Amicus Curiae Brief — Stephen E. Stockman, Petitioner v. United States

No. 20-103

In the

Supreme Court of the United States

__________________

STEPHEN E. STOCKMAN,

v.

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

__________________

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Fifth Circuit

__________________

BRIEF AMICI CURIAE OF AMERICAN TARGET

ADVERTISING, INC., ET AL.

IN SUPPORT OF PETITIONER

__________________

MARK J. FITZGIBBONS

Counsel of Record

AMERICAN TARGET ADVERTISING, INC.

9625 Surveyor Ct. #400

Manassas, VA 20110

(703) 392-7676

mfitzgibbons@americantarget.com

Counsel for Amici Curiae

August 12, 2020

i

LIST OF AMICI

Individual amici include (affiliations listed for

identification purposes only):

Rachel Alexander, Former Maricopa County Elections

Attorney

Art Ally, President, Timothy Plan

Jim Babka, President, Downsize DC Org, Inc.

Ted Baehr, Chairman, Good News Communications,

Inc.

The Hon. Bob Barr, Founder and President, Liberty

Guard, Former Congressman, Georgia

Brent Bozell, Chairman, Media Research Center

The Hon. Paul C. Broun, M.D., U.S. House of

Representatives, Former Member, Georgia

Floyd Brown, Publisher, Western Journal

Tammy Cali, President, Eberle Communications Group

James Clymer, Esq., Clymer Musser & Sarno, P.C.

Chad Connelly, President, Faith Wins

William Federer, Author, American Minute, former

candidate for U.S. House of Representatives

Rick Green, President & Founder, Patriot Academy

Rebecca Hagelin, Writer, The Washington Times

Colin Hanna, Chairman, Let Freedom Ring

ii

Howard A. Hickman, General Counsel and Treasurer,

Young Conservatives of Texas PAC

Thomas Lifson, Editor, American Thinker

Sheriff Richard Mack (Ret), President, Constitutional

Sheriffs and Peace Officers Association

Dr. William Magill, Exec. Director, Veterans in Defense

of Liberty

Ed Martin, President, Phyllis Schlafly’s Eagle Forum

ELDF

Jim Martin, Founder/Chairman, 60 Plus Association

Colby May, Esq.

The Hon. Bob McEwen, Executive Director, Council for

National Policy, Former Congressman, Ohio

Malcolm Morris, Chairman, Weathermatic

James Lee Murphy, Esq., General Counsel, America

First Committee

Tom Pauken, Chairman, Westside Helping Hand,

Former Chairman, Texas Republican Party, Former

White House legal counsel’s staff, Reagan

Administration

Frank M. Reilly, Esq., Potts & Reilly, L.L.P.

Stewart Rhodes, Founder and National President, Oath

Keepers

Ron Robinson, President, Young America’s Foundation

Rick Scarborough, President, Recover America Now

iii

Howard Segermark, VP, American Business Defense

Counsel

John Schlafly, Esq.

The Hon. Andrea Seastrand, Former Member U.S.

House of Representatives

Craig Shirley, Reagan biographer and presidential

historian

J. Thomas Smith, President, Early Light Fund

The Hon. Charles H. Taylor, Former Member of US

House - NC 11th district

Richard A. Viguerie, Chairman, FedUp PAC

iv

TABLE OF CONTENTS

LIST OF AMICI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . v

INTEREST OF THE AMICI CURIAE . . . . . . . . . . . 1

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

I.

McCONNELL v. FEC DOES NOT APPLY

HERE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II.

IGNORING

FIRST

AMENDMENT

PROTECTIONS OF NONPROFIT

SOLICITATIONS, THE FIFTH CIRCUIT

USED WRONG STANDARD OF REVIEW

FOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . 14

III.

JURY INSTRUCTIONS ON TAX-EXEMPT

MISSIONS WERE INADEQUATE ABOUT

THE LAW ALLOWING POLITICS, AND

THEREFORE MISLEADING . . . . . . . . . . . . 22

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

v

TABLE OF AUTHORITIES

CASES

Buckley v. Valeo,

424 U.S. 1 (1976). . . . . . . . . . . . . . . . . . . . . passim

Center for Individual Freedom v. Carmouche,

449 F.3d 655 (5th Cir. 2006). . . . . . . . . . . . . . . . . 6

Chamber of Commerce of the United States v.

