Our attorneys provide a broad range of services to our clients related to the defense of Federal campaign finance fraud allegations. Our firm represents a broad array of clients on campaign finance issues, including defense litigation, regulatory law, and Federal Election Commission compliance.
Federal campaign finance cases are often seen on the front page of newspapers recently; however prosecutions are less frequent on the federal level than in many states and municipalities, though prosecutors and regulatory agencies do carefully monitor the flow of cash into and out of politics.
An example of Federal campaign finance fraud is using conduits, or straw donors, to funnel cash into a political campaign. In these instances, a third-party bundler provides money in the name of a donor with or without their consent to avoid rules and restrictions on contribution limits and eligibility.
Federal election laws prohibit a contribution of more than $2,700 to any single federal candidate in an election cycle. Parties seeking to gain outside influence with a candidate may exceed these limits by using conduits with cash to give money in their own name or assume another’s identity and do it.
Another form of Federal campaign finance fraud involves federal candidates’ campaign accounts. The Federal Election Commission (FEC) requires every candidate running for federal office to establish a campaign account for his or her election.
If a Federal candidate or their campaign committee provides a false statement on one of the scheduled reports regarding either contributions or expenditures federal prosecutors or the FEC may pursue criminal actions against the candidate, campaign and in some instances individual donors for finance fraud.
Another area of Federal campaign finance fraud lawn involves campaign eligibility. The landmark US Supreme Court decision Citizens United v FEC (558 U.S. 338) gave corporations and labor unions the right to contribute to political campaigns like private citizens with only certain rules and restrictions.
While Citizens United opened the door for corporations to make contributions, Federal law prohibits foreign nationals from contributing or receiving expenditures to political campaigns on all levels of government.
Political campaigns are required to ensure the legitimacy of their donors and may be prosecuted for campaign finance fraud if they knowingly accept contributions from foreign nationals.
CFR Title 11, Chapter 1, which establishes the FEC and sets out the general outline of election law, is the primary source of law regarding the enforcement of election law, governs federal campaign finance law.
The major provisions of Title 11 establish the rules for the creation and administration of political campaigns, individual and campaign contributions and expenditures, reporting requirements, and prohibited uses of campaign funds.
These rules apply to campaign committees and individuals alike in terms of campaign contributions with enforcement in the hands of the FEC and federal prosecutors through the United States Department of Justice.
Since the Citizens United ruling the US Supreme Court hesitates taking up any pivotal campaign finance fraud cases, it instead focuses on matters involving Political Action Committee actions while deferring to Title 11 and the FEC on issues of campaign finance fraud.
As such, most states and municipalities have taken their own steps to regulate campaign finance and introduce individual efforts to curtail fraud.
In campaign finance cases, fraud may seem to be a difficult concept to grasp, particularly since the FEC is a relatively young regulatory agency only being created in 1974. The three major fraudulent activities that affect campaign finance law are:
- Conduits: The most commonly prosecuted campaign finance fraud cases, involves the use of conduits or straw donors to provide oversize influence to a particular donor.
The FEC has established campaign contribution limits for individuals, corporations, political action committees, and campaign committees. The standard amount an individual or corporation may contribute is $2,700 per individual candidate per election cycle.
Multicandidate political action committees may contribute up to $5,000. These contribution limits increase depending on who the intended recipient is, be it a local party committee at $10,000 a year or a national party committee at over $100,000.
Individuals and corporations seeking to increase their influence and candidates seeking the largess and political advantages of large corporations have often contested these limits.
Some have stepped outside of the law and employed conduits to donate more than legally permitted by funneling money to third parties who then donate to the chosen candidate in their own name.
Recent notable examples of this fraud include political commentator Dinesh D’Souza who in 2014 pleaded guilty to charges of making illegal contributions in the names of his conduits to a candidate for Senate from New York.
Additional charges have been brought against Jeffrey E. Thompson for illegally bundling contributions to Hillary Clinton and allegations made against the 2016 Donald J. Trump campaign.
Violators of the conduit prohibition have received penalties ranging from several years in prison to severe fines, property forfeiture, and probation.
- Campaign Administration Violations: The FEC requires stringent reporting standards from candidates for federal office. Those running for municipal or state office are required to comply with state and local law.
