United States v. Kanchanalak
192 F.3d 1037 | D.C. Cir. | 1999
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 8, 1999 Decided October 8, 1999
No. 99-3019
United States of America,
Appellant
v.
Pornpimol Kanchanalak a/k/a Pornpimol Parichattkal, and
Duangnet Georgie Kronenberg,
Appellees
Consolidated with
No. 99-3034
Appeals from the United States District Court
for the District of Columbia
(No. 98cr00241)
Jonathan Biran, Attorney, United States Department of
Justice, argued the cause and was on the briefs for appellant.
Eric L. Yaffe, Attorney, entered an appearance.
Reid H. Weingarten argued the cause for appellees. With
him on the brief were Erik L. Kitchen, Brian M. Heberlig,
and James Hamilton. Michael Spafford entered an appear- ance.
Before: Wald, Silberman and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Wald.
Wald, Circuit Judge: The government charged Pornpimol
"Pauline" Kanchanalak (aka Pornpimol Parichattkal) and
Duangnet "Georgie" Kronenberg with a scheme to disguise
illegal hard money contributions and soft money donations
from foreign nationals and corporations to national and state
political committees. Defendants were also alleged to have
caused political committees to file reports with the Federal
Election Commission ("FEC") falsely identifying lawful per- manent residents as the source of funds that actually originat- ed with foreign nationals and corporations in violation of 18
U.S.C. ss 2 (b), 1001. The government argued that s 441e of
the Federal Election Campaign Act ("FECA") prohibits any
infusion of money from foreign nationals into federal, state,
and local elections and that section 104.8 of the FEC
regulations requires that political committees report the true
source of their contributions and donations. Defendants as- serted that as to both hard and soft money, political commit- tees were not required to report the true sources of their
receipts, and as to soft money, FECA did not restrict such
donations by foreign nationals.1 They also argued that the
__________
1 Defendants now concede that in United States v. Hsia, 176 F.3d
517 (D.C. Cir. 1999), we rejected their contention that political
committees are not required to report the true sources of their hard
money but ask us to reconsider that decision. We have no authori- ty to do so. See LaShawn v. Barry, 87 F.3d 1389, 1396 (D.C. Cir.
1996) ("One three-judge panel ... does not have the authority to
overrule another three-judge panel of the court.... That power
may be exercised only by the full court.").
FEC reporting regulation could not reasonably be read to
require disclosures of the original sources of soft money
receipts.
Based on its prior rulings in United States v. Hsia and
United States v. Trie, the district court dismissed the hard
money counts, determining that the government needed to
demonstrate affirmative conduct beyond using conduit checks
for a false statement prosecution. See United States v. Hsia,
24 F. Supp. 2d 33 (D.D.C. 1998), rev'd, 176 F.3d 517, 523-24
(D.C. Cir. 1999); United States v. Trie, 23 F. Supp. 2d 55
(D.D.C. 1998). The district court also dismissed the soft
money counts, holding that the disclosure regulation, section
104.8(e), did not require political committees to reveal the
original sources of their soft money.
This court subsequently reversed the district court's ruling
in Hsia, finding that, in fact, the government had sufficiently
alleged affirmative conduct for a false statement prosecution
by charging that the defendant utilized conduit checks, and
that FECA requires the "true source" of hard money to be
reported. See United States v. Hsia, 176 F.3d 517 (D.C. Cir.
1999). On the basis of that ruling, the government seeks
reinstatement of the hard money counts in this case. We
agree that our decision in Hsia mandates reinstatement of
the hard money false statement counts, and thus we summari- ly reverse the district court's order with respect to those
counts.
We also find that the FEC regulation, section 104.8(e),
prohibits the reporting of conduit contributions with respect
to soft money and that s 441e of FECA also prohibits foreign
soft money donations. Accordingly, we reverse the judgment
of the district court with respect to the soft money counts as
well.
I. Background
Defendants, Pauline Kanchanalak and Duangnet Kronen- berg, were charged with "knowingly and willfully caus[ing]
the submission of material false statements to the FEC." See
Superceding Indictment, at 24. Defendants are officers of
Ban Chang International (USA) Inc. ("BCI USA"), a foreign
corporation. Kanchanalak is neither a citizen nor a perma- nent resident of the United States. Kronenberg is a perma- nent resident of the United States. The contributions in
question are checks made out to political committees and
signed by permanent residents of the United States, even
though the signing individuals were not the actual source of
the donated funds.
On November 13, 1998, a federal grand jury issued an eighteen- count superceding indictment against defendants. The indict- ment charged violations of FECA, 2 U.S.C. ss 431 et seq.,
and regulations issued by the FEC pursuant to FECA. The
indictment generally alleges a scheme in which defendants
illegally provided both "hard money contributions" and "soft
money donations" to the Democratic National Committee
("DNC" or "the Committee") and other political committees.2
"Hard money" refers to funds that have been deposited by
the Committee into a "federal account" and are used to
finance federal election campaigns. "Soft money" refers to
funds that are deposited into a "non-federal" account and are
supposed to be used for, among other things, state and local
campaigns. See Trie, 23 F. Supp. 2d at 55. Defendants are
alleged to have illegally used conduits to donate to the
Committee both hard and soft money funds that originated
with foreign nationals and corporations. The conduits were
__________
2 A "political committee" is defined under FECA as follows:
(A) any committee, club, association, or other group of per-
sons which receives contributions aggregating in excess of
$1,000 during a calendar year or which makes expenditures
aggregating in excess of $1,000 during a calendar year; or
...
