MURs 5305 & 5398: Corporate and excessive contributions in the name of another
In March 2006, the Commission announced conciliation agreements in two enforcement cases (Matters Under Review or MURs) that involved prohibited corporate contributions and contributions in the name of another. Respondents in MURs 5305 and 5398 agreed to pay civil penalties totaling $159,000 and $200,000, respectively for violations of the Federal Election Campaign Act (the Act).
Background
The Act prohibits corporations from making contributions or expenditures, and also prohibits contributions in the name of another, e.g., reimbursing someone for a contribution they made. Likewise, it is unlawful for any person knowingly to permit their name to be used to make a contribution in the name of another. At the time of these violations, an individual or partnership could contribute no more than $1,000 per election to a candidate.¹
MUR 5305
James M. Rhodes is president of Rhodes Design and Development Corporation (RDDC), owns Bravo, Inc., and has substantial equity interest in Rhodes Ranch General Partnership. In 2002, Mr. Rhodes asked two RDDC employees, James A. Bevan, chief financial officer, and Nadine Giudicessi, corporate controller, to make contributions to the Dario Herrera and Harry Reid campaigns and to ask management-level staff at all three companies to contribute as well. Mr. Rhodes specified how much the employees should contribute and stated that everyone who gave would be reimbursed for their contribution. Mr. Bevan and Ms. Giudicessi asked 12 employees and two spouses for contributions for the Herrera Committee; they asked three employees for contributions to the Reid Committee.
Mr. Rhodes and the employees’ contributions to the Herrera Committee totaled $27,000. The contributions to the Reid Committee totaled $10,000. Mr. Rhodes used funds from RDDC, Bravo and Rhodes Ranch corporate bank accounts to reimburse these contributions. RDDC, Bravo and Rhodes Ranch reimbursed the employees with cash. This use of corporate and partnership funds to reimburse donors resulted not only in prohibited contributions in the names of others, but also prohibited corporate contributions and excessive contributions.
Conciliation agreements
Mr. Rhodes, RDDC, Bravo and Rhodes Ranch are jointly responsible for a $148,000 civil penalty for corporate and excessive contributions in the names of others. Mr. Bevan and Ms. Giudicessi agreed to pay $5,500 each in civil penalties for assisting Mr. Rhodes and allowing their names to be used to make a contribution in the name of another.
MUR 5398
LifeCare Holdings, Inc. (LifeCare) and, LifeCare Management Services, LLC (LMS) operate a nationwide chain of hospitals. David LeBlanc was president and CEO of LifeCare/LMS and Donald Boucher was LMS’s director/vice president for government relations. The companies terminated Mr. LeBlanc and eliminated Mr. Boucher’s position in 2003 during internal investigations which led to the voluntary disclosure of violations of the Act. From 1997 to 2002, Mr. LeBlanc and Mr. Boucher made contributions in their own names in the names of their wives to many various federal political committees. The companies reimbursed approximately $50,000 in these contributions with corporate funds through the receipt of through bonuses, salary increases and expense reimbursements from the companies. Mr. LeBlanc authorized these reimbursements.
Conciliation agreements
Mr. LeBlanc and Mr. Boucher both signed conciliation agreements in which they admitted to knowingly and willfully violating the Act. Mr. LeBlanc agreed to pay a $100,000 civil penalty and Mr. Boucher agreed to pay a $50,000 penalty. Mr. LeBlanc and Mr. Boucher also have entered criminal plea agreements with the Department of Justice in connection with their conduct.
Due to the cooperation of LifeCare and LMS, the FEC made no finding of knowing and willful violations against the companies; the Commission has also determined to take no further action against any current life Care Employee in connection with this matter. LifeCare and LMS agreed to pay a $50,000 civil penalty, strengthen corporate policies to address more directly and fully the illegality of reimbursing political contributions and conduct an employee-training program to promote compliance. The companies’ civil penalty reflects a reduction from the penalty the Commission would have sought if the violations had not been voluntarily disclosed.
¹ Today, the limit for partnership and individual contributions to candidate committees is $2,100 per election. Partnership contributions are dually attributed to the partnership and to the individual partners. Individuals have a biennial limit of $101,400 on overall contributions.