In the News
By Jacob Sullum
“At a minimum,” former Federal Election Commission Chairman Brad Smith wrote in a Reason essay after Cohen’s guilty plea, “it is unclear whether paying blackmail to a mistress is ‘for the purpose of influencing an election,’ and so must be paid with campaign funds, or a ‘personal use,’ and so prohibited from being paid with campaign funds.” Smith noted that spending “to fulfill a commitment, obligation or expense of any person that would exist irrespective of the candidate’s campaign” counts as “personal use,” even if it is politically beneficial.
The sentencing memo says Cohen, as “a licensed attorney with significant political experience and a history of campaign donations,” was “well-aware of the election laws.” He “knew exactly where the line was, and he chose deliberately and repeatedly to cross it.” Can the same be said of Trump?
There is reason to doubt it, beginning with Trump’s notorious lack of interest in legal niceties. After Cohen pleaded guilty, Trump insisted in an interview with Fox News that “those two counts [related to the hush payments] aren’t even a crime.” He emphasized that he reimbursed Cohen with his own money, as opposed to campaign funds, which “could be a little dicey.” Trump’s critics mocked his ignorance of FECA’s requirements. “What Trump doesn’t know about campaign finance law is, um, a whole lot,” wrote CNN political correspondent Chris Cillizza.
Smith argued that Trump, who was allowed to spend as much of his own money on the campaign as he chose, could have paid Clifford directly and reported the transaction as an expenditure under the uninformative heading of “legal services.” If so, Trump’s failure to take that approach counts as further evidence that he did not have a very firm grasp of FECA. It is hard to “knowingly and willfully” violate a law you don’t understand.
Capital Research Center: Senate to Consider Partisan Anti-Speech Resolution
By Michael Watson
Forced disclosure of donors by the government is in the news again. This particular controversy began over the summer, when the IRS made a welcome change to its reporting rules for nonprofits by announcing it would no longer require most types of nonprofits (except the subset of nonprofits whose donors can deduct donations from their personal income taxes) to file with the IRS a list of their substantial donors and the donors’ addresses.
But now, 42 U.S. Senators, all of whom are members of the Democratic Conference, led by Jon Tester (D-Montana) and including Bernie Sanders (I-Vermont), Kirsten Gillibrand (D-N.Y.) and four incumbents who lost re-election in November, have made a motion to overturn the IRS’s decision under the Congressional Review Act…
(For more on the IRS rule, see Episode 33 of the Influence Watch Podcast, on which CRC spoke with Luke Wachob of the Institute for Free Speech on this issue.)
At issue is not a matter of disclosure per se: The list of donors and addresses (titled “Schedule B” on nonprofit tax returns) is supposed to be kept confidential under federal law. The problem? Too often, the information doesn’t remain confidential-either the IRS, or state governments, or an organization’s own accountants can slip up (or worse still, deliberately leak), “doxxing” financial supporters. Even if rogue or incompetent officials fail to publicize the documents, they can still be abused: The Pacific Legal Foundation, a center-right public-interest law firm, has alleged that a demand by California Attorney General Xavier Becerra (D) that the right-of-center Americans for Prosperity hand over an un-redacted Schedule B could result in the creation of an “enemies list.”
Daily Signal: Trump’s Ex-Lawyer Didn’t Violate Campaign Finance Laws, and Neither Did the President
By Hans von Spakovsky
The fact that a jury did not convict Edwards would not ordinarily mean that the government did not have a viable claim that a defendant violated the law. But consider this. Edwards had two former chairmen of the Federal Election Commission on retainer-Scott Thomas and Robert Lenhard-who were prepared to testify that, in their opinion, such payments to a mistress are not campaign-related expenses. Brad Smith, another former chairman of the commission, has similarly said that the hush money paid by Cohen is not a campaign-related expense.
So the government in the Edwards prosecution was unable to convince the jury that these were campaign-related expenses covered by federal campaign finance law. The Justice Department subsequently dropped its prosecution and never retried Edwards-in part, no doubt, because many other campaign finance experts called the case “legally flawed,” according to a Politico report in 2012.
