FEC ruling: Leadership PACs can legally be used a personal slush funds

The FEC, for the first time, explicitly ruled that leadership PAC funds can be used for personal expenses.

The Federal Elections Commission was reviewing a case wherein former Republican congressman Lou Barletta, of Pennsylvania, used his leadership PAC to make rent payments to his wife. A leadership PAC is a political committee controlled by a candidate or officeholder, but is not officially an “authorized” campaign committee. They are often used to raise and spend money on allies without exceeding the standard campaign committee financial limits.

After losing re-election in 2018, Barletta converted his campaign committee into a PAC and transferred all of his donor cash to a leadership PAC called LOU PAC. He then used LOU PAC funds, originally raised during a campaign, to pay rent to his wife for a property they jointly owned.

The FEC ruled 4-2 not only to excuse Barletta’s use of campaign money for personal reasons, but that all leadership PAC money is exempt from personal-use restrictions. The two dissenting commissioners, both Democrats, wrote:

The resolution of this case […] raised broader issues about the personal use of campaign funds, specifically whether Members of Congress, despite statutory prohibitions on such conduct, will be allowed to personally benefit from the money they raise for their candidacies or will be able to circumvent personal use restrictions by simply moving the money to another committee under the Members’ control. The Commission should have taken a strong stand against such conduct. Sadly, it did not… for the first time, a majority of the Commission explicitly determined that the Federal Election Campaign Act (FECA)’s personal-use restriction does not apply to leadership PACs.

As a result, candidates and officeholders are expressly permitted to use leadership PACs as personal slush funds. Further, they will also be allowed to transfer campaign donor money to leadership PACs to shield it from legal oversight. The only solution is congressional legislation explicitly limiting what leadership PACs may be used for.

The Campaign Legal Center:

Because a leadership PAC is, by definition, established by a candidate or officeholder, every contribution to a leadership PAC is “accepted by a candidate” and thus is already statutorily covered by the personal use prohibition. But because certain FEC Commissioners have insisted on applying the personal use prohibition only to money contributed to a candidate’s authorized campaign, Congress should amend the law to explicitly apply the prohibition to leadership PACs.

The ideal legislative solution would be for Congress to extend the personal use prohibition to all political committees, including PACs. In fact, the FEC has for many years asked Congress to do exactly this in its annual legislative recommendations; even while disagreeing about what money the law covers, Commissioners have agreed that the law needs to be strengthened.

Corruption of leadership PACs

A 2018 report by the Campaign Legal Center found that less than half of the hundreds of millions of dollars spent by leadership PACs each election cycle actually go to other candidates, as intended. Most of the expenditures of leadership PACs are for personal, often lavish, items and events.

Instead of contributing to other candidates, some politicians have routinely used leadership PAC funds for luxury flights, hotel rooms, fine dining, and event tickets… A South Dakota senator spent $403,000 at West Virginia’s Greenbrier Sporting Club. A Missouri senator spent $117,000 at the Disney Yacht Club Resort in Florida. An Ohio congressman spent $64,000 on Broadway tickets in New York City. A Georgia congressman spent $34,000 for one event at the five-star Sea Island Resort. A Texas congressman spent $21,000 on membership dues to a Maryland country club. A Kentucky senator spent $4,000 for a limousine service in Rome.