Campaign Finance Law Violations and Defenses
Federal campaign finance laws tightly regulate fundraising for a political candidate and their action committees, including their marketing activities.
Any type of activity that falls under the umbrella of campaign finance fraud could be prosecuted. The political candidate and organizers who are found violating campaign finance laws could be facing stiff civil penalties and even criminal prosecution.
There are numerous federal laws prohibiting a wide range of practices within the field of campaign finance. Anyone who is running for a political office needs to understand and follow these laws.
Further, it's a federal crime to knowingly prepare and submit a false campaign finance report to the Federal Election Commission.
If you've been charged with federal campaign finance violations, your first reaction may be pure bewilderment. U.S. campaign laws are so complex, and many campaigns violate them without even realizing it.
So you may be wondering, “What did I do?” This page by our federal criminal defense lawyers explain some of the more prominent aspects of campaign finance law.
It offers at least a starting point for a better understanding of what you may be facing.
Campaign Finance Law
The U.S. government did not establish a clear set of campaign finance laws until it passed the Federal Election Campaign Act (FECA) in 1971.
In addition to outlining a series of campaign regulations, that law also created a new government agency, the Federal Election Commission (FEC), to enforce them.
The FECA statutes were ultimately incorporated into Title 52 of the U.S. Code, which contains other laws relating to voting and elections.
Campaign finance is covered in Subtitle III that includes 46 distinct regulations. However, some of these are more prominent than others.
- 52 U.S.C. 30101 – Definitions,
- 52 U.S.C. 30102 – Organization of political committees,
- 52 U.S.C. 30103 – Registration of political committees,
- 52 U.S.C. 30109 – Enforcement.
These sections of the code define who may and may not organize a political committee, the rules under which these committees function, and the enforcement proceedings under the FECA which can be either civil or criminal for knowing and willful violations.
Importantly, it is here that FECA allows for the formation of PACs and Super PACs, in addition to candidate committees and party committees.
Each type of committee works in a slightly different way, but 52 U.S.C. 30102 explicitly states that all must have a treasurer who keeps detailed records of all contributions and disbursements.
Violations of these statutes could include a number of offenses, such as failing to record contributions or expenses properly, maintaining too much petty cash, and mentioning a particular candidate in a Super PAC ad.
Prison sentences for a criminal violation ranges from one to five years and a defendant will also face steep fines. In civil FECA cases, the violator will face large fines, restitution, and getting barred from engaging in any campaign activity.
52 U.S.C. § 30114 – Use of Contributed Amounts for Certain Purposes
Statute 30114 deals with how contributions may be spent and has been a stumbling block for several candidates over the years. It specifically states that candidates may only spend contribution funds on campaign-related expenses.
Further, it expressly forbids spending funds on “any commitment, obligation, or expense of a person that would exist irrespective of the candidate's election campaign or individual's duties as a holder of federal office.”
While that language seems clear enough, in practice, it can be difficult to separate what counts as part of a campaign and what doesn't.
Vacations and clothes—items that might theoretically be useful to a campaigning candidate—are explicitly disallowed.
52 U.S.C. § 30116 – Limitations on Contributions and Expenditures
Where sections 30101, 30102, and 30103 define the various types of political committees, section 30116 sets strict limits on how much any individual may contribute to each type.
For example, the law limits contributions to an individual candidate to $2000 a year while contributions to political parties can reach $25,000 a year.
These limits can become quite confusing, though. For instance, contributions in even-numbered years can be higher than in odd-numbered years.
Related section 30118 of FECA establishes similar limits on campaign contributions and expenditures by national banks, corporations, and labor organizations.
Criminal Violations of Campaign Finance Laws
Normally, a federal prosecutor will file charges for knowingly filing a false campaign disclosure form under 18 U.S.C. § 1001, which is a common statute prohibiting material false statements.
While 18 U.S.C. § 1001 can be filed for willfully filing false campaign disclosure forms, the more common statute for this type of charge is 2 U.S.C. § 441(a), under the Federal Election Statute.
