In one of the first cases to rely on the U.S. Supreme Court's McCutcheon decision, a federal judge just tried to open the door to new levels of corruption in Wisconsin elections -- but the Seventh Circuit Court of Appeals could still stop him.

On May 6, federal Judge Rudolph Randa ordered a halt [3] to Wisconsin's long-running "John Doe" criminal probe into allegedly illegal coordination between political campaigns (including Governor Scott Walker's 2012 recall campaign) and non-profit groups like Wisconsin Club for Growth that spent millions during the state's recall elections. Randa, who was appointed to the bench by George H.W. Bush and is a board member of the Milwaukee Federalist Society, compared limits on money-in-politics to "the guillotine and the gulag."

His order was halted the following day by a Seventh Circuit panel made up of Judges Diane Wood, William Bauer and Frank Easterbrook, which ruled that he had not properly certified an earlier appeal from prosecutors as frivolous, a necessary step before he could halt the investigation. (Prosecutors had earlier appealed Judge Randa's decision rejecting [4] their motion to dismiss the case on grounds that they were subject to immunity.) On Thursday, Randa certified [5] the appeal as frivolous and reinstated his order. Prosecutors will likely appeal again to the Seventh Circuit.

Judge Randa's May 6 decision halting the investigation is extraordinary. It involves a federal court injecting its own interpretation of state law into a high-profile criminal probe of political operatives of the party that appointed him to the bench, while state court proceedings are ongoing. It deploys a strained reading of U.S. Supreme Court precedent and the facts of the case, portraying the investigation -- led by a bipartisan group of District Attorneys and a Special Prosecutor who voted for Walker, and approved unanimously by the bipartisan group of retired judges on Wisconsin's Government Accountability Board -- as politically-motivated retaliation against Republicans. It green-lights electoral coordination between candidates and third-party groups, making it easy for politicians to bypass contribution and disclosure limits and solicit unlimited, secret donations for so-called "issue ads" timed to influence elections.

Randa even celebrated the intentional evasion of campaign finance rules by the players under investigation in the John Doe. He described their tactics as a means of promoting "speech."

Randa wrote that Eric O'Keefe's WCFG -- which filed the federal challenge to the probe and had spent $9.1 million on undisclosed election ads during the recalls -- "found a way to circumvent campaign finance laws, and that circumvention should not and cannot be condemned or restricted. Instead, it should be recognized as promoting political speech, an activity that is ingrained in our culture."

Activist Judge Orders the Destruction of Evidence in Criminal Probe

Perhaps even more astoundingly, Randa ordered prosecutors to destroy all evidence gathered in the investigation. Such an edict is an extreme measure in a criminal case. It is not clear when the last time was that a federal judge actually ordered that evidence in a criminal case be destroyed, as opposed to declaring that certain evidence could not be used or should be returned.

Ordering the destruction of evidence in any case is an especially extraordinary step for a preliminary injunction, which is an intermediate measure that is only supposed to halt the investigation while the court case proceeds.

Prosecutors immediately appealed the decision, and the Seventh Circuit barred Randa's decision ordering the destruction of evidence. Despite Randa reinstating his order on Thursday, the requirement that prosecutors destroy evidence remains blocked.

Unlimited, Undisclosed Money Likely to Flow to Candidates

Despite ongoing state proceedings on the scope of Wisconsin's campaign finance law, Judge Randa deemed that Wisconsin statutes do not bar coordination between political campaigns and nonprofit groups that run sham "issue ads," those thinly-veiled election messages that stop short of expressly telling viewers to vote for or against a candidate. Such coordination is prohibited under federal law [6] in the months before Congressional or Presidential elections, and for years Wisconsin appellate court precedent [7] had indicated that issue ad coordination was also unlawful under Wisconsin law.

Yet Judge Randa deemed that issue ad coordination is "not subject to [Wisconsin] regulations and statutes."

"A candidate‘s promotion and support of issues advanced by an issue advocacy group in its effort to enhance its message through coordination cannot be characterized as quid pro quo corruption," he wrote.

