Federal Agency Targets GOP Fundraiser

Federal election regulators have taken a political group to court in what could serve as a test case for how the government will address complaints over millions of dollars in big contributions poured into last year's presidential race.

The Federal Election Commission (search) filed a lawsuit Monday in U.S. District Court in Washington against the Club for Growth (search), the first case of its kind to arise from high-dollar fundraising during the 2004 elections. The pro-Republican group spent at least $21 million in the 2003-2004 election cycle.

The FEC contends the club spent enough in federal races to require it to file with the commission as a political committee and to follow contribution and spending limits. It wants the court to fine the group and order it to comply with campaign finance rules.

Pat Toomey (search), the club's president, called the FEC lawsuit "outrageous" and "a bizarre interpretation of the club's mission, the Constitution, the laws adopted by Congress and their own regulations governing nonprofit organizations."

"The club's principle purpose is to advocate for and defend pro-growth policies," Toomey said in a written statement. "We have consulted with counsel every step of the way and have followed the law and regulations that govern our work."

FEC Vice Chairman Michael Toner rated the case "one of the most important suits the commission has brought in recent years."

"At stake is whether Club for Growth will be able to continue raising and spending millions of dollars in soft money for activities influencing federal elections," said Toner, a Republican.

The lawsuit is the first to result from several complaints filed against pro-Republican and pro-Democratic "soft money groups" during the last election, and it could determine whether the commission can rein in such groups without new congressional legislation or FEC rules.

Campaign finance watchdogs contend the groups spent millions of dollars in corporate, union and unlimited contributions despite a new law banning the use of such money in presidential and congressional races.

The FEC investigated the club's fundraising and spending after the Democratic Senatorial Campaign Committee complained to the commission about it.

The DSCC complaint stemmed from an ad the club ran in the 2003-04 election cycle against then-Senate Minority Leader Tom Daschle (search), D-S.D., over his opposition to a tax-cut proposal. Daschle lost to Republican John R. Thune (search) in last November's election.

President Bush's re-election campaign and the sponsors of the 2002 campaign finance law sued the FEC last year, accusing it of failing to enforce the law and crack down on soft money spending, particularly in the presidential race. Those cases are pending in federal court.

The 2004 election saw the emergence of several partisan groups created by political activists to continue spending five- and even six- and seven-figure contributions after the new law imposed tough donation limits on national parties and congressional and presidential candidates. Under the law, the national parties and federal candidates can no longer raise corporate and union donations in any amount or unlimited donations from any source, and such money isn't supposed to be used by anyone trying to influence a federal race.

The commission's lawsuit accuses the club of failing to follow federal fundraising and spending rules as far back as 2000.

The complaint says the club told prospective donors their money would be used to help elect or defeat specific candidates, and that it raised more than $4 million last year alone from donors who exceeded the $5,000 federal contribution limit. Of that, roughly $3 million came from just 14 donors.

The club spent more than $1 million in the past three elections on ads targeting specific campaigns — often going so far as urging people to vote for or against candidates — and raised more than $9 million during that time that exceeded federal limits, the lawsuit says.

The lawsuit could be the first in a parade of cases brought against soft money groups by the FEC, said Larry Noble, head of the Center for Responsive Politics (search) campaign watchdog group and a former FEC general counsel.

"We've all been waiting to see what they do with those complaints, and I think it's positive that they have brought suit," Noble said.

However, the lawsuit seems to focus on spending that urged voters to elect or defeat candidates, Noble said. That leaves it an open question how the FEC will deal with partisan groups that intended to influence races but didn't go quite as far as the club did, he said.