Bloomberg News

Judge Won’t Restore Charges Over Corporate Campaign Giving

June 07, 2011

(Updates with judge’s reasoning in fourth paragraph.)

June 7 (Bloomberg) -- A federal judge let stand his decision to throw out part of an indictment against two fundraisers for Hillary Clinton’s campaigns, saying a ban on direct corporate donations to federal candidates is unconstitutional.

U.S. District Judge James Cacheris in Alexandria, Virginia, today reaffirmed his May 26 ruling that the Supreme Court’s Citizens United decision in 2010, which gave corporations the same rights as individuals to spend money independently to support candidates, means they can make direct campaign donations that comply with general legal limits. This year, individuals can give $2,500 to a candidate per election.

“For better or worse, Citizens United held that the First Amendment treats corporations and individuals equally for purposes of political speech,” Cacheris wrote. “This leaves no logical room for an individual to be able to donate $2,500 to a campaign while a corporation like Galen cannot donate a cent.”

The judge’s decision came in a case against fundraisers for Clinton’s 2008 presidential campaign who were indicted for improperly reimbursing $186,600 to donors. Cacheris threw out the charge that they illegally funneled money from Galen Capital Group LLC to the campaign.

Peter Carr, a spokesman for U.S. Attorney Neil MacBride in Alexandria, said Justice Department lawyers are reviewing the ruling and considering their options.

Request to Reconsider

Prosecutors asked Cacheris last week to reconsider his decision, saying the government failed to cite a campaign finance ruling critical to the case.

Assistant U.S. Attorney Richard Pilger said in court on June 3 that the 2003 Supreme Court ruling in FEC v. Beaumont upheld a ban on corporations contributing directly to candidates. The Citizens United case involved corporate expenditures, not contributions, he said.

Cacheris said today he wasn’t bound by the Beaumont decision because it involved a nonprofit company, not a for- profit company like Galen. The discrepancy leaves him with “two persuasive decisions, one more recent than the other,” he said.

The Supreme Court in 1976 said limits on direct contributions to candidates are constitutional as a means to prevent corruption. The court reaffirmed that position in Citizens United.

Cacheris said the high court in 1976 implicitly concluded that any contributions under the limit “do not create a risk of quid pro quo corruption or its appearance.”

Senate Campaign Too

In the indictment, which covers Clinton’s 2006 Senate run as well, the government also charged William P. Danielczyk Jr., chairman of McLean, Virginia-based Galen Capital, and Eugene R. Biagi, its secretary and treasurer, with conspiracy, obstruction of justice and causing false statements. A trial is to begin July 6, according to court papers.

Bans on direct corporate donations to candidates go back to the Tillman Act of 1905. The 2002 campaign finance law prohibited contributions known as “soft money” from corporate and union treasuries to the political parties.

The case is U.S. v. Danielczyk, 1:11-cr-00085, U.S. District Court, Eastern District of Virginia (Alexandria).

--With assistance from Greg Stohr and Jonathan D. Salant in Washington. Editors: Charles Carter, Stephen Farr

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net;


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