(C)any local committee of a political party which receives
contributions aggregating in excess of $5,000 during a calendar
year, or makes payments exempted from the definition of
contribution or expenditure ... in excess of $5,000 during a
calendar year, or makes contributions aggregating in excess of
$1,000 during a calendar year or makes expenditures aggregat-
ing in excess of $1,000 during a calendar year.
2 U.S.C. s 431(4). Duangnet Kronenberg and Praitun Kanchanalak, a relative of
both defendants and an unindicted co-conspirator.3
More specifically, Count One charges that defendants en- gaged in a conspiracy to defraud the United States by
disguising the fact that the true source of funds contributed
to the DNC was BCI USA. See Appendix ("App.") 60-82;
Superceding Indictment p p 1-66. Counts Two through Four- teen charge that defendants knowingly and willfully caused
the DNC and other political committees to file false reports
with the FEC, which erroneously identified the sources of
contributions and donations, in violation of 18 U.S.C. ss 2(b),
1001.4 See App. 83-85, Superceding Indictment p p 1-2. The
false statements were contained in thirteen reports filed with
the FEC; each report is the subject of a separate count.
Counts Two through Four, Six through Eight and Thirteen
of the superceding indictment were based solely on hard
money "contributions."5 The remaining false statement
__________
3 The indictment alleges that the defendants caused political
committees to receive checks signed "P. Kanchanalak," leading
political committees to believe that they were being made by
Pauline Kanchanalak, even as they were being drawn on Praitun
Kanchanalak's account. See Appendix at 67.
4 Section 1001 currently provides, in relevant part, that:
(a) Whoever, in any matter within the jurisdiction of the
executive, legislative, or judicial branch of the Government of
the United States, knowingly and willfully ... makes any
materially false, fictitious, or fraudulent statement or represen-
tation ... shall be fined under this title or imprisoned not more
than 5 years, or both.
18 U.S.C. s 1001. Some counts allege violations of the previous
version of s 1001. However, the differences between these ver- sions are not relevant to the appeal.
Section 2(b) provides: "Whoever willfully causes an act to be
done which if directly performed by him or another would be an
offense against the United States, is punishable as a principal." 18
U.S.C. s 2(b).
5 A contribution is defined under FECA's definitional provision as
"any gift, subscription, loan, advance, or deposit of money or
counts were based either partly or wholly on soft money
funds that were not deposited into a federal account. Defen- dants sought dismissal of both the hard and soft money
counts, arguing that under 18 U.S.C. ss 2(b), 1001, the gov- ernment had failed to demonstrate adequately that defen- dants "caused" the submission of false statements. Addition- ally, on the soft money counts, defendants argued that soft
money conduit contributions--even from foreign nationals-- were not prohibited under FECA.
On December 31, 1998, the district court, largely agreeing
with the defendants, dismissed Counts Two through Four and
Seven through Fourteen. See United States v. Kanchanalak,
31 F. Supp. 2d 13, 14 (D.D.C. 1999) ("Kanchanalak I"). The
district court's decision was based on its own prior reasoning
in United States v. Hsia, 24 F. Supp. 2d at 33, and Trie, 23
F. Supp. 2d at 55. In both Hsia and Trie, the government
had alleged only that the defendants signed conduit checks,
or solicited others to act as signers for conduit checks. The
court found that merely signing (or soliciting others to sign)
checks was not sufficient to demonstrate that the defendants
had "caused" the making of false statements about the actual
source of the contributions.6 In Hsia, it also found that the
"statements" at issue were literally true, since the check
writers were a source (if not the only source) of the contribut- ed funds. In Kanchanalak I, the court found that the
__________ anything of value made by any person for the purpose of influencing
any election for Federal office." 2 U.S.C. s 431(8)(A)(i).
6 In Hsia and Trie, the district court said that the indictment's
lack of specificity in this regard was constitutionally impermissible,
given that it charged conduct in an area which implicated First
Amendment considerations. The court found that "[t]he combina- tion of First Amendment interests at stake and the threat of a
criminal prosecution necessitates a close examination of any indict- ment to ensure that the statutes utilized are neither overly vague
nor overly broad in their language or in their application." Hsia,
24 F. Supp. 2d at 56. This court later rejected this vagueness
argument, holding that the application of the statute to the conduit
check situation was not so broad so as to offend the First Amend- ment. See Hsia, 176 F.3d at 523.
allegations were "virtually indistinguishable from the allega- tions at issue in Hsia and Trie." Kanchanalak I, 31 F. Supp.
2d at 14. Again, the government had failed to allege any
conduct that could satisfy the necessary causal elements of a
violation under 18 U.S.C. ss 2(b), 1001. In Kanchanalak I,
the district court did not reach the issue of whether there was
a basis--statutory or otherwise--for the government to allege
false statements at all with respect to soft money.7
On February 3, 1999, in United States v. Kanchanalak, 41
F. Supp. 2d 1 (D.D.C. 1999) ("Kanchanalak II"), the district
court dismissed all of the remaining false statement counts as
to Ms. Kanchanalak and all but one as to Ms. Kronenberg.
Even as to those counts for which the government had
sufficiently met its burden of alleging "affirmative conduct,"
the district court found that there was an additional reason
supporting dismissal, namely, the inapplicability of FECA to
soft money.
