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On June 19, 2015, the Commission filed suit against Utah businessman Jeremy Johnson alleging that he knowingly and willfully violated the Federal Election Campaign Act (the Act) by using straw donors to exceed the contribution limits. On December 10, 2015, the Commission moved to amend its complaint to add John Swallow as a defendant. On April 6, 2018, the United States District Court for the District of Utah dismissed the Commission’s case against John Swallow. The court further ordered 11 CFR 110.4(b)(1)(iii) stricken from the Code of Federal Regulations and enjoined the Commission from enforcing it.
The Commission's complaint alleges that during the 2009-2010 election cycle, Jeremy Johnson made contributions to three federal candidates that exceeded applicable limits and were made in the names of other persons. Over the course of the election cycle, Johnson contributed through straw donors approximately $100,000 to Mark Shurtleff's United States Senate campaign, about $50,000 to Mike Lee's Senate campaign, and about $20,000 to then-Senate Majority Leader Harry Reid's re-election campaign. In the process, he advanced or reimbursed approximately $170,000 to the straw donors he recruited to contribute to the campaigns.
In 2009, Johnson met with John Swallow, Utah's Chief Deputy Attorney General and a fundraiser for the Shurtleff campaign. Johnson offered to write a check for Shurtleff's campaign in an amount that would exceed the Act's limits. Mr. Swallow explained the statutory contribution limit that applied to federal campaigns. Johnson then entered into arrangements or understandings with friends, family members, and business associates that they would contribute funds to Shurtleff's campaign and that he would supply them with the funds for those contributions, which collectively amounted to approximately $100,000.
In 2010, Johnson used a similar arrangement to contribute approximately $50,000 to Mike Lee's Senate campaign, and approximately $20,000 to Reid's campaign. Johnson made these contributions voluntarily and with an awareness that they were unlawful.
The Act and Commission regulations limit the amount individuals can contribute to federal candidates and further state that “no person shall make a contribution in the name of another person,” nor may any person “knowingly help or assist” any person in making a contribution in the name of another. 52 U.S.C. §§ 30116(a)(1)(A) and 30122, 11 CFR 110.1(b) and 110.4(b)(iii). During the 2009-10 election cycle, the limit on an individual's contributions to a federal candidate was $2,400 per election.
On June 30, 2014, the Commission received an administrative complaint alleging, among other things, that Johnson used the names of others to contribute $50,000 to the Lee Senate campaign. The complaint provided the names of straw donors as well as the details of Mr. Swallow's discussions with Johnson. After investigation, the FEC found reason to believe that Johnson had knowingly and willfully violated 52 U.S.C. § 30116(a)(1)(A) and § 30122 by making excessive contributions in the names of others.
The FEC notified Mr. Johnson of its findings and endeavored to correct his violations through informal methods of conference, conciliation, and persuasion. Unable to secure an acceptable conciliation agreement, the FEC authorized filing suit against Johnson. The Commission sought a declaration that Johnson's contributions were violations of 52 U.S.C. § 30116(a)(1)(A) and § 30122. The FEC further sought a permanent injunction against similar future violations by Mr. Johnson, and appropriate civil penalties.
On December 10, 2015, the Commission moved to amend its complaint to add John Swallow as a defendant. The Commission alleged that Swallow violated the Federal Election Campaign Act by knowingly and willfully making contributions in the names of others when he caused, helped, and assisted Johnson’s scheme. See 52 U.S.C. § 30122. The FEC argued that its motion should be granted because of the overlapping fact patterns and legal issues involved, and stated that both Swallow and Johnson reasonably should have been aware that Swallow could be added as a defendant. Swallow moved to dismiss and for judgment on the pleadings, asserting that in adopting 11 CFR 110.4(b)(1)(iii), which applies to those who “[k]nowingly help or assist any person in making a contribution in the name of another,” the Commission exceeded its statutory authority by imposing secondary liability where Congress did not include it. Swallow also argued that the Commission had failed to state a claim against him, that the regulation burdened his protected speech under the First Amendment, and that it was promulgated in violation of the Administrative Procedure Act.
