(a) Short title.—This Act may be cited as the “Stopping Corrupt Actors from Making Political Action Committees Act” or the “SCAM PAC Act”.

(b) Findings.—Congress finds the following:

(1) In its 2022 legislative recommendations to Congress, the Federal Election Commission unanimously identified the “fraudulent fundraising and spending activities of certain political committees that are often referred to as ‘scam PACs’” as a priority for Congress to “address, define, and prohibit.” As the Federal regulator empowered to enforce campaign finance laws, the Federal Election Commission possesses the requisite technical expertise on political committees to help Congress effectively regulate scam PACs.

(2) Congress affirms the Federal Election Commission’s description of scam PACs as unauthorized committees that mislead contributors by “[soliciting] contributions with the promise of supporting candidates, but then disclose minimal or no candidate support activities while engaging in significant and continuous fundraising. This fundraising predominantly funds personal compensation for the committees’ organizers. In many cases, all funds raised by this subset of political committees are provided to fundraising vendors, direct mail vendors, and consultants in which the political committees’ officers appear to have financial interests.”.

(3) Scam PACs are political parasites that degrade the integrity of our elections and harm American democracy. Fraud in elections erodes public confidence in American institutions, and reports of scam PACs abusing donations for self-enrichment schemes can have a chilling effect on donors’ and voters’ willingness to politically participate. Candidates also suffer harm when cash they need to run their campaigns is diverted away from them.

(4) This Act targets scam PACs’ fraud and self-dealing. The Supreme Court has acknowledged “it goes without saying that there is a ‘substantial governmental interest[] in protecting the public from fraud.’” (Americans for Prosperity Found. v. Bonta, 141 S. Ct. 2373, 2386 (2021)). In the context of elections, “the State’s interest in preserving the integrity of the electoral process is undoubtedly important. . . . The State’s interest is particularly strong with respect to efforts to root out fraud, which not only may produce fraudulent outcomes, but has a systemic effect as well,” (John Doe No. 1 v. Reed, 561 U.S. 186, 197 (2010)).

(5) The Supreme Court has repeatedly upheld that giving and spending money in elections is protected speech. When scam PAC operators misuse donations, they are suppressing their donors’ speech. By making few to no political contributions with the dollars raised off false promises to further their donors’ political views, scam PACs are stealing money, and theft is not protected speech.

(6) In the interest of safeguarding constitutionally protected speech, this Act does not prescribe sweeping regulations regarding how all political committees may spend money in elections. This Act’s prohibitions are narrowly tailored to only apply to a subset of nonconnected committees that do not have a majority of their disbursements spent on legitimate expenditures, sparing the vast majority of committees from being subjected to any additional requirements. For the committees that fail to have a majority of their disbursements spent on legitimate expenditures, their only penalty under this Act is being prevented from disbursing funds to any entity that has a financial interest or familial connection to the committees’ operators. This restriction is exceedingly reasonable and simple to comply with to promote the governmental interest of preventing self-dealing.

(7) While current PAC reporting requirements provide the public with information that can be useful for identifying scam PACs, the mere public availability of this disclosed information has done little to protect donors from scams, deter scam PACs’ operations, or curb the proliferation of fraudulent committees. Most grassroots donors who are looking to express their opinions by making a political contribution are unable to easily interpret this disclosed information even if they know to look for it and know where to find it. Disclosures in the absence of meaningful fundraising and spending standards are insufficient to hold scam PACs accountable.

(8) Given the finite timelines of campaign cycles, prophylactic measures to combat fraud in elections are necessary alternatives to strict reliance on enforcement actions against fraud after an election is already over when the harm is very difficult to remedy.

(a) In general.—Section 302 of the Federal Election Campaign Act of 1971 (52 U.S.C. 30102) is amended by adding at the end the following new subsection:

“(j) (1) Except as provided in paragraphs (3) and (4), during a reporting period covered by a report filed by a political committee under section 304, the committee may not make disbursements to an entity owned or controlled in whole or in part by an individual, or by a family member of an individual—

“(A) who is authorized to carry out executive or managerial authority over the operation of the committee;

“(B) who is authorized to solicit or disburse funds for or on behalf of the committee; or

“(C) who is an employee of the committee (whether paid or unpaid) and who provides the committee with professional services (other than accounting or legal services) relating to the committee’s campaign or fundraising strategy.

“(2) A political committee may not employ or allow to volunteer on behalf of the committee an individual who owns or controls an entity that has accepted disbursements made from any political committee in violation of paragraph (1).

“(3) Paragraph (1) does not apply with respect to disbursements made by a political committee during the reporting period covered by a report filed by the committee under section 304 if a majority of the funds disbursed by the committee during the period were for contributions to an authorized committee of a candidate or a committee of a political party or for making independent expenditures.

“(4) Paragraph (1) does not apply with respect to the following:

“(A) An authorized committee of a candidate.

“(B) A committee of a political party.

“(C) A separate segregated fund of a corporation or labor organization under section 316(b)(2)(C).

“(5) In this subsection, the term ‘family member’ means, with respect to an individual, any of the following:

“(A) A spouse, and parents thereof.

“(B) Sons and daughters, and spouses thereof.

“(C) Parents, and spouses thereof.

“(D) Brothers and sisters, and spouses thereof.

“(E) Grandparents and grandchildren, and spouses thereof.

“(F) Aunts and uncles, and spouses thereof.

“(G) Cousins, and spouses thereof.

“(H) A domestic partner, and parents thereof, including domestic partners of any individual described in subparagraphs (A) through (G).”.

(b) Regulations.—Not later than 90 days after the date of the enactment of this Act, the Federal Election Commission shall promulgate such regulations as may be necessary to carry out the amendment made by this Act.

(c) Effective date.—The amendment made by this Act shall apply with respect to disbursements made on or after the date that is 90 days after the date of enactment of this Act, without regard to whether or not the Commission has promulgated regulations under subsection (b).