The court found only one provision in FECA that arguably
provided a basis for alleging a false statement, namely s 441f,
which prohibits contributions in another person's name, and
that indisputably applied only to hard money.8 In the court's
words, "[o]n the thin reed of Section 441f, the government
... has a plausible argument that a report submitted by a
political committee to the FEC that lists the identity of a
'conduit' or a person other than the true source of a contribu- tion contains a false statement." Kanchanalak II, 41
__________
7 In Kanchanalak I, the district court declined to dismiss some
disputed counts, ordering the parties to file supplemental briefs
indicating whether these remaining counts might survive Hsia. See
Kanchanalak I, 31 F. Supp. 2d at 15.
8 Section 441f, entitled "[c]ontributions in name of another prohib- ited," provides that:
No person shall make a contribution in the name of another
person or knowingly permit his name to be used to effect such
a contribution, and no person shall knowingly accept a contri-
bution made by one person in the name of another person.
2 U.S.C. s 441f. F. Supp. 2d at 7 (internal quotations omitted). However, that
argument "relied heavily on the definitions and operation of
FECA, definitions that apply only to hard money 'contribu- tions' regulated by FECA." Id. Although FECA requires
political committees to report their hard money contributions,
the court could find no corresponding FECA provision requir- ing political committees to report soft money donations. Id.
(discussing 2 U.S.C. s 434 (b)(2)(A)).
The only reporting requirement directly applicable to soft
money donations was 11 C.F.R. s 104.8(e), which the court
characterized as a "stand alone provision in the regulations."
Id. at 8. However, that provision in "the regulations provid- ed no indication of whether a national party committee is
obligated to report the 'true source' of any such donation";
thus the court said that the government "lacks any basis to
argue that the statute and regulations require a political
committee to list the names of 'true sources' of soft money
donations in reports to the FEC." Id. Since neither FECA
nor FEC regulations required committee treasurers to report
the "true sources" of soft money donations, the court rea- soned, defendants had not "caused" political committees to
issue "false statements," and, therefore, had not violated 18
U.S.C. ss 2(b), 1001.
After the district court ruled in Kanchanalak I and II, this
court reversed in large part the district court's decision in
Hsia. See Hsia, 176 F.3d at 517. In Hsia, we rejected the
district court's ruling that knowingly engaging in conduit
check writing was not enough to "cause" a false statement to
be made. Id. at 522-23. We found that s 434(b) of FECA
requires political committees to report the "true source" of
hard money contributions; thus, statements identifying con- duits as the source of funds were not "literally true." Id. at
523-24.
The government now appeals the dismissal of the hard
money counts in Kanchanalak II on the grounds that its
reasoning was explicitly rejected in our Hsia decision. The
government also seeks reinstatement of the soft money
counts on the theory that the FEC reporting regulation,
section 104.8(e), requires political committees to report the
same information for soft money that they report for hard
money, including the true sources of their receipts.
II. Discussion A. Hard Money Counts
Our reasoning in United States v. Hsia, 176 F.3d 517 (D.C.
Cir. 1999), mandates reinstatement of the hard money counts
in this case. In Hsia we found that "the simple interposition
of conduits to sign the checks is certainly enough to 'cause' a
committee to make false statements in its report." Id. at 523.
We also held that FECA requires political committees to
identify the true source of hard money contributions. There- fore, if committees "did not report the true sources, their
statements would appear to be false." Id. at 524.
In these respects, this case is indistinguishable from Hsia.
As in Hsia, defendants are alleged to have acted as conduits
or utilized others as conduits in making contributions to
political committees in federal elections. By thus causing
political committees to report conduits instead of the true
sources of donations, defendants have caused false statements
to be made to a government agency. Accordingly, we sum- marily reverse the district court's orders dismissing the false
statement counts predicated on hard money contributions. B. Soft Money Counts
1. The Soft Money Reporting Regulation
The validity of the false statement prosecutions based on
conduit soft money donations ultimately turns on whether the
FEC's soft money regulation, 11 C.F.R. s 104.8(e), is read to
require political committees to report the "true" sources of
their soft money donations. As the district court correctly
noted, there is no soft money counterpart to s 441f in FECA
itself, which prohibits conduit transfers of "contributions,"
i.e., hard money. We note at the outset, however, that
defendants do not attack the FEC's authority under the Act
to promulgate regulations that address the disclosure of soft
money donations.9 However, defendants do contest the
FEC's interpretation of section 104.8(e) as a valid basis for a
false statements prosecution.
We first discuss the standard under which we review the
FEC's interpretation of its soft money disclosure regulation,
keeping well in mind that this interpretation must also satisfy
due process notice requirements of a criminal conviction for
false statements. In Paralyzed Veterans of America v. D.C.
Arena, L.P., 117 F.3d 579, 584 (D.C. Cir. 1997) (citations
omitted), we said:
Agency interpretations of their own regulations have
been afforded deference by federal reviewing courts for a
very long time and are sustained unless "plainly errone-
ous or inconsistent" with the regulation. It is sometimes
said that this deference is even greater than that granted
an agency interpretation of a statute it is entrusted to
administer.
We have followed that standard in FEC cases, explaining:
The Supreme Court, we note, explicitly concluded in
DSSC [FEC v. Democratic Senatorial Campaign Com-
mittee] "that the [Federal Election] Commission is pre-
cisely the type of agency to which deference should
presumptively be afforded."