Moore, 288 F.3d 187 (5th Cir. 2002). . . . . . . . . . . 6

Citizens United v. FEC,

558 U.S. 310 (2010). . . . . . . . . . . . . . . . . . . . . . . 25

Illinois ex rel. Madigan v. Telemarketing

Associates, Inc.,

538 U.S. 600 (2003). . . . . . . . . . . 15, 16, 17, 20, 22

McConnell v. FEC,

540 U.S. 93 (2003). . . . . . . . . . . . . . . . . . . . passim

Riley v. National Federation of Blind of N. C., Inc.,

487 U.S. 781 (1988). . . . . . . . . . . . . . . . . 15, 16, 21

Secretary of State of Md. v. Joseph H. Munson Co.,

467 U.S. 947 (1984). . . . . . . . . . . . . . . . . . . . . . . 15

Schaumburg v. Citizens for a Better Environment,

444 U.S. 620 (1980). . . . . . . . . . . . . . . . . . . . . . . 15

CONSTITUTION AND STATUTES

U.S. CONST. amend. I . . . . . . . . . . . . . . . . . . . . passim

U.S. CONST. amend. VI . . . . . . . . . . . . . . . . . . . . . . 25

18 U.S.C. § 608(e)(1) (1970 ed., Supp. IV). . . . . . . . . 7

vi

26 U.S.C. § 501(c)(3). . . . . . . . . . . . . . 1, 22, 23, 24, 26

26 U.S.C. § 501(c)(4). . . . . . . . . . . . . . . . . . . . . passim

52 U.S.C. § 30101 et seq. . . . . . . . . . . . . . . . . . passim

52 U.S.C. § 30116(a)(7)(B)(ii). . . . . . . . . . . . . . . . . . . 7

Bipartisan Campaign Reform Act of 2002,

(McCain–Feingold Act, Pub.L. 107–155 . . passim

RULE

Fed. R. Crim P. 52(b) . . . . . . . . . . . . . . . . . . . . . . . . 26

OTHER AUTHORITIES

IRS online guidance, ‘Social Welfare Organizations,

https://www.irs.gov/charities-non-profits/othernon-profits/social-welfare-organizations . . . . . . 25

IRS Rev. Rul. 2007-41, 2007-25 I.R.B. (June 18,

2007), https://www.irs.gov/pub/irs-drop/rr-0741.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Jeff Krehely, 501(C)(4) Organizations: Maximizing

Nonprofit Voices & Mobilizing the Public,

National Committee for Responsive

Philanthropy, January 30, 2005,

https://www.ncrp.org/publication/501c4organizations-maximizing-nonprofit-voicesmobilizing-public. . . . . . . . . . . . . . . . . . . . . . . . . 24

1

INTEREST OF THE AMICI CURIAE1

American Target Advertising, Inc. is a direct mail

marketing agency that provides services to nonprofit

organizations communicating with members of the

general public and soliciting contributions nationally.

Its chairman pioneered political direct mail in the

1960s and 70s. Its clients include Internal Revenue

Code §§ 501(c)(3) and 501(c)(4) nonprofit organizations.

37 amici are individuals (1) formally associated with

nonprofit organizations, (2) providing services to

nonprofits (including legal representation or

fundraising), and/or (3) are former elected officials or

candidates for elected office. These amici are concerned

for the rights of nonprofit organizations and political

committees to communicate, fundraise, build files of

supporters, and associate with prospective donors and

voters. Because of their experience in nonprofit or

political missions central to this case, your amici wish

to bring to the attention of the Court relevant matters

not already briefed by the parties that may be of

considerable help to the Court.

1

It is certified that counsel for the parties have consented to the

filing of this brief; that no counsel for a party authored this brief

in whole or in part; and that no person other than these amici

curiae, their members, or their counsel made a monetary

contribution to its preparation or submission.

2

SUMMARY OF ARGUMENT

Failing to even mention the First Amendment, and

failing to apply the standards of review in criminal

matters this Court has articulated in areas of nonprofit

political spending and charitable solicitation, the Fifth

Circuit upheld the 10-year conviction of former

Member of Congress Stephen Stockman. By wrongly

using this Court’s analysis applied solely to certain

broadcast communications, the Fifth Circuit erred in

finding a print publication lacking express advocacy

was an expenditure under federal election law. That

court also failed to require the Government to prove

fraudulent intent at the time donations were solicited

from just two wealthy donors for nonprofit projects that

later underachieved. And, that court failed to find fault

with jury instructions that omitted the important

political activities in which nonprofit organizations

may engage, despite this being a criminal case about

nonprofit political expenditures. The Fifth Circuit

creates chilling dangers to lawful day-to-day operations

of nonprofit organizations in their fundraising

communications protected by First Amendment.

Certiorari should be granted to remedy the harms to

First Amendment rights.

3

ARGUMENT

Stockman’s Petition for Writ of Certiorari comes

before this Court at a time of often-bitter disagreement

in this country about political and ideological

differences. At times such as these, there may be even

greater temptation by those who wield authority to

criminalize the free exercise of First Amendment

rights. And, at such times, there may be no greater

need for the courts to ensure those sacred rights are

robustly protected.

Following his unsuccessful primary challenge to

unseat an incumbent U.S. Senator, Stockman was

convicted of various charges related to the types of

nonprofit and political communications that this Court

has stated repeatedly have protections under the First

Amendment, and he was sentenced to ten years in

prison. He petitions this Court from an opinion of the

Fifth Circuit that not once mentions the First

Amendment in its analysis upholding his conviction.

I.

McCONNELL v. FEC DOES NOT APPLY

HERE

Stockman was convicted under Count 12 of his

indictment for causing an excessive campaign

contribution through unlawful coordination between

him as a candidate for U.S. Senate and an Internal

Revenue Code § 501(c)(4)2 organization. The unlawful

coordination on which he was convicted was he (and his

paid associates) raised money from just one wealthy

Republican donor for the § 501(c)(4) organization to

2

26 U.S.C. § 501(c)(4).

4

make an independent expenditure aiding his Senate

campaign. Stockman’s argument on this issue, from his

appeal to the Fifth Circuit, now through his Petition

before this Court, is that there was no “expenditure”

under the Federal Election Campaign Act (“FECA”), 52

U.S.C. § 30101 et seq. Certiorari should be granted so

the conviction on Count 12 may be reversed.

Stockman claims “[i]n upholding [his] conviction,

the Fifth Circuit relied on the McConnell3 discussion on

BCRA4 § 202 to find Buckley’s5 narrowing construction

had been displaced for non-BCRA activity,” and the

“McConnell discussion is at best opaque.” Petition 17.

