Giffords sues NRA alleging campaign finance violations

Gun Rights

With Daniel Lippman

GIFFORDS, WATCHDOG ALLOWED TO SUE NRA OVER CAMPAIGN FINANCE ALLEGATIONS: Giffords, the gun control advocacy group founded by former Rep. Gabby Giffords, sued the National Rifle Association today in a rare third-party campaign finance case, accusing the gun rights group of funneling as much as $35 million in illegal campaign contributions to six GOP Senate campaigns over the past seven years and the 2016 campaign of former President Donald Trump.

The complaint, filed by nonpartisan campaign finance watchdog Campaign Legal Center on behalf of Giffords, accuses the NRA of using shell companies to coordinate about $35 million of election spending illegally by running ad buys through what was actually a common vendor, in violation of FEC rules. Giffords had filed a series of complaints with the federal elections watchdog since 2018, and later CLC sued the agency on Giffords’ behalf after the FEC failed to act on the complaints. The NRA did not immediately respond to a request for comment on the latest lawsuit, but has referred to CLC’s previous litigation as a “frivolous distraction.”

— The U.S. District Court for the District of Columbia in September ordered the agency to take action on the complaints within 30 days, a deadline that lapsed this week with no action. On Monday, the court issued an order declaring that the FEC had failed to comply with its September order and paving the way for today’s complaint. It’s a rare instance of a defendant being authorized to pursue legal action against an alleged violator of campaign finance law directly, which Giffords called “groundbreaking” in a press release.

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— “In addition to the NRA’s pretty significant illegal spending, we also have a systemic problem of the FEC not doing its job as a law enforcement agency,” Adav Noti, CLC’s vice president and legal director, asserted. The FEC, he argued, “hasn’t been doing its law enforcement job for more than a decade now, and courts are starting to lose patience.”

— According to the complaint, during the 2014, 2016 and 2018 elections, the NRA’s political action committee and the gun group’s lobbying arm hired the consulting firm Starboard to produce its ads. The complaint alleges that Starboard is “functionally indistinguishable” from the consulting firm OnMessage, which was hired by candidates like now-Sen. Josh Hawley (R-Mo.) and Matt Rosendale, a GOP Senate nominee from Montana. Starboard and OnMessage then hired the National Media-linked Red Eagle Media and American Media & Advocacy Group for ad placement and strategy. The Trump campaign also hired American Media & Advocacy Group, according to the complaint, which documents instances of several individual employees at the consultancies toggling back and forth between placing ads for the Trump campaign and ads for the NRA affiliates in the lead-up to the 2016 election.

— “Taken together, the Starboard and National Media schemes represent a continuous and ongoing pattern in practice by” NRA affiliates “to illegally coordinate advertising spending with candidates for federal office through a common vendor and to shield their illegal acts from federal regulators through the use of shell corporations,” the complaint says. The alleged scheme allowed the NRA “to evade federal contribution limits and shield millions of dollars of political spending from public scrutiny in violation of” federal campaign finance law.

— “There are a variety of types of activities that constitute illegal coordination,” Noti told PI. One activity that is “specifically laid out in the FEC’s regulations at some length is coordination by use of a common vendor.” In this case, he continued, “clearly there was no, there was no division between … the people working on the NRA ads and the candidate ads, because they were, in many cases, literally the same people.”

— “The NRA has long acted like it is above the law, and it has done so flagrantly in the last several election cycles,” David Pucino, a senior staff attorney at Giffords Law Center, said in a statement. “This lawsuit demonstrates that the NRA broke the law by illegally coordinating with federal campaigns and funneling millions of dollars to candidates who supported their extremist, deadly agenda.” Giffords and the Campaign Legal Center are seeking a fine of up to $35 million, and a prohibition on further violations of campaign finance law by the NRA, which would carry with it more severe penalties if violated.

Good afternoon and welcome to PI. Send lobbying and K Street tips: [email protected]. And be sure to follow me on Twitter: @caitlinoprysko.