John Glenn Presidential Comm., Inc. v. FEC, 822 F.2d 1096,
1097 (D.C. Cir. 1987) (citing FEC v. Democratic Senatorial
Campaign Comm., 454 U.S. 27, 37 (1981)); see also Fulani v.
FEC, 147 F.3d 924 (D.C. Cir. 1998) (FEC entitled to "sub- stantial deference" when interpreting own regulation). Quite
apart from the substantial deference that we owe the agency,
we find it eminently reasonable for the FEC to interpret
section 104.8(e) to require political committees to report the
true source of their soft money donations. __________
9 FECA explicitly grants the FEC broad powers to administer its
duties under the Act. See, e.g., 2 U.S.C. s 437c(b)(1) (granting
FECA the authority to formulate general policy with respect to the
administration of FECA); accord 2 U.S.C. ss 437d(a)(8), 437d(e) &
437g(a).
We begin with the language of the provision itself. See
Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S.
552, 557-58 (1990). Section 104.8(e) provides, in relevant
part, that:
National party committees shall disclose in a memo
Schedule A information about each individual, committee,
corporation, labor organization or other entity that do-
nates an aggregate amount in excess of $200 in a calen-
dar year to the committee's non-federal account(s). This
information shall include the donating individual's or
entity's name, mailing address, occupation, or type of
business, and the date of receipt and amount of any such
donation.... The memo entry shall also include, where
applicable, the information required by paragraphs (b)
through (d) of this section.
11 C.F.R. s 104.8(e).
There can be no doubt, and indeed the district court acknowl- edged, that section 104.8(e) imposes a reporting requirement
with respect to soft money that includes the identity of the
"donating individual[ ]," as well as, "where applicable," the
information required for hard money sources in section
104.8(b)-(d).10 The district court, however, focused on the
fact that "donates" is nowhere defined in the regulation (or in
FECA), and does not have an ordinary meaning that confined
__________
10 The district court deemed it a "stand alone provision in the
regulations," not rooted in any particular provision within the
FECA. Kanchanalak II, 41 F. Supp. 2d at 7. We are not sure
why this is relevant. We also point out that in its effort to locate a
statutory source for the prohibition against soft money conduit
contributions, the district court discussed only 2 U.S.C. s 441f, the
provision which prohibits hard money contributions in the name of
another, and which it found was not applicable to soft money. See
id. Notably, the district court opinion never addressed s 441e,
which proscribes contributions from foreign nationals, as a potential
source for the statutory prohibition on at least some soft money
conduit contributions. One reason it may not have done so is that it
had previously found in Trie that, contrary to the FEC's interpreta- tion, s 441e is inapplicable to soft money.
it to the true source of the donated funds. In the district
court's words:
[T]he regulations provide no indication of whether a
national party committee is obligated to report the "true
source" of any such donation. In fact, the word "do-
nates" is never defined in either the statute or regula-
tions. The government therefore lacks any basis to
argue that the statute and regulations require a political
committee to list the names of "true sources" of soft
money donations in reports to the FEC.
Id.
Defendants reiterate here the district court's reasoning,
concluding that "an individual who writes a soft money dona- tion check to a committee literally constitutes a 'donating
individual' or an individual that 'donates' to the committee's
non-federal account, even if that individual is in fact reim- bursed for the donation." Br. of Appellees, at 11-12.
That proposition does not seem so apparent to us. To
donate ordinarily signifies the act of giving away something
over which the giver has control or sovereignty. Thus a
donation is defined, inter alia, as "a formal grant of sover- eignty or dominion." Webster's Third New International
Dictionary (Unabridged) 672 (1976). And indeed in Hsia,
this court rejected a similarly restrictive definition of persons
who "make the contribution" in the case of hard money,
declaring that the "demand for identification of the 'person
who makes the contribution' is not a demand for a report on
the person in whose name money is given; it refers to the
true source of money." Hsia, 176 F.3d at 524. We see no
critical distinction between the ordinary meaning of the terms
"contribute" and "donate" in that respect.11
There is, however, an even more crucial sentence in section
104.8(e) that validates the FEC's interpretation, namely, the
requirement that "the memo entry shall also include, where
__________
11 We recognize that because of the special definition of contribu- tion in the Act, s 441f prohibits conduit contributions of hard
money only. But this limitation on the scope of s 441f does not
upset the ordinarily synonymous meanings ascribed to both terms. applicable, the information required by paragraphs (b) through
(d) of this section." 11 C.F.R. s 104.8(e). Thus, subsection
(e), by its own terms, cannot be read in isolation, but must be
read to incorporate (unless inapplicable) the earlier hard
money disclosure requirements of paragraphs (b) through (d).
Among those provisions is subsection (c), which provides that:
"[a]bsent evidence to the contrary, any contribution made by
check, money order, or other written instrument shall be
reported as a contribution by the last person signing the
instrument." 11 C.F.R. s 104.8(c) (emphasis added).12 The
incorporation of this disclosure provision into section 104.8(e)
is significant. Its language is transparent; a committee may
not report that a signer is the actual source of funds if it is
aware that the signer is not the source.13 The plain implica- __________
12 The district court did refer to subsection (c) in addressing the
hard money reporting requirements in Hsia, but limited its applica- tion to committee treasurers. Hsia, 24 F. Supp. 2d at 59 (noting
that the provision "implies that if there is 'evidence to the contrary'
of which the political committee is aware, the committee may not
report the contribution as having been made by the last person
signing the instrument. The FEC regulation, if not the statute
itself, therefore implies that the term 'contributor' is not synony- mous with the phrase 'the last person signing the instrument' and
that the political committee is supposed to identify the 'true source'
of a contribution if it knows the true source."). The district court
thus found that while 11 C.F.R.s 104.8 (c) may impose obligations
on the committee treasurer, it does not impose the same obligation
on a donor, absent a knowing conspiracy with the treasurer to
conceal the true source.
