[EL] "Illegal contributions" from Ami Bera's father

Thu May 12 06:58:54 PDT 2016

These problems open up all sorts of issues of state and federal estate and gift tax issues as well (and income tax too in Brad's scenarios).  Don't want to argue the merits of tax policy here out of respect to the scope of the list, but isn't it easier just to hold that money doesn't equal speech OR if we are stuck with that framework, to accept that self-spending is an unfortunate exception and not make it an exception that drives the rule.

We see this all the time on ethics policies and gifts.  While "old friends" should obviously be excluded from gift bans as such gifts are likely not have the relationship altering impact, where they are included into statutes those exceptions end up swallowing much of the rule.   Bans with bright line rules (say based on biological and marriage relationships) are MUCH easier to implement, enforce, and counsel on.

Kevin Greenberg
215-279-9912
kevin.greenberg at flastergreenberg.com<mailto:kevin.greenberg at flastergreenberg.com>

On May 12, 2016, at 8:50 AM, Smith, Brad <BSmith at law.capital.edu<mailto:BSmith at law.capital.edu>> wrote:

You can do all those things anyway, now. They're really unrelated to whether or not the spouse can legally contribute to the campaign.

Scenario 1: Mr. Potter's Pottersville Amalgamated Enterprises hires candidate spouse at rate of $300,000. Candidate spouse contributes $300,000 to the campaign.

Scenario 2: Mr. Potter's Pottersville Amalgamated Enterprises hires candidate spouse at rate of $300,000. Candidate and spouse use money to purchase a nice summer home and a new car.

Scenario 3: Mr. Potter's Pottersville Amalgamated Enterprises hires candidate spouse at rate of $300,000. Candidate and spouse use money to cover tuition, subsidize home sale, cover other expenses. Candidate then boosts his personal spending on the campaign by $300,000.

Scenarios two and three are legal, scenario one is not.

Fighting corruption the American way.

There's not much solution here except to prohibit candidate and officeholder spouses from working.

Bradley A. Smith

Josiah H. Blackmore II/Shirley M. Nault

   Professor of Law

Capital University Law School

303 E. Broad St.

Columbus, OH 43215

614.236.6317

http://law.capital.edu/faculty/bios/bsmith.aspx

________________________________
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu>] on behalf of Kathay Feng [kfeng at commoncause.org<mailto:kfeng at commoncause.org>]
Sent: Thursday, May 12, 2016 8:25 AM
To: Thomas J. Cares; Election Law
Subject: Re: [EL] "Illegal contributions" from Ami Bera's father

I am sympathetic to the argument of a dad just wanting to help his son out. But I worry that once you open an exception for certain family members, it becomes an open invitation for interests to "hire" the spouse, subsidize the house sale of a relative, or cover the tuition of a son as a way of passing money to or currying favor with a candidate. Sadly, none of these examples are hypothetical. It may not be right that a few bad apples taint our concern about the appearance or existence of corruption of all, but it is the reality.

‎
From: Thomas J. Cares
Sent: Thursday, May 12, 2016 1:09 AM
To: Election Law
Subject: Re: [EL] "Illegal contributions" from Ami Bera's father

Much-or-all of this quibbling over family lines sounds sarcastic. One's grandparents or any descendants thereof and any of their spouses sounds like an extremely reasonable line - a natural law PAC if you will, with a constitutional right to coordinate or donate to each other's campaigns freely. I don't think it should be hard to recognize this constitutional right of families to participate in politics without this restriction, which doesn't appear to survive any scrutiny. Its purpose would appear illegitimate - to deliberately suppress the disproportionate ability of an affluent family to participate in politics - not to prevent corruption. This would indeed feel like incumbent-favoritism. Of course incumbents can raise money - even get it from their party or safe-seat colleagues en masse, as well as special interests. To unseat an entrenched incumbent, you might need a candidate supported by family wealth.

