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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK: PART 16

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STRATEGIC ADVANTAGE INTERNATIONALand DANIEL ODESCALCHI,

Petitioners,

- against -

COMMISSION TO INVESTIGATE PUBLICCORRUPTION,

Respondent.

:::::::

:::::

Index No. 161554/201

Honorable Alice Schle

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MEMORANDUM OF LAW IN OPPOSITION TO THE MOTION

TO QUASH AND IN SUPPORT OF THE CROSS-MOTION TO COM

JANOS MARTONDEREK J.ETTINGERSpecial Counsel at theCommission to Investigate Public Corruption

90 Church Street, 15th FloorN Y k NY 10007

ERIC T.SCHNEIDERMANAttorney General of theState of New York

DAVID E.NACHMANSenior Enforcement Counsel

LESLIE B.DUBECKSpecial Assistant

120 Broadway, 25th FloorNew York, New York 10271

(212) 416-8390(212) 416-6001 (facsimile)David.Nachman@ag.ny.gov

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TABLE OF CONTENTS

TABLE OF CONTENTS .............................................................................................

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

PRELIMINARY STATEMENT .................................................................................

STATEMENT OF FACTS ..........................................................................................

A. The Establishment of the Commission ................................................

B. The Rise of Election Dark Money and the 501(c)(4) Vehicle ......

1. Dark Money After Citizens United..........................................

2. Legal Constraints on the Use of Dark Money By 501(c)(4)Organizations ...........................................................................

C. CSP: Dark Money in New York ..........................................................

D. The Commissions Subpoenas .............................................................

ARGUMENT ........................................................................................................

I. THE COMMISSIONS INVESTIGATION OF CSP IS CONSISTENT WITITS STATUTORY MANDATE AND PUBLIC POLICY .............................

A. The Subpoenas Seek Information Consistent with the Commissions

Broad Mandate to Investigate the Effectiveness and Weaknesses ofExisting Campaign-Finance and Lobbying Regulations. ....................

B. The Commissions Work Is Not Yet Completed .................................II. PETITIONERS PROCEDURAL ARGUMENTS ARE WITHOUT MERIT

A. The Commission Has Complied With All Necessary Procedures and

B. The Subpoenas Are Neither Overbroad Nor Unduly Burdensome .....III. THE SUBPOENAS DO NOT IMPERMISSIBLY BURDEN FIRST

AMENDMENT RIGHTS ................................................................................

A. The Subpoenas Serve Important State Interests...................................

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TABLE OF AUTHORITIES

Cases

Anheuser-Busch, Inc. v. Abrams,71 N.Y.2d 327 (1988) ............................................................................................

Bailey v. Me. Commn on Govt Ethics & Election Practices,900 F. Supp. 2d 75 (D. Me. 2012) .........................................................................

Brown v. Socialist Workers 74 Campaign Comm.,459 U.S. 87 (1982) .................................................................................................

Buckley v. Valeo,424 US 1 (1976) .....................................................................................................

Carl Andrews & Assoc. Inc. v. Office of the Inspector General ,85 A.D.3d 633 (1st Dept 2011) ............................................................................

Carlise v. Bennett,268 N.Y. 212 (1935) ..............................................................................................

Citizens United v. Federal Election Commission,558 U.S. 310 (2010) ...............................................................................................

Ctr. for Individual Freedom v Madigan,697 F.3d 464 (7th Cir. 2012) .................................................................................

Doe v. Reed,__ U.S. __, 130 S. Ct. 2811 (2010) ..............................................................6, 21,

Eastland v. United States Servicemens Fund,421 U.S. 491 (1975) ...............................................................................................

Human Life of Wash. Inc. v. Brumsickle,624 F.3d 990 (9th Cir. 2010), cert. denied__ U.S. __, 131 S. Ct. 1477 (2011) ....

Matter of Am. Dental Co-op., Inc. v. Attorney General of the State of N.Y.,127 A.D.2d 274 (1st Dept 1987) ..........................................................................

Matter of De Brizzi,

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Matter of the Joint Legislative Comm. (Teachers Union),285 N.Y. 1 (1941) ..................................................................................................

Matter of La Belle Creole Intl v. Attorney General,10 N.Y.2d 192 (1961) ............................................................................................

Matter of Minuteman Research, Inc. v. Lefkowitz,69 Misc.2d 330 (Sup. Ct. N.Y. Co. 1972) .............................................................

Matter of the New York Republican State Committee v. New York State Commission

Government Integrity,138 Misc. 2d 790 (Sup. Ct. N.Y. County 1988)......................................................

Matter of Nicholson v. State Commn on Judicial Conduct,50 N.Y.2d 597 (1980) ............................................................................................

McConnell v. Federal Election Commn,540 U.S. 93 (2003) .................................................................................................

N.Y. State Commn on Govt Integrity v. Congel,156 A.D.2d 274 (1st Dept 1989) ..........................................................................

NAACP v. Alabama,357 U.S. 449 (1958) ...............................................................................................

Nixon v. Shrink Mo. Govt Pac,528 U.S. 377 (2000) ...............................................................................................

Ognibene v. Parkes,671 F.3d 174 (2d Cir. 2011), cert. denied__ U.S. __, 133 S. Ct. 28 (2012) .........

Perryv. Schwarzenegger,591 F.3d 1147 (9th Cir. 2009) ...............................................................................

ProtectMarriage.com v. Bowen,

830 F. Supp. 2d 914 (E.D. Cal. 2011)....................................................................

SpeechNow.org v. FEC,599 F.3d 686 (D.C. Cir.), cert denied__ U.S. __, 131 S. Ct. 553 (2010) .............

United States v. Miss. Valley Generating Co.,

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Federal Statutes

26 U.S.C. 501(c) .................................................................................................................. 501(c)(4) ............................................................................................................. 501(c)(6) ............................................................................................................. 527.......................................................................................................................

State Statutes

Civil Rights Law 73 ..................................................................................................

Election Law 14-126. ................................................................................................

Executive Law 6........................................................................................................................... 68(3) .................................................................................................................... 63(8) ....................................................................................................................

63(12) ..................................................................................................................