In Kanchanalak II, the district court acknowledged subsection
(c) in a footnote, but failed to draw the connection we find between
subsection (c) and subsection (e). See Kanchanalak II, 41 F. Supp.
2d at 7 n.6.
13 Our analysis in Hsia is relevant here again. If political com- mittees did not report the true sources of their donations, their
statements would appear to be false. Even if the defendants did
not themselves make false statements to the FEC (and are not
being charged as such), "the simple interposition of conduits to sign
tion of this is that a signer, who through a knowing conduit
transaction, causes a committee to make an erroneous identi- fication by withholding "evidence to the contrary," may be
held responsible for causing the false statement.
Defendants offer one counter-argument. The term "contri- bution" contained in 11 C.F.R. s 104.8(c) is defined as "any
gift ... for the purpose of influencing any election to Federal
office." 2 U.S.C. s 431(8)(A) (emphasis added). Since the
term "contribution" in subsection (c) is thus limited to hard
money used for federal elections, the entire subsection (c) by
its own terms is similarly limited and hence not "applicable"
to the soft money reporting requirements of section 104.8(e).
A closer and more contextual reading of section 104.8 and
its various subsections disposes of this argument. Subsec- tions (b), (c), and (d) of section 104.8, all incorporated by
reference into subsection (e), address requirements for "con- tributions." On defendants' apocalyptic reasoning none
would ever be applicable to subsection (e); this reading in
turn would render the entire incorporation clause referring to
subsections (b) through (d) superfluous. See Benavides v.
DEA, 968 F.2d 1243, 1248 (D.C. Cir. 1992) (declining to
interpret a provision so as to render it superfluous). Surely
it is not reasonable to think that the FEC would have
incorporated other subsections into subsection (e), when "ap- plicable," if it knew or intended that none of these subsections
could ever apply to soft money. The more reasonable inter- pretation by far is that these hard money disclosure require- ments apply to soft money reporting unless there is an
obvious reason why they should not.14 __________ the checks is certainly enough to 'cause' a committee to make false
statements in its report." Hsia, 176 F.3d at 523.
14 It bears noting that the FEC has not been particularly consis- tent when it has employed the term "contribution" in regulations
and opinions. Indeed, the term is often used synonymously with
"donation." See, e.g., 11 C.F.R s 113.3 (referring to "funds donated
... to a candidate for federal office"); 11 C.F.R. s 115.2 (a)
(prohibition on federal contractor "contributions" not applicable to
"contributions ... in connection with State or local elections");
Not only is the FEC's construction of section 104.8(e)
reasonable, but it also advances the articulated concerns that
impelled the FEC to adopt the regulation in the first place.
See Methods of Allocation Between Federal and Non-Federal
Accounts, 55 Fed. Reg. at 26,058.15 Adopted in 1990 as part
of a "comprehensive set of allocation rules" drafted to "pro- vide additional safeguards against the use of impermissible
[soft money] funds in federal election activity by expanding
the disclosure of receipts and disbursements by national
party committees," section 104.8, in particular, was "[r]evised
[to] ... require national party committees to disclose the
source and amount of receipts by their non-federal accounts
... as well as by their federal accounts under the current
rules." The revised section was retitled "Uniform Reporting
of Receipts," id., "to reflect its broadened application" to both
hard and soft money. To that end, "[n]ew paragraph (e)," the
FEC explained, "require[s] national party committees to also
disclose information about receipts to their non-federal ac- counts." Id. This "broadened disclosure" was designed to
"help eliminate the perception that prohibited funds [soft
money] have been used to benefit federal elections and cam- paigns." Id.
Given our druthers, we might have wished that the FEC
elaborated in greater detail just why identifying the true
source of soft money would prevent the reality or the percep- tion of soft money being illicitly used for federal election
__________ FEC Advisory Op. 1998-11 (Sept. 3, 1998), 1998 WL 600994, at *3
(discussing "contributions in connection with State and local elec- tions"); FEC Advisory Op. 1997-14 (Aug. 22, 1997), 1997 WL
529606, at *2 (discussing "contributions" to "State party building
funds") (emphasis added in all citations).
15 In interpreting a regulation, we may consider a contemporane- ous statement of the agency's policy reasons for promulgating it.
See Sierra Pac. Power v. EPA, 647 F.2d 60, 65 (9th Cir. 1981) ("An
appellate court will ordinarily give substantial deference to a con- temporaneous agency interpretation of a statute it administers.
When dealing with an interpretation of regulations the agency has
itself promulgated, 'deference is even more clearly in order.' ")
(quoting Udall v. Tallman, 380 U.S. 1, 16 (1965)).
purposes. We do know that the overall design of the new
allocation and reporting requirements was "to track the flow
of non-federal funds transferred into federal accounts" to
insure they were used only for legitimate allocation of joint
expenses. It does not seem to require any leap from that
premise to the conclusion that tracking such a flow will often
be easier if the true source of the soft money is identified.
