Ashcroft participated in a patently phony deal that allowed a political action committee he founded and controlled to transfer a highly valuable mailing list to his campaign committee. The donation of the list—which cost more than $1.7 million to create—flouts campaign contribution limits.

Yet a divided FEC just winked at the arrangement, slapped the committees with a small penalty, and let Ashcroft himself off scot-free. This leaves it up to the federal courts to force the FEC to do its job, and the Justice Department should also appoint a special prosecutor to conduct a criminal inquiry.

Acting on a complaint filed by the National Voting Rights Institute, the Alliance for Democracy, Common Cause and two Missouri voters, the FEC conducted an investigation which reveals that the Ashcroft's campaign committee and Spirit of America PAC (SOA), founded and controlled by Ashcroft, constructed a fig leaf of a contract to cloak their illegal transaction. Under the agreement, SOA gave Ashcroft exclusive rights to the list in exchange for the use of his name or likeness. In other words, Ashcroft gets the mailing list, and the PAC he formed gets to use his name or image—which the PAC had already been using for free for more than six months!

The FEC's legal staff flatly rejected the idea that this was an exchange of equal value. Commissioner Ellen Weintraub wrote, "Not only was it not commercially reasonable, it appears to have been virtually unprecedented in the annals of political fundraising." Yet Ashcroft himself signed off on this strange agreement, along with then-executive director of Spirit of America Jack Oliver. The arrangement was so odd that Garrett Lott, the treasurer of both committees, had to assure the mailing list company that Ashcroft personally approved of the transfer of rental receipts from SOA to his campaign, and that the mailing list company would be "held harmless" for any claims of illegality.

To buy that the transaction was legal, you also have to buy that SOA gave the list to Ashcroft, rather than to his campaign committee, and then Ashcroft turned around and donated it to the campaign committee himself. As the FEC's General Counsel's report observes, the two committees were both controlled by Ashcroft, Lott and Oliver. And as the three dissenting Commissioners note, if Ashcroft really held the list as a personal asset, it should have been disclosed in his United States Senate Public Financial Disclosure Reports. Clearly the Ashcroft family wasn't using the list to mail holiday cards. The theory doesn't even pass the laugh test.

The two committees created their agreement because they knew that a direct gift of the list from SOA to Ashcroft's campaign violated federal laws limiting such donations to $10,000 per election cycle; the law treats mailing lists as an in-kind contribution equivalent to cash. Yet the FEC, divided on party lines, closed its eyes to the arrangement, despite the analysis of its own legal counsel. Rather than punish the list transfer, the agency just fined the two committees for the transfer of income generated from the rental of the list—and the penalty, at $37,000, is only a fraction of the minimal estimate of rental income—$112,000. The agency does not appear to have even interviewed Ashcroft himself, much less attempted to hold him accountable.

The FEC's action, weak as it is, came only after a federal lawsuit in which the Alliance and the voters who filed the original complaint with the agency in March 2001 sued it one year later for failing to act on their allegations. That litigation over the FEC's unlawful delay continues. Now that the agency has turned a blind eye to the core of the complaint, a new lawsuit is coming, which will argue that the penalty is so grossly inadequate as to constitute an effective dismissal of the case. Under law, parties to an FEC complaint can sue when the agency wrongfully dismisses a case. In addition, the complainants will ask the Justice Department to appoint a special prosecutor to pursue a criminal investigation.

The fact that Ashcroft, Oliver and Lott took the pains to create a pseudo-contract shows that they were well aware of the law they were seeking to evade. Yet the FEC is too hamstrung to identify and punish this clear violation. This casts doubt on the agency's ability to enforce campaign finance laws, precisely when the Supreme Court has just approved a major overhaul of the laws in the Bipartisan Campaign Finance Reform Act of 2002. The FEC may be willing to go after small fry, but when it comes to the nation's highest law enforcement officer, the watchdog has no bite.