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Company Campaign Funds Ban Survives Citizens United Test

June 28, 2012

The U.S. Supreme Court decision giving corporations the same rights as people to spend money independently to support political campaigns didn’t overturn a century-old ban on direct corporate donations to candidates, a federal court ruled.

A three-judge appeals panel in Richmond, Virginia, made its ruling today in reinstating a criminal campaign-finance charge against two fundraisers for Hillary Clinton’s presidential bid who were indicted for improperly reimbursing $186,600 to donors.

U.S. District Judge James Cacheris had thrown out a charge that the two illegally funneled corporate money to the campaign, ruling that the high court’s 2010 Citizens United decision meant companies can make campaign donations directly to candidates as long as they comply with general legal limits. The appeals court judges disagreed.

“Leaping to this conclusion ignores the well-established principle that independent expenditures and direct contributions are subject to different standards of scrutiny and supported by different government interests,” U.S. Circuit Judge Roger Gregory wrote for the panel.

‘Explicitly Declined’

Citizens United “explicitly declined” to address the constitutionality of the ban on direct contributions or “indicate that its ‘corporations-are-equal-to-people’ logic” applies in the context of direct contributions, Gregory said.

The indictment, which covers Clinton’s 2008 presidential bid and 2006 Senate run, also charged the two men -- William P. Danielczyk Jr., chairman of McLean, Virginia-based Galen Capital Group LLC, and Eugene R. Biagi, Galen’s secretary and treasurer -- with conspiracy, obstruction of justice and causing false statements.

Their trial had been put on hold while the appeal was pending.

Jeff Lamken, a lawyer for Danielczyk, and Mark Matney, a lawyer for Biagi, didn’t immediately respond to e-mail messages seeking comment on the ruling.

Peter Carr, a spokesman for U.S. Attorney Neil MacBride, had no immediate comment.

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, 11-4667, U.S. Court of Appeals for the Fourth Circuit (Richmond).

To contact the reporter on this story: Tom Schoenberg in Washington at

To contact the editor responsible for this story: Michael Hytha at

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