Candidates are responsible for reporting each contribution and expenditure to the FEC and are required to ensure the donor eligibility to make a contribution – that the person is a national and over the age of 18.
In addition, Candidates are also required to ensure they are not receiving illegal contributions, including contributions over legal limits or from prohibited sources.
Prohibited sources include certain corporations and labor organizations that the FEC has determined poses and undue influence of control over a candidate for office or who has been deemed to have engaged in political corruption.
- Non-national contributions: The Federal government and the FEC prohibit campaign contributions from non-nationals to any candidate for any public office in the United States, despite the level of government. Non-nationals are also prohibited from receiving expenditures from election committees.
- Additional Fraud: Political campaigns on all levels of government are prohibited on accepting contributions by a national bank or federally chartered organization.
Federal political campaigns are prohibited from accepting contributions from government contractors who either currently hold a government contract or are actively seeking a government contract.
Federal campaign finance fraud enforcement is conducted by the FEC, the United States Department of Justice and the Internal Revenue Service of the Department of the Treasury.
Federal prosecutors generally have broad discretion to prosecute those accused of fraud. Penalties range from fines on individuals or political campaign committees to imprisonment of up to ten years in a Federal prison.
In recent cases, conduit fraud prosecutions, prosecutors have relied on the individual conduits to provide evidence sufficient to prove guilt beyond most of the evidence. The FEC relies heavily on audits of campaign finance filings made by political committees and regularly audits all contributions and expenditures.
Recent Campaign Finance Fraud Cases in the News
How Michael Cohen broke campaign finance law; PBS News
Issue: Campaign contribution limits
Criminal Charge: Violating Title 11 by accepting a contribution to the Trump campaign in excess of $2,700.
Penalty: 36 months in prison
“Cohen’s payment to Clifford, they said, exceeded the $2,700 limit on personal contributions to a single candidate for an election. The payment he helped arrange for McDougal flouted the ban on corporations contributing directly to campaigns.”
Former congressional staffer gets prison time for participating in a fraud scheme with Stockman
Issue: Conduit contributions
Criminal Charge: Conduit contributions, false statements, mail fraud, wire fraud
Penalty: 18 months in prison; $2.8 plus million in asset forfeiture among two defendants
“Dodd pleaded guilty on March 20, 2017, to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to make conduit contributions and false statements. In his plea deal, Dodd said he acted in a scheme led by former U.S. Rep. Stephen E. Stockman, 62.
Stockman was convicted by a federal jury in Houston on April 12 of 23 counts of mail fraud, wire fraud, conspiracy to make excessive conduit contributions and false statements to the Federal Election Commission (FEC), as well launder money and file a false tax return.”
What was Dinesh D’Souza charged with? A look at the conservative filmmaker Trump plans to pardon
Issue: Conduit contributions
Criminal Charges: Conduit contributions
Penalty: Eight years probation, eight-month community confinement
“D’Souza, 57, pleaded guilty to campaign finance fraud after donating $20,000 to New York politician Wendy Long, a Republican, during her Senate race in 2012.
He was indicted two years later, in January 2014, for using a “straw donor,” a person who makes illegal contributions to a campaign in the names of others, to make the donation.”
Poll: Hunter leads in re-election fight despite federal charges
Issue: Misuse of Campaign Funds
Criminal Charges: Misuse of $250,000 of campaign funds for personal use
“Federal prosecutors contend that the Hunters repeatedly misrepresented what their expenses were for — in one instance buying personal clothing at a golf course so that the purchase “could be falsely reported to the treasurer as ‘balls for the wounded warriors,'” the indictment says.”
Why You Need an Experienced Campaign Finance Fraud Attorney
Federal campaign finance fraud is a serious crime that can result in severe fines, asset forfeiture, prison time and the loss of elected office or access to the political system through a prohibition to make contributions or disenfranchisement.
Because of the complexities and the public nature of these offenses, it is crucial counsel is retained to ensure a strong defense against knowledgeable and practiced law enforcement.
Those involved in the campaign finance system inevitably face public scrutiny and higher expectations; therefore a defense that cannot only vociferously defend you at trial, but is able to navigate the details of the Federal campaign finance system deftly, is crucial.
The ability to take on a regulatory body specializing in audits, a strong detail-oriented defense is essential to victory, and a strong litigation team is a critical element to your success.