Your amici respectfully argue that McConnell on

these key points is not opaque, but that the Fifth

Circuit distorts McConnell’ through selectively editing

the key passage from that opinion to agree with, and

reach, the government’s incorrect and unconstitutional

position. The Fifth Circuit would make new campaign

finance law by selectively editing McConnell. These

amici respectfully argue the Fifth Circuit’s opinion is

more plainly harmful to First Amendment freedoms of

3

McConnell v. FEC, 540 U.S. 93 (2003).

4

Bipartisan Campaign Reform Act of 2002, (McCain–Feingold Act,

Pub.L. 107–155,(“BCRA”).

5

Buckley v. Valeo, 424 U.S. 1 (1976).

5

speech, the press, and association6 than mere

misinterpretation of McConnell caused by its being

opaque on this issue.

The Fifth Circuit’s flawed analysis of an unlawful

coordinated expenditure under FECA starts at page 10

and ends at page 14 of its Opinion (Pet. App. 10a-14a).

The Fifth Circuit said that Stockman “caus[ed] an

excessive campaign contribution in the form of a

coordinated expenditure, an offense covered by Count

12 of the indictment,” and governed by FECA. Pet. App.

10a.7

The sole communication at issue for Count 12 was

a print publication distributed via direct (targeted)

mail called The Conservative News. The print

publication was issued by a § 501(c)(4) nonprofit

organization with which Stockman allegedly

“unlawfully” coordinated the payment for

6

The right of association has been at the heart of donations to

causes and candidates, as expressed in Buckley:

And the Act’s contribution limitations permit associations

and candidates to aggregate large sums of money to

promote effective advocacy. By contrast, the Act’s $1,000

limitation on independent expenditures "relative to a

clearly identified candidate" precludes most associations

from effectively amplifying the voice of their adherents,

the original basis for the recognition of First Amendment

protection of the freedom of association. See NAACP v.

Alabama, 357 U.S. at 357.

Buckley, 424 U.S. at 22.

7

The Opinion’s Note 7 (Pet. App. 12a) says the Fifth Circuit’s

precedents about independent expenditures referenced herein at

amici’s Note 8 are distinguishable from the Stockman case.

6

dissemination of the publication. The Conservative

News was critical of Stockman’s opponent in his U.S.

Senate primary race, and favorable to Stockman.

Stockman was clearly involved in the arrangement of

financing for that publication. See Pet. App. 11a-12a.

The Fifth Circuit does not identify that the nonprofit

organization reported this publication to the Federal

Election Commission as an “expenditure” under FECA,

nor any complaints filed with the FEC or legal

adjudications that the organization should have

reported the publication as an expenditure under

FECA. Indeed, under Fifth Circuit law for over a

decade before, and at the time of, the Stockman trial,

there was no objective reason to believe the publication

constituted an expenditure subject to FECA. In fact,

just the opposite was true.8

8

The test about “express advocacy” for purposes of independent

expenditures was addressed in 2006 by the Fifth Circuit in Center

for Individual Freedom v. Carmouche, 449 F.3d 655 (5th Cir.

2006). The court acknowledged the Fifth Circuit’s existing use of

the “magic words” test for express advocacy from Buckley, stating,

“[w]ords of express advocacy include terms “such as ‘vote for,’

‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote

against,’ ‘defeat,’ ‘reject.’” Center for Individual Freedom, 449 F.3d

at 664. Prior to the Center for Individual Freedom decision, the

Fifth Circuit in Chamber of Commerce of the United States v.

Moore, 288 F.3d 187 (5th Cir. 2002) was even more expansive in

explaining what constitutes express advocacy for independent

expenditures. The court concluded that “the Chamber’s

advertisements do not expressly advocate the election or defeat of

a candidate . . . because the advertisements do not contain explicit

terms advocating specific electoral action by viewers. As a

consequence, the advertisements are not subject to mandatory

disclosure requirements for independent campaign expenditures.”

Id. at 190.

7

From the seminal Buckley opinion (which the Fifth

Circuit had expressly acknowledged before the

Stockman trial as to “independent expenditures”)

“expenditures” for purposes of FECA are only those

communications that expressly advocate for the

election or defeat of a named candidate. Buckley

limited the “express advocacy” test to expenditures for

communications that use the “magic words,” such as

“vote for,” “vote against,” “elect,” “defeat,” and certain

other terms,9 which were entirely absent from The

Conservative News for which Stockman was charged

with the crime of excessive contributions via

coordinated expenditure, a term codified at 52 U.S.C.

§ 30116(a)(7)(B)(ii).

As explained more fully below, with the enactment

of the Bipartisan Campaign Reform Act (BCRA) in

2002, a second type of communications called

“electioneering communications” were legislatively

defined as “expenditures” under FECA, and thus made

subject to FECA’s law that prohibits coordination

between a candidate and an entity making the

expenditure. The Fifth Circuit’s Note 6 accurately

describes “electioneering communications” as “any

broadcast, cable, or satellite communication that refers

to a clearly identified candidate for federal office and is

made within 30 days of a primary or 60 days of a

general election.” Pet. App. 12a.

9

Buckley’s widely acknowledged “magic words” test is found at

Footnote 52 of that opinion, and reads, “[t]his construction would

restrict the application of § 608(e)(1) to communications containing

express words of advocacy of election or defeat, such as ‘vote for,’

‘elect,’ ‘support, ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote

against, ‘defeat,’ ‘reject.’”

