Is Hush Money Really a Campaign Expense? The John Edwards Example.

Sara Mase, Staff Writer

Political scandal has long been the fodder for juicy media stories.  In just the last several decades there have been numerous examples of poorly behaving public officials – but the most recent is John Edwards.  After losing the vice-presidency in 2004, losing the presidential race in 2008, and finding out that his wife has cancer you wouldn’t think that life could get much worse for him.[1]  Enter, Rielle Hunter, a videographer during his 2008 presidential bid.[2]  In July 2008, Edwards admitted to having an extramarital affair with her, that ended in 2006, but that appears to only be the tip of the iceberg.[3]  Earlier this year, on May 3, 2009, Edwards admitted “that federal investigators [were] looking into the handling of” his campaign finances during his 2008 run for the presidential nomination.[4]

 Specifically, investigators are looking into money and gifts, including a BMW, that were paid to Ms. Hunter during the campaign.[5]  These included:

 Benefits Ms. Hunter received from the two Edwards supporters, Fred Baron, a wealthy trial lawyer from Dallas who has since died, and Rachel Mellon, known as Bunny, a 99-year-old heiress to the Mellon fortune.  Before his death, Mr. Baron said in a statement that he paid Ms. Hunter and helped move her and [an aide] to California and other places on his own initiative, without informing Mr. Edwards.  Mr. Edwards has asserted that he knew nothing of the benefits provided to Ms. Hunter by Mr. Baron or Mrs. Mellon.[6]

 In addition, investigators are also “examining some $114,000 paid by the Edwards campaign to Ms. Hunter for a series of short campaign videos she produced.  About $14,000 of that money was paid to her well after the videos were produced, some through transfers from accounts and listed as for furniture purchases.”[7]  Despite the investigation, “Edwards has maintained that there was no impropriety in campaign payments for Hunter’s work.”[8]

 The details of the transaction have not been made readily available to the public.  “The federal grand jury meets in secret.  Its discussions are confidential.  The jurors have the power to bring criminal charges but can also decline to pursue a matter brought before them by prosecutors.”[9]  And the results of their deliberation may not be seen for while since, “[t]he investigation will require grand jurors to sift through millions of dollars in donations gathered over several years for Edwards’ presidential run.”[10]  However, “[a]ccording to people familiar with the grand jury investigation, prosecutors are considering a complicated and novel legal issue: whether payments to a candidate’s mistress to ensure her silence (and thus maintain the candidate’s viability) should be considered campaign donations and thus whether they should be reported.”[11]  More specifically, “whether Edwards should have reported the money and gifts his campaign allegedly used to silence his mistress.”[12]

 Due to the novelty of the arguments and the dearth of precedent in the courts, prosecutors may be facing an uphill battle.  Violations of campaign law, in and of themselves, are typically punished by fines from the Federal election commission.[13]  However, should the prosecutors be able to show evidence of willful deception, they may be able to institute to criminal charges.[14]  The real challenge is that campaign finance “law probably doesn’t anticipate payments to a mistress during as campaign.”[15]

 The Federal Election Campaign Act, enacted by the powers of Congress to regulate campaign financing, are codified under Title Two, Chapter 14 of the United States Code.[16]  The statute requires campaigns to report both receipts and disbursals of money.[17]  The pertinent portions of the statute here revolve around reporting campaign expenses. The Code includes regulations for (1) who reports, (2) when they must report, and (3) how campaign contributions must be reported.[18]  Violations of these provisions are also outlined in the statute.[19] 

 Under the Code, a campaign contribution includes:

 Any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the   purpose of influencing any election for Federal office; or [] the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose.[20]

 In addition, while the statute actually lists those donations not considered contributions,[21] nowhere does it mention “hush money”.  However, it is not a stretch to consider such payments as a means of “influencing” an election.  Is it not likely that a candidate will lose votes when potential constituents discover he has been having an extra-marital affair?

