Federal Election Commission Main Page
November 7, 2003
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2003-26
William L. Curlis, Treasurer
Voinovich for Senate
865 Macon Alley
Columbus, Ohio 43206
Dear Mr. Curlis:
This responds to your letter dated August 25, 2003,
requesting an advisory opinion on behalf of Voinovich for
Senate, concerning the application of the Federal Election
Campaign Act of 1971, as amended ("the Act"), and Commission
regulations, to the proposed use of campaign funds received by
Voinovich for Senate to refund contributions received by
Voinovich for Governor.
Background
Voinovich for Senate ("the Senate Committee") is the
principal campaign committee of Senator George V. Voinovich.
Senator Voinovich is a candidate for the U.S. Senate in 2004. 1
Voinovich for Governor ("the State Campaign Committee") was
the principal campaign committee authorized under the laws of
Ohio for then Governor (now Senator) Voinovich. In 1998, the
State Campaign Committee concluded its activities, filed all
of its required reports and terminated its existence with a
zero balance.
You explain that an investigation by the United States
Attorney for the Northern District of Ohio revealed improper
or illegal campaign contributions from a corporation, PIE
Mutual Insurance, its officers and employees.2 You state that
the United States Attorney specifically found that, "no
wrongdoing [had] . . . been found on the part of any recipient
political candidate or political committee." The United
States Attorney, nonetheless, identified the contributions
that were improper and identified the campaign committees that
had received the contributions and the amount of those
contributions. The request does not present any facts
indicating that any State or Federal authorities have demanded
that the Senate Committee make the refunds on behalf of the
State Campaign Committee, or that the Senate Committee is
otherwise legally obligated to do so.3 You also state that
any refunds that would be made by the Senate Committee would
be made to the PIE liquidation fund established subsequent to
the corporation's bankruptcy. 4
Legal Analysis and Conclusion
Question: May the candidate's principal campaign committee
use its Federal campaign funds to refund contributions
received by that candidate's now non-existent State campaign
committee?
No, the Senate Committee may not use its Federal campaign
funds to refund the illegal contributions received by the
State Campaign Committee. As explained below, this purpose is
not one of the permissible uses of campaign funds under the
Act and Commission regulations.
Under the Act, there are four categories of permissible
uses of campaign funds: (1) otherwise authorized expenditures
in connection with the candidate's campaign for Federal
office; (2) ordinary and necessary expenses incurred in
connection with the duties of the individual as a holder of
Federal office; (3) contributions to organizations described
in 26 U.S.C. 170(c); and (4) transfers, without limitation, to
national, State or local political party committees. 2 U.S.C.
439a(a); see also 11 CFR 113.2. Before 2002, section 439a
also included "any other lawful purpose" within the list of
permissible uses. Congress in the Bipartisan Campaign Reform
Act of 2002 ("BCRA"), Pub. L. No. 107-155, 116 Stat. 81
(2002), deleted this phrase when it amended section 439a. The
Commission in the Explanation and Justification for 11 CFR
113.2 discussed the significance of this deletion:
The Commission . is removing and reserving paragraph
(d) of former section 113.2, which referred to "any
other lawful purpose." With this revision, it is now
clear that in addition to defraying expenses in
connection with a campaign for federal office, campaign
funds may be used only for the enumerated non-campaign
purposes identified in paragraphs (a), (b) and (c) of
section 113.2, and that this listing of permissible non-
campaign purposes is exhaustive.
Explanation and Justification for Disclaimers, Fraudulent
Solicitations, Civil Penalties, and Personal Use of Campaign
Funds; Final Rule, 67 Fed. Reg. 76970, 76975 (Dec. 13, 2002)
(emphasis added).
