Sec. 9. Prohibiting fraudulent PAC practices
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Section 313 of the Federal Election Campaign Act of 1971 ( 52 U.S.C. 30114 ) is amended by adding at the end the following new subsection: A contribution or donation that is made to a political committee and is not described in subsection
(a)shall not be converted to personal use (including any use described in subparagraphs
(A)through
(I)of subsection (b)(2)). For purposes of paragraph (1), a contribution or donation shall be presumed to be converted to personal use if the contribution or donation is used to make a significant disbursement to a controlling person. The presumption in subparagraph
(A)may be rebutted only upon a showing that— the significant disbursement to the controlling person is a bona fide payment for goods or services at no greater than fair market value; the significant disbursement was negotiated at arms’ length by and approved by an agent of the committee who— was neither the controlling person nor in an employment relationship directly or indirectly subject to the direction or control of the controlling person; relied upon appropriate data as to fair market value prior to approving the disbursement; and documented the basis for the approval determination concurrently with making that determination; and at the time the significant disbursement was made, the aggregate total of itemized contributions to the committee during the election cycle exceeded the aggregate total of disbursements to controlling persons by the committee during the election cycle. For purposes of this paragraph: The term controlling person means any person who has authority or ability to direct or control the committee’s disbursements, any family member or business partner of such person, and any corporation (whether for-profit or not-for-profit, but not including publicly traded corporations), limited liability company, partnership, trust, bank or financial account, or other entity owned or controlled in whole or in part by such person, family member, or business partner. The term significant disbursement means any disbursement to a person if— such disbursement exceeds $1,000; or such disbursement, when aggregated with all other disbursements by the committee to the person within the calendar year, exceeds $5,000. . The heading for subsection
(b)of section 313 of such Act ( 52 U.S.C. 30114 ) is amended by inserting after by candidates and office holders . Prohibited uses Section 304(b)(6)(B) of the Federal Election Campaign Act of 1971 ( 52 U.S.C. 30104(b)(6)(B) ) is amended by striking and at the end of clause (iv), by inserting and at the end of clause (v), and by adding at the end the following new clause: person who during the reporting period received a disbursement that constituted a significant disbursement to a controlling person within the meaning of section 313(b)(2), together with the date, amount, and purpose of the significant disbursement and a sworn statement demonstrating that the requirements of 313(b)(2)(B) were satisfied; . Not later than 120 days after the enactment of this Act, the Chairman of the Federal Trade Commission and the Chairman of the Federal Election Commission shall jointly submit to Congress a report on measures that should be taken by Congress or the Federal Election Commission to limit fraudulent solicitations by political committees. The amendments made by this section shall apply to disbursements made after the date of the enactment of this Act.
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