I feel like this is kind of how Citizens United happened. It was wrong for the government to challenge that anti-Hillary film. Very wrong. Doing so provoked the courts to gut all restrictions on IEs.

Prohibiting contributions from a father to a candidate is very wrong. It feels like the kind of thing that could eventually provoke a court to void all restrictions on campaign contributions.

Tom Cares

On Thursday, May 12, 2016, Smith, Brad <BSmith at law.capital.edu<mailto:BSmith at law.capital.edu>> wrote:
Sure, parents, spouse and siblings is fine. Easy to understand. Personally, I'm fine with first cousins and aunts and uncles if you want. I really doubt there's much going to be much corruption there. But I can see a pretty good argument that allowing them to contribute would be more problematic. So again, let's just start with spouses and parents. Or just spouses. That seems reasonable, right? Does anyone really want to argue that "reasonable regulation" requires prohibiting spouses from contributing to their spouses? I'm getting curious about just what regulation is "unreasonable regulation."

Bradley A. Smith

Josiah H. Blackmore II/Shirley M. Nault

   Professor of Law

Capital University Law School

303 E. Broad St.

Columbus, OH 43215

614.236.6317<tel:614.236.6317>

http://law.capital.edu/faculty/bios/bsmith.aspx

________________________________
From: Larry Levine [larrylevine at earthlink.net]
Sent: Wednesday, May 11, 2016 9:19 PM
To: Smith, Brad; 'Trevor Potter'
Cc: law-election at uci.edu
Subject: RE: [EL] "Illegal contributions" from Ami Bera's father

Parents, spouse and siblings? Step-parents, step children? First cousins? Aunts and uncles?
Larry

From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Smith, Brad
Sent: Wednesday, May 11, 2016 5:45 PM
To: Trevor Potter <tpotter at capdale.com>
Cc: law-election at uci.edu
Subject: Re: [EL] "Illegal contributions" from Ami Bera's father

I've suggested a statutory or constitutional line, not unfettered agency discretion.

You ask where the line should be drawn. I think immediate family would work pretty well. Almost any of the lines you suggest, however, would be clear and more targeted at fighting corruption. So I don't see any of questions as posing a serious problem.  Limiting it to parents only would be an improvement, and should not be very controversial amongst those who favor "reasonable regulation."

Sent from my iPhone

On May 11, 2016, at 5:31 PM, Trevor Potter <tpotter at capdale.com> wrote:
But the point Mark raises is really broader-where should the line be drawn to prevent corruption and the appearance of corruption? And should an enforcement agency have discretion in deciding the line on an ad hoc basis?
Brad suggests that parents should be on the non- corrupt side of that line. How about siblings? Parents in law? Cousins? To what degree? Aunts, Uncles ? By blood or marriage or both?

All of those are questions that will arise when drawing the line between contribution limits for the public and unlimited contributions for " family". And if the family member owns a large industrial corporation and the relative is running for Congress or the Presidency, then the corruption rationale may not be so clearly irrelevant....

Trevor Potter
Sent from my iPhone

On May 11, 2016, at 5:17 PM, Smith, Brad <BSmith at law.capital.edu<mailto:BSmith at law.capital.edu>> wrote:

No, I think a law that says parents aren’t likely to corrupt this kids is sensible, and doesn’t leave much discretion in the hands of bureaucrats. It’s not the agency we’re discussing, but the statute, and whether the constitution should protect that behavior.

For what’s it worth, I would also be comfortable with a law saying if a donor says, "I just wanted to give that candidate lots of money because I thought he was really attractive," then the contribution is legal. But that seems like a very different discussion with lots more room for disagreement.