And this wasn’t just their opinion-it was also the opinion of the Federal Election Commission. How do we know? Because as the chief financial officer for the Edwards campaign testified, when the Federal Election Commission audited the campaign, it determined that these payments were not campaign-related expenses that needed to be reported or run through the campaign. Thus, the commission said the federal rules governing campaign contributions and expenditures did not apply…
[A]s former Federal Election Commission Chairman Brad Smith recently said, we can probably all agree that these “payments to women were unseemly.”
But “that doesn’t mean they were illegal,” says Smith, regardless of the fact that the Southern District of New York convinced Cohen to plead guilty.
Washington Examiner: Stormy in a teacup – campaign finance case against Trump is laughably weak
By Washington Examiner
The argument is that since the hush money was paid to “influence” the election, it was a campaign expenditure. But by that logic, every dime Chris Christie spent to lose weight before his 2016 run – the diet books, the StairMaster, the bariatric surgery – was a campaign expenditure. If Christie bought a SlimFast shake with his personal money, was he a felon?
Former Federal Election Commissioner Bradley Smith posited another hypothetical: “If a business owner ran for political office and decided to pay bonuses to his employees in the hope that he would get good press and boost his stock as a candidate, would that be a campaign expenditure, payable from campaign funds?”
If a candidate who normally gets a $12 haircut shells out $40 for a better cut, is he a criminal for paying out of his own pocket even though the idea is to look sharp in front of news cameras? If a candidate pays a contested past-due personal bill only to make the headache go away before the debates begin, is he legally required to pay out of his campaign coffers?
Paying such expenses out of campaign funds would probably be unethical and possibly be illegal. If you’re damned if you don’t and damned if you do, then it’s a pretty good sign that either the law is an ass or someone is not reading it honestly.
Cohen pleaded guilty to this campaign finance violation to avoid prison time for more serious tax evasion issues. Just because he pleads guilty doesn’t make Trump a criminal.
The Courts
Wall Street Journal: Michael Cohen, Trump’s Former Lawyer, Sentenced to Three Years in Prison
By Nicole Hong and Rebecca Davis O’Brien
Michael Cohen, President Trump’s longtime fixer and personal attorney, was sentenced to three years in prison, culminating a legal saga that led Mr. Trump’s own Justice Department to directly implicate the sitting president in federal crimes.
Mr. Cohen, 52 years old, was sentenced in Manhattan federal court Wednesday after pleading guilty in recent months to nine felonies, including two campaign-finance violations related to payments he arranged during the 2016 presidential campaign to silence two women who said they had sexual encounters with Mr. Trump.
Courthouse News Service: Massachusetts State Ban on Secretly Recording Officials Struck Down
By Zack Huffman
A federal judge ruled Monday that the Massachusetts law barring the secret recording of government officials is unconstitutional.
The ruling was applied to a pair of First Amendment lawsuits from opposite ends of the political spectrum.
On one side were two local activists who sought more protections in their efforts to secretly record police officers, while on the other end was conservative activist James O’Keefe and his organization Project Veritas, which planned to secretly record Democratic public officials in order to embarrass them.
“On the core constitutional issue, the Court holds that secret audio recording of government officials,including law enforcement officials, performing their duties in public is protected by the First Amendment, subject only to reasonable time, place, and manner restrictions,” Chief U.S. District Judge Patti Saris wrote in a 44-page ruling.
The 1968 Massachusetts wiretap law criminalizes secret audio recordings, and has been used to arrest and prosecute people for secretly recording police officers performing their duties in public. Both the Boston Police Department and the Suffolk County District Attorney’s Office have pursued criminal action under the state law against individuals for secretly recording police officers performing their duties in public.
