Campaign Legal Center, Democracy 21, Common Cause, & CREW File Amicus Brief Supporting The FEC’s Efforts To Prevent Corruption In Ted Cruz Loan Repayment Case
When candidates raise funds after an election to repay personal loans to their own campaigns, the risk of corruption is self-evident and voters lose out on essential knowledge until it is too late.
The Campaign Legal Center (CLC), joined by Democracy 21, Citizens for Responsibility and Ethics in Washington (CREW), and Common Cause, filed an amicus brief in the Supreme Court yesterday in Federal Election Commission (FEC) v. Ted Cruz for the Senate to defend a law that prevents potential corruption from arising when politicians make large personal loans to their own campaigns only to repay them with donations received after Election Day.
Federal law limits candidates from using more than $250,000 in contributions raised after the date of an election to repay outstanding personal loans candidates make to their campaigns. In 2018, Senator Ted Cruz (R-TX) put $260,000 of his own money into his reelection and sued the FEC the following year, complaining that this law prevented him from paying off the last $10,000 with post-election contributions.
In June, the District of Columbia Court of Appeals sided with Senator Cruz, striking down the limit on the amount candidates can raise post-election to repay personal loans to their campaigns.
The limit on the use of post-election fundraising to repay outstanding personal loans, according to the brief, “is a common-sense restraint on candidates’ acceptance of personally enriching cash payments after Election Day, a practice that magnifies the risk of a quid pro quo and is ‘bound to … arouse suspicions of malfeasance and corruption.’ (Nixon, 528 U.S. at 390.) The First Amendment does not preclude such a basic reform.”
“At hand here is the risk of corruption posed by what is, functionally, a personal gift to a candidate,” Tara Malloy, senior director for appellate litigation and strategy at Campaign Legal Center, said. “What should concern all voters is that the funds raised for such a purpose are not the typical campaign contributions made to a candidate to support an active campaign; instead, they are solicited after the election has occurred for the sole purpose of repaying the candidate’s personal campaign loans — and thus the money effectively goes right into that candidate’s pocket.”
“The Supreme Court should make short work of rejecting Senator Cruz’s constitutional challenge,” Democracy 21 President Fred Wertheimer said. “The money a candidate raises after an election to repay his loans to the campaign goes directly into the candidate’s pocket. Those contributors are, in reality, making a gift of money to the candidate for personal use. For a winning candidate this presents an obvious danger for corruption and the appearance of corruption. The Court should uphold the constitutionality of the contribution limit, consistent with the many rules limiting personal gifts to officeholders that are in place for all three branches of government.”
“Allowing donors to repay candidates’ loans is a shell game that breeds cynicism about our elections,” Common Cause President Karen Hobert Flynn said. “Campaign donations end up in the candidate’s pocket, after the election – while voters are deprived of information about who’s funding the candidate, while deciding how to vote. Without the loan repayment limit, the opportunity for corruption is enormous: an officeholder could raise millions of dollars from special interests and lobbyists after an election and pocket that money in the form of a loan repayment. And with a Senate election, it would be six years before the voters have a chance to act on that information.”
“It is incredibly corrupting to allow unlimited amounts of money given to a campaign after a candidate has won to flow straight into the candidate’s hands under the guise of a ‘loan repayment,’” CREW President Noah Bookbinder said. “Reinstating the limit will protect the public from the danger of letting candidates personally benefit from donations that have nothing to do with the actual election.”
The full amicus brief filed by the groups on Monday is online here.
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