For instance, the identity of the real donor may suggest to
the FEC monitor that special scrutiny is in order to insure
the pristineness of the federal side of the ledger. Ultimately,
however, we know of no bar to an agency's interpretation of a
prophylactic disclosure rule, such as this one, that may over- shoot the mark a bit, so long as it stays in reasonable range.16
To cut to the chase, we find that the language and purpose
of section 104.8(e) permits only one reasonable interpretation.
In an effort to enhance its ability to prohibit the illegal
commingling of hard and soft money receipts, the FEC
required identifying information for the donors of both to
assist it in tracking the flow of funds between the two.
2. Fair Notice
That the FEC's interpretation of its disclosure regulation
as applying to the true source of soft money is a reasonable
one does not end the matter. For to support a criminal
prosecution, it must give fair notice to the subject of what
conduct is forbidden. The Due Process Clause of the Fifth
Amendment prohibits punishing a criminal defendant for
conduct "which he could not reasonably understand to be
proscribed." United States v. Harris, 347 U.S. 612, 614
(1954). The Supreme Court has held that this "fair warning"
requirement prohibits application of a criminal statute to a
defendant unless it was reasonably clear at the time of the
__________
16 Defendants also counter that "no purpose would be served by
requiring the reporting of the original source of soft money," given
that "soft money donations in the name of another are not prohibit- ed by FECA." Br. of Appellees, at 12, n.13. This ignores the
FEC's longstanding interpretation of s 441e as barring foreign
national contributions of soft money in section 110.4a.
alleged action that defendants' actions were criminal. United
States v. Lanier, 520 U.S. 259, 266 (1997).
The Superceding Indictment does not offend the principles
of due process and fair notice because the defendants should
reasonably have understood federal laws to require commit- tees to report the true source of soft money donations.
Additionally, they should reasonably have understood that
disguising those true sources would cause false statements to
be made in violation of 18 U.S.C. ss 2(b), 1001. The court in
Hsia, which addressed the hard money reporting require- ment, found that this "case fits comfortably within the clear
and previously accepted scope of ss 2(b) and 1001." Hsia,
176 F.3d at 523. We find likewise in this case. In arguing
that ss 2(b), 1001 may not comfortably be applied to soft
money reporting, defendants assert that it was previously
unclear that section 104.8(e) required real source identifica- tion for soft money, thus it would violate the due process
requirement of clear notice to hold them criminally accounta- ble now. We disagree.
Section 104.8(e) explicitly covers soft money; the FEC has
interpreted it as such since its promulgation and announced
its prophylactic purpose at that time. It also expressly
incorporated several hard money disclosure requirements laid
down in earlier subsections (b) through (d) into the subsection
(e) requirement. One of those, subsection (c), unambiguously
permits committees to report the name of the signer of a
check as the donor only if there is no "evidence to the
contrary." If an individual possesses that contrary evidence
and participates in the conduit transaction by signing the
check himself or conspiring with another to do so, he is
"causing" a false statement to be made to the FEC in
violation of ss 2(b), 1001. That is clear notice enough.
3. The Foreign National Prohibition
The government offers a further justification for the soft
money reporting requirement. It contends that s 441e of
FECA bars foreign nationals from making both hard money
contributions and soft money donations, indirectly or directly,
for use in either federal or local elections. This statutory bar,
it says, provides a powerful justification for the true source
reporting requirement of soft money--that is, to ensure that
United States citizens and permanent residents are not con- duits for soft money that originates with foreign nationals.
Defendants resolutely maintain that the statutory language of
s 441e restricts that provision's scope to federal elections.
In determining whether an agency's interpretation of a
statute is appropriate, we apply Chevron U.S.A. Inc. v. Natu- ral Resources Defense Council, Inc., 467 U.S. 837 (1984).17
Under Chevron, the court examines whether the statute
speaks "directly ... to the precise question at issue." Chev- ron, 467 U.S. at 842-43. If the statute "has not directly
addressed the precise question at issue," then the agency's
construction, if reasonable, should be honored. Id.
Through a promulgated regulation and an advisory opinion,
the FEC has indicated that s 441e prohibits soft money
donations as well as hard money contributions by foreign
nationals. See, e.g., 11 C.F.R. s 110.4(a); FEC Advisory
Opinion, 1987-25 (Sept 17. 1987), 1987 WL 61721. Section
441e provides, in relevant part, that:
It shall be unlawful for a foreign national directly or
through any other person to make any contribution of
money or other thing of value, or to promise expressly or
impliedly to make any such contribution, in connection
with an election to any political office; or in connection
with any primary election, convention, or caucus held to
select candidates for any political office; or for any
__________
17 Defendants argue that this court should not give Chevron
deference to the FEC's interpretation of an ambiguous statute in a
criminal proceeding. Defendants' support for this proposition is
scant. That criminal liability is at issue does not alter the fact that
reasonable interpretations of the act are entitled to deference. See
Babbitt v. Sweet Home Chapter of Communities for a Great Or.,
515 U.S. 687, 703-05 (1995) (according Chevron deference to a
Department of the Interior regulation which interpreted a criminal
provision of the Endangered Species Act).
person to solicit, accept, or receive any such contribution
from a foreign national.
