An independent political group allied with Democrats and heavily bankrolled by billionaire George Soros has agreed to pay $775,000 to the Federal Election commission for violating campaign laws during the 2004 presidential campaign.

The civil penalty, announced Wednesday, is the third largest fine ever levied by the FEC.

The group, America Coming Together, was an influential player in the 2004 election cycle, spending millions of dollars to mobilize voters in support of Democrats in key states.

The FEC found that ACT inappropriately used money raised outside federal election limits to help federal candidates. In a separate legal analysis, the FEC concluded that despite ACT's violations, the group did not coordinate its activities with the Democratic National Committee or the presidential campaign of Democratic nominee John Kerry. Such coordination is prohibited under federal law.

The FEC's action is the latest it has taken against independent groups that were active on both sides of the political divide during the 2004 elections. Most of the violations center on improper use of so-called soft money, that is, money that is not covered by federal campaign finance laws and can't be used to help federal candidates.

The settlement comes more than three years after campaign finance watchdog groups filed complaints against ACT and others, alleging they improperly influenced the 2004 election with money raised outside federal limits.

The groups on Wednesday argued for a stiffer penalty against ACT and said the case underscores the need for the FEC to adopt clearer regulations governing independent political groups.

"This is a clear warning to everyone that the FEC must take steps to prevent these kinds of massive violations from occurring in the future or we will face them in the 2008 congressional and presidential elections," said Fred Wertheimer, president of Democracy 21, which filed the complaint against several independent groups along with the Campaign Legal Center and the Center for Responsive Politics.

ACT was formed in 2003 by liberal and union-related activists as a response to the voter mobilization efforts of the Bush-Cheney campaign. The group raised $137 million, much of it from Soros and the Service Employees International Union. The money was split between a political action committee, which could spend on federal candidates, and a separate organization set up under IRS rules that could raise unrestricted funds.

According to the FEC, ACT claimed that $70 million in expenses during the 2004 election cycle were for voter drives that could be financed with soft money. But an FEC investigation determined that ACT spent the money on "clearly identified federal candidates in a manner that could only be paid for with federal funds."

In a statement Wednesday, ACT lawyer Laurence Gold said: "Today's actions mark the conclusion of three years of politically motivated charges by the Republican Party and ill-conceived allegations by self-styled campaign finance 'reform' groups."

He applauded the decision to dismiss the complaint that ACT had unlawfully coordinated with the DNC and the Kerry campaign. He played down the violation as a "legally and factually complex question of whether ACT properly 'allocated' its 2004 spending between ACT's two accounts."