New Yorks Public Integrity Reform Act of 2011 .......................................................

Federal Regulations

26 C.F.R. 1.501(c)(4)-1(a)(2)(ii) ..................................................................................

Proposed Federal Regulations78 Fed. Reg. 71535 ................................................................................................

State Regulations and Executive Orders

9 N.Y.C.R.R. 8.106....................................................................................................................

Executive Order No. 106 (July 2, 2013) ......................................................................

Miscellaneous Authorities

Azi Paybarah,Addabbo Hit With PAC Mailer Excerpting City & State,Cap. N.YAug. 22, 2012,http://www.capitalnewyork.com/article/politics/2012/08/6481091/addabbo-hit-p

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Center for Responsive Politics, Outside Spending by Disclosure, Excluding PartyCommittees, http://www.opensecrets.org/outsidespending/disclosure.php ...........

commonsenseprinciples.com .......................................................................................

Glenn Coin and Paul Riede,Candidates, parties pour almost $2 million into 49th DNY Senate race, The Post-Standard: Syracuse.com,Oct. 28,2010,http://www.syracuse.com/news/index.ssf/2010/10/candidates_parties_pour_almost.html .................................................................................................

Jessica Alaimo, Fact Check: Ted OBrien Betrayed New York Women,RochesterDemocrat & Chron., Sept. 26, 2012,http://blogs.democratandchronicle.com/voteup/2012/09/26/fact-check-ted-obriebetrayed-new-york-women/ ...................................................................................

Jimmy Vielkind,Drumroll: Common Sense Principles Lists Its Donor, CapitolConfidential, Feb. 6, 2013,http://blog.timesunion.com/capitol/archives/160954/senate-gop-is-paying-super

director/ ..................................................................................................................

Jimmy Vielkind, Senate GOP is paying Super PAC founder, Capitol Confidential, O22, 2012, http://blog.timesunion.com/capitol/archives/160954/senate-gop-is-paysuper-pac-director/ .................................................................................................

John D. Feerick, Reflections on Chairing the New York State Commission onGovernment Integrity, 18 Fordham Urb. L.J. 157 (1990) .....................................

Jude Seymour, Common Sense Author is a Mystery, Watertown Daily Times, Aug. 2010, http://www.watertowndailytimes.com/article/20100818/BLOGS09/100819832/-1//BLOGS09 ......................................................................................

Memorandum of Governor Cuomo, reprinted in Bill Jacket for ch. 79 (1992), at 30-

Old Dominion Res. Group,

http://www.dominionresearch.com/index.php/site/about/about_kevin_wright .....

Phil Reisman,Mystery Surrounds Anti-Latimer Mailers, Politics on the Hudson, Oc2012, http://www.lohud.com/article/20121016/NEWS02/310160102/Reisman-Mystery-surrounds-anti-Latimer-mailers. ..............................................................

Preliminary Report of the Commission dated December 2 2013

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Lee Aitken, The Atlantic, Dec. 16, 2013, Theres No Way To Follow The Money,http://www.theatlantic.com/politics/archive/2013/12/theres-no-way-to-follow-th

money/282394/ ......................................................................................................

Thomas B. Edsall,Dark Money Politics, N.Y. Times Blogs, June 12, 2013,http://opinionator.blogs.nytimes.com/2013/06/12/dark-money-politics/ ..............

Thomas Kaplan,Attack Ads, by Outside Groups With Murky Ties, Shape 3 New YorSenate Races, N.Y. Times, Oct. 16, 2012,http://www.nytimes.com/2012/10/17/nyregion/3-new-york-senate-races-flooded

money-from-outside-groups.html ..........................................................................

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PRELIMINARY STATEMENT

In response to a public crisis of confidence in government, Governor Andre

formed the Commission to Investigate Public Corruption (Commission) in Jul

Attorney General Eric T. Schneiderman designating Commission members as hi

conduct a broad investigation into the laws and public agencies that regulate

government ethics, conflicts of interest and campaign finance.

Like similar commissions formed by prior governors or attorneys

Commission is an investigatory body tasked with achieving a comprehensive und

the problems facing New Yorks current government-ethics regime. Although the

cannot itself enact laws or promulgate state policy, its investigations are intend

recommendations for proposed legislative and administrative reforms. The C

authority derives from two distinct and complementary statutes: (1) Executive Law

which the Legislature authorized the Governor to examine and investigate the ma

affairs of state agencies, and (2) Executive Law 63(8), through which th

separately authorized the Attorney General, with the approval of or at the dir

Governor, to investigate matters concerning the public peace, public safety and pu

Each statute expressly authorizes the issuance of subpoenas for documents and witn

As just one part of its broad inquiry into government ethics, the Co

evaluating the role played in New Yorks electoral system by dark money -

undisclosed donors used to pay for and influence elections and campaigns. Dark m

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officials to detect and respond to violations of campaign finance laws. The Com

pursued its investigation into dark money in order to determine whether exis

adequate to address these harms, or whether instead reforms are needed to ensure th

voters can make informed decisions about the candidates and issues that have attr

growing amounts of anonymous spending to this State.

To help it understand the scope of the dark money phenomenon, the

exercised its express subpoena powers under Executive Law 6 and 63(8

information concerning an out-of-state entity, Common Sense Principles (CSP

millions of dollars to affect the outcomes of the 2010 and 2012 legislative races i

The Commissions investigation led it to believe that a leading New York politica

and its principal (petitioners here) were likely coordinating the in-state activities

issued subpoenas calling upon petitioners to disclose communications that would re

paying for and directing those activities.

In an effort to keep this information secret, petitioners have moved

Commissions subpoenas. Each of the arguments advanced in support of petitio

however, is without merit. The nature of CSPs involvement in funding election-rel

falls squarely within the Commissions authority to investigate weaknesses in

existing campaign-finance and lobbying laws. Petitioners procedural and overbread

are plainly belied by the Commissions enabling order and the Commissions w

narrow the subpoenas scope to address any legitimate burden concerns. And

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election-related spending serve compelling state interests. Petitioners motion shou

and the subpoenas enforced.

