The hit piece made it seem like Lee was using the Mormon faith as a cudgel against Bennett, when it was actually produced by people who supported Bennett. Polls indicated it hurt Lee at the state convention, but he survived and eventually won the election, while Bennett came in third and was eliminated.
Lee has steamed over the mailer ever since, wanting to know who was behind the piece. But on Thursday, he said he accepted the agreement.
"I am satisfied the FEC has properly conducted their duties and consider the matter closed," he said.
His former campaign aide, Dan Hauser, who filed the original complaint in June 2010, had a stronger reaction.
"It is disappointing to say the least that someone who committed such an egregious act that almost completely swayed a convention election ... gets a slap on the wrist," said Hauser.
He's referring to Tim Stewart, the only person who had previously been connected to the mailer. Stewart worked for Bennett's Senate office for seven years before becoming a lobbyist. Bennett, who said he had no prior knowledge of the mailer, has recently partnered with Stewart to create the Bennett Consulting Group.
He was the main player behind the mailer, which featured Lee in front of The Church of Jesus Christ of Latter-day Saints temple in Salt Lake City, while Bennett was pictured in front of a black and white U.S. Capitol. The mailer asked: "Which candidate really has Utah's values?" and on the reverse side featured phrases steeped with meaning for Mormons, such as "Utahans (sic) value the Constitution above all else, but we know it hangs by a thread."
Shortly after the convention, Stewart defended the piece received by 2,000 delegates but refused to take credit for it, telling The Salt Lake Tribune: "I sincerely wish that I could take credit for what may be the most brilliant and possibly the biggest single game-changing political play in Utah politics in the last 20 years. But I can't. I am not that diabolical or creative."
Lee called the mailer "thuggish, Chicago-style tactics," and requested an FEC investigation since the group didn't register or disclose who funded its activities.
The agreement, reached March 22, says the Utah Defenders of Constitutional Integrity, represented by Stewart, violated three laws for not registering as a political committee, not filing a disclosure report and not including its contact information on the piece.
It required that Stewart legally create the political action committee, which he did this week, and file the appropriate reports. It also says the PAC must pay a $1,400 fine, but the FEC takes no action against Stewart as an individual.
Stewart declined to comment on the settlement, but his attorney Michael Toner, said that his client was "glad to have this matter behind him" and that the FEC levied only a modest financial penalty.
As part of the agreement, Stewart had to explain how the mailer came to be. He said he ran the idea by friends George Marshall and Randy Simmons, before contracting with a Democratic campaign consultant to create the ad and Precision Strategies, a mail house to send it out.
Precision Strategies charged a little more than $4,700 for the temple mailer. Stewart paid $3,500 and Marshall paid $75. The agreement said an "unspecified person" spent $50 for a prepaid cell phone to accept calls in response to the mailer.
Simmons, a political economics professor at Utah State University, says he didn't pay for or help design the mailer, but he did discuss the idea with Stewart, one of his former students.
Stewart told Simmons his goal was to produce a mailer that would improve Bennett's meager chances of getting enough delegate support to reach a primary election.
"He said, 'This is what I'm thinking of doing, do you think it would work,' and I said, 'It may succeed in helping Senator Bennett get into the primary,' " said Simmons, the former mayor of Providence, Utah, who calls the mailer "powerful."
He argues that the temple mailer "captures what I think was the Mike Lee whisper campaign" against Bennett, a claim that infuriates Lee supporters.
Hauser, the former campaign aide, said Lee and his supporters never tried to use religion in its campaign against Bennett, which was fueled by the rise of the tea party, focused primarily on federal spending.