More On Justice For Sale

Judge Voids Ban on Campaign Donations by Business
The New York Times by Nicholas Confessore - May 27, 2011

A federal judge in Virginia has declared unconstitutional a century-old law banning political contributions from corporations, a ruling that, if upheld, could have major implications for the rules governing campaign fund-raising and spending.  But while the ruling addressed one of the biggest issues in the ideological and partisan battle over regulating campaign donations — a question likely to be taken up at some point by the Supreme Court — the circumstances of the case left unclear how much practical and legal effect it would have.  The decision, issued Thursday by Judge James C. Cacheris of Federal District Court for the Eastern District of Virginia, did not come in one of the many legal and regulatory challenges now being mounted by proponents of loosening campaign finance restrictions. Instead, it was from the criminal trial of two Virginia businessmen accused of circumventing the law to donate tens of thousands of dollars to the Senate and presidential campaigns of Hillary Rodham Clinton.  “This was definitely something that is almost incidental in terms of the case it was decided in,” said Sean Parnell, president of the Center for Competitive Politics, a group that supports efforts to ease campaign-finance regulations.  Still, the ruling drew from and extended the reasoning in the Supreme Court’s landmark decision last year in the Citizens United case. The justices ruled in that case that the government may not ban political spending by corporations in candidate elections, but did not address the current bans on direct contributions by corporations to candidates.

In his decision, Judge Cacheris said that if corporations and people have an equivalent right to free speech under Citizens United, they also have an equivalent right to contribute to candidates, albeit within the same limits currently established by federal law.  “That logic is inescapable here,” Judge Cacheris wrote.  Federal prosecutors alleged that the two businessmen, William P. Danielczyk Jr. and Eugene R. Biagi, solicited employees of their financial firm to make campaign donations to fund-raisers hosted by Mr. Danielczyk and then reimbursed the employees with company money. Current law caps total contributions by individuals to $5,000 for each candidate in each election cycle and bans contributions from corporations and labor unions altogether.  Defense lawyers had sought to have the case dismissed, arguing that the law banning corporate contributions was itself unconstitutional in light of Citizens United. Judge Cacheris agreed.  If “corporations and human beings are entitled to equal political speech rights” under the Citizens United decision, he wrote, “corporations must also be able to contribute.”  Some election lawyers said that the decision, if upheld, could lead to the collapse of all legal limits on campaign donations, whether from corporations or individuals.  “If this case stood, it would mean the end of campaign contribution limits for everyone, because it would be so easy to get around the law through a straw or sham corporation,” said Richard L. Hasen, a law professor at the University of California, Irvine, who is helping to defend a lawsuit challenging municipal campaign laws in San Diego.  But the practical impact of the decision is unclear. Mr. Hasen and others said that Judge Cacheris’s ruling had ignored a 2003 Supreme Court decision, Federal Election Commission v. Beaumont, that upheld the ban on direct corporation contributions to federal candidates and was not specifically overturned in Citizens United.  The prosecution did not cite the Beaumont decision in its own court papers. “It’s strange that the government didn’t bring up this controlling Beaumont case in its brief and the judge didn’t bring it up,” said Mr. Hasen, who said he expected prosecutors to file a motion asking the judge to reconsider his decision.  Peter Carr, a spokesman for the United States attorney’s office for the Eastern District of Virginia, said prosecutors were reviewing Judge Cacheris’s ruling.

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The Associated Press

ALEXANDRIA, Va. — A judge has ruled that the campaign-finance law banning corporations from making contributions to federal candidates is unconstitutional, citing the Supreme Court's landmark Citizens United decision last year in his analysis.  In a ruling issued late Thursday, U.S. District Judge James Cacheris tossed out part of an indictment against two men accused of illegally reimbursing donors to Hillary Clinton's Senate and presidential campaigns.  Cacheris says that under the Citizens United decision, corporations enjoy the same rights as individuals to contribute to campaigns.  The ruling from the federal judge in Virginia is the first of its kind. The Citizens United case had applied only to corporate spending on campaigning by independent groups, like ads run by third parties to favor one side, not to direct contributions to the candidates themselves.  Cacheris noted in his ruling that only one other court has addressed the issue in the wake of Citizens United. A federal judge in Minnesota ruled the other way, allowing a state ban on corporate contributions to stand.  "(F)or better or worse, Citizens United held that there is no distinction between an individual and a corporation with respect to political speech," Cacheris wrote in his 52-page opinion. "Thus, if an individual can make direct contributions within (the law's) limits, a corporation cannot be banned from doing the same thing."  In court papers, prosecutors defending the law said overturning the ban on corporate contributions would ignore a century of legal precedent.  "Defendants would have the court throw out a century of jurisprudence upholding the ban on corporate political contributions, by equating expenditures — which the Court struck down in Citizens United — with contributions. This is, however, equating apples and oranges," prosecutor Mark Lytle wrote in his argument to keep the indictment intact.  Peter Carr, a spokesman for the U.S. Attorney in Alexandria, which is prosecuting the case against defendants William P. Danielczyk Jr. and Eugene R. Biagi, said Friday that the office is reviewing the ruling. Prosecutors have the option to appeal the ruling to the 4th U.S. Circuit Court of Appeals in Richmond.  Defense lawyers, though, said the implications of the Citizens United case are clear.  "Corporate political speech can now be regulated, only to the same extent as the speech of individuals or other speakers," Biagi's lawyer, public defender Todd Richman, wrote in court papers. "That is because Citizens United establishes that there can be no distinction between corporate and other speakers in the regulation of political speech."  Danielczyk, 49, and Biagi, 76, who live in the Washington suburb of Oakton, Va., allegedly reimbursed $30,200 to eight contributors to Clinton's 2006 Senate campaign, and reimbursed $156,400 to 35 contributors to the 2008 presidential campaign.  Cacheris, in his ruling, allowed most of the indictment against Danielczyk and Biagi to stand. If the government does not appeal Cacheris' ruling on the constitutionality of corporate contributions, the case is scheduled to go to trial in July.