On July 30, 1996 the Federal Election Commission filed suit against the Christian Coalition for its failure to register and report as a political action committee in violation of United States Code Sections 433 and 434. The Federal Election Commission (FEC) stated that "the Christian Coalition has every right to be involved in the political process as citizens and voters. In so doing, however, they must still play by the same rules as everyone else."
The FEC complaint alleges that the Christian Coalition satisfies the two criterion necessary to be considered a federal political committee. Those standards are (1) it must receive contributions or make expenditures in excess of $1,000 for federal election races and (2) a major purpose of the organization must be the nomination or election of candidates for any public office. Furthermore the complaint alleges "coordination between the leadership of the Christian Coalition and the campaigns of federal candidates resulted in contributions to or expenditures on behalf of a number of federal candidates over the years. They included not only the Bush-Quayle '92 primary and general committees and Helms for Senate Committee in 1990, but also the Oliver North for U.S. Senate Committee in 1994, the Inglis for Congress Committee in 1992, the Hayworth for Congress Committee in 1994, the National Republican Senatorial Committee in 1990, and the National Republican Senatorial Committee and the National Republican Congressional Committee in 1991. The Coalition's contributions to these candidates and committees alone totaled over $1.4 million dollars."
The complaint found that "the Christian Coalition's ultimate goal, like that of a political party is to obtain control of the levers of government so that it may then put into operation its policies and philosophies. The Coalition's public statements, written materials, and actual election-related activities all demonstrate that its major purpose is to influence federal elections." The FEC relied, in part, on the recruitment and training videotape produced by the Christian Coalition in 1990, "America At A Crossroads," in which Pat Robertson described the political purposes and the election-related goals of the Christian Coalition when he stated, "I believe that the Christian Coalition will be the most powerful political force in America by the end of this decade," and then proceeded to explain point by point how this goal would be reached.
Christian Coalition executive director Ralph Reed, Jr. and communications director Mike Russell wasted no time in setting up damage control. Reed sent a memo, dated July 30, 1996, to friends and supporters of the Christian Coalition assuring them that "we are assembling the finest legal team to oppose this effort by the Federal Election Commission to infringe upon the First Amendment rights of Christians." Communications director Russell issued a press release that day stating "the Christian Coalition today announced that it was recruiting the finest election law legal team ever assembled" and would "commit every resource available" to fight what it called a "totally baseless" and frivolous lawsuit by the Federal Election Commission.
The Christian Coalition's troubles are further compounded by accusations of financial mismanagement lodged by Judy Liebert, the Christian Coalition's former chief financial officer. Ms. Liebert was terminated on May 31, 1996 after the coalition learned that she instigated a federal probe into alleged overbilling by the coalition's direct mail vendor, Hart Conover. Ben Hart, an owner of Hart Conover, is Ralph Reed's golfing buddy.