8

The print publication that formed the basis for

which Stockman was convicted for unlawful

coordination, The Conservative News, was clearly not

an “electioneering communication,” and undisputedly

lacked Buckley’s magic words that would otherwise

qualify it as an “expenditure” under FECA. (“It is clear

and uncontested that The Conservative News does not

contain direct instructions to ‘vote for’ or ‘defeat’ any

candidate. It would follow, Stockman argues, that

Uihlein did not effect an ‘expenditure’ when he funded

The Conservative News.” Pet. App. 12a-13a.) Therefore,

as Stockman argues and these amici agree, The

Conservative News could not as a matter of law be

subject to FECA’s unlawful coordination rules. This

conclusion should have precluded bringing Count 12 ab

initio.

Instead, the Fifth Circuit reached its errant

conclusion that The Conservative News was an

expenditure under FECA by selectively editing a

passage from McConnell. That passage when read in

its entirety, however, provides a distinctly different

result than what the Fifth Circuit reached. As shown

below, that passage applied solely to BCRA § 202,

which reads:

SEC.

202.

COORDINATED

COMMUNICATIONS AS CONTRIBUTIONS.

Section 315(a)(7) of the Federal Election

Campaign Act of 1971 (2 U.S.C. 441a(a)(7)) is

amended-[[Page 116 STAT. 91]]

9

(1) by redesignating subparagraph (C) as

subparagraph (D); and

(2) by inserting after subparagraph (B) the

following:

(C) if-(i) any person makes, or contracts to

make, any disbursement for any

electioneering communication (within the

meaning of section 304(f)(3)); and

(ii) such disbursement is coordinated with

a candidate or an authorized committee of

such candidate, a Federal, State, or local

political party or committee thereof, or an

agent or official of any such candidate,

party, or committee; such disbursement

or contracting shall be treated as a

contribution to the candidate supported

by the electioneering communication or

that candidate’s party and as an

expenditure by that candidate or that

candidate’s party; and.10

The full passage at issue from McConnell is clearly and

inescapably anchored in a congressional decision that

“electioneering communications” may be “expenditures”

for purposes of FECA and its unlawful coordination

prohibitions:

10

Bipartisan Campaign Reform Act of 2002, (McCain–Feingold

Act, Pub.L. 107–155, https://www.govinfo.gov/content/pkg/PLAW107publ155/html/PLAW-107publ155.htm, (last visited Aug. 10,

2020).

10

6. The District Court’s judgment is affirmed

insofar as it held that plaintiffs advanced no

basis for finding unconstitutional BCRA §202,

which amends FECA §315(a)(7)(C) to provide

that disbursements for electioneering

communications that are coordinated with a

candidate or party will be treated as

contributions to, and expenditures by, that

candidate or party, 2 U. S. C. A. §441a(a)(7)(C).

That provision clarifies the scope of

§315(a)(7)(B), which provides that expenditures

made by any person in cooperation, consultation,

or concert with, or at the request or suggestion

of a candidate or party constitute contributions.

BCRA pre-empts a possible claim that the term

“expenditure” in §315(a)(7)(B) is limited to

spending for express advocacy. Because

Buckley’s narrow interpretation of that term was

only a statutory limitation on Congress’ power to

regulate federal elections, there is no reason why

Congress may not treat coordinated

disbursements for electioneering communications

in the same way it treats other coordinated

expenditures.

McConnell, 540 U.S. at 202-03 (emphasis added).

Compare that full passage from McConnell with the

Fifth Circuit’s edited version and verbal jockeying to

reach its incorrect outcome:

In McConnell, the Supreme Court considered

precisely the statutory language at issue here,

namely the rule (now codified at 52 U.S.C.

§ 30116(a)(7)(B)(i)) that “expenditures . . . in

11

cooperation, consultation, or concert with” a

candidate are to be considered the equivalent of

campaign contributions and restricted

accordingly. See McConnell, 540 U.S. at 202.

The McConnell Court explained that a postBuckley statutory enactment had “clarifie[d] the

scope” of this language, “pre-empt[ing]” a

possible claim that “coordinated expenditures for

communications that avoid express advocacy

cannot be counted as contributions.” 540 U.S. at

202. In other words, the Court held that the

presence of express advocacy is not a

prerequisite of the “settled” rule that when

expenditures are “controlled by or coordinated

with the candidate and his campaign[,] [they]

may be treated as indirect contributions subject

to FECA’s . . . amount limitations.” Id. at 219

(cleaned up).

The Fifth Circuit’s confounding that passage from

McConnell goes beyond interpreting opaque language,

and instead invades the legislative function, making

new (and incorrect) law. Neither BCRA nor McConnell

eliminated the Buckley test that should apply to The

Conservative News and the Stockman case.