Bradley A. Smith
Josiah H. Blackmore II/Shirley M. Nault
Professor of Law
Capital University Law School
303 East Broad Street
Columbus, OH 43215
(614) 236-6317<tel:%28614%29%20236-6317>
bsmith at law.capital.edu<mailto:bsmith at law.capital.edu>
http://www.law.capital.edu/faculty/bios/bsmith.asp<http://www.law.capital.edu/faculty/bios/bsmith.asp>

From: Mark Schmitt [mailto:schmitt.mark at gmail.com]
Sent: Wednesday, May 11, 2016 5:03 PM
To: Smith, Brad; law-election at uci.edu<mailto:law-election at uci.edu>
Subject: Re: [EL] "Illegal contributions" from Ami Bera's father

I'm surprised that some of you who are on the more libertarian side of things would be comfortable with an agency selectively deciding which individuals' contributions might be likely to lead to corruption, and which would not. That's an awful lot of power to put in the hands of bureaucrats!

If you accept that *some* large contributions from *some* donors might have a potential for corruption, then wouldn't the cleanest, fairest law be one that simply limits contributions, regardless of the identity and interests of the donor? What if a donor says, "I just wanted to give that candidate lots of money because I thought he was really attractive." If that's really the motive for giving, there's probably less potential for corruption than if the donor says, "He's on the Financial Services Committee and I'm a banker." But I don't want some agency parsing that distinction.

Some of you may believe that there's no such thing as corruption or dependence corruption, and I've seen that argument. But if that's the case, then it doesn't matter that the donor is the candidate's father anyway.

Mark Schmitt
Director, Political Reform Program<http://www.newamerica.org/political-reform/>, New America<http://www.newamerica.org/>
202/246-2350<tel:202%2F246-2350>
gchat or Skype: schmitt.mark
twitter: @mschmitt9

On Wed, May 11, 2016 at 12:13 PM, Smith, Brad <BSmith at law.capital.edu<mailto:BSmith at law.capital.edu>> wrote:
Let’s try this link, then: http://www.myplainview.com/article_a9d1622d-8e2b-5cd4-b5a8-dc221c33a730.html<http://www.myplainview.com/article_a9d1622d-8e2b-5cd4-b5a8-dc221c33a730.html>

The answer to your question is, “yes, the FEC has the authority to investigate parental gifts” if it believes that those gifts are being used to fund political campaigns in amounts in excess of the contribution limits of the Federal Election Campaign Act.” We did this several times during my time on the FEC, including the case linked to above.

You are correct that Mr. Bera could have formed a single candidate super PAC and then spent to his heart’s content (or at least his bank account’s capacity) independently of his son and the compaign. As Allen Dickerson points out, that he did not choose that option suggests that it may be a poor substitute for direct contributions. And of course, it still leaves us without an answer as to why the law should prohibit Bera from contributing directly to his son’s campaign, and why one wouldn’t think the Constitution should protect that right.

Bradley A. Smith
Josiah H. Blackmore II/Shirley M. Nault
Professor of Law
Capital University Law School
303 East Broad Street
Columbus, OH 43215
(614) 236-6317<tel:%28614%29%20236-6317><tel:%28614%29%20236-6317>
bsmith at law.capital.edu<mailto:bsmith at law.capital.edu>
http://www.law.capital.edu/faculty/bios/bsmith.asp<http://www.law.capital.edu/faculty/bios/bsmith.asp>

From: Gabriel Gopen [mailto:gabe.gopen at gmail.com<mailto:gabe.gopen at gmail.com>]
Sent: Wednesday, May 11, 2016 10:29 AM
To: Smith, Brad
Cc: David A. Holtzman; Election Law

Subject: Re: [EL] "Illegal contributions" from Ami Bera's father

Mr. Smith, your link was on 527s. (Could be evergreen, FEC criticized for failure to act).

Without getting into a discussion about the rule governing intergenerational transfers of wealth, does the FEC have authority to investigate parental gifts? Who would even know to rip them of as happened here?

