Colorado Ethics Watch filed a complaint with the Colorado Secretary of State against the Senate Majority Fund LLC (SMF) and the Colorado Leadership Fund LLC (CLF) asserting that SMF and CLF sponsored political ads that expressly advocate in favor of particular candidates in violation of state laws.

Both SMF and CLF are registered with the Internal Revenue Service (IRS) and the Colorado Secretary of State as 527 political organizations. As 527s, under Colorado law SMF and CLF are not subject to any contribution or spending limits. Ethics Watch’s complaint alleges that by purchasing ads that expressly advocate in favor of state candidates, SMF and CLF became political committees under Colorado law and must comply with all applicable contribution limits and reporting requirements.

“Senate Majority Fund LLC and Colorado Leadership Fund LLC are trying to have their cake and eat it too; they want to enjoy the 527 benefits of unfettered fundraising abilities while also enjoying the political committee benefits of expressly advocating the election of candidates,” said Chantell Taylor, director of Colorado Ethics Watch. “With this lawsuit we aim to hold them accountable for so blatantly scoffing at campaign finance laws,” Taylor continued.

According to Ethics Watch’s complaint, SMF and CLF became political committees under Colorado law the day of their first expenditures on these political ads. From that moment forward, each became subject to the political committee contribution limit of $500. SMF and CLF’s disclosure reports show that each organization has accepted contributions far in excess of $500, including several single contributions up to $30,000. SMF and CLF could be liable for civil penalties up to five times the amount of each contribution received in excess of $500.

“These ads are no accident -- both Senate Majority Fund LLC and Colorado Leadership Fund LLC purchased at least ten ads that likely violate state law. And Senate Majority Fund LLC has a history of hiding its spending and shirking Colorado campaign finance laws. Based on these facts, Ethics Watch will seek maximum penalties in this case, which could be more than $1.5 million each based on their sizable contributions.”