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Colorado GOP Chair Seeks to Evade Campaign Finance Limits - Gets Mixed Ruling

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The Colorado Secretary of State today rejected a petition seeking a "Declaratory Order" which would have sanctioned a "party-sponsored" Independent Expenditure Committee allowing the Colorado Republican Party to evade contribution limits (source and amount) applying to political parties - but issued a non-binding "advisory opinion" expressing the belief that such a committee could be legal.

The "Petition for Declaratory Order" was filed by Colorado Republican Party Chair Ryan Call last November and received a public hearing in early January (receiving public comment overwhelmingly in opposition). (see, Colorado Republican Party Chair Seeks Exemption to State Campaign Finance Law, 10 January 2014)

The Secretary of State ruling rejected the Petition largely on jurisdictional grounds (as predicted by Clear The Bench Colorado's previously published analysis), noting that any order issued by the SOS "would not terminate the uncertainty or conflict giving rise to the proceedings" and further noting that "a declaratory order would not prevent a person or organization from filing a campaign finance complaint against Petitioner." Even more pointedly,

A declaratory order would not terminate a controversy or remove an uncertainty for the Petitioner, because courts fail to give deference to the Secretary's opinion. (SOS Ruling at 4)

Interestingly, the case law cited (six separate citations in the Secretary's ruling) confirming that the Secretary of State's advice and opinions are NOT "entitled to deference" by the courts was the attack filed by the left-leaning "Colorado Ethics Watch" (CEW, pronounced "sue" - it's what they do) against Clear The Bench Colorado in 2010.

Having made clear that the Petitioner (Colorado Republican Party Chair Ryan Call) could have no legal reliance on the Secretary's opinion, the Secretary proceeded to register an (advisory) opinion anyway - from which the party chair at least might take some comfort (albeit at considerable legal risk - indeed, the Secretary prefaced the opinion by stating that it "will likely result in a lawsuit in state or federal court or before an ALJ").

The Secretary's advisory opinion largely condoned the actions proposed by the COGOP chair, albeit with several important caveats:

It is the Secretary's opinion that a political party may form an independent expenditure committee (IEC) for the purpose of making independent expenditures and may raise funds in any amount and from any permissible source. But a political party IEC must ensure that its expenditures are truly independent and in no way coordinated with any candidate or the political party. (SOS Ruling at 6)

However, as previously noted, the very notion that an entity owing its existence to the state party, using the party name, with the director and management committee appointed personally by the state party chair, would be “independent” in any sense of the word, is simply risible. Such an entity is almost by definition not "independent" and would be “pre-coordinated” – although it would not be constrained by party bylaws (bylaws theoretically restricting, for example, the IEC’s ability to spend or promise spending in order to influence primary elections).

The Secretary's reliance on the party qualifying as a "person" under constitutional and statutory language, and thus eligible to form an IEC, likewise leads to an absurd result; since, following that logic, a candidate for office (subject to contribution limits) is likewise a "person" and would also be able to form an IEC using his name (with "safeguards" against coordination, wink wink nudge nudge).

Indeed, the issue of "coordination" is central to the legality of the proposed "party-sponsored" IEC:

Petitioner must ensure the absence of "coordination" to avoid the potential for corruption or the appearance of corruption. (SOS Ruling at 9)

Unfortunately, as the Secretary's ruling makes clear, what constitutes "coordination" is a legal grey area:

While state law does not define coordination, under Secretary of State Rule 1.4, an expenditure is coordinated with a candidate or political party if the expenditure or spending is "at the request, suggestion, or direction of, in consultation with, or under the control of" a candidate committee or political party. (SOS Ruling at 10)

The Secretary's ruling further notes,

There is little Colorado case law discussing the definition of "coordination" as it applies to Colorado campaign finance law. (SOS Ruling at 11)

In fact, what case law does exist has shown that absent an airtight confirmed “smoking gun” to the extent of a notarized confession signed in the perpetrator’s blood in front of multiple witnesses, “coordination” is extremely unlikely to be prosecuted.

The Secretary's advisory opinion closed in classically understated language:

The fact that the party exercises control over the appointment - and presumably removal - of the IEC's executive director and management committee is potentially problematic.

Analysis:

Should the party proceed with the IEC, and receive contributions exceeding the limits that apply to the party, a complaint (leading to expensive litigation) would be a near-certainty, putting the party at risk for fines & penalties of TWO TO FIVE TIMES the amount by which any contribution exceeded the limits - and the CONTRIBUTORS could also be subject to fines and penalties, as well.

Even a best-case scenario (from the party's perspective) would lead to expensive legal challenges to the IEC - but, since the attorneys hired to defend the state party would almost certainly hail from the chairman's own law firm, perhaps he sees that not as a bug - but as a feature?

Read more about the COGOP Chair’s attempt to skirt Colorado Campaign Finance Law

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