Judge fines conservative group, orders disclosure of its donors

By Anjeanette Damon

Published Tuesday, July 30, 2013 | 2:25 p.m.

Updated Tuesday, July 30, 2013 | 4:46 p.m.

A Carson City judge has found a Las Vegas-based conservative organization violated campaign finance law when it sent mailers attacking former Assembly Speaker John Oceguera, D-Las Vegas, without disclosing the expense or reporting who contributed money to fund the attack.

Judge James Russell signed an order fining Citizen Outreach $10,000 and ordered the group to file the necessary campaign contribution and expense report within 30 days. Citizen Outreach is headed by longtime conservative activist Chuck Muth, who writes a daily newsletter and has been active in many state campaigns.

The two-year-old case centers on mailers Citizen Outreach created attacking Oceguera in his last re-election campaign.

Although Oceguera is no longer in office, the decision could have far-reaching implications for campaign attacks waged in state elections. Muth had argued he didn't have to file campaign contribution and expense reports because his mailers didn't use so-called "magic words" such as "elect," "vote for," or "defeat." Under federal law, such words imply express advocacy, which triggers certain reporting requirements.

Instead, the Citizen Outreach mailers accused Oceguera of having "gamed the system to retire at age 48 with $135,000 salary plus benefits” and for “sponsoring trivial bills, voting for tax hikes and enriching himself as a public employee.”

A loophole in federal law allows such campaign mailers to evade some reporting requirements. Muth attempted to use the same defense, describing his mailers as "educational," rather than campaign-oriented.

But Secretary of State Ross Miller has argued no such loophole exists under state law. Rather, if there can be “no other reasonable interpretation” than the ad seeks the election or defeat of a candidate, then the producer must disclose the funding source for the ad, he argued.

The judge who originally heard the case agreed.

"In Nevada, express advocacy extends beyond just Buckley's magic words," wrote Judge James Wilson wrote in his ruling in January. "It includes all communications that, with limited reference to context, can have no reasonable interpretation other than as an appeal to vote for or against a clearly identified candidate."

Wilson agreed with other federal court decisions that simply avoiding certain words doesn't undermine the intent of an attack ad.

"Such a functionally meaningless test exalts form over substance and eviscerates disclosure requirements," Wilson wrote.

Although Wilson heard the case and issued the original ruling, Russell signed the order imposing the fine.

Miller has filed several cases against organizations who have used a similar "express advocacy" argument to hide the identity of donors who fund attacks against state candidates.

Also pending in district court is a case against the Nevada arm of Americans for Prosperity, which sent out attack mailers against Sen. Kelvin Atkinson, D-North Las Vegas, last year. That case could force the well-known conservative organization to disclose donors it has long fought to keep secret.

Muth said the final judgment wasn't surprising, given Russell had ruled in Miller's favor in January. Muth had asked for reconsideration and was denied, prompting the imposition of the fine.

"We asked for reconsideration. He chose to stand by his original ruling. We will now weigh our legal options," Muth said.

This story has been edited to clarify the roles of the two Carson City judges involved in the case.