STATEMENT OF FACTS

A. The Establishment of the Commission

Corruption and the appearance of corruption are not new to New York Sta

reformers have tried with minimal success to scrub New York politics of

relationships and outright frauds that violate the public trust and alienate the citizen

government. Twenty-six years ago, then-Governor Mario Cuomo created the Co

Government Integrity. See N.Y. State Commn on Govt Integrity v. Congel, 156 A.

Dept 1989); John D. Feerick, Reflections on Chairing the New York State Co

Government Integrity, 18 Fordham Urb. L.J. 157, 158-59 (1990). Also known a

Commission -- for its chair, John D. Feerick, then the dean of Fordham Law S

commission investigated all aspects of New York political life, including the S

campaign finance laws. Congel, 156 A.D.2d at 275-76. That commission expos

shortcomings in New Yorks existing laws and proposed a series of thoughtful refo

supra, at 160-61, but many of the relevant laws were left unchanged or modified

and the problematic practices that marked political life in New York were not e

Memorandum of Governor Cuomo, reprinted in Bill Jacket for ch. 79 (1992), at 30-

This past spring, these problems notoriously re-emerged when a larg

indictments were handed down against several New York legislators. As th

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It is in this environment, and with the unfinished work of the Feerick Commission a

that the current Commission was created.

On July 2, 2013, Governor Andrew M. Cuomo signed Executive Order 106

Commission to Investigate Public Corruption and empowering the Commissio

inquiries under Executive Law 6 and 63(8).1 Executive Order (Cuomo)

N.Y.C.R.R. 8.106 (2013) (Executive Order). Ex. A.2

Both sections expressly

Commission to require the production of any books, records, documents or pape

[its] inquiry. Executive Law 6 & 63(8). The scope of the Commissions inqui

includes, in pertinent part, the power to investigate:

compliance with and the effectiveness of campaign finance laws, existing laws, regulations and procedures relating to the regulation

including but not limited to examining compliance by organizatiopersons engaged in lobbying and other attempts to influence policieincluding tax-exempt organizations under Section 501(c) of the InteCode . . . ,

weaknesses in existing laws, regulations and procedures relating public corruption, conflicts of interest, and ethics in State Gove

whether the Board [of Elections] is fulfilling its obligation underLaw to . . . oversee election campaign practices and campaipractices.

Executive Order II(a) & (c). The Commission also is charged with the responsib

recommendations to reform any weaknesses uncovered in existing State laws. Id.

To fulfill its mandates, the Commission thus far has issued over 200 su

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dozens of interviews and depositions. The Commission has heard testimony from

state prosecutors, good government groups, public officials, and members of the

worked closely with numerous state agencies, local, state, and federal prosecutors,

enforcement entities. Throughout this process, the Commission has acted even-ha

investigated both Republicans and Democrats alike, and it has issued subpoen

related to both major parties. Marton Aff. 4.

On December 2, 2013, the Commission issued a preliminary report of its

findings along with its initial recommendations (Preliminary Report). Ex

Preliminary Report explicitly noted, the Commissions investigatory work is

ongoing. Ex. B at 6; see also id. at 1, 98. The Commission is continuing to examin

in the enforcement of existing State laws and is in the process of developing m

legislative proposals based on additional information from its investigations.

B. The Rise of Election Dark Money and the 501(c)(4) Vehicle

1. Dark Money After Citizens United

One of the biggest challenges to effective campaign regulation is the preval

money, election-related spending that goes undisclosed under federal and st

regimes. In the wake of the Supreme Courts decision in Citizens United v. Fed

Commission, 558 U.S. 310 (2010), an increasingly popular way to deploy dark mo

to channel it through nonprofit entities putatively dedicated to social welfare and

qualify for special tax treatment under 501(c)(4) of the Internal Revenue Code, w

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politics/ ([E]yes glaze over trying to follow [the] money trail between organization

like . . . Americans for Job Security, American Future Fund and American Commitm

By hiding information about the sources of election-related spending,

organizations undermine core democratic values. They interfere with the ability

know who is seeking to influence their voting behavior, and they prevent citizens

political actors democratically accountable for their actions. See Doe v. Reed, __ U

Ct. 2811, 2819 (2010) (highlighting the importance of transparency and account

electoral process). As one good government advocate has noted, [n]othing is mor

our democratic system of government than politicians indebted to and perhaps doin

of donors while watchdog journalists or, more importantly, the voting public are lef

to discover these secret relationships.3

In the last decade, the use of dark money has risen dramatically across the

percentage of outside election spending by organizations that do not disclose the

increased from 1% in 2006 to over 40% in 2012, and the total amount of undisclo

has increased from just over $5 million in 2006 to more than $310 million in 201

Citizens United, which struck down limits on independent expenditures to promot

or defeat of political candidates, this is not a surprising trend. Filing as a 501(c)(4

dark money organizations to attract and spend unlimited funds while, at the same ti

the identity of those who are ultimately providing these monies. In a hearing on don

David Early, Counsel to the Brennan Center, noted that, while a 501(c)(4) mus

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amount it spends on political ads, it can easily avoid disclosing its underlying donor

public in the dark about who is paying for advertisements designed to sway their v

bottom line here is that big spenders are aware of the 501(c)(4) loophole a

ruthlessly.5

2. Legal Constraints on the Use of Dark Money By 501(c)(4) Orga

By obscuring the sources of election-related spending, dark money organ

prevent the effective enforcement of election laws and regulations that indisputably

activities. Although Citizens United substantially limited the governments abili

campaign spending limits, it did not affect two important constraints on the

501(c)(4) organizations: first, the requirement that they carry out a social welfar

defined by the Internal Revenue Service; and second, that they avoid coordination

campaign committees in violation of state law.6

Federal law provides that 501(c)(4) organizations must operate exclu

promotion of social welfare.26 U.S.C. 501(c)(4). I.R.S. regulations state that th

of social welfare does not include direct or indirect participation or interventio

campaigns on behalf of or in opposition to any candidate for public office

1.501(c)(4)-1(a)(2)(ii) (emphasis added).7 To further clarify this prohibition

participation, the IRS has commenced a proposed rulemaking proceeding to a

regulations so that no candidate-related political activity would qualify as the

5NYC Hearings 40 (David Early, Counsel to the Brennan Center) (Ex. F).