Congress
Wall Street Journal: Senate Votes to Overturn Treasury Rule Restricting Donor Disclosure
By Richard Rubin
The Senate on Wednesday voted to overturn a Treasury Department rule that lets politically active nonprofit groups provide the Internal Revenue Service with less information about their donors, but the measure stands little chance of becoming law.
The 50-49 bipartisan vote came on a measure pushed by Democrats, who argue that the rule will weaken enforcement of nonprofits’ adherence to tax and campaign-finance laws and make it harder for the government and the public to tell whether foreigners are financing political activity. Sen. Susan Collins (R., Maine) joined Democrats in favor of repealing the rule.
“We’re willing to work in a bipartisan way to get something done on this unbelievable flood of money that hits these elections every year,” said Sen. Jon Tester (D., Mont.) ahead of the vote. “Most of it comes out of dark-money circles.”
The House hasn’t voted on repealing the rule. Even if the House does so, President Trump will be able to veto the measure and protect his administration’s rule…
Republicans argued that the rule would prevent the federal government from accidentally releasing the information or retaliating against people who donate to certain groups.
Senate Majority Leader Mitch McConnell (R., Ky.) said ahead of the vote that the measure was “an attempt by some of our Democratic colleagues to undo reforms that protect Americans’ private, personal information as they exercise their First Amendment rights.”
Treasury officials have argued that the information wasn’t necessary for enforcement of tax law.
Real Clear Politics: Leave New IRS Free Speech Rule in Place
By Jenny Beth Martin
Shouldn’t we be able to support the causes of our choosing without having to worry about opponents learning about it, so they can intimidate or harass us?
That’s a question for Senate Democrats as they push for passage of a resolution that would overturn a rule recently promulgated by the Internal Revenue Service effectively shielding from public scrutiny the names and addresses of significant donors to nonprofit groups.
That new IRS rule – Revenue Procedure 2018-38 – exempts certain tax-exempt organizations that are not 501(c)(3) organizations from the requirement to report on their tax returns the names and addresses of their contributors who donate more than $5,000 in a given year. Such organizations are still required to maintain the records, in order to make them available to the IRS on request, but no longer will they have to include the information on their tax returns.
That new rule – a boon to free speech – made perfect sense when it was proposed in July of this year. The donor information was already required to be kept confidential, and was irrelevant to the administration of the tax system anyway, according to the IRS. Maintaining the confidentiality of the donor information was a burden to the IRS itself (by law, the information had to be redacted from nonprofit tax returns before they were made available to the public), and having it on hand created the possibility that it could leak, either by design or by mistake.
The IRS’s solution was simple – since it does not need the information, it wouldn’t collect it in the first place. Free speech advocates rejoiced. Montana Democrat Sen. Jon Tester wasn’t one of them. On Sept. 24, Tester introduced a resolution of disapproval, which now has 35 co-sponsors – all Democrats.
FEC
Roll Call: Florida Republican Not Even Sworn In, Facing Campaign Finance Questions
By Emily Kopp
The campaign finance issues looming around Rep.-elect Ross Spano, R-Fla., have grown more troublesome in recent days with new questions about the role of a longtime friend in funding his campaigns and hiring his new Congressional staff.
Spano has not been sworn into Congress yet, but already faces bipartisan calls for inquiries by the Federal Election Commission and the House Ethics Committee into how he funded his campaign to replace in Rep. Dennis A. Ross in the 15th District.
Spano acknowledged in a letter to federal regulators in November he may have violated campaign finance rules against straw donations by taking out $180,000 in loans from two benefactors and directing approximately the same amount to his campaign.
Spano accepted $75,000 from Cary Carreno – a businessman in utilities, longtime donor and a childhood friend – on Oct. 29, eight days before the election, and lent his campaign $70,000 the same day.
Over the course of the campaign Carreno loaned Spano a total of $110,000, according to the letter.
Spano has blamed any lawbreaking on an error by his campaign treasurer, who denied she knew anything about the loans to the Tampa Bay Times.
“The only information I received was they were drawn from his personal account,” she said.