DEMS BROKER DRUG PRICING DEAL: “Senate Democrats on Tuesday announced an agreement on drug pricing reform, coming out in favor of allowing Medicare Part D to negotiate directly with pharmaceutical companies for the first time since its creation,” POLITICO’s Alice Miranda Ollstein reports — “a move the drug industry has fought hard against for nearly two decades. While the latest proposal is far weaker than the version passed twice by the House, even staunch progressives in both chambers are preparing to accept that it’s likely the best they’re able to get in the narrowly divided Congress.”

— “‘We’ve heard from people across the country who have serious illnesses and can’t afford their medicine,’ Senate Majority Leader Chuck Schumer told reporters Tuesday. ‘Today we’ve taken a massive step forward in helping alleviate that problem…It’s not everything we all want. Many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs.’”

— “An outline of the most recent policy, obtained by POLITICO, would empower the government to negotiate the cost of 30 drugs by 2028, and would carve out exceptions for small biotech companies. Only drugs that have been on the market for several years and have passed their initial exclusivity periods would be eligible for negotiation, according to the outline, which began circulating among lobbyists earlier this week. To the dismay of progressive lawmakers and outside advocates, the deal would also limit drug companies’ price hikes to the 2021 inflation rate, not the far lower 2016 rate they had initially supported.”

— The latest proposal, crucially, won the support of Sen. Kyrsten Sinema (D-Ariz), a vocal critic of the reforms put forward by the House. In an announcement of her support, Sinema’s office called the plan “historic” and “transformative,” arguing the industry-friendly changes to the policy will “ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics.”

MORE ANNALS OF CAMPAIGN FINANCE: The FEC “has ruled foreign donors can finance U.S. referendum campaigns, opening the door to foreign spending on fights over high-profile policy issues,” Axios’ Lachlan Markay reports. “Foreign nationals are barred from donating to U.S. political candidates or committees. But the FEC’s decision — allowing them to support ballot committees — provides another avenue for foreigners to directly influence U.S. voters and domestic policy.”

— The agency’s 4-2 vote in July found that ballot initiatives are not considered “elections” under federal law, meaning that prohibitions on foreign contributions don’t apply. “Two sources familiar with the decision told Axios that FEC Chair Shana Broussard, a Democrat, voted with the panel’s three Republicans to dismiss the underlying complaint,” which “stemmed from a 2018 complaint alleging a Canadian subsidiary of Australian firm Sandfire Resources illegally financed a measure to block new restrictions on hard rock mining in Montana.”

— “A major question stemming from the decision is whether foreign nationals are now permitted to spend money to influence the actual mechanisms of the U.S. democratic process. That would include congressional redistricting, which is frequently subject to ballot referenda,” a question the agency’s ruling didn’t broach. Seven states already ban foreigners from contributing to state ballot committees.

— “I would expect a corresponding explosion of DOJ Foreign Agents Registration Act” registrations and investigations, Brandon Van Grack, a former head of DOJ’s FARA unit, said in a tweet. David Laufman, a partner at Wiggin & Dana who previously oversaw FARA enforcement at DOJ as chief of the Counterintelligence and Export Control Section, called the decision “concerning,” though technically legally correct. “Congress should consider legislation to ban foreign support for ballot initiatives,” he wrote in a tweet, especially given the recent surge in “foreign influence operations directed at the American political system.”

BIDEN WORKING GROUP DROPS STABLECOINS REPORT: “U.S. financial regulators on Monday called on Congress to require companies that issue certain types of stablecoins to become banks, as part of a broader effort to ramp up supervision of the virtual tokens,” POLITICO’s Victoria Guida reports.

— “Federal agencies led by the Treasury Department released the recommendations in a widely anticipated report on risks posed by stablecoins, a form of cryptocurrency whose value is tied to an underlying asset. Officials zeroed in on stablecoins pegged to a fiat currency like the dollar and problems that could arise if they become accepted as a payment method for everyday transactions.”