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social welfare. See Guidance for Tax-Exempt Social Welfare Organizations o

Related Political Activities, 78 Fed. Reg. 71535 (proposed Nov. 26, 2013),

http://www.irs.gov/irb/2013-52_IRB/ar18.html. Thus, a 501(c)(4) organization th

participates in campaigns for or against political candidates violates existing federal

Apart from these federal requirements, a 501(c)(4) organization is also

separate requirements of each States election laws. In New York, for example, a

campaign committee that coordinates with a 501(c)(4) organization to make el

expenditures in order to evade contribution limits may be guilty of a crime under

Election Law. That section provides:

[a]ny person who . . . act[s] on behalf of a candidate or political commknowingly and willfully [to] solicit, organize or coordinate the formatiactivities of one or more unauthorized committees, make[s] expendituconnection with the nomination for election or election of any candidasolicit[s] any person to make any such expenditures, for the purpose of evthe contribution limitations . . . [is] guilty of a class E felony.

N.Y. Elec. Law 14-126.

C. CSP: Dark Money in New York

CSP engaged in intense electioneering in New York in connection with both

2012 New York State legislative races, spending more during those elections than a

money entity. Marton Aff. 7. It has been the subject of intense scrutiny by jou

government groups, and government agencies. Notwithstanding this attention,

publicly available information about CSP or the sources of its funding..

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tax and budget policies by engag[ing] in issue advocacy direct mail to individuals

policies in close proximity to an election. Ex. C at 15.

Public records show that in 2010, CSP raised $2.62 million from unknown

spent $2.54 million, Ex. C at 1, primarily to run attack ads against several Democra

State Senators.8In 2011, a non-election year, CSP raised no funds and spent only $

at 1. In the 2012 election year, CSP raised $785,929 from unknown sources and sp

Ex. E at 2. Its website, commonsenseprinciples.com (CSP.com or the Websit

still is, dedicated almost exclusively to attacking New York State Senators Joseph A

OBrien, and George Latimer, each of whom were Democrats running in compet

2012. The Website includes examples of attack mailers that were sent to voters i

candidates districts before the 2012 election. Ex. I. The attack mailers drew signifi

from journalists, but efforts to unearth their ultimate source proved futile.9

In 2013, the three targeted State Senators, along with good government a

other legislators, testified at a series of hearings held by the New York State Atto

concerning proposed regulations on political spending by nonprofit organizatio

8See Glenn Coin and Paul Riede,Candidates, parties pour almost $2 million into 49th Dirace, The Post-Standard: Syracuse.com, Oct. 28, 2010, http://www.syracuse.com/news/in

candidates_parties_pour_almost.html; Jude Seymour, Common Sense Author is a Mystery, WatertowAug. 18, 2010, http://www.watertowndailytimes.com/article/20100818/BLOGS09/100819832/-1/one target of CSPs 2010 ads, State Senator Timothy Kennedy, stated at a hearing on the subject, [wpublic figures and these attacks can come from anywhere at any time, and we know that theypersonal and unfair, but we ask only that the rules allow us to know where these attacks are comingcan rightfully respond.New York State Office of the Attorney General Public Hearing: 501(c)(4) D

Regulations16 (Buffalo, N.Y., Feb. 20, 2013) [hereinafterBuffalo Hearings] (Ex.H).

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Senators described CSPs effect on the 2012 election in some detail. State Sen

explained that shortly before the election, voters in his district were bombarded

from outside groups who made some very ugly and very misleading accusations ab

intimating that [he] condoned sexual harassment of women.Buffalo Hearingsat 2

acknowledged that [i]n politics attacks are part of the business; what disturbed

knowing who was behind the attacks and thus not being able to effectively refute th

State Senator OBrien said he wrote several complaints to CSP and, in an effort to

it was, even sent a relative to its address. These efforts were not fruitful: no one re

even acknowledged his complaints, and there was no entity operating as CSP a

provided. Senator OBrien ultimately concluded that [t]here was no indication of w

Sense or Common Sense Principles was or any way to hold anyone accountable f

mailers.Id. at 27.

State Senator Latimer, who was accused by CSP of using campaign funds

dinners and other indiscretions, Ex. I, testified that despite his efforts to determine w

he could find no evidence of anything they did that was other than political . . . n

advocacy of any sort for social welfare was evident. If it is evident, then its as inv

are the people behind Common Sense. New York State Office of the Attorney G

Hearing on Proposed New Charity Disclosure Regulations16-17 (Albany, N.Y., J

[hereinafterAlbany Hearings] (Ex. G).

State Senator Addabbo described CSPs practices this way:

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Albany Hearings at 57-59 (Ex. G).

In January 2013, CSP filed a Semi Annual Report with the Joint Commiss

Ethics (JCOPE) (Ex. E). In its Report, CSP took the position that it was a lobbyin

campaign vehicle. As required by New Yorks Public Integrity Reform Act o

included a Source of Funding Disclosure which revealed only one donor -- th

Common Sense, LLC (CFCS), a Florida-based limited liability company. CF

address other than that of an accountant who serves multiple clients out of the sam

LLC was voluntarily dissolved on May 24, 2013. Ex. J. The Albany Times-Un

CSPs disclosure as a performance satire of the states election laws.10

To

principals of CFCS and the sources of its funding remain unknown. As the Commi

its Preliminary Report, [t]his daisy chain of out-of-state corporations and ghos

appear to exist for one reason: to hide the source of money used to fund negative ad

influence our local elections. Ex. B at 40.

