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On June 11, 2012, the Federal Election Commission filed suit in the U.S. District Court for the District of Columbia against former U.S. Senator Larry Craig and his authorized campaign committee, Craig for U.S. Senate, claiming that they converted more than $200,000 in contributions to Mr. Craig’s personal use. The suit names Craig for U.S. Senate ("Craig Committee"), Kaye O’Riordan (in her official capacity as treasurer for Craig for U.S. Senate) and Larry Craig as defendants.
The complaint alleges that during 2007 and 2008 Mr. Craig used campaign funds to pay legal expenses he incurred in connection with his June 2007 arrest at Minneapolis-St. Paul International Airport, his guilty plea to a misdemeanor charge of disorderly conduct, and subsequent efforts to withdraw that guilty plea. From July 9, 2007, through October 5, 2008, the Craig Committee disbursed more than $480,000 for legal fees and other expenses. This sum includes more than $200,000 paid to two firms for expenses related to Mr. Craig’s efforts to withdraw his guilty plea.
The suit claims that these legal expenses were not incurred in connection with Mr. Craig’s campaign for federal office or with his ordinary and necessary duties as a Senator, and that the payment of these expenses with campaign funds amounts to impermissible personal use. The FEC seeks a declaration that this conversion of funds to personal use violates the Federal Election Campaign Act (the Act), a permanent injunction against future similar violations, an order that Mr. Craig repay the funds to Craig for U.S. Senate and a civil penalty against each of the defendants.
The Act prohibits conversion of campaign funds to personal use. A contribution or donation “shall be considered to be converted to personal use if the contribution or amount is used to fulfill any commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election campaign or individual’s duties as a holder of Federal office.” 2 U.S.C. §439a(b)(2).
Under FEC regulations, whether payments for legal expenses constitute personal use is determined on a case-by-case basis. Expenses that a candidate can reasonably demonstrate resulted from the campaign or officeholder duties are not considered personal use, but legal fees will not be treated as being related to the campaign or officeholder duties simply because the underlying proceedings may have some impact on the campaign or officeholder’s status. Illustrating this distinction, the Commission has stated that legal expenses stemming from divorce or charges of drunk driving will be treated as personal, rather than related to the campaign or the officeholder’s duties. Final Rule and Explanation and Justification, Personal Use of Campaign Funds, 60 Fed. Reg. 7862, 7867-68 (Feb. 9, 1995).
On November 10, 2008, the FEC received an administrative complaint alleging that Mr. Craig had violated the Act in spending more than $213,000 in campaign funds for legal fees incurred in connection with his arrest and conviction. In May of 2009, the FEC voted to find “reason to believe” that Craig for U.S. Senate, Kaye O’Riordan (in her capacity as treasurer of the committee) and Mr. Craig violated the personal use ban. After an investigation, the FEC notified the defendants on April 8, 2011, that the General Counsel was prepared to recommend that the Commission find probable cause to believe that the defendants violated the Act. On February 7, 2012, the Commission made that finding and notified the defendants in a February 22, 2012 letter. The FEC was unable to secure acceptable conciliation agreements with the defendants, and on May 3, 2012, the Commission authorized the filing of this lawsuit.
On August 2, 2012 the defendants moved to dismiss the suit, arguing that the use of campaign funds for Mr. Craig’s legal expenses was expressly permitted under the statute and not subject to the prohibition against personal use; and the defendants should be immune from FEC enforcement in this case based on FEC advisory opinions that defendants claim approve the use of campaign funds in similar situations.
On March 28, 2013, the United States District Court for the District of Columbia denied the Motion to Dismiss finding neither of the defendants' arguments persuasive. The court concluded that the expenditures for legal fees could not be characterized as ordinary and necessary expenses in connection with Mr. Craig’s duties as a federal officeholder and that the expenses would have existed irrespective of his duties as an officeholder.
The court also rejected the defendants’ reliance on past FEC advisory opinions because the facts in those opinions are entirely distinguishable from the facts in this case.
The court ordered the parties to file a joint report by April 19, 2013 and to attend a status and scheduling conference on April 26, 2013.
Source: FEC Record -- July 2012 [PDF].