This law makes it a federal crime to knowingly and willfully accept or receive contributions that exceed the limits of the Act.
In a situation where two are more people conspired to violate this law, then prosecutors will use 18 U.S.C. § 371 to file federal charges, which is the general conspiracy statute.
Most cases for violating campaign financial disclosure laws occur in a situation where there was a conspiracy to conceal the amount of donations, or to hide the identity of the donors, especially in cases of large sums of money that exceed the spending limitations.
Thus, federal prosecutors often use the catchall general conspiracy statute defined under at 18 U.S.C. § 371, along with the 18 U.S.C. § 1001 false statements statute, and even the illegal campaign excessive spending statute under 2 U.S.C. § 1446.
Wire Fraud – Mail Fraud – Tax Evasion – Money laundering
Campaign finance violations that are criminally prosecuted also include the use of other federal statutes, such as:
- 18 U.S.C. § 1341 – mail fraud,
- 18 U.S.C. § 1343 – wire fraud,
- 18 U.S.C. § 356 – dispositions of money,
- 18 U.S.C. §1957 – money laundering,
- 26 U.S.C. § 7201 – tax evasion.
The federal mail fraud and wire fraud statutes make it a crime for anyone to use a phone, internet, or mail directly related to committing a fraudulent scheme.
The statutory language within these federal statutes are so broad and wide-ranging, it covers most activities that would fall under the general umbrella of campaign finance fraud.
The 18 U.S.C. §1957 federal money laundering statute is also broad enough to be used in many fraudulent campaign finance practices.
This federal statute prohibits spending over $10,000.00 where the source of the money can't be determined from the financial transaction.
Many determined people will use money orders or cash deposits in order to conceal the true identity of the funds owner. Thus, prosecutors can also use this statute to charge someone with violating campaign finance laws.
Finally, any improper use of political campaign contributions could also result in an investigation by the Internal Revenue Service Criminal Investigations Division and charged by prosecutors under 26 U.S.C. § 7201 tax evasion.
Campaign Finance Violation Procedures
Campaign finance cases can originate from several different sources:
- Audits: Routine FEC monitoring,
- Complaints: Sworn information from anyone alleging a violation,
- Referral: Information provided to the FEC by other government agencies,
- Self-submission: Admission by any person or entity that they believe they have violated campaign finance law.
Civil enforcement of violations is handled by the FEC's Office of General Counsel and normally involves one of two processes.
- Alternative dispute resolution: Appropriate cases are dealt with by reaching a settlement through mutual consent of both parties. Typically, these settlements involve remedial measures. A committee, for instance, could agree to hire a compliance officer to address any campaign finance issues moving forward.
- Administrative fine: Committees are assessed penalties for late or non-filed reports. These penalties are based on a clear schedule.
Meanwhile, criminal prosecutions of campaign finance law are dealt with by the United States Department of Justice.
Penalties vary widely, depending on which specific law that was broken, who broke it, to what extent it was broken, and whether the person broke it knowingly.
As a guideline, though, Presidential campaign finance law violations can garner up to five years in prison and $50,000 in fines.
In addition, it is important to remember that every state has its own individual campaign finance laws. Campaigns and political committees must follow these laws as well.
Criminal Defense for Campaign Finance Fraud
If you are under an investigation for campaign finance fraud, then your reputation, employment, and freedom could be at stake.
The first step to protect yourself is to contact an experienced federal criminal defense lawyer who can prepare a strategic plan for best possible outcome.
You will need legal counsel who knows how to effectively negotiate with prosecutor's and federal law enforcement agencies.
Our law firm has a record of success in all type of federal cases and investigations and we know how to protect you. We need to first review all the facts of your case in detail in order to put a plan together moving forward.
At Eisner Gorin LLP, we are highly experienced dealing with representing people who are involved in a federal criminal investigation.
Alleged political campaign finance violations are a serious issue with the potential of harsh civil and criminal penalties, and could even include a prison sentence.
Related: Election Law Crimes