According to the decision, prosecutors were focused on R.J. Johnson, a top Walker advisor and friend who also was an "advisor" to Wisconsin Club for Growth during the 2011 and 2012 recall campaigns. Prosecutors alleged that "Johnson controlled WCFG and used it as a hub to coordinate fundraising and issue advocacy involving [the Walker campaign] and other 501(c)(4) organizations such as Citizens for a Strong America, Wisconsin Right to Life, and United Sportsmen of Wisconsin" (a web that the Center for Media and Democracy uncovered in November [8]).

Groups running sham issue ads timed for elections are sometimes referred to as "dark money" groups, since they don't disclose their donors and can accept unlimited donations, unlike Political Action Committees that must report their contributions and expenditures and comply with caps on donations under long-standing election laws.

Limits also exist on donations directly to candidates. Under Wisconsin law, an individual donor can give no more than [9] $10,000 to a gubernatorial candidate, $1,000 to a candidate for state Senate, and $500 to a person running for Assembly. Every donation must be reported to Wisconsin's elections board and publicly disclosed.

If a politician can work closely with a dark money "issue ad" group, they could sidestep the contribution and disclosure rules that apply to candidates.

Paul Seamus Ryan, Senior Counsel with the Campaign Legal Center, describes how this could work:

"Scott Walker could say to a donor, 'you can give me $10,000 and have it reported, or you can spend millions by running this exact ad, and the money won't be disclosed. Here is the script [for the ad]. The ad doesn’t tell you how to vote, but its going to be really helpful. Don’t worry, it is not a coordinated expenditure, thanks to Judge Randa.'"

Similarly, under Randa's ruling, Walker (or his likely 2014 opponent Mary Burke) could solicit a million-dollar, secret donation for Wisconsin Club for Growth (or the Democrat-supporting Greater Wisconsin Committee), and tell the group how to spend it -- and it would all be legal, as long as the ads run didn't expressly say "vote for" or "vote against." The donation to the dark money group would be effectively the same as a donation to the candidate, undermining the candidate contribution limits, and raising the same concerns about corruption and undue influence as a million-dollar check directly to Walker or Burke.

"This ruling creates a real threat of corruption in Wisconsin politics," says Jay Heck, Executive Director of Common Cause Wisconsin. "It lifts the lid off of coordination rules, and essentially ends any separation between candidates and outside groups."

Ruling on Issue Ads Is "Muddled" Application of McCutcheon

The decision is one of the first to rely on the U.S. Supreme Court's recent holding in McCutcheon v. FEC, which held that candidate contribution limits can only be justified as a means of preventing quid pro quo corruption like bribery, rather than as a means of protecting the political process from the influence of big donors. Based on that decision, Randa asserted that issue ads can no longer be regulated, even though the U.S. Supreme Court did not issue such a ruling.

Citing McCutcheon, Randa held that election ads that stop short of explicitly telling viewers how to vote can be "viewed only one way, and that is as protected First Amendment speech," he wrote. "Only limited intrusions into the First Amendment are permitted to advance the government‘s narrow interest in preventing quid pro quo corruption and then only as it relates to express advocacy speech," not issue advocacy.

Therefore, according to Randa's decision, rules prohibiting candidates from coordinating with non-profit issue ad groups cannot be enforced since they wouldn't prevent quid pro quo corruption.

"Coordination does not add the threat of quid pro quo corruption that accompanies express advocacy speech," Randa claimed.

Randa's interpretation of U.S. Supreme Court precedent is "muddled," Ryan says.

"The Supreme Court has always analyzed coordinated expenditures as in-kind contributions and has never constrained the coordination analysis to express advocacy," Ryan says. "Randa's decision flies in the face of well-established federal coordination laws."

In fact, in 2003 the U.S. Supreme Court explicitly upheld [10] the McCain-Feingold law's prohibition on coordination between candidates and groups airing issue ads near an election (which are known as "electioneering communications"). The Court in McConnell v. FEC [10] held that "there is no reason why Congress may not treat coordinated disbursements for electioneering communications in the same way it treats all other coordinated expenditures."

No Corruption if a Candidate and Donor Already Agree?

In one of the more galling lines from the decision -- which Heck calls "politically naive" -- Randa held that there is no risk of corruption from issue ad coordination, because the group spending money and the candidate likely already agree.