BCRA did add, and McConnell did confirm, that

electioneering communications are to be considered

expenditures under FECA, and as explained below

were legislatively designated a “functional equivalent”

of expenditures subject to FECA. Nowhere, though,

does McConnell say or imply that its language quoted

above (“there is no reason why Congress may not treat

coordinated disbursements for electioneering

12

communications in the same way it treats other

coordinated expenditures”) -- or anything from

McConnell -- overruled the Buckley test for nonelectioneering communications. The following passage

from McConnell further helps illuminate the context of

its very limited holding:

In light of our precedents, plaintiffs do not

contest that the Government has a compelling

interest in regulating advertisements that

expressly advocate the election or defeat of a

candidate for federal office. Nor do they contend

that the speech involved in so-called issue

advocacy is any more core political speech than

are words of express advocacy. After all, “the

constitutional guarantee has its fullest and most

urgent application precisely to the conduct of

campaigns for political office,” Monitor Patriot

Co. v. Roy, 401 U.S. 265, 272 (1971), and

“[a]dvocacy of the election or defeat of

candidates for federal office is no less entitled to

protection under the First Amendment than the

discussion of political policy generally or

advocacy of the passage or defeat of legislation.”

Buckley, 424 U.S., at 48. Rather, plaintiffs argue

that the justifications that adequately support

the regulation of express advocacy do not apply to

significant quantities of speech encompassed by

the definition of electioneering communications.

McConnell, 540 U.S. at 205-06 (emphasis added.) That

First Amendment challenge to BCRA’s making

electioneering communications “expenditures” under

FECA did not succeed because:

13

This argument fails to the extent that the issue

ads broadcast during the 30- and 60-day periods

preceding federal primary and general elections

are the functional equivalent of express

advocacy. The justifications for the regulation of

express advocacy apply equally to ads aired

during those periods if the ads are intended to

influence the voters’ decisions and have that

effect.

Id. at 206 (emphasis added).

In campaign finance law one may rarely say

something is clear, but this is: In a First Amendment

challenge, McConnell decided a very narrow issue

about specific legislation governing expenditures under

FECA. The Court held that electioneering

communications are the functional equivalent of

independent expenditures for purposes of Congress’s

authority to regulate in this area of communications

protected by the First Amendment. Any reading beyond

that, like what the Fifth Circuit construed, is not

supported. FECA’s regulation of non-electioneering

communications remains limited by the Buckley magic

words test.

In its review of Stockman’s criminal conviction, the

Fifth Circuit failed to follow this Court’s critical

baseline from Buckley: “Close examination of the

specificity of the statutory limitation is required where,

as here, the legislation imposes criminal penalties in

an area permeated by First Amendment interests.”

Buckley, 424 U.S. at 41. Because The Conservative

News is not an electioneering communication,

McConnell’s holding about expenditures does not

14

remotely apply to the Stockman case as the

Government and Fifth Circuit unconstitutionally forced

it in to convict Stockman under Count 12.

II.

IGNORING

FIRST

AMENDMENT

PROTECTIONS OF NONPROFIT

SOLICITATIONS, THE FIFTH CIRCUIT

USED WRONG STANDARD OF REVIEW

FOR FRAUD

Out of concern if not fear that the standard of

review for fraud applied by the Fifth Circuit to

fundraising solicitations opens the door for the

government to target nonprofit organizations -whether broadly or selectively -- for common, even

everyday failures or underachievement to meet

nonprofit project or program goals, your amici

respectfully urge the Court to issue the writ for

certiorari sought by the Petitioner.

As the Fifth Circuit explains:

Stockman was indicted on four counts of mail

fraud, four counts of wire fraud, two counts of

making false statements in FEC filings, eleven

counts of money laundering, one count of

conspiracy to make conduit campaign

contributions and false statements, one count of

causing an excessive campaign contribution, and

one count of filing a false tax return.

Pet. App. 7a. As described by the Fifth Circuit,

Stockman argued before the court that “the

government produced insufficient evidence of

Stockman’s fraudulent intent. In this context, he

argues that the government’s evidence does not suggest

15

a ‘contemporaneous’ intent to defraud because evidence

of Stockman’s illicit spending cannot establish bad

faith simultaneous with the solicitation and receipt of

donor funds.” Pet. App. 18a. In its written opinion

entirely devoid of any mention of the First Amendment

on any matter it decided, the Fifth Circuit disagreed

with Stockman: “Notwithstanding Stockman’s selfserving view that later misappropriations cannot

evidence earlier bad faith, the jury could rationally

have inferred Stockman’s fraudulent intent from this

largely undisputed evidence. We thus find that the

government has also met its burden with respect to the

‘intent’ element of mail and wire fraud.” Pet. App. 19a.

Since 1980 this Court has on four occasions

prominently addressed the First Amendment

protections of fundraising for nonprofit causes in the

context of government laws targeting fraud. See

Schaumburg v. Citizens for a Better Environment, 444

U.S. 620 (1980), Secretary of State of Md. v. Joseph H.

Munson Co., 467 U.S. 947 (1984), Riley v. National

Federation of Blind of N. C., Inc., 487 U.S. 781 (1988),

and Illinois ex rel. Madigan v. Telemarketing

Associates, Inc., 538 U.S. 600 (2003).

In Telemarketing Associates the Court emphasized

that “the First Amendment does not shield fraud.”

Telemarketing Associates, 538 U.S. at 611-12. Notably,

however, “[t]he First Amendment protects the right to

engage in charitable solicitation.” Schaumburg, 444

U.S. at 632. “Charitable appeals for funds ... involve a

variety of speech interests -- communication of

information, the dissemination and propagation of

views and ideas, and the advocacy of causes that are

16

within the protection of the First Amendment.”

National Federation of Blind, 487 U.S. at 788-789.

