Watchdog Group Sues FEC Over Crossroads GPS

Watchdog Group Sues FEC Over Crossroads GPS

(Photo: AP/Lawrence Jackson)

The watchdog group Citizens for Responsibility and Ethics in Washington (CREW) has filed suit against the Federal Election Commission, alleging that the agency violated election laws when it dismissed a CREW complaint against Crossroads GPS, a conservative political operation masterminded by GOP operative Karl Rove.

The lawsuit asks the court to refute the FEC’s dismissal—which was due to a 3-3 partisan split over whether or not the commission should take action—and order the FEC to do its job. In the suit, CREW accuses the FEC of violating the Federal Election Campaign Act, the post-Watergate reform law that formed the agency to begin with.

At issue is whether Crossroads GPS is a political organization or a legitimate 501(c)(4) social welfare group. Since its inception, Rove’s GPS group has branded itself a “social welfare” nonprofit. These groups are not required to disclose their donors, but under tax laws they may not engage in politics as their “primary purpose.” But IRS regulations are murky, and CREW alleges that GPS has taken advantage of loopholes in the law. Crossroads GPS has spent $100 million dollars—all undisclosed—in the past six years, mostly on attack ads.

Back in 2012, CREW filed a complaint with the FEC alleging that Crossroads GPS violated election laws when it raised $6 million specifically to support Republican Josh Mandel’s unsuccessful Ohio Senate bid without disclosing its donors. Campaign-finance laws require that organizations disclose their donors when contributions are spent on political activity.

Other campaign-finance watchdogs have challenged Crossroads GPS in FEC complaints, to no avail. The Campaign Legal Center and Public Citizen sued the agency in 2014 after it also dismissed the groups’ complaint arguing that the commission should act on evidence substantiating that GPS is a traditional political committee.

“It’s a shame that we have to take the government to court for not doing something it was put in place to do,” CREW Communications Director Jordan Libowitz told the Prospect in an interview. “It shows a pattern [regarding the FEC’s partisan gridlock] that so many groups have resorted to lawsuits.”

The FEC isn’t the only government agency that reformers say has failed to hold Crossroads GPS to the standard of law. CREW’s lawsuit comes just a week after news broke that the Internal Revenue Service had officially granted GPS tax-exempt status as a “social welfare” nonprofit.

As Robert Maguire meticulously detailed for the Center for Responsive Politics, Crossroads GPS’s lawyers essentially waged a multi-year war of attrition until the tax agency finally granted the group exemption.

In the case of the FEC, its own general counsel had found likely wrongdoing on GPS’s behalf, but due to its partisan deadlock the commission failed to find a consensus to even consider taking action. FEC rules bar the agency from taking action without at least four votes.

Having found no relief from the FEC or the IRS, reform advocates have also asked the Department of Justice’s tax division to crack down on Crossroads GPS. But the division has signaled no plans to wade into the troubled waters of political regulation.

To CREW and other reformers, federal regulators’ failure to act signals that more dark money spending lies ahead.

“Between the FEC refusing to act in this case and the IRS granting Crossroads GPS nonprofit status, the government has allowed Karl Rove and company to get away with entirely too much improper secret political activity,” said CREW Executive Director Noah Bookbinder.