Funding Liberty! Table of Contents
Funding Liberty!
Chapter 13
Refusing to File
March 2000
In March, campaign income plummeted from February's $118,500 to less than 75,000. Despite a further loan from the candidate, the Browne campaign was very nearly broke. Only $6302 was on hand at the month's end. The Browne Campaign responded with a new fundraising gimmick, a prospective lawsuit against the Federal Election Commission. I stress 'prospective'. No suit was ever filed by the Campaign. When, in 2002, the FEC finally fined the Browne campaign for late filing, the campaign promptly paid the fine.
The Browne Campaign's FEC Report on March spending should have captured the attention of Libertarians from coast to coast. The Browne Campaign was barely keeping its fiscal head above water. The campaign treasury was running on vapor. Libertarians from coast to coast remained blissfully, innocently ignorant of the issue, because the Browne campaign filed no disclosures with the FEC until late May.
How was this possible? Harry Browne had declared his candidacy on February 14. Ignoring questions as to whether his filing obligations had begun earlier, say in 1997, in March 2002 there was no more room for doubt. The clock had certainly ticked down to the legal deadline for filing.
On Sunday, March 12, the Browne Campaign issued what they claimed was a new fundraising announcement. "We have come across what may be an exceptional opportunity to strike a blow against oppressive government—while at the same time generating major national press coverage for our campaign. How? By deliberately violating the contribution limits and reporting requirements imposed by the FEC."
As part of the announcement, the Campaign revealed that it would refuse to file financial statements with the FEC. The campaign also spoke of asking Libertarians to make individual donations to the Browne campaign in excess of the legal limits. (Under Federal Law, a single donor can give no more than $1000 for pre-nomination expenses, and no more than a separate $1000 for general election campaign expenses.)
These actions, the refusal to file and the possible decision to accept illegally excessive campaign contributions, were to be tied to a legal campaign to void substantial sections of the Federal Election Campaign regulations. However, potential donors were led to understand that 'There appears to be no risk of criminal prosecution from defying either the contribution limit or the reporting rules. But there could be large fines...'
Coupled with the possible legal campaign was a request for $25,000 to research the case and determine the risks. The $25,000 was to be stored away in a separate account, a PC Trust, so it would be there when needed.
From published records, it is not certain that the contribution limit was ever broken by any person. After the campaign ended, the FEC sent a series of letters to the Browne Campaign, identifying donors who to its eyes had appeared to have given improperly large amounts. The FEC indicated that there were other donors whom it deliberately did not identify who also appeared to have given improperly large amounts. As of this writing, the Browne campaign has not filed a complete set of responses.
For several months the Browne campaign did defy the reporting rules, hiding its financial situation from Libertarians across America. Incidentally, it showed that the Federal Election Commission was a paper tiger, impotent at enforcing Federal Law. No enforcement actions or criminal prosecutions ensued during the Presidential campaign year, consistent with the Campaign's promise that there was no risk of Federal prosecution. It may well be the case that, given the Commission's limited enforcement budget, this was the best the Commission could do. Many laws have statutes of limitation, but the absence of prosecution during 2000 does not guarantee an absence of prosecution at later dates. The 2002 fine related, however, to a 2001 filing. (Your author, who has repeatedly run for office and is the Treasurer of a Federal PAC, has always dutifully complied with FEC regulations to the best of his ability.)
Libertarian Presidential campaigns get less coverage than do the campaigns of Democrats and Republicans. The announcement was made on a Sunday. Only in mid-week did the announcement get the attention of the press. On Wednesday, March 15, Tim Curry of MSNBC.Com reported on the Browne Campaign's intent to defy the law. MSNBC.com also contacted the FEC, and reported responses to their questions from an FEC spokesman. Browne's Campaign Journal #5, as distributed through LibertyWire on March 25, reports on Browne's contacts with Tim Curry, but does not mention MSNBC.Com's contacts with the FEC.
To the author, the FEC responses appear to be pro forma assurances to the public that if a person broke Federal Election Campaign Laws, that person would potentially be subject to legal action. From the broad wording used by their spokesman, it is not clear that there was a specific intent by the FEC to threaten the Browne campaign with legal action. However, MSNBC.com had raised the issue with the FEC. As of March 15, the FEC had been notified that the issue existed.
What legal action? The FEC could levy civil penalties. The FEC does not actually prosecute criminal cases. It refers cases to the Justice Department, which prosecutes. This distinction between FEC and Justice Department roles leads, with some regularity, to an incorrect claim that there is no criminal hazard associated with violating FEC regulations. Not true. There is an extensive hazard of criminal prosecution for adequately egregious offenses. It's just that the Federal bureaucrats whose duty it is to try to throw perpetrators in prison do not happen to work in the FEC's offices.
