Colorado Court of Appeals rejects CEW’s CORE IEC challenge

The Colorado Court of Appeals rejected legal arguments filed by Colorado Ethics Watch (a state subsidiary of the Washington D.C. -based ‘Citizens for Responsibility and Ethics in Washington‘, or CREW) challenging the Colorado Republican Party’s establishment of a supposedly “independent” SuperPAC (Colorado Republican Party Independent Expenditure Committee, or ‘CORE IEC’) allowing the party to circumvent contribution limits otherwise applying to political parties.

The court ruled that because an Independent Expenditure Committee may be formed by any “person” (or persons) and that a political party is defined as a “person” under Colorado law (Colo. Const. art. XXVIII, § 2(11), definition of “person”) that (ipso facto) “a political party is a person who may establish an independent expenditure committee to collect or make independent expenditures” (Ruling at 10)

The court went on to say that the “political party’s independent expenditure committee may make independent expenditures when it does so without “the request, suggestion, or direction of, in consultation with, or under the control of that . . . political party.””

Such “coordination” between the party and the IEC remains illegal, according to the ruling (Ruling at 9-13); however, because the legal challenge was “facial” (based entirely on theoretical application of the law) rather than “as-applied” (based on evidence of actual activity or conduct), the court did not review or consider any evidence or history of the IEC’s actual activities (more on that later).

CEW issued the following statement:

Today, the Court of Appeals’ rejected Ethics Watch’s appeal of a ruling that allowed the Colorado Republican Party to circumvent party contribution limits by setting up a purportedly “independent” expenditure committee. Ethics Watch Director Luis Toro issued the following statement:

“We are disappointed in the Court of Appeals’ ruling. On one important point, however, we agree with the Court of Appeals: this problem can be fixed by the General Assembly. The legislature should promptly amend the independent expenditure statute to make clear its original intent, and close the loophole opened by today’s ruling.”

Background and Constitutional/Statutory Framework

Following the passage of Amendment 27 in 2002 (enacted as Article XXVIII, Colorado Constitution), contribution limits have applied to organizations supporting or opposing candidates in state elections –including political parties.  Under current Colorado law, political parties may accept a maximum of $3,400 per year (state, county, local levels combined) in aggregate (total) contributions from any individual – and are prohibited from receiving contributions from corporations or labor organizations (unions).

Independent Expenditure Committees (IECs), a more recent statutory (vs. constitutional) creation, on the other hand, are not subject to contribution limits, and may support or oppose candidates, but only so long as the support and spending are” truly independent and not coordinated with a candidate or political party.”

CORE IEC Historical Activity and the “Coordination” Question

The CORE IEC was formed at the specific direction of former COGOP Chairman Ryan Call (who publicly bragged that the IEC was his personal “brainchild”) and initially registered with the Secretary of State on 7 May 2014.  Ryan Call filed a lawsuit in the name of the Colorado Republican Party in Denver District Court the next day seeking a ruling (Petition for Declaratory Order) “blessing off” on the IEC’s existence.  Even before the District Court issued its decision, the CORE IEC collected (and spent, mostly to pay Executive Director Tyler Harber) tens of thousands of dollars – money that, had the party lost its challenge, would have subjected both the party and the donors to penalties of 2-5X the amount each contribution exceeded the limit ($3,400) applying to political parties.

The District Court ruled in September that, so long as the CORE IEC did not coordinate activity or spending with the Colorado Republican Party (inclusive officers, including Chairman Call) that it could be established and operate as an independent entity.  The District Court (as, later, the Court of Appeals) relied almost exclusively on the representations of the IEC’s Bylaws – holding that the bylaws provided sufficient separation (and “firewalls”) against coordination.

CEW filed an appeal of the District Court’s decision on 6 October 2014 – seeking to overturn the judgment on purely facial (theoretical) grounds rather than seek to prosecute the IEC for “as-applied” violations of campaign finance law (including the “coordination” issue).  The case dragged through the Spring and into the Summer of 2015 (during which time it became a hot potato in internal party politics), before ultimately leading to yesterday’s ruling.

The Court of Appeals ruling extensively cited the CORE IEC’s bylaws as grounds for asserting that the entity did not coordinate with the state party or its officers (in particular, the party chairman):

“[T]he IEC will not retain or utilize any common consultant or common vendor with the Colorado Republican Committee or with any Republican candidate for public office . . . .” In addition, “[t]he IEC will fully comply with all disclosure and reporting requirements mandated by C.R.S. § 1-45-107.5 and other applicable provisions of Colorado campaign finance law, and will assist donors to the IEC to fulfill their reporting requirements under the independent expenditure statute.”

Meanwhile, the CORE IEC was successfully prosecuted for violations of state campaign finance law – along with a dozen-odd big-money donors, when the IEC failed in its above-cited obligations to “assist donors to the IEC to fulfill their reporting requirements” – in a series of complaints filed in late 2014 (resulting in a ‘guilty plea’ entered by COGOP Chairman Ryan Call on behalf of the IEC) and early 2015 (again resulting in a stipulated judgment against the CORE IEC negotiated and authorized by the new COGOP Chairman Steve House).  Part of that settlement agreement negotiated by COGOP Chairman House included a commitment to terminate the CORE IEC within 150 days – or pay a suspended penalty of $23, 125 as mandated by statute.  The state party (and Chairman House) along with the IEC have failed to honor that obligation.

Additionally, a dozen deep-pocketed Colorado Republican donors have been assessed penalties for failing to “fulfill their reporting requirements under the independent expenditure statute” (thanks to the failure of Ryan Call and the IEC to “assist” the donors in fulfilling their legal obligations) – including such luminaries as former Colorado Governor Bill Owens, along with former IEC managing board member Keven Kauffman, to name just a few of the most prominent – although the party actually paid the penalties on behalf of the donors.

Furthermore, the IEC does in fact “retain or utilize any common consultant or common vendor with the Colorado Republican Committee” – namely, the same campaign finance management firm, the Utah-based McCauley & Associates PC (owned and operated by former Utah Republican Party Treasurer Mike McCauley) – who took over as the CORE IEC’s Registered Agent and Designated Filing Agent on 9 February 2015 from the departing Tyler Harber, who entered a guilty plea for federal felonies a few days later (12 February 2015) – ironically, for illegal campaign coordination.

Consequently, although the CORE IEC (and its sponsor, the Colorado Republican Party) can celebrate a court victory – they’re not out of the woods just yet.

 

Clear The Bench Colorado generally opposes the imposition of contribution limits or other restrictions on free speech in the civic and political arena (see, Speaking Out on Reforming Colorado’s Campaign Finance Laws) as unconstitutional abridgments of the 1st Amendment; in particular, the excessively complex and convoluted nature of campaign finance laws in Colorado challenge the Constitution, chill free speech, and curtail civic participation.  Any such laws that do remain in effect, however, must be fairly and equitably applied to everyone – with no “special exemptions” for favored entities.  It is our view that the CORE IEC is an attempt to create just such a “special exemption” and violates the spirit (and, if “coordinating” activities) letter of the law.

Read More about the CORE IEC:

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