Breaking News

Japan Industrial Production Falls 3.3% in June, More Than Estimated
Tweet TWEET

Clinton Straw-Donor Plotter Sentenced to 28 Months

Virginia businessman William Danielczyk was sentenced to two years and four months in prison for illegally reimbursing donors to Hillary Clinton’s campaigns in a case that challenged the ban on direct corporate contributions to candidates.

Danielczyk’s associate in the reimbursement scheme, Eugene Biagi, 78, was sentenced to probation because of his age and smaller role in the crime. Danielczyk, 51, was also fined $50,000 today by U.S. District Judge James Cacheris at a hearing in federal court in Alexandria, Virginia. Danielczyk faced as long as five years in prison.

Danielczyk and Biagi pleaded guilty on Feb. 26 to using funds belonging to Galen Capital Corp., a banking company based in McLean, Virginia, to reimburse straw donors who gave $186,600 to Clinton’s Senate and presidential campaign committees. Danielczyk was Galen’s chairman and chief executive officer and Biagi was its treasurer.

“This sentence promotes respect for the law” while avoiding “unwarranted disparities” with other campaign finance prosecutions, Cacheris said.

The case attracted national attention when Cacheris threw out one of the charges against the men, saying the U.S. Supreme Court’s ruling in Citizens United, which gave corporations the same rights as people to spend money independently to support candidates, meant they also should be able to make direct campaign donations.

Decision Reversed

The U.S. Court of Appeals in Richmond, Virginia, reversed Cacheris’s decision, upholding the century-old ban on direct corporate contributions to campaigns. After the Supreme Court declined to hear their appeal, Danielczyk and Biagi pleaded guilty.

The pleas cover illegal contributions made to Clinton’s 2008 presidential campaign and her 2006 Senate bid and involved at least 35 straw donors. Clinton, who this year stepped down as the U.S. secretary of state wasn’t implicated in the scheme.

Danielczyk hosted fundraisers for Clinton, a Democrat, and “committed to reimbursing his own employees as well as many non-employees if they would contribute to the campaign,” according to the prosecution’s sentencing memorandum.

Biagi “personally authorized and used corporate funds to reimburse the straw contributors,” prosecutors said.

A five-year sentence was warranted for Danielczyk because he tried to cover up his actions and “well-heeled individuals with access to vast financial resources are unlikely to be deterred” from conduct like his if the only consequence is a fine, according to prosecutors.

Civil Settlement

Danielczyk had sought probation, arguing the government’s proposed sentence “lacks any sense of proportionality” to similar campaign-finance offenses. He’s also pursuing a civil settlement with the Federal Election Commission for campaign-finance violations, according to documents in the criminal case.

Prosecutors said that because of Biagi’s “advanced age and physical infirmities” probation would be enough.

Danielczyk’s assistant, April Spittle, was fined $5,000 in April on a misdemeanor count of assisting in the reimbursement scheme.

Philip Layton, Galen’s information-technology officer, was sentenced to 60 days in jail and fined $3,000 on a felony count of aiding a scheme to obstruct justice in connection with the cover-up of the straw-donor plan.

The case is U.S. v. Danielczyk, 11-cr-00085, U.S. District Court, Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.