You propose to use the Senate Committee's campaign funds
to refund improper contributions originally made to the State
Campaign Committee in prior campaigns. Your proposed refunds
are linked to contributions made to Senator Voinovich's past
State campaigns for Governor, campaigns that occurred well
before Senator Voinovich's Federal candidacy for the 1998 or
2004 elections.5 Further, as noted above, your request does
not indicate that the Senate Committee or Senator Voinovich is
under any legal obligation to make these refunds. The facts
before the Commission in this advisory opinion do not support
a conclusion that a refund of the impermissible State
contributions would be in connection with either of Senator
Voinovich's campaigns for Federal office.
The proposed refunds also would not comply with the other
three permissible uses set forth in 2 U.S.C. 439a in that they
are not ordinary and necessary expenses incurred in connection
with Senator Voinovich's duties as a U.S. Senator; they are
not contributions to an organization described in section
170(c) of the Internal Revenue Code of 1986; and they are not
transfers to a national, State or local committee of a
political party.6 Therefore, the Commission concludes that
your proposal would not comply with 2 U.S.C. 439a(a) and
11 CFR 113.2.
This response constitutes an advisory opinion concerning
the application of the Act and Commission regulations to the
specific transaction or activity set forth in your request.
See 2 U.S.C. 437f. The Commission emphasizes that, if there
is a change in any of the facts or assumptions presented, and
such facts or assumptions are material to a conclusion
presented in this opinion, then the requestor may not rely on
that conclusion as support for its proposed activity.
The Commission notes that this advisory opinion analyzes
the Act, as amended by the Bipartisan Campaign Reform Act of
2002, and Commission regulations, including those promulgated
to implement the BCRA amendments, as they pertain to your
proposed activities. On May 2, 2003, a three-judge panel of
the United States District Court for the District of Columbia
ruled that a number of BCRA provisions are unconstitutional
and issued an order enjoining the enforcement, execution, or
other application of those provisions. McConnell v. FEC, 251
F.Supp. 2d 176 (D.D.C. 2003); prob. juris. noted, 123 S.Ct.
2268 (U.S. argued Sept. 8, 2003). Subsequently, the district
court stayed its order and injunction in McConnell v. FEC, 253
F. Supp. 2d 18 (D.D.C. 2003), pending review by the Supreme
Court. The Commission has determined that your request for
advice is not affected
by McConnell v. FEC because the provisions of the Act
underlying this advisory opinion are not challenged in that
litigation.
Sincerely,
(signed)
Ellen L. Weintraub
Chair
_______________________________
1 On March 20, 2002, Senator George Voinovich filed a
statement of candidacy for re-election to the U.S. Senate.
2 A September 2, 2003 Columbus Dispatch article identifies
the corporation as PIE Mutual Insurance and provides more
details. According to the article, PIE Mutual Insurance,
which was Ohio's largest medical-malpractice insurer, failed
in 1998. The article states that former chief executive,
Larry E. Rogers, gave $1.5 million in illegal contributions to
75 politicians or campaign committees in Ohio and three other
States between 1990 and 1997. Mr. Rogers is serving a 40-
month prison term for fraud and improper contributions.
Returned contributions from PIE are placed in the PIE
liquidation fund being maintained by the Ohio Department of
Insurance. According to the article, PIE has unpaid insurance
claims worth $150 million.
3 According to a conversation with the PIE liquidation fund
administrator, the PIE liquidation fund has never asked either
the Senate Committee or Senator Voinovich to make these
refunds.
4 In your October 12, 2003 email to the Commission staff, you
indicated that the Senate Committee had refunded $15,450 in
contributions to the PIE liquidation fund. The 2002 Year-End
Report filed by the Senate Committee confirms this July 2,
2002 disbursement. Also, in a September 24, 2003 conversation
with Commission staff you stated that the amount of similar
improper contributions made to the State Campaign Committee
was $85,000.
5 Senator Voinovich's campaigns for Governor occurred in 1990
and 1994.
6 A conversation with the P.I.E. liquidation fund
administrator confirms that the fund is not a section 170(c)
organization. Furthermore, the PIE liquidation fund is not
making payments to any section 170(c) organization.