Despite this lack of transparency, evidence has emerged suggesting that

coordinating with political entities in New York State. CSPs 2010 and 2011 tax fil

Wright, a Virginia political strategist, as one of its two directors. Ex.C at 7; Ex

York State Board of Elections campaign filings show that Wright was paid ove

research by the New York State Senate Republican Campaign Committee (S

2007 to 2008.11Moreover, during the 2012 election cycle, an organization found

12

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improper connection or coordination between CSP and New York political entities

no way to verify these denials without determining who controls and directs CSPs

In light of the concerns expressed by good government groups and legislato

public hearings, and the relevance of those concerns to the Commissions

Commission attempted to learn more about CSPs role in the 2012 election cyc

inquiries into the individuals and entities associated with CSP led to out-of-st

jurisdictions in which the Commission can serve subpoenas only with considerable

expense. The Commission did, however, identify at least one entity readily subje

Prompt Mailers, a Staten Island-based direct mail company that sent CSPs

mailers. In response to a subpoena served upon it, a representative of Prompt Ma

Commission that CSPs attack ads had been ordered by a Florida based company c

Printing Corp. He was unable to provide any information about CSP and referr

ghost company. Marton Aff. 13.

D. The Commissions Subpoenas

With few other options, the Commission directed its attention to CSP

learned that CSP.com is registered to a private company, petitioner Strategi

International (SAI). In addition to its work for CSP, SAI administers other doma

nassautaxrevolt.com and a website for the Somali Peoples Party. In addition,

payments from eleven New York political campaign committees from 2006 through

Although he has previously denied any connection to the Website,14 the e

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their nexus to CSP and CSPs New York activities, the Commission subpoenaed th

seeking, inter alia, communications that would identify who paid for and directe

Obtaining this information would assist the Commission in determining not

existing election and lobbying laws had been followed, and the efficacy of those l

crucially, whether further disclosures should be mandated to ensure transparency i

and operation of dark money groups.

On November 8, 2013, with the unanimous approval of the Commission C

Commission served subpoenas on Daniel Odescalchi, SAI, and CSP.com. In dis

petitioners counsel, the Commission agreed to extend the subpoenas return date

27, 2013. Petitioners counsel informed the Commission that her clients did

produce any documents and would instead file a motion to quash the subpoenas. In

that discussion, counsel explained that she considered the subpoenas to be too

impose overly burdensome demands on her client. The Commission expressed a w

address these concerns and, to avoid litigation, the parties again agreed to extend th

while they attempted to resolve their dispute. Marton Aff. 16 - 17.

The parties had several subsequent conversations, but were unable to

agreement. Marton Aff. 18. On December 16, 2013, the Commission sent counse

email reiterating its willingness to narrow the scope of the subpoena. Ex. M. In p

Commission emphasized its view that compliance with the subpoena would ha

documents demonstrating petitioners interactions with Common Sense Principle

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the Commissions position, counsel indicated that petitioners would nevertheless fi

quash because the Commission sought documents relating to those with whom M

and SAI conducted business. Ex. N. The next day, petitioners filed the pending pet

the subpoenas and for a protective order. On February 6, 2014, the Commission f

motion to compel compliance with the subpoenas.

ARGUMENT

I. THE COMMISSIONS INVESTIGATION OF CSP IS CONSISTENT WSTATUTORY MANDATE AND PUBLIC POLICY

A. The Subpoenas Seek Information Consistent with the Commissio

Mandate to Investigate the Effectiveness and Weaknesses of Exis

Campaign-Finance and Lobbying Regulations.

The Commission has a broad mandate to investigate public corruptio

empowered to require the production of any books, records, documents or paper

material to [its] inquiry. Executive Law 68(3) (emphasis added); see also

Andrews & Assoc. Inc. v. Office of the Inspector General, 85 A.D.3d 633 (1st Dep

Commission therefore is entitled to the same deferential, relevant or material

applies to executive subpoenas issued by the Attorney General in other contex

Matter of La Belle Creole Intl v. Attorney General, 10 N.Y.2d 192, 196 (1961) (au

Executive Law 63(12)); Anheuser-Busch, Inc. v. Abrams, 71 N.Y.2d 327 (198

under the Martin Act). A motion to quash an executive subpoena will be granted

the futility of the process to uncover anything legitimate is inevitable or obvious

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presumption that it is acting in good faith.Matter of Hogan v. Cuomo, 67 A.D.3d 1

Dept 2009) (citingAnheuser-Bush, Inc., 71 N.Y.2d at 332;Matter of La Belle Cr

N.Y.2d at 196; Carlise v. Bennett, 268 N.Y. 212, 217-18 (1935)).

Contrary to petitioners assertions, the Commissions authority is no

investigating wrongdoing or violations of existing laws. (Memorandum of Law

Petition to Quash Subpoenas and for a Protective Order (Mem. Law) at 12).

complaint of wrongdoing is required to trigger the Commissions reasonable in

Matter of the New York Republican State Committee v. New York State Co

Government Integrity,138 Misc. 2d 790, 796 (Sup. Ct. N.Y. County 1988), becau

the Commission is not to sanction individual violations of the law, but rather to un

the legal and regulatory regime governing corruption, conflicts of interest, l

campaign finance currently works -- and how it may be improved. Here, the cor

sought by the subpoenas -- communications reflecting who pays for and directs CSP

campaign activities -- relates directly to several of the Commissions objectives as s

Executive Order.

First, the Commissions mandate includes determining the effectiveness

finance laws, as well as assessing the Board of Elections oversight of campa

practices. See Executive Order II(a)-(b). As one of the largest spenders in the 2

New York State elections, the largest dark money spender, and one with at least i

political party campaign operatives, CSPs conduct raises serious questions a

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the ability of the Board of Elections to effectively oversee such organizations

ensure compliance with New York laws.

Second, the Commission is charged with assessing the regulation of lobby

. . . attempts to influence policies or elections by tax-exempt organizations u

501(c) of the Internal Revenue Code. Executive Order II(b). CSP is a 501(c)(4)

that has filed as a lobbying entity in New York State. Ex. E. The information s

directly relevant to assessing the adequacy of current lobbying regulations and whe

other entities like it, are able to improperly influence New York elections

anonymous principals or donors.

Third, the information sought is directly relevant to the Commission

determine weaknesses in existing laws, regulations and procedures relating to addr

corruption. Executive Order II(c). The Commission cannot make specific recomm

address the weaknesses in State disclosure laws unless it fully understands how

groups such as CSP have been able to avoid disclosures that are crucial to e

electorate to make informed decisions and give proper weight to different

messages. Citizens United v. FEC, 558 U.S. 310, 371 (2010).

