An End Run on the Campaign Finance Laws

When the government indicted John Edwards for campaign finance violations stemming from the extra-marital affair he conducted and covered-up during his 2008 presidential campaign, his attorneys assailed the charges as “novel” and “unprecedented.”  They were quick to condemn their client for cheating on his cancer-stricken wife and lying to the American people, but protested that the payment of nearly $1 million in hush money by wealthy Edwards donors to his mistress and mother of his youngest child was not illegal.

Prominent Washington lawyers, law professors and national Democrat surrogates parroted the Edwards talking points and all but predicted dismissal of the charges or a “not guilty” verdict.  Apparently, many of the same people who can’t stand the thought that the Constitution permits a corporation to fund a political ad independently of a candidate can see no crime in the payment of $1 million in hush money to the paramour of a would-be president.

But here’s why Team Edwards shouldn’t print invitations for the acquittal barbecue just yet:

First, of course the charges are unprecedented.  That’s because the conduct itself is unprecedented.  So unprecedented, in fact, that the only person ever before to have conceived of such a scheme had the good sense to ask the Federal Election Commission for permission before implementing it.  The FEC said no, by the way, in a public advisory opinion of the type that campaign finance lawyers cite to their clients as precedent every day.

Just because the charges are unprecedented doesn’t mean they can’t stick.  There is—unfortunately, in this case—a first time for everything.

Second, a general principle of law prohibits one from doing indirectly what one could not achieve directly.  Here, Fred Baron and Bunny Mellon could not have contributed the hundreds of thousands of dollars at issue directly into Edwards’ presidential campaign, because illegal excessive contributions would have resulted.  Neither could Edwards’ campaign have spent that money to pay Rielle Hunter’s rent, car payment, utilities, household food and other similar expenses, because federal campaign finance law prohibits the conversion of campaign funds for personal use.

So instead, Baron and Mellon allegedly made an end run on the law and gave the money directly to Rielle Hunter.  Accomplishing an illegal result through the use of incremental lawful steps, however, does not automatically render the result legal.  Just ask the many individuals the IRS has jailed as a result of tax shelter litigation over the past three decades.

Indeed, no campaign finance lawyer worth his or her hourly rate would have signed off on a plan to divert hundreds of thousands in cash from several max donors to place a roof over the head of the candidate’s secret love child.  Such a ploy would constitute a knowing and willful attempt to evade the limitations and prohibitions of the Federal Election Campaign Act—a matter that is and always has been properly the subject of the federal criminal laws, not the FEC’s civil conciliation process, as Edwards’ lawyers have begged for.

Third, Edwards apparently intends to argue that the donors paid off Hunter not to further his presidential campaign, but rather to conceal the affair from Edwards’ wife. This, they contend, means that the funds never were campaign contributions, because they instead were gifts of a personal nature, if not to Edwards himself then to his lover or her creditors.*

If accepted, this argument would permit wealthy political donors to underwrite presidential and other federal candidates’ living and personal expenses with unlimited and undisclosed cash contributions merely by denominating the payments as “gifts” to a “friend,” paying them to the candidate and his or her family or creditors instead of running them through the campaign.

This type of payment is exactly what the campaign finance law’s “irrespective of” test forbids.  That is, the law prohibits the use of campaign funds to cover personal expenses, defined as those obligations that would exist “irrespective of” the individual’s status as a federal candidate.  Those types of obligations include mortgage payments, tuition bills, utility charges, health and country club memberships—and, as Edwards apparently will argue, the desire to conceal an extra-marital affair from an unknowing spouse.

If the definition of campaign contribution is broad enough to encompass indirect payments and expenditures such as those at issue in the Edwards case—and it is—then the use of such funds to help conceal an affair from a spouse is per se illegal personal use.  This is particularly true if the candidate or his campaign conceived, directed, facilitated or assented to the scheme.  In this case, it is hard to believe that everyone involved did not know exactly what was going on.

All of this is not to say that the prosecution of John Edwards will be easy, let alone successful.  His legal team is stacked with brilliant, experienced, media savvy trial lawyers.  For all of Edwards’ own flaws as a witness, reports have suggested that the government’s star witnesses may have credibility problems, as well.  And the government will have to prove beyond reasonable doubt that Edwards orchestrated or at least permitted the hush payments.

But to the extent the prosecution of Edwards is, like the conduct the indictment alleges, unprecedented, the case against him is not unsound.  The law limits the amount of money that any single donor can contribute to a candidate, and defines contributions to include both direct and indirect payments and expenditures. Moreover, the law prohibits the use of contributions for personal purposes.  John Edwards should not be able to escape liability merely because his donors funneled their contributions around the system rather than through it.

*  Much of the public debate about this case has centered on whether Baron and Mellon’s payments were made “for the purpose of influencing a federal election.”  It appears most have concluded they were not, such that the payments would not be campaign contributions as a matter of law.  I think Edwards’ attorneys will have a tough time convincing a jury of that underlying fact, especially in light of Bunny Mellon’s widely-reported note.  (“From now on, all haircuts, etc., that are necessary and important for his campaign – please send the bills to me . . . . It is a way to help our friend without government restrictions.”)

More fundamentally, however, there can be no doubt that if Baron and Mellon had sent the money to the campaign instead of directly to Hunter, those funds would have been deemed contributions (albeit excessive ones).  I don’t think, as stated above, they can or should escape liability for that merely by funneling the money around the system rather than through it, and I have a hard time believing any campaign finance attorney would have advised a client that he or she could get away with it.

Note:  The original version of this post, dated June 10, 2011, can be found here: http://ashbylog.tumblr.com/post/6386827987/an-end-run-on-the-campaign-finance-laws.