Ted Cruz has won a lawsuit against the FEC over a loan to his re-election campaign. A federal court ruled that his freedom of speech rights had been violated.

Sen. Ted Cruz in May.

Sebastian Scheiner/AP Photo

• Federal court ruling says FEC violated Sen. Ted Cruz's First Amendment rights with repayment limit.
• Cruz loaned $260,000 to his 2018 re-election campaign, which was $10,000 over the repayment limit.
• The "loan-repayment limit burdens political speech" three federal judges wrote.
• See more stories on Insider's business page.

A federal court has handed Sen. Ted Cruz a victory, saying a $250,000 limit on post-campaign repayments to candidates violated his First Amendment rights.

On April 1, 2019, Cruz's campaign filed a lawsuit against the Federal Election Commission after contributing $260,000 to his 2018 reelection campaign. He sued as he attempted to repay his personal loan.

"We find that the loan-repayment limit burdens political speech and thus implicates the protection of the First Amendment," a trio of federal judges wrote on Thursday in a memorandum opinion.

They added: "Because the government has failed to demonstrate that the loan-repayment limit serves an interest in preventing quid pro quo corruption, or that the limit is sufficiently tailored to serve this purpose, the loan repayment limit runs afoul of the First Amendment."

Thursday's ruling amounted to another victory for conservative politicians and donors, who have long sought to remove limits on political fundraising. The Supreme Court in 2010 ruled against the FEC in its case against Citizens United, striking limits on corporate election spending, and giving rise to super PACs.

In the back-and-forth between Cruz and the FEC, the commission's lawyers said last year that Cruz had intentionally broken the rules, forcing his lawsuit.

Cruz's campaign staffers started discussing taking action against the repayment limit as early as 2012, according to court filings.

"Those discussions continued for several years, concurrently with Senator Cruz's preparation to run for reelection in 2018," FEC lawyers wrote as they sought a summary judgement in 2020.

Cruz had raised more than $35 million during the campaign against Beto O'Rourke. But the day before the election, Cruz loaned his campaign $260,000. As polls closed on November 6, 2018, his campaign had $2.38 million in cash on hand, according to court filings.

Campaign finance law allowed campaigns to repay up to $250,000 in personal loans from candidates, but they had to wait 20 days before distributing the funds.

Within that 20-day waiting period, Cruz's campaign could have repaid the extra $10,000 using cash on hand on election day, according to the FEC.

"The plaintiff repaid no money during that period, however, because they wanted to bring this lawsuit," the commission said in a court filing.

Cruz's campaign waited 20 days, then began repaying the funds.

In an email to his campaign 2 days after the deadline, Cruz said, "Since more than 20 days have passed, it would be REALLY good if we could pay back at least some of the $250k now. Our cash is really getting stretched."

In the lawsuit filed on April Fools Day in 2019, Cruz's team said the limit on repayments violated the First Amendment rights of candidates. Cruz argued that his campaign should have been able to continue raising funds after the election to repay the $10,000 balance of his personal loan, according to the filing.

The limit on repayment "restricts the political speech of candidates and their campaign committees by limiting the time period in which the candidate may raise money to communicate his or her political message and by effectively limiting the candidate's ability to lend the campaign necessary funds," Cruz's lawyers wrote in their complaint.

Insider has reached out to Cruz's office for additional comment.

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