2 U.S.C. s 441e.
Although the text by itself might appear comprehensive
enough to encompass soft money, the defendants point to the
use of the word "contribution" in that section; contribution is
defined elsewhere in the Act as applying to hard money for
federal elections. The term "contribution," as we have noted,
includes: "(i) any gift ... made by any person for the
purpose of influencing any election for Federal office...." 2
U.S.C. s 431(8)(A)(i).
This definition, say defendants, limits the scope of s 441e
to federal elections. Principles of consistent usage in statuto- ry interpretation must, however, be applied consistently.
While defendants focus exclusively on the term "contribu- tion," they ignore the phrase "any political office" which
appears not only in s 441e but also in its neighboring provi- sion, s 441b. Section 441b distinguishes between contribu- tions to federal offices and those tendered to "any political
office."18 Thus while s 441b regulates the manner in which
most corporations and labor organizations may contribute to
__________
18 Section 441b provides, in relevant part, that:
(a) It is unlawful for any national bank, or any corporation
organized by authority of any law of Congress, to make a
contribution or expenditure in connection with any election to
any political office, or in connection with any primary election
or political convention or caucus held to select candidates for
any political office, or any corporation whatever, or any labor
organization, to make a contribution or expenditure in connec-
tion with any election at which presidential and vice presiden-
tial electors or a Senator or Representative in, or a Delegate or
Resident Commissioner to, Congress are to be voted for, or in
connection with any primary election or political convention or caucus held
to select candidates for any of the foregoing offices....
(b)(2) For purposes of this section ... the term "contribution
or expenditure" shall include any direct or indirect payment,
distribution, loan, advance, deposit, or gift of money, or any
services, or anything of value ... to any candidate, campaign
committee, or political party or organization, in connection with
federal offices, that same provision limits the contributions
that nationally chartered banks and corporations may make
"in connection ... with any political office." 2 U.S.C. s 441b
(emphasis added). By distinguishing federal offices from
"any political office," Congress plainly intended to reach
certain contributions made to state and local offices. Guided
by the same canon of consistent usage that the defendants
invoke on behalf of the term contribution, we think it telling
that Congress employed the phrase "any political office"
when defining the scope of the foreign-national contribution
provision. Accordingly, the language of s 441e does not un- ambiguously cabin its reach to only federal offices.19 __________
any election to any of the offices referred to in this sec-
tion....
2 U.S.C. s 441b.
19 Defendants attempt to answer the government's s 441b argu- ment by noting that s 441b(b)(2) carries its own definition of the
term contribution, distinct from that contained in s 431(8)(A)(i). It
defines a contribution as "any direct or indirect payment, distribu- tion, loan, advance, deposit or gift of money, or any services, or
anything of value ... to any candidate, campaign committee, or
political party or organization, in connection with any election to
any of the offices referred to in this section." 2 U.S.C. s 441b
(b)(2) (emphasis added). The question then becomes what are the
offices referred to in this section. Subsection (a), for example,
prohibits national banks and federally chartered corporations from
making contributions "in connection with any election to any politi- cal office, or in connection with any primary election or political
convention or caucus held to select candidates for any political
office." 2 U.S.C. s 441b(a).
Defendants concede that the term "any political office" in
s 441b(a) must include non-federal offices since elsewhere in the
same subsection, the statute prohibits "any corporation whatever"
(presumably, including, but not limited to federally chartered corpo- rations) from making a contribution in connection with elections to
federal offices. Presumably, if Congress had intended to prohibit
only the entities referenced in subsection (a) (including national
banks and federally chartered corporations) from making federal
The legislative history and structural scheme of the statute
tend to buttress the FEC's broader interpretation of section
441e but can hardly be read as making its case conclusively.
Section 441e was preceded by 18 U.S.C. s 613, a subsection
of the Foreign Agents Registration Act ("FARA"), which
made it unlawful for "agents of foreign principals" to "know- ingly mak[e] any contribution of money or other thing of
value ... in connection with an election to any political office
or in connection with any primary election, convention, or
caucus held to select candidates for any political office." 18
U.S.C. s 613 (repealed 1976). Nothing in the committee
report that accompanied the original passage of section 613
indicated that Congress intended for the phrase "an election
to any political office or in connection with any primary
__________ contributions, the clause concerning national banks and federally
chartered corporations would have been surplusage.
But then defendants go on to argue that if Congress had intended
to modify the Act's generic definition of "contribution" for purposes
of s 441e to cover non-federal elections, it could have done so
explicitly as it did with s 441b. In response to this, the govern- ment notes that ss 441b and 441e were both preceded by provisions
in Title 18, which were moved to Title 2 as part of the amendments
to FECA in 1976. The government argues that s 441b's special
definition of the term contribution is a vestigial remainder from the
preceding provision, 18 U.S.C. s 610, which Congress inadvertently
failed to remove. It also points out that there was no definition of
"contribution" in the predecessor to s 441e (which was part of the
Foreign Agents Registration Act ("FARA")).
Candidly we see no way to definitively resolve this statutory
puzzle other than to declare an ambiguity and move on to our
traditional rules for resolving ambiguities.
As a final note, we do think both defendants and the district court
make too much of the definition of "contribution" as controlling the
interpretation of every section in which it appears. Congress itself
performed with no such consistency. Although contribution by
itself does mean contribution to a federal candidate, Congress in
many sections of the Act added contributions "for Federal office"
although that seems surplusage. In contrast in others like ss 441e
and 441b, it used contribution in conjunction with the phrase "for
any political office." Compare ss 441a, 441b, and 441e. election, convention, or caucus held to select candidates for
any political office" to be restricted to federal office.20 And
significantly, this relevant language of s 441e has remained
identical through multiple amendments to FARA and to the
provision itself, when the 1976 amendments moved the provi- sion from Title 18 to FECA. The 1976 FECA Amendments
Report said "[section 441e] is the same as Section 613." H.R.