As to costs of fundraising, specifically the fees paid

to solicitors acting on behalf of nonprofit organizations,

the Court said, “[w]hile bare failure to disclose that

information directly to potential donors does not suffice

to establish fraud, when nondisclosure is accompanied

by intentionally misleading statements designed to

deceive the listener, the First Amendment leaves room

for a fraud claim.” Telemarketing Associates, 538 U.S.

at 606 (emphasis added). And, “in a properly tailored

fraud action the State bears the full burden of proof.

False statement alone does not subject a fundraiser to

fraud liability,” (id. at 620) and “the gravamen of the

fraud action in this case is not high costs or fees, it is

particular representations made with intent to

mislead.” Id. at 621 (emphasis added). A cause of

action for fraud will survive when those soliciting

attracted donations by misleading potential

donors into believing that a substantial portion

of their contributions would fund specific

programs or services, knowing full well that was

not the case . . . . Such representations remain

false or misleading, however legitimate the other

purposes for which the funds are in fact used.

Id. at 622 (emphasis added). Lastly, the “mere failure

to volunteer the fundraiser’s fee when contacting a

potential donee, without more, is insufficient to state a

claim for fraud.” Id. at 624.

The Indictment states Stockman and his associates

“made false representations in soliciting hundreds of

17

thousands of dollars in donations from charitable

foundations and individuals who ran those

foundations,” and Stockman et al. told these donors

“the donations would be used for charitable and

educational purposes, or for lawful independent

political advocacy ….” ROA.74 (emphasis added). (See

Section I above about why The Conservative News was

lawful advocacy.)

Because of the First Amendment protections of

charitable solicitations, your amici argue that lookback speculations about intent based merely on success

or failure of the projects for which funds were raised

are contrary to the standards articulated in

Telemarketing Associates. By way of example about

how the Fifth Circuit erred, your amici will reference

the Stockman solicitations of donations from Richard

Uihlein, which are described at Pet. App. 4a-6a.

Stockman approached Mr. Uihlein to donate

financing for a printed publication called The

Conservative News to be sent via direct mail. Mr.

Uihlein, a wealthy donor to conservative causes, not

only had known Stockman and previously supported

him, but had prior solicitation dealings with

Stockman’s associate Dodd. Mr. Uihlein testified he

told one solicitor he had “no problem” with donating to

an independent expenditure for Stockman. ROA.2143.

Mr. Uihlein testified he was aware the communication

would be made by the nonprofit organization Center for

American Future. He received a letter acknowledging

a pledge of support of $500,000 to Center for American

Future, and a request for “an additional large sum of

money, $726,000, to mail the entire state of Texas.”

18

ROA.2150-51. Mr. Uihlein testified that Wagner, a

direct mail vendor for Center for American Future,

then later asked him to “basically, pay for postage for

the mailing that is ready to go out.” ROA.2156. This

request was subsequent to Mr. Uihlein’s then-extant,

documented pledge to Center for American Future.

Mr. Uihlein testified he was told the quantity of

newspapers (The Conservative News) would be “830some thousand,” and the mailing needed postage of

$450,571.65. ROA.2157. That donation by Mr. Uihlein

forms the bases of Jury Instructions on Counts 3 and 4.

ROA.919. Mr. Uihlein made his check for the mailing

payable to the U.S. Postmaster.

Center for American Future ended up mailing fewer

than 830,000 copies of The Conservative News. Without

referencing anything in the record supporting its

assertion -- or reasons why -- the Fifth Circuit

nevertheless claims, “Stockman called off the direct

mail campaign shortly before the primary, at which

point only $214,718.51 remained of Uihlein’s …

donation.” Pet. App. 6a.

The Postal Service requires upfront payment, unlike

other direct mail vendors that may work on credit. As

Chief Executive Officer of a direct mail catalogue

company (ROA.2115-17), Mr. Uihlein would know that.

The Fifth Circuit does not say Mr. Uihlein’s donation

was expressly restricted (see Petition 7 for an

explanation of restricted donations). Nor does the Fifth

Circuit say whether or not the balance of Uihlein’s

donation was used to pay the authors of The

Conservative News, for its printing, or for a mail shop

to affix addresses so it could be mailed to its intended

19

recipients. And, payments to the fundraiser(s) whose

services found Mr. Uihlein’s donation were likely

another cost the Center for American Future needed to

pay. Nor does the Fifth Circuit say Mr. Uihlein would

have disapproved of such uses of his donation. Based

on the record (explained below), it would appear just

the opposite is true.

Center for American Future planned to mail

830,000 copies of The Conservative News, and the Fifth

Circuit points to nothing proven by the Government

contradicting that intent when funds were solicited

from Mr. Uihlein. Especially since mailing 830,000

copies would have been good for Stockman’s political

career and “(especially) his political needs” (Pet. App.

5a), it would appear the decrease in the intended

quantity mailed worked against Stockman. Indeed, a

representative for Center for American Future had

asked Mr. Uihlein for a total of over $1.2 million for the

project. Mr. Uihlein instead provided $450,571.65,

hoping other donors might finance the rest for the

“need[ed] millions,” and his “half million would get

some positive results in other races.” ROA.2154.

Therefore, even Mr. Uihlein clearly realized his

donation would not be sufficient to cover the quantity

of mail or projects sought to be executed by Center for

American Future before the election.

The fact that Center for American Future mailed

fewer than the goal of 830,000 newspapers may also be

easily explained when one understands direct mail.