— The report, which was drafted by the Federal Reserve, SEC, CFTC, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, argues “that stablecoins could cause disruptions in the payment system if they’re not managed properly. Users might also face problems if they try to redeem a stablecoin for cash all at once,” the report adds. Another concern to regulators “is that stablecoins could lead to further concentration of economic power if they are issued by companies with existing commercial might,” Victoria writes.

— “Regulators already have the authority to grant a traditional bank charter to stablecoin issuers, but the proposed legislation would essentially require the firms to obtain one to distribute their tokens. The agencies don’t take a firm position on whether stablecoins should be protected by deposit insurance. The report stresses the importance of having consolidated oversight of the entire company behind a stablecoin, which — as with existing banks — would most likely mean supervision by the Federal Reserve.”

Jobs Report

Laura Leigh Latta has joined the American Council of Life Insurers as state relations regional vice president. She was most recently assistant vice president of government affairs at Protective Life Corporation.

DISH has promoted Peter Lewis to director of government affairs. Lewis leads DISH’s engagement with GOP offices on the Hill and is a Sen. Lisa Murkowski (R-Alaska) alum.

Julie Alderman Boudreau is joining American Bridge 21st Century as presidential research director. She most recently was research director at the League of Conservation Voters, and is a Planned Parenthood and Media Matters alum.

Bronwyn Flores will join IBM to lead comms for the IBM Policy Lab. She most recently led communications for regulatory tech startup Metrc, and is a Consumer Technology Association alum.

Jason Ginenthal is now vice president of health care media at FleishmanHillard. He most recently was a freelance PR consultant.

— The American Forest & Paper Association has promoted Elizabeth VanDersarl to vice president for strategy and operations, Lindsay Murphy to vice president of strategic communications and Terry Webber to vice president of industry affairs. VanDersarl was previously interim vice president for government and industry affairs, Murphy was previously executive director of strategic communications and Webber was formerly executive director of packaging.

Heather Conley will be president of the German Marshall Fund of the United States. She currently is senior vice president for Europe, Eurasia and the Arctic at the Center for Strategic and International Studies.

Elizabeth Coats will be the first director of policy and advocacy at the National NeighborWorks Association. She’s a Senate Appropriations Committee alum.

New Joint Fundraisers

LOBO Velvet Hammer Victory Fund (Lobo PAC, VELVET HAMMER PAC)

New PACs

CONSERVATIVES FOR FREEDOM PAC (Super PAC)
Expand Liberty PAC (Hybrid PAC)
League of Her Own PAC (Super PAC)
Texas Republican Voter Engagement PAC (PAC)

New Lobbying Registrations

Allon Advocacy, LLC: Arrived Holdings, Inc.
American Defense International, Inc.: Cobham Advanced Electronic Solutions Inc.
American Defense International, Inc.: Epirus, Inc.
American Defense International, Inc.: Printed Circuit Board Association Of America
Bramer Group, LLC: Tactical Medical Solutions, LLC
Continental Strategy, LLC: Corporacion Internacional Cemcal
Foley Hoag LLP: Elekta Inc
Foley Hoag LLP: Happiest Baby, Inc.
Foley Hoag LLP: Icad, Inc.
Foley Hoag LLP: Isoray Inc.
Foley Hoag LLP: Polsinelli Pc (On Behalf Of American Glaucoma Society)
Foley Hoag LLP: Procept Biorobotics
Invariant LLC: California Date Commission
Jake Perry + Partners: K&L Gates Obo Savion, LLC
Jake Perry + Partners: K&L Gates On Behalf Of Cyanco International
Mercury Public Affairs, LLC: Dailypay, Inc.
Net-Negative Co2 Baseload Power, Inc.: Net-Negative Co2 Baseload Power, Inc.
O’Rourke And Associates, LLC: Bath & Body Works, Inc.
Stonington Global: Maimonides Medical Center
Summit Strategies Government Affairs LLC: Mount St. Helens Institute
Tiber Creek Group: Gobrands, Inc. D/B/A Gopuff

New Lobbying Terminations

American Association For Respiratory Care: American Association For Respiratory Care
Bass Public Affairs: Westfield LLC
Paul Hastings LLP: Totle, Inc.

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