I suppose I could have said Bera Sr. could have set up a single candidate super Pac ("citizens for Elk Grove" Ceg) and a 501(c)(4) ("Elk Grove social club" EGSC). Then he could give unlimited contributions to EGSC, solicit unlimited contributions from relatives abroad for EGSC and dump it all into CEg to run ads in support of his son. I'd go on but Mr. Potter did this bit on Colbert already.

On May 11, 2016, at 9:57 AM, Smith, Brad <BSmith at law.capital.edu<mailto:BSmith at law.capital.edu>> wrote:
If, as suggested below, Bera gave his son gifts, and the son then spent his own money on the campaign, the FEC would still consider that an illegal contribution in the name of another. See e.g. http://articles.latimes.com/2003/jun/14/nation/na-fec14.<http://articles.latimes.com/2003/jun/14/nation/na-fec14.> Mr. Gopen's proposed solution might satisfy the tax man, but it would not satisfy the FEC.

Nor does this change the fact that if "supporting your own child's political ambitions is laudable," we really ought to question why it is illegal. Any other law Bera violated stems from that illegality when combined with his laudable goal. I doubt our democracy would be poorly served if the Constitution had been properly interpreted to protect Mr. Bera's right to support his son's campaign without restrictions on the amount.

Bradley A. Smith

Josiah H. Blackmore II/Shirley M. Nault

Professor of Law

Capital University Law School

303 E. Broad St.

Columbus, OH 43215

614.236.6317<tel:614.236.6317><tel:614.236.6317>

http://law.capital.edu/faculty/bios/bsmith.aspx<http://law.capital.edu/faculty/bios/bsmith.aspx>

________________________________
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu>] on behalf of Gabriel Gopen [gabe.gopen at gmail.com<mailto:gabe.gopen at gmail.com>]
Sent: Wednesday, May 11, 2016 9:35 AM
To: David A. Holtzman
Cc: Election Law
Subject: Re: [EL] "Illegal contributions" from Ami Bera's father
With the caveat that I did not see the original version of the article, Babual Bera's deceitful intent appears clear to me. As a max donor, he knew precisely the legal limit he could give to his son. He could also have given Ami cash gifts up to the limit of $14k ($28k if as a couple) per calendar year without a tax penalty. If he wanted to exceed that, he would have to pay the tax. Instead, the senior Bera found 90 other individuals to give maximum contribution which he reimbursed. To the public record, it looked as if candidate Bera had a wider array of supporters than he did.
I agree that supporting your own child's political ambitions is laudable. But unfortunately the method Babual Bera used to provide support was criminal.

On May 11, 2016, at 12:05 AM, David A. Holtzman <David at HoltzmanLaw.com<mailto:David at holtzmanlaw.com>> wrote:
Thomas, you may have seen an earlier version of the article. Note:
"UPDATES
. . .
2:37 p.m.: This article was updated with a quote and additional information from the U.S. attorney."
Without that I might have been baffled too.
The illegality was money laundering and fraud.
- dah

On 5/10/2016 7:05 PM, Thomas J. Cares wrote:
'I have, in fact, done the crime': Rep. Ami Bera's father admits illegal campaign contributions
http://lat.ms/1sbbYts<http://lat.ms/1sbbYts>

I really would have thought constitutional rights to self fund would include the right of a very close relative, like a parent, to fund a campaign without restrictions. This feels very wrong. I don't see why such a restriction would survive any scrutiny - a large contribution from a parent is highly unlikely to create any conflict of interest that wouldn't already be there by virtue of them being your parent (especially if they are the kind of parent who would have made a large contribution, but for a law prohibiting it - (a parent who has surely otherwise been a supportive figure to the candidate)).

I am incredibly baffled by the contents of that LA Times story.

Also, I think it's kind of great if a candidate is so lucky to have a parent to fund them (I was a candidate once, but don't have parents with those kinds of resources). Much better for society to have candidates funded by parents than candidates funded by executives whose companies have business before Congress, albeit in smaller aggregated amounts. (Baffled).

Tom Cares

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