Planned direct mail quantities may decrease for any

number of reasons: (1) the intended number of names

and addresses from lists rented for the mailing may not

20

be available on time to meet the mail date; (2) the

printers of the mail and the mail shops that affix

names, addresses, and postage to the pieces of mail

may be overbooked; (3) funds projected to pay for the

entire costs of the direct mailing may not be available;

or (4) the nonprofit organization may simply decide the

projected quantity was too high to meets its strategic

objectives. (It is not uncommon, for example, that your

amicus American Target Advertising will reduce its

direct mail postage needs budget substantially from

one week to the next based on changes in quantities of

its nonprofit clients’ mail to be sent.)

By concluding there was fraud here, the Fifth

Circuit’s lack of exacting examination of intent at the

time of solicitation would make everyday flexibility of

how nonprofits spend their money on projects, everyday

logistics of direct mail, or even common failures in

nonprofit projects the equivalent of “intentionally

misleading statements designed to deceive the

listener,” articulated under the standards in

Telemarketing Associates, as quoted supra. And as with

Stockman’s solicitations to Mr. Uihlein for the other

tax-exempt projects, such as Freedom House and Life

Without Limits (Pet. App. 4a-5a), there is risk of failure

in completion of those projects. But even the sole donor

to testify at Stockman’s trial understood the need to

provide seed money to encourage others to fund those

projects (“hopefully use [his donation] to encourage

others to contribute” while solicitors “continued to

attempt to raise additional money”). ROA.2132.

To be safe from the approach taken by the Fifth

Circuit, organizations would likely need to put

21

donations in a lockbox while not being able to use those

donations for administrative overhead (including even

regulatory compliance costs), the costs of conducting

more fundraising, or costs of promoting and marketing

their missions in ways to educate the public about

causes (the last having innate benefits, including

attracting more donations). The Fifth Circuit’s

approach could smother and extinguish many

organizations.

The Fifth Circuit failed to adequately address the

issue of whether the Government proved donations

were solicited with intent to defraud, and instead relied

on after-the-fact results that individual programs failed

or under-achieved, examples of which are “Stockman

appears to have promised” one mailing (Pet. App. 3a),

and “Stockman failed to mail any ‘voter education

material’ as promised.” Id. Another example is that the

quantity of the direct mail publication The

Conservative News mailed was less than what was

originally intended (see Pet. App. 6a), but the Fifth

Circuit does not identify any fraudulent intent at the

time of the solicitation was made to Mr. Uihlein.

That the jury may have viewed failure or

underachievement of the projects for which funds were

solicited, and “rationally have inferred Stockman’s

fraudulent intent” (see Pet. App. 19a (emphasis

added)), is contrary to the more exacting First

Amendment standards required for charitable

solicitations. The Government must prove “money [was

obtained] on false pretenses or by making false

statements,” (National Federation of Blind, 487 U.S. at

800) and “particular representations made with intent

22

to mislead.” Telemarketing Associates, 538 U.S. at 621.

The Fifth Circuit, which never mentioned the First

Amendment or its role in protecting charitable

solicitations, failed to hold the Government to the

standard of proving fraudulent intent at the time of the

solicitations. Instead, it served a thin (and bitter) gruel

to uphold Stockman’s conviction.

III.

JURY INSTRUCTIONS ON TAX-EXEMPT

MISSIONS WERE INADEQUATE ABOUT

THE LAW ALLOWING POLITICS, AND

THEREFORE MISLEADING

The Petition addresses the inadequate and

therefore misleading jury instructions about the taxexempt missions of § 501(c)(3)11 and § 501(c)(4)

organizations, and how the “net earnings” of such

organizations may not “benefit any private shareholder

or individual.” Petition 9-10. Those missions and issues

are central to the Stockman case, and key to

understanding why the Fifth Circuit’s opinion failed to

protect, and is dangerous to, First Amendment rights.

As the Fifth Circuit states:

With respect to the jury instructions, Stockman

contends that the district court erred by defining

501(c)(3) and 501(c)(4) organizations in the

charge and by failing to instruct the jury on

Stockman’s “good faith” defense to the tax and

campaign finance counts.

Pet. App. 7a-8a. And,

11

26 U.S.C. § 501(c)(3).

23

Stockman concedes, however, that no

contemporaneous objection was made at trial;

instead, he now argues that the district court

should have excluded the 501(c)(3) and 501(c)(4)

definitions from the charge sua sponte.

Given Stockman’s failure to object at trial, our

review is for plain error.

Pet. App. 10a. Then,

[W]e cannot agree that the district court’s

statutory instructions merit reversal under the

plain error standard. An instruction that

mirrors relevant statutory text “will almost

always convey the statute’s requirements,”

United States v. Lebowitz, 676 F.3d 1000, 1014

(11th Cir. 2012), and Stockman has not

identified any authority rendering it “clear or

obvious” that a district court’s jury instructions

must go beyond the language of the statute in

this context.

Pet. App. 11a.

Nonprofit political spending and missions played a

pivotal role in the Fifth Circuit’s upholding Stockman’s

conviction. Though issues about tax-exempt purposes

may be complicated, it is without doubt that § 501(c)(3)

and § 501(c)(4) tax-exempt organizations do and

lawfully may engage in “politics.”

The federal statutes quoted in the trial court’s jury

instructions (and re-quoted by Fifth Circuit (Pet. App.

