U.S. Asks Judge to Restore Corporate Campaign Money Charge

U.S. prosecutors said a federal judge didn’t have enough information when he ruled that a century-old ban on direct corporate donations to federal candidates was unconstitutional and threw out part of an indictment against two fundraisers for Hillary Clinton’s campaigns.

Prosecutors in federal court in Alexandria, Virginia, today asked U.S. District Judge James Cacheris to reconsider his May 26 decision. The government lawyers said they failed to cite a campaign finance ruling that is critical to the case.

“We’ve raised the argument,” Assistant U.S. Attorney Mark Lytle told the judge today in court. “We just didn’t cite one precedent.”

Cacheris ruled that the Supreme Court’s Citizens United decision in 2010, which gave corporations the same rights as individuals to spend money independently to support candidates, also meant they can make direct campaign donations that comply with general legal limits. Individuals this year can give $2,500 to a candidate per election.

Assistant U.S. Attorney Richard Pilger asked Cacheris to consider the 2003 Supreme Court ruling in FEC v. Beaumont. The court upheld a ban on corporations contributing directly to candidates, Pilger said. The Citizens United case involved corporate expenditures, not contributions, he said.

“Citizens United did not overrule Beaumont,” Pilger said. “Citizens United is not about contributions. This is a contributions case.”

Presidential Campaign

The 52-page decision by Cacheris came in a case against fundraisers for Clinton’s 2008 presidential campaign who were indicted for improperly reimbursing $186,600 to donors. Cacheris threw out the charge that they illegally funneled corporate money to the campaign.

The indictment, which covers Clinton’s 2006 Senate run in addition, also charged 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. A trial is set to begin July 6, according to court papers.

Cacheris said he will issue a decision early next week on whether to reinstate the charge.

Lawyers for the two defendants argued in court that the Citizens United ruling “swept away” the earlier Beaumont decision. They also said that by not raising the Beaumont case earlier, prosecutors waived their opportunity to do it now.

“We’re back here arguing a new set of cases,” Danielczyk’s lawyer, Jeffrey Lamken of MoloLamken in Washington, told Cacheris.

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, 1:11-cr-00085, U.S. District Court, Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Phil Milford in Wilmington at pmilford@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net;

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