The Commissions subpoenas plainly fall within the scope of its subpoena au

B. The Commissions Work Is Not Yet Completed

Petitioners do not seriously dispute the Commissions broad authority

campaign-finance and lobbying activities. But they contend that the Commissio

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aligned themselves with conservative causes or sought to discuss the issue

Democratic officeholders in New York State. (Mem. Law at 12, 14).

The basic premise of this argument is flawed. The Commission did not fulfi

by publishing a Preliminary Report, which by its very terms was just that -- prelim

B at 1, 6 and 98. In the case of the CSP investigation, there are still many unanswer

- more, perhaps, than when the investigation began. The Commission still has n

who controls CSP and how it manages to move dark money through the syst

undetectable by the government, by advocacy groups, or by the media.

Answers to these questions will advance the Commissions work in at least t

respects. First, a clearer understanding of CSPs byzantine activities will help the

make specific legislative recommendations to the Legislature beyond the very

outlined in its Preliminary Report. As discussed above, the Commissions inve

reveal methods by which CSP was able to circumvent IRS regulations, 14-126

State Election Law, or other campaign finance provisions. A basic understanding o

like CSP actually operate in New York will inform the Commissions specific reco

to the Legislature. Second, the Commissions continuing investigation into CSP

may reveal enforcement inadequacies at the Board of Elections, and furthe

Commissions work in recommending reforms to the conduct of that agency.

Petitioners contention that these objectives have been mooted by v

Preliminary Report is precisely the argument that was considered and rejected

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Feerick Commission had already issued a preliminary report contai

recommendations, the information sought was no longer needed. Supreme Cour

motion to quash, but the First Department reversed. Rejecting the argument tha

Commissions work was finished because it had already issued its preliminary rep

Department held that it was not for the court to determine whether the subpoen

[were] necessary, id. at 279, and stated that the materials the subpoenas sought we

relevant to the Commissions inquiry. Id. at 280. As in Congel, this Commi

finished its work, and the subpoenaed material remains relevant to its ongoing inves

II. PETITIONERS PROCEDURAL ARGUMENTS ARE WITHOUT ME

A. The Commission Has Complied With All Necessary Procedures a

Petitioners threshold procedural objection -- that the Commission may no

subpoena authority until it has publicly disseminated procedures and rules g

Commissions work (Mem. Law at 11-12) -- has no basis in law. The subpoena

under the authority of 6 and 63(8) of the Executive Law, neither of which req

Commission adopt particular procedures as a prerequisite to exercising subpo

pursuant to those sections.

Likewise, the Executive Order does not condition the Commissions subpo

on first adopting certain procedures and rules. Rather, the Order authorizes the Co-

of the Commission to adopt, by unanimous vote, such procedures and rules as

necessary to govern the exercise of [the Commissions] powers and authority. Ex

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(which it did not), the Governor may not by executive order limit the Attorn

subpoena authority under 63(8). See Matter of De Brizzi, 303 N.Y. 206, 213 (195

order requesting inquiry by the Attorney General under 63(8) could not dep

General of discretion required by that section).

Although the Commission was not obligated to adopt rules governing the e

powers, provisions regulating its conduct already exist to protect the interests o

required to provide testimony or information to the Commission. Executive Law

it a misdemeanor to disclose to any person other than the governor or the attorne

name of any witness examined or any information obtained upon such in

Commissions inquiry also is subject to 73 of the Civil Rights Law, which create

fair procedure for investigating agencies, and controls the disclosure of informatio

a Commission subpoena. In addition to these statutory protections, the Executive O

that each subpoena be unanimously approved by all of the Co-Chairpersons. Th

issued to SAI and Odescalchi were so approved and issued consistent with a

requirements.

B. The Subpoenas Are Neither Overbroad Nor Unduly Burdensom

Petitioners further contend that the subpoenas are overbroad and burdenso

[t]he time and resources that would be required to comply with the Subpoenas are

(Mem. Law at 17). But [a] subpoena is not rendered invalid merely becaus

production of a substantial number of documents.Matter of Am. Dental Co-op., In

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The premises of petitioners argument are in any event mistaken: the Com

not seek, and has not demanded, all of the petitioners documents, communication

materials unrelated to their dealings with CSP. (Mem. Law at 14-15). Construing t

consistently with the Commissions obvious intent, the subpoenas are tailore

production only of records pertaining to petitioners relationship with CSP and re

The purpose of the subpoenas broad language was simply to capture the relevant do

materials regardless of the corporate form that CSP used to conduct business with t

-- a necessary recourse in light of CSPs well-documented use of shell organizatio

through entities.

The Commission has made the scope of the subpoenas clear in disc

petitioners over compliance with the subpoenas. In an email to petitioners

Commission clarified that it is uninterested in communications regarding poli

pertaining to specific candidates or particular political messages. Ex. M. Petitio

their counsel, were indisputably aware of the Commissions willingness to work

clarify and narrow the subpoenas scope, but nonetheless proceeded with their moti

The Commission remains willing to accept as compliance with the

production of documents, communications and media materials relating specificall

CSP-related persons and entities, and has no objection to the Court declari

production will constitute compliance with the subpoena. See Congel, 156 A

(narrowing Commissions subpoenas to address concerns of overbreadth). Petitione

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III. THE SUBPOENAS DO NOT IMPERMISSIBLY BURDEN FIRST AMRIGHTS

Petitioners final argument is that the subpoenas impermissibly intrude on t

clients First Amendment rights by requiring disclosures that assertedly interfere w

political expression and association. This argument lacks merit.

Unlike limits on corporate independent expenditures, disclosure requireme

pose less of a burden on First Amendment rights because they impose no ceiling

related activities and accordingly do not prevent anyone from speaking. Citizen

U.S. at 366 (internal quotation marks and citations omitted). For these reason

United, the Supreme Court held that disclosure requirements are not subject to the

scrutiny standard that applies to campaign limits, but rather to a more relax

scrutiny test requiring only a substantial relation between the disclosure requi

sufficiently important governmental interest. 558 U.S. at 366-67(citingBuckley

US 1, 64 (1976); McConnell v. Federal Election Commn, 540 U.S. 93, 231-232

Ctr. for Individual Freedom v Madigan, 697 F.3d 464, 477 (7th Cir. 2012). Althou

in Citizens United struck down limits on corporate independent expenditure

mandatory disclosure requirements under federal law. The Commissions sub

likewise satisfy First Amendment scrutiny.

