Bloomberg News

Company Campaign Funds Ruling Appealed by U.S. Prosecutors

June 16, 2011

(Adds background of case from second paragraph.)

June 16 (Bloomberg) -- A federal judge’s ruling that corporations have a constitutional right to contribute money directly to candidates’ campaigns was appealed by U.S. prosecutors.

The Justice Department today filed a notice of appeal in the U.S. Court of Appeals in Richmond, Virginia, seeking review of Judge James Cacheris’s dismissal of the part of an indictment of two fund raisers for Hillary Clinton’s campaigns that involved corporate funds.

Cacheris upheld his May 26 decision ruling on June 7, saying in light of the Supreme Court’s decision last year in Citizens United v. Federal Elections Commission, the ban on corporate contributions to campaigns is unconstitutional. In Citizens United the high court said companies have the same rights as individuals to spend money independently to support candidates.

The fundraisers, William P. Danielczyk Jr., chairman of McLean, Virginia-based Galen Capital, and Eugene R. Biagi, its secretary and treasurer, were indicted for improperly reimbursing $186,600 to donors in Clinton’s 2008 presidential campaign. Cacheris threw out the charge that they illegally funneled money from Galen Capital Group LLC to the campaign.

The indictment, which covers Clinton’s 2006 Senate run as well, also charged the defendants with conspiracy, obstruction of justice and causing false statements. A trial is scheduled to begin on 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 Tom Schoenberg in Washington. Editors: Fred Strasser, Glenn Holdcraft

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net.

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


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