9a) and the Petition at 9-10) about the lawful taxexempt purposes of § 501(c)(3) and § 501(c)(4)

24

organizations are completely devoid of any mention of

politics. Yet nonprofits are very politically active, and

per this observer, “[m]any of the most visible and

politically active nonprofit organizations in the United

States are classified by the Internal Revenue Service

(IRS) as 501(c)(4) social welfare groups.” Jeff Krehely,

501(C)(4) Organizations: Maximizing Nonprofit Voices

& Mobilizing the Public, National Committee for

Responsive Philanthropy,

January 30, 2005

https://www.ncrp.org/publication/501c4-organizationsmaximizing-nonprofit-voices-mobilizing-public (last

visited Aug. 10, 2020).

Although not mentioned in the statutes about taxexempt missions used in the jury instructions,

§ 501(c)(3) organizations may conduct the political

activities of voter registration, get-out-the-vote, and

providing voter guides so long as those activities are

not partisan.12 § 501(c)(4) organizations may go further

and engage in partisan political activities, including

12

Guidance from the Internal Revenue Service states:

Section 501(c)(3) organizations are permitted to conduct

certain voter education activities (including the

presentation of public forums and the publication of voter

education guides) if they are carried out in a non-partisan

manner. In addition, section 501(c)(3) organizations may

encourage people to participate in the electoral process

through voter registration and get-out-the-vote drives,

conducted in a non-partisan manner. On the other hand,

voter education or registration activities conducted in a

biased manner that favors (or opposes) one or more

candidates is prohibited.

IRS Rev. Rul. 2007-41, 2007-25 I.R.B. (June 18, 2007),

https://www.irs.gov/pub/irs-drop/rr-07-41.pdf, last visited Aug. 9,

2020.

25

issue advocacy naming and criticizing candidates, and

even express advocacy using “independent

expenditures,”13 so long as the organizations meet a

“primary purpose test,” and do not exceed some

statutorily-unstated threshold of partisan political

activity.14

Unfortunately for the Stockman jury, and more

unfortunately for Stockman himself, the jury received

no adequate legal guidance in the instructions that

“politics” at the core of this case is authorized under

federal law governing tax-exempt missions. Instead,

the jury was sent the statutory language devoid of the

many political activities in which nonprofits may

lawfully engage. In the context of a criminal trial

resulting in a 10-year conviction, the trial court’s jury

instructions about lawful tax-exempt missions were

inadequate, confusing, and therefore devastating to

Stockman’s First and Sixth Amendment rights.

The inadequate jury instructions about lawful and

constitutionally protected activity robbed Stockman of

a fair trial. The Fifth Circuit, however, decided to look

the other way by applying plain-error review (Pet. App.

14a-16a) instead of de novo review as was sought by

Stockman on appeal, and is re-sought in his Petition at

13 (“Independent appellate review to protect First

Amendment rights from chill is de novo, but Stockman

13

14

See Citizens United v. FEC, 558 U.S. 310 (2010).

“[A] section 501(c)(4) social welfare organization may engage in

some political activities, so long as that is not its primary activity.”

See, IRS online guidance, ‘Social Welfare Organizations,

https://www.irs.gov/charities-non-profits/other-non-profits/socialwelfare-organizations (last visited Aug. 10, 2020.

26

also meets the plain-error standard for relief under

FED. R. CRIM P. 52(b). See Section II, infra.”).

Additionally, the Fifth Circuit was harsh in its

criticism of Stockman’s allegedly “repurposing” of

nonprofit funds for personal use. (“As before, Stockman

repurposed the funds. He spent thousands on personal

goods, including airline tickets, fast food, and gasoline.”

Pet. App. 4a). The Fifth Circuit fails, though, to

identify whether the day-to-day expenses of many

nonprofit executives such as “airline tickets, fast food,

and gasoline” were paid by Stockman personally, from

the account of a nonprofit organization, or were

personal benefits from the net earnings of a nonprofit

organization. If the Fifth Circuit’s shotgun

criminalization of expenditures on “airline tickets, fast

food, and gasoline” were to be left unchecked, paid

fundraisers, nonprofit executives, and candidates for

office best be wary of making such common

expenditures.

Given the inadequate instructions by such an

experienced, esteemed, and highly respected judge, it

would be easy for the jury to conclude that use of

nonprofit funds for any political purpose was verboten,

and that yet another slick politician was trying to game

the system. Stockman’s Petition at 34 says it this way:

“[I]t is possible that Stockman was convicted of the

non-crime of failing to work exclusively for educational

or charitable purposes within a § 501(c)(3) or

§ 501(c)(4) entity.” Your amici prefer to say it this way:

It is probable that Stockman was convicted, at least in

part, of engaging in lawful and constitutionally

protected nonprofit political activity because the jury

27

was confused by the legally inadequate jury

instructions. The legally and constitutionally

inadequate jury instructions clearly may have tainted

deliberations, and prejudiced the jury’s view of what

was lawful in this criminal case where (really) the

exercise of First Amendment rights formed the basis

for the conviction.

CONCLUSION

The Fifth Circuit failed to adequately review

Stockman’s criminal appeal in the context of the

important constitutional rights involved. Its opinion in

areas of campaign finance and nonprofit law is

unconstitutional and dangerous to the security of

rights, and certiorari should be granted to remedy this.

Respectfully submitted,

MARK J. FITZGIBBONS

Counsel of Record

AMERICAN TARGET ADVERTISING, INC.

9625 Surveyor Ct. #400

Manassas, VA 20110

(703) 392-7676

mfitzgibbons@americantarget.com

Counsel for Amici Curiae