A. The Subpoenas Serve Important State Interests

1. Electoral Integrity: Transparency and Accountability

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the Court again emphasized that disclosure promotes transparency and account

electoral process to an extent other measures cannot. 130 S. Ct. at 2820 (2010); s

2837 (Scalia, J., concurring in the judgment) (Requiring people to stand up in pu

political acts requires civic courage, without which democracy is doomed). Thes

intimately related to the importance of provid[ing] the electorate with informati

sources of election-related spending. Citizens United, 558 U.S. at 367 (quoting

U.S. at 66).

The importance of transparency and accountability in the electoral proc

affirmed as well by federal appellate courts that have upheld various disclosure

over the past several years. See, e.g.,Ctr. for Individual Freedom v. Madigan, 6

490-93, 498-99 (7th Cir. 2012) ([C]ampaign finance data can help busy voters sif

information and make informed political judgments . . . [s]uch transparency helps th

political speakers accountable for making false, manipulative, or otherwise unse

they might otherwise run with impunity.); SpeechNow.org v. FEC, 599 F.3d 68

Cir.) ([T]he public has an interest in knowing who is speaking about a candidat

funding that speech, no matter whether . . . contributions were made towards a

expenses or independent expenditures.), cert denied__ U.S. __, 131 S. Ct. 553 (2

Life of Wash. Inc. v. Brumsickle, 624 F.3d 990, 1008 (9th Cir. 2010) ([D]isclosure

thus advance the important and well-recognized governmental interest of providi

public with the information with which to assess the various messages vy

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elections. This information is crucial to fulfill the Commissions core responsibility

whether existing laws and regulatory efforts require sufficient disclosures to ful

electorate. Without understanding the relationships that are being hidden from the

the current disclosure regime, the Commission cannot determine whether and wh

disclosures will provide appropriate information to the public. The same co

transparency and accountability that were sufficient to uphold disclosure req

Citizens United, Buckley, and a host of federal appellate decisions thus more tha

support the Commissions efforts here to study the weaknesses of existing disclosur

Against the substantial bulk of Supreme Court and appellate court preceden

the importance and validity of disclosure requirements, petitioners rely on the N

decision inPerryv. Schwarzenegger, 591 F.3d 1147, 1165 (9th Cir. 2009). Perry

readily distinguishable. First, the interests at stake in Perry were significantly wea

are here. In Perry, private individuals requested the disclosure of intern

communications in an effort to demonstrate voter intent in an initiative measure. Se

The court held that plaintiffs had not met their burden in demonstrating a sufficien

discovery because, among other things, there were other ways to get the needed inf

id. at 1165.

Here, in contrast, the subpoenas in question were issued under the aut

Governor and the Attorney General, seeking information in service of the lon

government interests of transparency and accountability in elections, and in direct

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investigation is similarly an indispensable ingredient of lawmaking. . . .); Matte

Legislative Comm. (Teachers Union), 285 N.Y. 1, 8 (1941) ([P]ower of inquiry, w

enforce it, is an essential auxiliary to the legislative function.). Moreover, unlike

subpoenas at issue here seek information that is not available by any other practica

has filed no disclosures with the Board of Elections, and its disclosure to JC

Commission only to an equally obscure shell organization which has since been dis

the Commission has no practical way apart from these subpoenas to determine how

organizations such as CSP obtain or spend funds.

Second, the holding in Perry was not to protect donor identities across

petitioners would like the Court to do here. Rather, the court emphasize[d] that

[wa]s limited to private, internal campaign communications concerning the fo

campaign strategy and messages. 591 F.3d at 1165 n.12 (emphasis in origina

Commission alreadyhas made clear that the communications it seeks do not inc

those portions, regarding political strategy pertaining to specific candidates or parti

messages. Given that the holding in Perry shielded only communications conce

strategy and messages, that decision in no way supports petitioners blanket cha

Commissions subpoenas.

2. The Appearance of Corruption

Dark money also fosters the appearance that large contributors are hiding th

because they are engaged in illicit or improper behavior. The disclosures so

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The importance of this interest cannot be gainsaid. The Supreme Court has e

without the authority to regulate the appearance of undue influence, the cynical as

large donors call the tune could jeopardize the willingness of voters to take part i

governance.McConnell, 540 U.S. at 144 (citing Nixon v. Shrink Mo. Govt Pac,

390 (2000)). See Buckley, 424 U.S. at 67 (explaining the States interest in

appearance of corruption). Indeed, [d]emocracy works only if the people have

who govern, and that faith is bound to be shattered when high officials and the

engage in activities which arouse suspicions of malfeasance and corruption. Sh

U.S. at 390 (quoting United States v. Miss. Valley Generating Co., 364 U.S. 520,

see also Ognibene v. Parkes, 671 F.3d 174, 183 (2d Cir. 2011), cert. denied__ U

Ct. 28 (2012) (explaining that [i]t is not necessary to produce evidence of actual

demonstrate the sufficiently important interest in preventing the appearance of

Whether or not CSP is actually engaged in corrupt activities, the Commission

government interest in obtaining the information necessary to determine how best

appearance of corruption caused by CSPs and similar organizations political conne

B. Petitioners Have Not Demonstrated Significant First Amendmen

To withstand exacting scrutiny, the strength of the governmental interest m

seriousness of the actual burden on First Amendment rights. Doe v. Reed, 130 S

(internal quotation marks and citation omitted). Here, Petitioners have failed to

substantial burden on their First Amendment rights at all.

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communicate with them. (Mem. Law at 20). But the New York Court of Appeals

merely asserting the possibility of a chilling effect on First Amendment rights is

avoid compelled disclosure of information relevant to [a] legitimate subject of inq

of Nicholson v. State Commn on Judicial Conduct, 50 N.Y.2d 597, 609 (19

especially true where, as here, petitioners claim of possible reprisals lacks

support in the record. (Seediscussion at 27 - 30 below.)

