enforcement

What happens in Arkansas does not stay in Arkansas.  Or at least not when federal prosecutors from the Department of Justice’s Public Integrity Section get involved.

A recent sentencing from Arkansas highlights the many options in DOJ’s toolkit to pursue “state-level” misconduct involving public officials.  In the case of former state senator Jeremy Hutchinson, DOJ obtained a “global” guilty plea for misconduct charged in three separate district courts.  The court sentenced Hutchinson to 46 months incarceration. 

According to the Government’s sentencing memorandum, Hutchinson accepted over $157,500 from the owner of an orthodontic clinic in exchange for advancing favorable legislation to deregulate the state dental industry.  The bribes masqueraded as payment for legal retainers, according to the Plea Agreement.  In addition, Hutchinson:

commingled campaign contributions and donations with his own personal funds and misappropriated and converted campaign funds for his own personal use, including, but not limited to, using campaign funds for a vacation, hotel stay, travel expenses, groceries, a gym membership, and jewelry.

Continue Reading Recent Arkansas Sentencing Highlights How Easily Federal Prosecutors Can Target State Campaign Finance Issues

The Federal Election Commission (“FEC”) recently answered a common question for those involved in operating a federal PAC:  When is the treasurer personally liable for violations of the rules on recordkeeping and reporting?  In doing so, the FEC highlighted the importance of external oversight of PAC operations, and the value of periodic audits of the PAC that can identify problems before they grow. 

The case involved a non-connected PAC affiliated with the Ute Indian Tribe (“Tribe”).  The Tribe hired a consultant who claimed extensive knowledge of the FEC’s intricate rules.  The Tribe allowed the PAC to operate outside its routine financial controls because the consultant told them the PAC would operate under the FEC’s recordkeeping and reporting system.    

Trouble began immediately, with the FEC’s Reports Analysis Division flagging problems with 75% of the reports the PAC filed in the three years after it began receiving funds in 2016.  As one measure of visible distress, the PAC amended one report five times.  Because no one at the Tribe was overseeing the PAC’s correspondence with the FEC—which were available on the FEC website—the Tribe was unaware of these warning signs.  The volume and magnitude of the filing errors ultimately triggered an FEC audit, which the treasurer also concealed from the Tribe, according to the complaint.Continue Reading When is a Treasurer Personally Liable for PAC Violations?

Perhaps no citation has been more favored in Federal Election Commission (“FEC”) decisions over the past decade than Heckler v. Chaney, 470 U.S. 821 (1985), a Supreme Court decision that gives an agency broad discretion over which enforcement cases to pursue.  But there is a category of cases where the FEC is not employing Heckler when it should:  Cases where the constitutional support for the statute no longer exists.  See Citizens for Responsibility and Ethics in Washington v. Federal Election Commission, 993 F.3d 880, 884 (D.C. Cir. 2021) (“New Models”); see also Citizens for Responsibility and Ethics in Washington v. American Action Network, No. 18-CV-945, 2022 WL 612655, at *2 (D.D.C. Mar. 2, 2022) (holding that an FEC dismissal that was supported by “constitutional doubts” that “militate in favor of cautious exercise of our prosecutorial discretion” was judicially unreviewable under Chaney).

The FEC continues to pursue enforcement penalties in several categories of cases where there is almost no chance that a majority of the Supreme Court would find the statute constitutional.  This resembles a sort of regulatory Russian Roulette, where the agency pursues enforcement actions until it finds a respondent that is willing to fully litigate the constitutional issues, mostly likely in a case with plaintiff-friendly facts.  The risk for the agency is that when one of these cases eventually comes before the Supreme Court, the justices may use a hammer, rather than a scalpel, in striking down the law. 

In two areas in particular, the FEC should exercise its prosecutorial discretion to decline to pursue cases based on statutes and regulations of dubious constitutionality.   

A Person Cannot Corrupt His or Her Spouse With a Campaign Contribution, No Matter How Large. 

Currently, the FEC follows the Supreme Court’s decision in 1976 to rather tentatively uphold the application of the contribution limits to contributions from intimate family members in the same way as contributions from lobbyists and corporate and union PACs.  But the law has evolved, and the Supreme Court has since been clear that generally the only legitimate interest the contribution limits play is to prevent quid pro quo corruption or its appearance.  It is nearly impossible to argue that a spouse who gives a contribution over $2,900 to his or her candidate/spouse presents the risk of quid pro quo corruption. Continue Reading Picking Battles: The FEC and the Constitution