Democrat Senator Calls on FEC to End Illegal Campaign Donation Refunds

WASHINGTON, DC - JANUARY 3: U.S. Sen. Catherine Cortez Masto (D-NV) participates in a reenacted swearing-in with U.S. Vice President Joe Biden in the Old Senate Chamber at the U.S. Capitol January 3, 2017 in Washington, DC. Earlier in the day Biden swore in the newly elected and returning members on the Senate floor. Photo by Aaron P. Bernstein/Getty Images

Sen. Catherine Cortez Masto (D-Nev.) on Feb. 21 called on the Federal Elections Commission (FEC) to end the practice of refunding illegal campaign contributions to donors.

U.S. law places limits on the amount an individual may donate to a political campaign.

Under the Federal Election Campaign Act of 1971, restrictions are placed upon who can make donations to candidates and the maximum amount that they can donate to those campaigns.

According to the FEC, in the 2021 and 2022 election cycles, the max individual contribution was capped at $2,900 per election. However, the limit for individual donations to national party committees is much higher, capped at $36,500 per cycle.

Currently, when a contribution exceeds the legal limit, the FEC facilitates a refund on the excess amount.

Individual donations to candidates are a contentious issue. Some critics warn that the practice allows wealthy individuals and corporations to effectively buy elections.

In a Feb. 21 letter addressed to the FEC, Cortez Masto called on the commission to end the practice of refunding money to violators of campaign finance law.

“The laws that safeguard the fairness of our elections must be fully enforced and those who seek to circumvent the law should be held accountable,” Cortez Masto wrote. “Recent events, however, show that time and again, those making illegal campaign contributions have done so without fear of meaningful penalties.”

Cortez Masto noted that the FEC often permits refunds of illegal campaign contributions, albeit with fines. She added that while fines are imposed “on those who clearly disregard the law,” legislative limits on such fines mean that the fine is often less than the excess campaign contribution.

‘Undermines’ the Law

Cortez Masto said that returning donations “undermines the [FEC’s] ability to hold violators of the law accountable.”

“When illegal donations are then returned to the donor, this allows individuals who have violated the law to walk away in the black, having recouped more money than they paid in fines,” Cortez Masto wrote. “Illegal campaign contributions returned to their donors can even be used to pay the fines imposed by the FEC.”

She continued, “The practice of returning illegal donations clearly undermines the Commission’s ability to hold violators of the law accountable through the assessment of fines.”

Cortez Masto said that less ambiguous rules about the circumstances when a campaign contribution is refundable “will help deter illegal behavior.”

The Federal Election Campaign Act also prohibits military and other federal government contractors from making campaign contributions, in part due to the conflicts of interest that such contributions entail.

In her letter, Cortez Masto said that contractors are a “major source” of illegal contributions.

One such instance took place in February 2022 when three military industrial executives were criminally charged for illegally donating money to Sen. Susan Collins (R-Maine).

The senator listed off a litany of recent violations of this law, including illegal campaign contributions from Marathon Petroleum, Ashbritt, Inc., and others.

In each case, Cortez Masto said, the violators had their contributions returned, more than making up for the loss from any fines imposed.

Foreign Collusion Narrative

Further in her letter, Cortez Masto made a reference to debunked claims about foreign collusion by President Donald Trump and his allies.

Following the 2016 presidential election, many Democrats claimed that Trump colluded with Russia to steal the election. After an extensive investigation, special counsel Robert Mueller came up with no evidence to support the claims. Subsequent inquiries found that the investigation into Trump was triggered by a Hillary Clinton-funded dossier, composed by a former British intelligence agent, and and laundered to the press and government by an opposition research firm.

Though subsequent events have absolved Trump from the charge of Russian collusion, many Democrats continue to suggest that prominent Republicans and their political actors are in league with foreign powers.

In her letter, Cortez Masto alluded to this narrative pointing to the case of Barry Zekelman as an example.

Zekelman, a Canadian billionaire, was allegedly involved an illegal $1.75 million donation to the America First Action PAC.

“While the FEC imposed one of the largest fines in the Commission’s history on Mr. Zekelman—$975,000—the illegal donation was also returned in full,” Cortez Masto wrote. “Fines simply cannot function as a deterrent when violators of the law are allowed to recoup their illegal donations.”

‘Stand Against Illegal Donations’

Cortez Masto called for creating a rule outlining when the FEC can require the disgorgement of illegal campaign contributions. Disgorgement refers to a legal remedy requiring that a party who profited from unlawful acts not keep the profits of those actions. Cortez Masto noted that in some instances, FEC rules already allow for disgorgement of illegal campaign contributions.

“The Commission’s rules currently allow the FEC to require disgorgement and this penalty has been imposed by the Commission in the past.”

However, she said these rules need to be clarified.