Clinton Backers Plead Guilty to Campaign Funds Violation

Two contributors to the presidential primary campaign of Hillary Clinton pleaded guilty to illegally reimbursing straw donors in a case that tested a century-old ban on direct corporate giving to political candidates.

William Danielczyk, 51, and Eugene Biagi, 78, admitted yesterday in federal court in Alexandria, Virginia, that they improperly reimbursed donors who gave $186,600 to Clinton’s Senate and presidential campaign committees from corporate funds, U.S. Attorney Neil MacBride said.

“Direct contribution limits for corporations provide an important check in the integrity of our electoral process, and yesterday’s conviction helps ensure that those who illegally go beyond those limits are held accountable,” MacBride said in a statement.

The guilty pleas came a day after the U.S. Supreme Court declined to hear an appeal by Danielczyk and Biagi, who argued that their indictment violated the Constitution’s free speech guarantee as well as a 2010 high court decision allowing corporations to spend unlimited sums on elections.

A federal trial judge threw out one of the seven charges originally lodged against the two men, saying that the Supreme Court’s 2010 Citizens United ruling meant that companies can make campaign donations directly to candidates as long as they comply with general legal limits.

A federal appeals court in Richmond, Virginia, disagreed, saying the majority in the Citizens United case explicitly declined to allow corporate contributions.

Corporate Donations

In declining yesterday to take the Danielczyk case, the Supreme Court turned down the chance to expand its ruling in Citizens United and permit direct corporate donations to political candidates.

Danielczyk and Biagi were accused of reimbursing the Clinton donors from funds of McLean, Virginia-based Galen Capital Corp., where Danielczyk was the chairman and Biagi the secretary. Biagi admitted he disguised the nature of the reimbursements by writing “consulting fees” on the checks, according to the statement.

The guilty pleas cover illegal contributions made to Clinton’s 2008 presidential campaign and her 2006 Senate bid.

The charge carries a maximum penalty of five years in prison when they’re scheduled for sentencing on May 17.

The case is U.S. v. Danielczyk, 1:11-cr-00085, U.S. District Court, Eastern District of Virginia (Alexandria).

Before it's here, it's on the Bloomberg Terminal.