The court found that the Act’s language was unambiguous, limiting the prohibition on contributions in the name of another to three types of persons: first, a person who makes a contribution in the name of another; second, a person who knowingly allows his name to be used by the contributor; and finally, a candidate who knowingly accepts such a contribution. Because none of these apply to Swallow, the court stated, it granted Swallow’s motion to dismiss. The court concluded that the Commission “went too far, exceeding its authority to write regulations and improperly intruding into the realm of lawmaking that is the exclusive province of Congress,” and ordered 11 CFR 110.4(b)(1)(iii) stricken from the regulations and enjoined the Commission from enforcing it.
Court Decisions and Related Documents
Court Decisions :
- Memorandum Decision and Order (4/6/18) [PDF; 10 pages]
- Order (2/23/16) [PDF; 3 pages]
- Order on Motion for Partial Judgment on the Pleadings or to Strike Affirmative Defenses (2/23/16) [PDF; 6 pages]
- Order on Plaintiff's Motion for Waiver of Local Counsel Rules and on Defendant's Motion to Dismiss Complaint (10/8/15) [PDF; 2 pages]
- Plaintiff FEC's Opposition to Defendant John Swallow's Motion for Partial Final Judgment (8/9/18) [PDF; 14 pages]
- Defandant John Swallow's Motion for Partial Final Judgment (7/26/18) [PDF; 7 pages]
- Plaintiff FEC's Reply Memorandum in Support of its Cross-Motion for Partial Judgment on the Pleadings (1/29/18) [PDF; 14 pages]
- Defendant John Swallow's Opposition to the FEC's Cross-Motion (1/12/18) [PDF; 29 pages]
- Defendant John Swallow's Reply Memorandum (12/4/17) [PDF; 14 pages]
- Plaintiff FEC's Memorandum in Opposition to Def. John Swallow's Motions to Dismiss and for Judgment on the Pleadings and in Support of Cross-Motion for Partial Summary Judgment on the Pleadings (11/20/17) [PDF; 48 pages]
- Plaintiff FEC's Cross-Motion for Partial Summary Judgment on the Pleadings (11/20/17) [PDF; 3 pages]
- Defendant John Swallow's Motion to Dismiss, Motion for Judgment on the Pleadings, and Memorandum in Support (10/23/17) [PDF; 36 pages]
- Answer of Jeremy Johnson to Amended Complaint (4/27/17) [PDF; 7 pages]
- Defendant John Swallow's Answer to Amended Complaint (5/16/16) [PDF; 41 pages]
- Plaintiff FEC's Amended Complaint for Civil Penalty, Declaratory, Injunctive and Other Appropriate Relief (2/24/16) [PDF; 21 pages]
- Plaintiff FEC's Reply in Support of its Motion for Partial Judgment on the Pleadings or in the Alternative to Strike Affirmative Defenses (1/11/16) [PDF; 12 pages]
- Defendant's Memorandum Opposing Plaintiff's Motion for Partial Judgment on the Pleadings or in the Alternative to Strike Affirmative Defenses (12/21/15) [PDF; 18 pages]
- Plaintiff FEC's Motion for Partial Judgment on the Pleadings or in the Alternative to Strike Affirmative Defenses (11/12/15) [PDF; 19 pages]
- Defendant's Answer to Complaint (10/19/15) [PDF; 9 pages]
- Plaintiff FEC's Memorandum in Opposition to Defendant's Motion to Dismiss (10/9/15) [PDF; 8 pages]
- Defendant's Motion to Dismiss Plaintiff's Complaint(9/8/15) [PDF; 4 pages]
- Plaintiff FEC's Complaint for Civil Penalty, Declaratory, Injunctive and Other Appropriate Relief (6/19/15) [PDF; 16 pages]