November 26, 2022

The National Rifle Association used shell companies to make as much as $35 million in illegal donations to Republican candidates in 2018, a lawsuit filed this week on behalf of a gun control group claims. 

2018 Election Photo By Google

The nonpartisan Campaign Legal Center and Giffords, the gun safety advocacy group started by former Rep. Gabrielle Giffords and her husband Sen. Mark Kelly, filed the federal lawsuit Tuesday in D.C. The complaint says that two NRA affiliates, the NRA-Political Victory Fund and NRA-Institute for Legislative Action, “engaged in an ongoing scheme to evade campaign finance regulations by using a series of shell corporations to illegally but surreptitiously coordinate advertising with at least seven candidates for federal office.”

The allegations center around two groups: a political consultancy firm operating as both Onboard and Starboard, and a vendor, National Media and affiliates American Media and Advertising Group and Red Eagle Media. Giffords says the NRA used the groups to coordinate campaign advertising between the organization and the candidates.

NRA Shell Companies Scheme

“These schemes allow the NRA to evade federal contribution limits and shield millions of dollars of public spending from public scrutiny in violation of [the Federal Election Campaign Act],” the lawsuit says. 

The connections between the NRA and the groups were first reported by the Trace and Mother Jones in 2018 and 2019. 

The campaigns and candidates mentioned in the lawsuit include former President Donald Trump’s presidential campaign, which the CLC alleges received $25 million from companies as part of the scheme. In addition to the NRA-PVF and NRA-ILA, the lawsuit also names Sen. Josh Hawley and former Montana Senate candidate Matt Rosendale as defendants, and says Sens. Thom Tillis, Tom Cotton, Ron Johnson, and former Sen. Cory Gardner also received the donations.

The NRA denied the lawsuit’s claims. “Another premeditated abuse of the public by our adversaries—who will stop at nothing in their pursuit of their anti-freedom agenda,” the gun group told the Washington Post.

Did NRA Shell Companies Bribe
Did NRA Shell Companies Bribe

“Suffice to say, the NRA has full confidence in its political activities and remains eager to set the record straight.”

Kyle Plotkin, a political adviser for Hawley, told the St. Louis Post-Dispatch that the complaint was “a frivolous lawsuit by a special interest anti-gun group who wants to take away the rights of law-abiding gun owners.”

Giffords is the gun-safety advocacy group that came out of Americans for Responsible Solutions, the political action committee started by former congresswoman Giffords and Sen. Kelly. It was formed after she was shot and nearly killed in an assassination attempt in 2011. 

From 2014 to 2018, Giffords companies spent millions in support of Democratic candidates running against the Republicans named, including Hillary Clinton and former Sens. Russ Feingold, Claire McCaskill, and Mark Udall, the lawsuit says. The only Republican named in the lawsuit who lost his race was Rosendale, who was defeated by Sen. Jon Tester in 2018. Last year, Rosendale won election to the House. 

Both Companies The CLC and Giffords sued the Federal Election Commission in 2019 after it failed to act on complaints the group had filed. In September, the same D.C. court ruled that the FEC had to take action on the complaint within 30 days, and when the deadline expired without action, the court ruled that Giffords could sue the NRA directly in order to “remedy the violations” it sought in the FEC complaints. 

“The FEC had the chance to do its job by taking action against the NRA for this massive coordination scheme, but as usual, the FEC failed to enforce the law,” CLC Action senior legal counsel Molly Danahy said in a statement. “Therefore, we are compelled to take legal action to crack down on secret spending.”

ABOUT THIS COMPANIES CASE

In 2018, Campaign Legal Center (CLC) and Giffords filed four separate administrative complaints with the Federal Election Commission (FEC) alleging that the National Rifle Association (NRA) violated the Federal Election Campaign Act by using a series of shell corporations to make millions of dollars of unreported contributions to at least seven federal candidates since 2014.

The political and media consulting firm OnMessage set up a shell corporation called Starboard. According to their incorporation documents, the firms not only share an address, but share the same leadership. OnMessage has also taken credit for advertisements contracted through Starboard, including accepting and promoting industry awards for ads created by Starboard.

The NRA contracts with Starboard to produce advertisements in support of federal candidates. At the same time, the candidates contract with OnMessage for their own media and advertising needs.

Both the companies NRA and the candidates it supported place their ads through a media firm called National Media. To further hide this coordination, the NRA ads are typically placed under a separate trade name used by National Media called Red Eagle, while the candidate ads are typically placed by National Media affiliate American Media and Advocacy Group. There are several instances the same employee placed ads for both the NRA and the candidates the NRA supported, and in some cases ads were placed for both groups by the same employee on the same day.

This scheme appears designed to evade detection of violations of the laws governing coordination between campaigns and outside groups and, in doing so, facilitated as much as $35 million in illegal, unreported contributions from the NRA to at least seven federal campaigns.

The FEC regulates the use of common vendors for media placement because the targeting of political ads is a critical element of a campaign effort. If the NRA possessed inside knowledge of these campaigns’ strategies thanks to common vendors, it could strategically time and target its ads to complement the campaigns’ own efforts. 

That would make the expenditures anything but “independent.” Companies Vendors that work for both candidates and outside groups may be able to comply with federal election law by establishing a firewall segregating employees who work for outside groups from those who work for campaigns, and ensuring that information is not shared between the two sides. No such firewall exists, however, when the same employees are placing ads for both the NRA and the candidates the NRA supports.  

Through companies the shell company scheme described above, the NRA used inside information about candidates’ media and advertising strategy to create and place supposedly ‘independent’ ads supporting those candidates. This coordination creates an unfair advantage for the candidates, and violates the law. According to the U.S. Supreme Court, groups like the NRA can only make unlimited expenditures if they are truly independent of the candidates they support. It falls to the FEC to enforce the laws that preserve that independence and prevent corruption.

source https://campaignlegal.org/cases-actions/giffords-v-fec

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