Through the remainder of the week, the Browne Campaign's position on filing continued to gather publicity. Browne appeared at State Conventions, on talk radio, and gave press interviews. On Saturday, March 18, Investor's Business Daily covered the Browne Campaign's FEC boycott with their lead editorial.
The importance of the Investor's Business Daily editorial is difficult to overstate. For starters, the United States of America has four serious national newspapers, namely the New York Times, the Wall Street Journal, USA Today, and Investor's Business Daily. (There are also supermarket tabloids that employ highly competent professionals, but whose topical focus is normally more clintonian in nature.) You can get all sorts of local press, some very important, but there are only four daily newspapers that are routinely available from coast to coast.
What are these newspapers? The Times, a full-coverage paper, is the newspaper of the liberal establishment. USA Today, the other full-coverage newspaper, represents the party of mildness. The Wall Street Journal, while primarily a financial newspaper with vast tables of stock and bond data, is the Main Street businessman's conservative Republican newspaper. Investor's Business Daily, the Wall Street Journal's chief competitor as a publisher of fiscal tables and financial news, targets selectively the entrepreneur and the active investor. Its near-million circulation is drawn heavily from the well-to-do, the powerful, and the influential.
One might expect entrepreneurs and takers of active rather than passive risk to be open to the Libertarian message. Indeed, with some regularity transparently libertarian positions are advocated on the Daily's editorial pages. It is perhaps surprising that Libertarian candidates and party groups, especially at the Federal level, have never recognized the Daily as an appropriate location for advertising, to the extent that it is directly or indirectly open to political advertising.
The Daily's editorial was relatively sympathetic to the Libertarian Party. After noting that the Gore and Bush campaigns were pursuing campaign reform, characterized by the Daily as "questionable Constitutional thinking", the Daily observed that "a corrective may be on the way. If it comes, it will take the form of a court challenge from one of the oddball, small parties." The Daily in particular supported Browne's call for secret campaign donations: "That's the same logic that provides for the secret ballot, and it's hard to contest." The Daily emphasized that Browne had not committed himself to civil disobedience, neglecting to note that such civil disobedience was already under way. Of the Libertarian Party, the Daily said "We do not ourselves embrace the whole of the Libertarian Platform."
The IBD editorial may not have landed directly on the front doorstep of every FEC Commissioner. It is an overwhelmingly excellent bet that the editorial went directly to at least some of the Commissioners or their senior staff, and that FEC internal methods and their clipping service filled any gaps in the circulation. If the FEC did not take notice, its inaction was assuredly not due to ignorance. Once the IBD editorial appeared, the FEC was virtually certain to be aware of Browne's position.
The Browne Campaign derived multiple benefits from its announcement. On one hand, defying the Federal government at risk of fine or imprisonment is a fine piece of macho flash. Browne faced party critics who felt that he was too bland, and that an uncompromising anarchocapitalist like L. Neil Smith would be a better candidate. When he considered risking a jail sentence, Browne showed that he could take the extremely hard-line stands wanted by part of the purist wing of the party. On the other hand, Browne's announcement that he had refused to file was an excellent fundraising stunt. It put him in a positive light as a man who could take positive, direct steps to confront issues. The refusal was so spectacular that it distracted readers from questions they might otherwise have asked, questions like "Where is the advertising rollout?" and "What happened to the $750,000 reserve fund?"
Via the IBD editorial the Browne campaign garnered for itself and the Party a substantial level of publicity. As many libertarian observers have noted, you get earned (free) press when you do something to earn it. Browne had finally done something to earn press, and had reaped the benefit.
Above all else, the Browne Campaign's announcement meant that the Campaign would not file FEC statements, at least for some time. The announcement meant that the Browne Campaign's critics could not compare the Campaign's claims with the actual state of affairs. The announcement meant that the Libertarian faithful, the Party loyalists who would be going to Anaheim to vote for the Party's Presidential candidate, would have no way to learn that the Browne campaign's fabulous financial reserves were indeed a fable.
Finally, perhaps not by plan, the non-filing announcement gave the Browne campaign an effective way to distract the Party faithful from the campaign's actual activities. No sooner had the Campaign announced its plans not to file and to collect large donations than a red flag went up. Long-time Libertarian activist, critic of the National Party establishment, and Attorney Jacob G. ('Bumper') Hornberger put out an extensive e-mail. In an message dated March 16, Hornberger warned Party members that there were potential legal consequences to breaking Federal Election laws and FEC regulations.
