful.” Alternately, the FEC may impose a fine in an amount equal to 200 percent of any contribution or expenditure involved in the violation.

“Knowing and willful” violations are just that — violations that have been committed knowingly and willfully, and are considered more serious than garden-variety violations. They may also be referred to the Justice Department for criminal prosecution in some instances.

At the same time, the civil penalties for violating the Federal Election Campaign Act’s confidentiality provisions were elevated from $2,000 to $2,200 and from $5,000 to $5,500, in cases of those that are “knowing and willful.”

A significant increase could be a boon for the U.S. Treasury assuming that levels of wrongdoing keep pace with the past years.

Testifying last year before the Senate Rules and Administration Committee, Commissioner Ellen Weintraub, a Democrat, noted that the amount of fines imposed by the agency has increased significantly in the past decade.

In 1991, 262 cases resulted in $534,000 worth of civil penalties.

By 2003, the 535 cases closed out delivered civil penalties and fines totaling close to $2.8 million — and if recent cases are any indication, the trend of big fines in campaign finance investigations seems to be continuing.

Last week, the FEC announced it had assessed a total of $115,000 in civil penalties in a case involving former New Jersey Senate candidate William Gormley (R) and several casinos that were alleged to have improperly helped facilitate fundraisers for his unsuccessful 2000 campaign.

That’s nothing, however, compared to the so-called “Audiovox” case released in 2003. That case, which involved corporate contributions and contributions in the names of others, resulted in $849,000 worth of total fines and still remains the largest aggregate of civil penalties in one case in the FEC’s history.

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