Fortunately, the Supreme Court has supplied further definition of what constitutes “for the purpose of influencing” an election and therefore should be included in the reporting.[22]  The Court has noted that expenditures in excess of $50, made by others on the candidate’s behalf should be included if they “were intentionally facilitated by, solicited by, or approved by the candidate’s campaign.”[23]  Further, the court found contributions to include “contributions made directly or indirectly to a candidate, political party, or campaign committee, and contributions made to other organizations or individuals but earmarked for political purposes, as well as all expenditures placed in cooperation with or with the consent of a candidate, his agents, or an authorized committee of the candidate.”[24] 

The Supreme Court has continually supported the need for complete and accurate reporting, stating that a “sufficient relationship to the substantial governmental interest of increasing information relative to financial support of candidates” validates the actions required under the statute.[25]  Most important, however, the court has held that “the purpose of Congress in enacting the legislation was to promote full disclosure of campaign-oriented spending to insure both the reality and the appearance of the purity and openness of the federal election process” and, further, that “its task was to construe ‘for the purpose of . . . influencing,’ the definitions of ‘contributions’ and ‘expenditures,’ in a manner that precisely furthered this goal.”[26]

In the Edwards case, the real issue is whether the payments were reported properly.  Under the statute, violations can result in either civil or criminal penalties.  However, criminal sanctions can only be invoked when violations were “knowing and willful.”[27]  Factors to be considered in such a case include “the amount of the violation involved, the existence or previous violations by the person, and such other factors . . . [deemed] . . . appropriate.”[28]  The amount involved in this case is well over the $25,000 threshold that could lead to a fine as well as a five year prison sentence.[29]

Until more detail is provided as to what actually occurred, it is difficult to speculate as to how the grand jury will decide to proceed in the Edwards case.  The payments under examination certainly constitute enough money to warrant investigation, and even criminal prosecution if they were made in intentional violation of the election statutes.  Without doubt, however, the prosecutors will have their work cut out for them in presenting this novel issue to the court.

 Edited by Shane Egan


[1] Neil A. Lewis, For Edwards, Drama Builds Toward a Denouement, N.Y. Times, Sept. 19, 2009, available at http://www.nytimes.com/2009/09/20/us/politics/20edwards.html?pagewanted=1&_r=2&ref=us.

[2] Sammy Rose Saltzman, 48 Hours, John Edwards Faces Grand Jury and Former Aide Over Love Affair Lies, CBS News, Sept. 21, 2009, available at http://www.cbsnews.com/blogs/2009/09/21/crimesider/entry5327279.shtml.

[3] Lewis, supra note 1; Saltzman, supra note 2.

[4]Mark Silva, Edwards Acknowledges Probe of Funds, Chicago Tribune, May 2, 2009, available at http://www.swamppolitics.com/news/politics/blog/2009/05/edwards_acknowledges_probe_of.html

[5] Lewis, supra note 1; Saltzman, supra note 2.

[6] Lewis, supra note 1.

[7] Lewis, supra note 1; see Saltzman, supra note 2 (stating that in 2006 “Edwards’ political action committee paid Hunter’s video production firm $100,000 for work… and paid another $14,086 on April 1, 2007. . . The same day, the Edwards presidential campaign had injected $14,034.61 into the PAC for a “furniture purchase,” according to federal election records.”).

[8] Mark Silva, John Edwards’ Funds: Grand Jury Eye, Chicago Tribune, Aug. 6, 2009, available at http://www.swamppolitics.com/news/politics/blog/2009/08/john_edwards_funds_grand_jury.html.

[9] Id.

[10] Id.

[11] Lewis, supra note 1.

[12] Saltzman, supra note 2.

[13] Lewis, supra note 1.

[14] Id.

[15] Id.

[16] 2 U.S.C. § 431 et. seq. (2002).

[17] § 434 et. seq.

[18] § 434.

[19] § 437g.

[20] § 431(8)(A).

[21] § 431(8)(B).

[22] See e.g., Buckley v. Valeo, 424 U.S. 1, 23 (1976).

[23] Michael A. Rosenhouse, Annotation, Validity, Construction, and Application of Campaign Finance Laws – Supreme Court Cases, 19 A.L.R. Fed.2d 1, § 23 (2007).

[24] Id. (citing Buckley v. Valeo, 424 U.S. 1 (1976)).

[25] Id. (citing Buckley v. Valeo, 424 U.S. 1 (1976)).

[26] Id. at § 75 Contributions to Influence Campaigns.

[27] 2 U.S.C. § 437g(a)(5)(B) (2002).

[28] § 437g(a)(4)(C)(i)(II).

[29] § 437g(d)(1).

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