Conf. Rep. No. 94-105, at 67 (1976) (emphasis added). Ulti- mately, neither the plain language of s 441e nor its legislative
history reveals Congress's unambiguous intent.
In the face of such statutory ambiguity, we are required to
reach Chevron's second prong, which requires judicial defer- ence to an agency's reasonable interpretation. Indeed, this
court has noted in several opinions that the FEC's express
authorization to elucidate statutory policy in administering
FECA "implies that Congress intended the FEC ... to
resolve any ambiguities in statutory language. For these
reasons, the FEC's interpretation of the Act should be ac- corded considerable deference." Orloski v. FEC, 795 F.2d
156, 164 (D.C. Cir. 1986); accord Fulani v. FEC, 147 F.3d 924
(D.C. Cir. 1998); Republican Nat'l Comm. v. FEC, 76 F.3d
400 (D.C. Cir. 1996); LaRouche v. FEC, 28 F.3d 137 (D.C.
Cir. 1994).
The FEC has consistently interpreted s 441e as applicable
to federal, state, and local elections since 1976. In that year
it promulgated 11 C.F.R. s 110.4 which provides, in relevant
__________
20 Indeed, the House Conference report accompanying the
amendments to FARA, which established s 613, explain that the
"new section relating to agents of foreign principals ... would
prohibit such agents from making or promising to make in their
capacity as agents contributions in connection with any election to
any political office or in connection with any primary election,
convention, or caucus to select new candidates." H.R. Rep. No.
89-1470, at 15, reprinted in 1966 U.S.C.C.A.N. 2397, 2410-11.
Notably the relevant language of the provision ("an election to any
political office or in connection with any primary election, conven- tion, or caucus held to select candidates for any political office")
remains unchanged in the present provision.
part:21
(1) A foreign national shall not directly or through any
other person make a contribution, or an expenditure, or
expressly or impliedly promise to make a contribution, or
an expenditure, in connection with a convention, a cau-
cus, or a primary, general, special, or runoff election in
connection with any local, State, or Federal public office.
(2) No person shall solicit, accept, or receive a contri-
bution as set out above from a foreign national.
11 C.F.R. s 110.4(a).
It is unfortunate, but true, that neither the FARA, in which
the predecessor of s 441e first appeared, nor FECA, to which
it was removed in 1976, provides detailed reasons why Con- gress extended the ban in those sections to state and local
elections. However, the legislative history of FARA does
state repeatedly that it is designed to "protect the interests of
the United States by requiring complete public disclosure by
persons acting for or in the interests of foreign principals
where their activities are political in nature." S. Rep. No.
88-875, at 1 (1964).22 Hence, we do not regard the absence of
any more explicit reasons by Congress (or the FEC) to be
fatal to the reasonableness of the FEC's interpretation. The
__________
21 See Establishment Clause, 41 Fed. Reg. 35,950 (Aug. 25, 1976)
(establishing 11 C.F.R. s 110.4(a) and other regulations following
the 1976 amendments to FECA); see also 11 C.F.R. s 110.4(a);
FEC Advisory Opinion, 1987-25 (Sept. 17. 1987), 1987 WL 61721.
22 The Report continues: "Such public disclosure as required by
the Act will permit the Government and the people of the United
States to be informed as to the identities and interests of such
persons and so be better able to appraise them and the purposes for
which they work." S. Rep. No. 88-875, at 1; see also H.R. Rep. No.
89-1470, at 2 (1966). Senator Fulbright also commented on the
floor that foreign agents "will have to make public all their political
contributions." 109 Cong. Rec. 16598 (1965) (emphasis added).
Finally, in old s 613, "agent of a foreign principal" was defined as
"one who within the United States solicits ... or disburses contri- butions, loans, money or other things of value for or in the interests
of such foreign principal" (emphasis added). language of the statute and the explicit regulation of the FEC
interpreting it provide an additional reason that the defen- dants should have known that 104.8(e) imposed a true source
reporting requirement for soft money donations.23
III. Conclusion
For the reasons previously stated in our decision in Hsia,
we reverse the district court's orders that dismissed the false
statement counts predicated on hard money contributions.
We also find that the reporting regulation, section 104.8 (e),
requires the reporting of the true sources of conduit contribu- tions with respect to soft money and that s 441e forbids
foreign national donations of soft money. Thus, the judgment
of the district court, with respect to the soft money counts, is
reversed as well.
So ordered. __________
23 To argue, as defendants do, that the rule of lenity compels us to
reject the FEC's otherwise reasonable interpretation of an ambigu- ous statutory provision is to ignore established principles of law.
See Babbitt, 515 U.S. at 704 n.18 ("We have never suggested that
the rule of lenity should provide the standard for reviewing facial
challenges to administrative regulations whenever the governing
statute authorizes criminal enforcement. Even if there exist regu- lations whose interpretations of statutory criminal material provide
such inadequate notice of potential liability, the ... regulation [at
issue], which has existed for two decades and gives fair warning of
its consequences cannot be one of them.").
