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For Immediate Release

Contact: 

Bob Biersack

October 31, 2007

George Smaragdis

Michelle Ryan

 

Mitchell Wade and MZM Inc. Agree to Pay $1,000,000 Civil Penalty for Illegal Contribution Reimbursement Scheme

WASHINGTON –The Federal Election Commission (FEC/Commission) announced today that Mitchell Wade and MZM, Inc. will pay a $1,000,000 civil penalty, the second largest penalty ever paid in the 32-year history of the FEC.  The FEC has accepted a conciliation agreement in which Mr. Wade admits to knowingly and willfully violating the Federal Election Campaign Act (the Act) by funneling $78,000 in corporate contributions to two federal candidates.  The Commission unanimously approved the conciliation agreement. 

FEC Chairman Robert Lenhard stated: “There are serious consequences for those who knowingly and willfully try to funnel illegal contributions into federal election campaigns.  The historic civil penalty collected in this case shows that the FEC has a strong and vigorous enforcement program in place.”

This penalty brings the total civil penalties assessed by the FEC in 2007 to more than $4.7 million, which is the second largest amount ever collected in a single year in the Commission's history.  The Commission collected $6.2 million in all of 2006.

Facts of the Case

MZM (now known as True Norte, Inc.) is a corporation and a government contractor.  At the time the violations of the Act occurred, Mitchell Wade was the principal owner and Chief Executive Officer of MZM.  Richard Berglund was employed by MZM as a manager of an office of MZM located in Martinsville, Virginia.

Mr. Wade used MZM corporate funds to reimburse employees and their spouses for contributions to the campaign committees of Representatives Virgil Goode and Katherine Harris.  Richard Berglund assisted in the scheme by receiving cash from Wade from which Berglund made a contribution under his and his wife’s name and then distributed the remaining cash to other employees of MZM, and in some cases their spouses, to make contributions.  In total, Mitchell Wade and MZM reimbursed, directly and indirectly, $78,000 in contributions to two federal candidates.

On February 24, 2006, Mitchell Wade pleaded guilty to multiple felony counts, including one count of election fraud by unlawfully making campaign contributions in the name of another.  On July 23, 2006, Richard Berglund pleaded guilty to a misdemeanor violation by unlawfully making contributions in the name of another.

Respondents disclosed the violations of the Act to the U.S. Department of Justice and have cooperated with the Commission in resolving this matter.  Mitchell Wade and MZM have also taken responsibility for the liability of the former employees of MZM and their spouses who acted as conduits for the reimbursed contributions.  The Commission has determined to take no further action with respect to those conduits.  In addition to the $1,000,000 civil penalty to be paid by Mr. Wade and MZM Inc., Richard Berglund has agreed to pay a civil penalty of $42,000.

The Commission found no evidence that either Goode for Congress or Friends of Katherine Harris knew that the contributions were illegal, and both committees have either refunded or disgorged all MZM-related contributions.

By law, the FEC must attempt to resolve its enforcement cases or Matters Under Review (MURs) through a confidential investigative process that may lead to a negotiated conciliation agreement between the FEC and the individual or group the Commission determines has violated the law. Additional information regarding MURs can be found on the FEC website at http://www.fec.gov/em/mur.shtml.

This release contains only summary information. For additional details, please consult publicly available documents in the Enforcement Query System (EQS) on the FEC website at http://eqs.fec.gov/eqs/searcheqs .

CASE SUMMARY

MUR 5666

RESPONDENTS:

(a) Mitchell Wade

(b) MZM, Inc.

(c) Richard A. Berglund

(d) MZM, Inc. PAC and Jeanne O’Neil in her official capacity as Treasurer

(e) Christiane Wade

(f) Frank D. Bragg

(g) Anthony Capra

(h) Jonathan D. Flowers

(i) James C. King

(j) Christopher F. Rosche

(k) Roger A. Swinford

(l) Robin Berglund

(m) Cynthia S. Bragg

(n) Amy Cain

(o) Sharon Capra

(p) Jane T. Flowers

(q) Ralph P. Ganis

(r) Robert A. Harrell

(s) Donna J. Harrell

(t) Joseph R. James

(u) May I. James

(v) Jeneane C. King

(w) Matthew B. Shaffer

(x) Gregory V. Wade

COMPLAINANT:

Citizens for Responsibility and Ethics in Washington

SUBJECT:

Contributions in the name of another; corporate contributions; federal contractor contributions; excessive contributions; knowing and willful violations

DISPOSITION:

(a-b) Conciliation agreement: $1,000,000

(c) Conciliation agreement: $42,000

(d) Reason to believe, take no further action and close the file (re: knowing and willful corporate and federal contractor contributions (coercive solicitations))

(e) Reason to believe, take no further action and close the file (re: contribution in the name of another)

(f, h, i) Reason to believe, take no further action (re: knowing and willful contributions in the name of another, knowing and willful corporate contributions)

(g, j-x) Reason to believe, take no further action (contributions in the name of another)

DOCUMENTS ON PUBLIC RECORD:

Documents from this matter are available from the Commission’s web site at http://www.fec.gov by entering 5666 under case numbers in the Enforcement Query System. They are also available in the FEC’s Public Records Office at 999 E St. NW in Washington.

 

The Federal Election Commission (FEC) is an independent regulatory agency that administers and enforces federal campaign finance laws. The FEC has jurisdiction over the financing of campaigns for the U.S. House, the U.S. Senate, the Presidency and the Vice Presidency. Established in 1975, the FEC is composed of six Commissioners who are nominated by the President and confirmed by the U.S. Senate.

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