The strange case of W. Spann, LLC

August 5, 2011   •  By Brad Smith
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Those of us who have worked long and hard to defend political free speech cannot be overly thrilled by the case of W. Spann, LLC. If you’ve missed it, the campaign finance scandal du jour is reported in the Washington Post:

a now-extinct corporation called W Spann LLC, … gave $1 million in April to Restore Our Future, a “super PAC” created to help Mitt Romney’s presidential run, according to Federal Election Commission records.

The firm was formed in March and then dissolved in July, with no record of any shareholders, executives or business activities in between, … The entire arrangement was handled by a Boston lawyer who specializes in managing wealthy estates.

Reformers are in their usual bouts of hysteria, but Dan Eggen’s Post piece (Eggen being one of the better reporters on this beat) gives us a flavor for how this matter is going to be portrayed: “murky,” “hazy,” “a new twist in efforts by wealthy donors and corporations to cloak their political expenditures, which have accelerated in the wake of court rulings allowing corporations to spend unlimited amounts of money on elections.” Fred Wertheimer wants the Justice Department to investigate. Something called the “Public Campaign Action Fund” has asked Delaware, Attorney General Beau (Darn, I could’ve been a U.S. Senator) Biden to investigate.

So we, who fight for free political speech, can’t be thrilled by what we know will be another round of near hysteria about money in politics that will go far beyond this contribution. As one longtime battler for free political speech put it, “It’s these kinds of people that ruin it for everybody else. Pffft.”

But perhaps in that comment is some real perspective on the issue. After the failures of the Federal Election Campaign Act of 1971 and the McCain-Feingold law of 2002, the (largely court ordered) deregulation of campaign finance has been remarkably successful. Last year’s congressional elections were the most competitive, issue-oriented elections we’ve seen in a long, long time, the political system is full of newcomers flexing their wings, and voices are being heard that before were absent from our system.

“A million dollars, and nobody knows who gave it! Doesn’t W. Spann, LLC show the disaster of Citizens United?”[1] Well, no.

First, W. Spann, LLC is quite possibly in simple violation of existing law. The law defines a political committee as an organization formed for the purpose of influencing elections, and spending over $1000 to do so. It appears, if first news reports are true, that W. Spann, LLC fits that description. If so, it would have to register with the Federal Election Commission and report all of its contributions and expenditures to the FEC. Further, if the business was simply the alter ego of the founder – if the man who contributed funds to the LLC also controlled the LLC – it is possibly the making of a campaign contribution in the name of another, another violation of the law.

But let’s push this a bit further. Suppose it is all perfectly legal, and we’ll never know the true identity of the donor behind W. Spann, LLC: what does that tell us?

First, we know that the donor probably hasn’t done Restore Our Future, let alone good old Mitt Romney, any favors. Restore Our Future appears to have complied with the law, reporting its donors. Romney – well, he has nothing to do with it. The entire concept of a “SuperPAC” such as Restore Our Future is that the candidate has no role in the organization. But you can bet your a– that Romney is going to take a political hit for this – indeed, he already is. This suggests once again the wisdom of the Supreme Court’s longstanding view that independent expenditures should not be seen as creating a quid pro quo type obligation between spenders and candidates, and indeed that candidates will often be hurt by the actions of independent speakers. Similarly, if the donation by the “shadowy” W. Spann, LLC hurts Romney, as it appears it will, that seems to suggest that the system may be self-policing – take “murky” contributions, and it is likely to hurt your cause. It hardly screams out for a new law.

More than that, does anybody out there really believe that this is “corrupting” Mitt Romney? Holy Moly, I hope not. Romney is pretty well known by now. Some like him, some don’t (disclaimer: in 2008 I was Romney’s counsel in Ohio, and a member of his Advisory Committee on the Constitution and the Courts, so you can put me in the “like” category), but is there really anybody out there now wondering, “I used to think Romney was his own man, but not anymore” because of this? Is there anybody who thinks Romney is “corrupt” because of this? Is anyone thinking, “I used to think I knew what policies Romney would pursue, but now, who knows?” Let’s get serious, here.

Further, we realize the steps that someone is willing to go to to conceal his or her (or its?) identity. And why not? In recent years, the papers have been rife with stories of boycotts, harassment, threats, picketing, bogus legal complaints, and vandalism against individuals and companies who make campaign contributions, based on who they make those contributions to.

Over the past century, the right to privacy, including the right to a secret ballot, has become deeply engrained in our society. Anonymous political speech and anonymous charitable giving both have long, honored traditions in this country. Once everyone gets over the outrage of W. Spann, LLC, there will be a serious question: what harm was done, or at least what harm was done to anyone other than to Mitt Romney and the Romney campaign – neither of whom have any control or say in the whole matter? [2]

If you are upset about Romney’s contributions, don’t vote for him. We suspect that this won’t change many minds, but it will give those already opposed to Romney something to whine and carp about. And that’s fair enough, too, one supposes. But it’s not really a scandal, and doesn’t mean we need to further infringe on the First Amendment rights of Americans.

[1] We can’t help but note that the real “culprit” in this groundswell of political speech is less Citizens United, as important as that decision was, than v. FEC (a case in which we here at CCP, along with the Institute for Justice, represented the plaintiffs), which allowed for the creation of so-called SuperPACs. Citizens United allowed corporations and unions to spend, but absent, they would be required to spend on their own., not Citizens United, is what allows corporations (and unions) to give to “SuperPACs.” We remain extremely proud of this case, which has already demonstrated remarkable benefits in increasing political competition, voter choice, and individual freedom.

[2] Note that under our goofy campaign finance laws, it would quite possibly be considered illegal for Romney to call Restore Our Future and ask them to return these funds; and almost certainly illegal for him to ask them not to take such contributions in the future.

Brad Smith

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