Carreno personally fired the treasurer, according to a recent Politico report. At the same time, Carreno’s company donated $11,000 to a super PAC aligned with the candidate called CIVIC.
A super PAC donor performing an action on behalf of a campaign such as firing the committee’s treasurer raises red flags, experts say.
WPSU Pennsylvania NPR: Democracy Works: The Complicated Relationship Between Campaign Finance and Democracy
By Jenna Spinelle
In the United States, voting is a very private act. You step into the booth alone and, for a lot of people, it’s considered taboo to tell someone who you voted for. Campaign donations, however, are a different story.
The Federal Election Commission, an independent regulatory agency established after Watergate, collects donor information from candidates, makes it available to the public, and enforces federal campaign finance laws. Anyone can go online and look up records to see who gave money to a particular candidate…
FEC Chair Caroline Hunter joins us this week to explore the relationship between campaign finance and democracy. Hunter has been on the commission since 2008 and has seen the impact of the Citizens United ruling firsthand. She makes an interesting connection between PACs and political polarization – and how it all ties back to democratic participation.
Trump Administration
Washington Examiner: Sudden shift in get-Trump talk; now it’s campaign finance, not Russia
By Byron York
“With respect to both payments, Cohen acted with the intent to influence the 2016 presidential election,” prosecutors said. “He acted in coordination with and at the direction of [Trump].”
Those words caused a sudden shift in the debate over investigating the president. What had been a two-year-long conversation about Trump and Russia instantly became a conversation about Trump and campaign finance…
One significant problem could be that the campaign finance charge against the president is a pretty iffy case. Back in 2010, the Justice Department accused 2008 presidential candidate John Edwards of a similar scheme…
The Justice Department failed miserably at trial. Edwards was acquitted on one count, while the jury deadlocked in Edwards’ favor on the others. Prosecutors opted not to try again.
President Trump would point out that the accusation against him differs in at least one key respect from Edwards. Prosecutors accused Edwards of raising donor money to pay off the woman. Trump used his own money, which even the byzantine and restrictive campaign finance laws give candidates a lot of freedom to use in unlimited amounts.
So even more than Edwards, if the Justice Department pursued a case against Trump, it would be on unprecedented grounds.
But the political reality is, it doesn’t really matter if it is a weak case. And it doesn’t matter if Trump himself has not been indicted, or even that a sitting president cannot be indicted. Because now, Democrats can say, “The Justice Department has implicated the president in two felonies. Two felonies. TWO FELONIES!”
Politically, that’s as good as an indictment of Trump. Perhaps even better, since it does not give the president a forum to make a proper legal defense.
The States
Texas Tribune: Is “revenge porn” protected free speech? Texas Court of Criminal Appeals to weigh in.
By Emma Platoff
More than three years ago, a statute aimed at criminalizing “revenge porn” passed the Texas Legislature with rare bipartisan support – it passed both chambers with nary a “nay” vote and won a swift signature from the governor.
Now, the fledgling law faces an existential threat: a legal challenge alleging it violates free speech rights. A state appeals court in April ruled the law unconstitutional, writing that “it violates rights of too many third parties by restricting more speech than the [U.S.] Constitution permits.” Now, the case, set for submission Wednesday before the Texas Court of Criminal Appeals, awaits final reckoning…
The constitutional challenge stems from the conviction of Jordan Bartlett Jones, who was charged under the statute after sharing an intimate photograph of a woman without consent, according to court documents.
His attorney, Mark Bennett, a Houston First Amendment lawyer challenging the law on constitutional grounds, said it’s a clear violation of free speech rights.
“We engage in lots of harmful speech, and it’s constitutionally protected,” Bennett said. “If a statute restricts a real and substantial amount of protected speech, then it’s void.”
In April, the Tyler-based 12th Court of Appeals agreed with him. The state asked for that appeals court to rehear the case. After it declined, the state’s highest criminal court agreed in July to take up the matter.
After this week, the case will be fully briefed, and the high court could rule any time. A decision is expected in the next several months.