"A candidate‘s coordination with and approval of issue advocacy speech, along with the fact that the speech may benefit his or her campaign because the position taken on the issues coincides with his or her own, does not rise to the level of favors for cash," Randa wrote.

That’s like saying bribery is not illegal if the politician and the contractor that wants a favor agree, so long as the contractor's gift comes in the form of money spent on an election season issue ad rather than in a paper bag.

This logic could be applied to any form of political spending. Donors often give to candidates that they already agree with (or who they think will advance their interests) -- yet big contributors often expect something in return.

"If a person spends $9 million benefitting a campaign, of course that politician is going to be beholden to the donor," says Heck. If the money stream is secret -- a subterfuge made much easier under Randa's decision -- the public will not be able to discern whether a government official is doing favors for a big contributor.

Elsewhere in the decision, Judge Randa rejects an "intent-based standard" for determining whether an issue ad qualifies as electoral, yet feels comfortable ascertaining the intent of WCFG's messages: the Club's issue ads are "meant to educate the electorate, not curry favor with corruptible candidates," he claimed.

Collapses Crucial Distinctions Between Contributions and Expenditures

Randa's ruling also collapses the decades of Supreme Court rulings distinguishing between contribution limits and expenditure limits.

The U.S. Supreme Court has long held that limits on direct contributions to candidates are subject to less scrutiny than regulation of fundraising and spending by "independent" groups like PACs that make expenditures to benefit a candidate.

Part of the theory behind the two-tiered assessment is that "independent" expenditures pose less risk of corruption than direct contributions -- yet the lynchpin in that distinction is that the expenditures are not coordinated.

For example, in Citizens United, the Court struck down corporate independent spending limits under the theory that ‘[t]he absence of prearrangement and coordination of an expenditure with the candidate or his agent . . . undermines the value of the expenditure to the candidate.’”

With coordination the expenditure becomes more "valuable" to the candidate, increasing the risk of corruption. Yet Judge Randa seems to collapse this distinction, holding that cooperation between campaigns and "independent" groups is protected by the First Amendment.

"By blurring the rationales between contributions and expenditures, and by solidifying the distinction between express advocacy and issue advocacy, the opinion, if it stands, would lead to even further deregulation of the political system," notes [11] Rick Hasen, a Chancellor's Professor of Law and Political Science at the University of California-Irvine law School of Law.

Round Two for Randa

This is not the first time Judge Randa has been smacked down by the Seventh Circuit Court of Appeals in a case with political overtones.

In 2007, Randa wrongly convicted [12] a state official accused of steering state travel contracts towards a firm linked with Wisconsin's Governor Jim Doyle, a Democrat. Randa sentenced state purchasing supervisor Georgia Thompson to 18 months in prison -- yet when the Seventh Circuit heard the appeal, they immediately ordered her release.

Appellate Judge Diane Wood called the evidence that Randa relied on to convict Thompson "beyond thin."

Thompson was prosecuted by U.S. Attorney Steven Biskupic, whose relentless pursuit of Thompson, and the timing of the prosecution to coincide with the 2006 gubernatorial race, was widely perceived as a political move (see, for example,this 2007 New York Times editorial [13]). Biskupic's wife is reportedly [14] Randa's judicial assistant.

Biskupic is now in private practice and represents Scott Walker in the John Doe case.

More Appeals and Proceedings Likely

After Judge Randa's move on Thursday reinstating his order halting the John Doe, prosecutors are expected to return to the Seventh Circuit and again ask the appeals court to overturn Randa.

This could go on for a while.

-- This article has been updated --

 

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Read more about the John Doe campaign finance probe: 

Partisan Witchhunt Claims from Club for Growth Upended by New Court Filings [15]

Why Are the Franklin Center's "Wisconsin Reporter" and "Watchdog.org" Attacking the John Doe? [16]

Selective Targeting Claims in John Doe Filings Fall Flat [17]

Wisconsin Club for Growth Makes False Claims to Federal Court [18]

WI Club for Growth, Target of Walker Recall Probe, at Center of Dark Money Web [8]