Petitioners also claim that compliance with the subpoenas would lead fut

cease doing business with them. (Odescalchi Aff. 11, 13-14). The only evidenc

for this assertion is Odescalchis conclusory, self-serving affidavit. On its own

establish a sufficient burden on petitioners First Amendment rights. See Reed, 130

(finding insufficient evidence of potential retaliation where plaintiffs provid

evidence or argument beyond the burdens they assert disclosure would impose. . . .

Petitioners further argue that compliance with the subpoenas would infring

Amendment rights of donors to clients and former clients of Petitioners. (Mem

This argument is wrong as a matter of both law and fact. On the law, it incorrectly

campaign donors have a constitutionally protected interest in anonymity as su

weight of precedent discussed above lends no support for that position. It is factu

as well, in construing the subpoenas as a request for CSPs donor list. In fact, the s

not directed to CSP and do not seek the production of any donor list; instead, they a

a private, for-profit entity and its principal, and merely call for communications to

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charity, an advocacy organization, or even a 501(c)(4) non-profit, but rather a

profit, limited liability company registered in Florida. The Commission seeks

controlled and directed CFCS -- and by extension CSP.

Petitioners arguments concerning anonymity ring especially hollow b

business model relies on promoting, not shielding, the names of their clients. Petitio

(www.saipr.com) extensively and specifically advertises both their political work a

of their clients, and a review of Board of Elections data reveals the names o

campaigns in New York State since 2010 that have paid petitioners for their serv

thus no genuine reason to think that petitioners commercial well-being depends

its clients anonymity. See Bailey v. Me. Commn on Govt Ethics & Election Pra

Supp. 2d 75, 85 (D. Me. 2012) (Plaintiffs prior political work undercut need for

prevent threats, harassment and reprisals).

C. CSPs Donors Do Not Face a Realistic Threat of Reprisals or Ha

Petitioners final argument, advanced on behalf of their clients and their cl

is that [s]pecial consideration is warranted [because] it is probable that the

contributor names would subject these contributors to threats, harassment, or r

Government officials. (Mem. Law at 21).

The argument is entirely without merit. As an initial matter, it bears no

Commission has not subpoenaed a list of CSPs (or any other entitys) contributo

subpoenas are aimed, rather, at the communications of a for-profit consultant and

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As a matter of law, moreover, to assert a First Amendment defense agai

valid disclosure requirements, the party resisting disclosure must show a reasonab

that the compelled disclosure [of personal information] will subject them to threats

or reprisals from either Government officials or private parties. Reed, 130 S

(internal citation and quotation marks omitted). Petitioners have come nowhere ne

such a showing. Those who have prevailed under this test have typically been

underrepresented minority groups that have demonstrated a severe and concrete hist

and harassment. InNAACP v. Alabama, 357 U.S. 449 (1958), for example, the Co

the States interest in obtaining NAACP membership lists did not justify disclosure

because on past occasions revelation of the identity of its rank-and-file members

these members to economic reprisal, loss of employment, threat of physical coerci

manifestations of public hostility.Id.at 462-63.16Similarly, inBrown v. Socialis

Campaign Comm., 459 U.S. 87 (1982), the Court held that certain campaig

requirements could not constitutionally be applied to the Socialist Workers Pa

because of substantial evidence of past and present hostility from private

Government officials.Id.at 102.

By contrast, supporters of a recent ballot initiative opposing gay marri

extensive documentation of harassment during a campaign season were nevert

anonymity because, unlike the civil-rights activists and socialists inNAACPandBr

not belong to a minor party, had not suffered mistreatment over extended peri

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Here, petitioners can present no concrete, substantial evidence of a

probability of threats, harassment or reprisals remotely comparable to what led

protect the identity of NAACP members in the Alabama of the 1950s or of Socia

Party members in the early 1980s. Indeed, they present even less evidence of h

mistreatment than was presented by the opponents of a gay marriage

ProtectMarriage.com, where the court nevertheless required disclosure.

Petitioners rest their claim not on a showing that backers of CFCS are me

harassed or vulnerable minority, but rather on the basis merely that they spend cash

conservative political organization that aims to defeat targeted members of one of th

leading political parties. Petitioners cite no evidence that past disclosures about th

about organizations similar to their clients, have had any negative repercussions wh

they cite no evidence that contributors to conservative political causes in New Y

whom are well known) have suffered or will suffer retaliation or violence due to

beliefs or expression. There is simply no basis to equate petitioners unknown contr

persecuted and politically disadvantaged minorities of earlier eras, or to find t

realistic threat of governmental reprisals or intimidation.

Petitioners sole argument is speculation that their conservative contribut

future harassment due to Democratic influence in Albany and the Commissions

favoring Democrats. But their asserted bases for this claim are either erroneous or u

First, petitioners assert that the risk of reprisal is acute because the G

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Democrats called the Independent Democratic Conference (IDC) under the

Senator Dean Skelos (Republican) and Senator Jeffrey Klein (IDC).

Second, petitioners claim that the Commission has granted favorable tre

New York State Senate Democratic Campaign Committee (SDCC) over it

counterpart. (Mem. Law at 22). This claim, too, is inaccurate. On September 2

Commission served the SRCC housekeeping account with a subpoena requesting

other documents. Several days later, the Commission served the SDCC housekee

with a nearly identical subpoena. The Commission has served additional subpoena

York State housekeeping accounts of the Republican Assembly Campaign

Democratic Assembly Campaign Committee, Republican State Committee, Dem

Committee, Working Families Party, Independence Party, and Conservative Party

have complied with the Commissions subpoenas. Marton Aff. 4.There is no cred

of bias on the part of the Commission, and petitioners concerns about unfair treat

basis. See Hogan, 67 A.D.3d at 1146 (noting that New York State Attorney Gen

from a presumption that he is acting in good faith) (internal citations omitted).

CONCLUSION

The Commissions subpoenas lie squarely within the investigative aut

Commission, serve important government interests, and comply with all releva

requirements. Petitioners have shown no credible threat to their First Amendmen

the enforcement of these lawful subpoenas. Petitioners Motion to Quash should b

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