Hornberger also sent a letter to the FEC. The letter included the key phrase that the letter was not a complaint. As released to the public, it was also not notarized. The FEC has extremely specific rules about what it may act on as a complaint (You can find them for yourself at www.fec.gov.). Under FEC regulations, Hornberger's letter was not a complaint. The FEC had already had press inquiries about Browne, so Hornberger's letter did nothing to exacerbate the Campaign's legal circumstances with respect to the FEC.
Browne supporters claimed on Libertarian email lists that Hornberger had turned Browne in to the FEC. To the author's eyes, these claims were in fact efforts to discredit Hornberger by falsely accusing him of trying to damage the Libertarian Party. Nonetheless, Hornberger handed the Browne campaign a most excellent way of distracting Libertarians from negative features of the Browne campaign. The Campaign's supporters could invest their time and bandwidth denouncing Hornberger. Hornberger was said to be the man who turned the Browne campaign over to the FEC, a claim that for several reasons was transparently false:
(i) The FEC already knew about the issue. Their press spokesman Kelly Huff had taken questions from a major news outlet. A major national newspaper had used the Browne announcement in their lead editorial. This early publicity was hailed by Perry Willis in the March 22, 2000 LibertyWire as a 'very good sign', a demonstration of how much more publicity the Browne campaign would get when it actually filed the FEC challenge.
(ii) The FEC has a legally prescribed format for filing criminal complaints, without which the complaint is ignored. Hornberger's letter did not comply with the format and could not be used as a complaint by the FEC.
(iii) The FEC never did anything. It never responded to Hornberger's letter.
(iv) Well after Hornberger's letter went out, the Browne campaign was actively publicizing its plans to challenge the Federal Election Commission. On March 23, Browne's Campaign Journal #5 shows that Browne had an interview on Good Day USA, carried by 250 radio stations. The challenge was Browne's lead topic. If the Browne Campaign was at all concerned that the FEC might find out from Hornberger about the civil disobedience campaign, why were they taking steps that would be at least as likely to call themselves to the FEC's attention?
And, most important,
(v) If the Browne campaign had ever had any intent of litigating, it was an absolute prerequisite that the FEC undertake an enforcement action against them. If the FEC simply ignored Browne, the Browne Campaign could not readily ask the courts to block the FEC enforcement action as unconstitutional, because there would be no FEC action to block. Without FEC action, most litigation from the Browne campaign would be moot. [Of course, the Campaign could have asked the courts for a peremptory judgement, but to do that they did not need to break the law at all.] Only if the Browne campaign had no intent of undertaking legal action against the election laws would it make sense for the Campaign to announce that they were not filing and then complain that they might receive FEC scrutiny
All things considered, Browne's announced failure to comply with FEC regulations worked wonders for his campaign. To some Libertarians, Browne was a hero for defying Federal Law. To other Libertarians, Browne had shown that he was sufficiently competent as a campaigner that he could earn press.
Browne's most important strength was the three years he had spent running. Noncompliance protected the value of his claims about his efforts. So long as his finances remained secret, the Potemkin village of Browne's campaign would show only its front facade. No one would know his Campaign was almost broke. The longer the secret could be preserved, the better off Browne would be. The Campaign's actual situation might eventually be revealed, but it would take weeks or months for most Libertarians to hear the truth. Even if the truth came out before the convention, Browne's opponents might well not have enough time to exploit it. By convention time, many delegates would already have committed to Browne, often firmly enough that rumors of a scandal would not lead them to change their votes.
To close out March, how did the Browne campaign spent its money? Spending on associates fell by almost $9000, with ten associates receiving:
Jim Babka $4,167
Barbara Braun $ 856
Robert Brunner $2,574
Erich Covey $ 384
Robert DeVoil $3,401
Debra Greeson $1,428
Jennifer Willis $2,000
Steve Willis $2,911
Perry Willis $5,167
Stephanie Yanik $ 500
TOTAL $23,388
while firms long associated with the campaign received
Optopia $3,152
TOTAL $3,152
Among the associates, particularly dramatic was the reduction by $4000 in payments to Stephanie Yanik for administrative services. The only increases were new Associate Barbara Braun, and an additional $1000 for campaign management to Perry Willis. On a percentage base, spending on associates and their firms fell only slightly, to 31.6%.
The campaign also had major external expenses, including
Polaris Productions $15,000
The Firm MultiMedia $15,000
William J Olson $ 5,000
Newman Communications $ 4,666
CopyRight (videotapes) $ 4,000
Seabreeze Travel $ 3,000
AccuMail, Inc $ 2,828
Walter Karl (list rental) $ 2,103
TOTAL $51,597
and $1683 to the candidate himself for travel and other expenses. The $5000 for William J Olson is to a PC Trust Account, a mechanism for locking money away from the campaign for the announced FEC lawsuit.