O'Donnell Illegally Used Campaign Money for Rent, Court Rules

Money & Politics Report provides comprehensive behind-the-scenes coverage of campaign finance, lobbying, and government ethics issues at the federal, state, and local levels.

By Kenneth P. Doyle

Sept. 22 — Former Republican Senate candidate Christine O'Donnell illegally used campaign funds to pay her rent and utilities in 2010 and 2011, a federal court in Wilmington, Del., ruled ( Federal Election Commission v. O'Donnell, D. Del., No. 15-17, memorandum opinion 9/21/16 ).

The Sept. 21 decision by Judge Leonard Stark of the U.S. District Court for District of Delaware came in a long-running civil enforcement lawsuit against O'Donnell and her Senate campaign committee. The enforcement case was filed by the Federal Election Commission, which has pursued a number of personal-use cases in recent years.

In 2010, O'Donnell, a conservative activist who identified with the Tea Party wing of the GOP, defeated former Rep. Mike Castle (R-Del.), a veteran lawmaker, in a Republican Senate primary. O'Donnell lost the general election that year to Sen. Chris Coons (D-Del.).

The judge rejected an argument by lawyers for O'Donnell that legal restrictions on personal use of campaign funds are unconstitutional because campaign money is equivalent to free speech. He said O'Donnell's lawyers failed to explain how the long-standing personal-use prohibition in the Federal Election Campaign Act “restricts or limits political speech.”

Rent Money Not Speech

The judge said in a 28-page ruling on summary judgment motions that O'Donnell's lawyers “have not shown how Defendants' use of campaign funds to pay O'Donnell's rent and utility obligations has expressive value. O'Donnell, like any other person, needed to live somewhere, regardless of whether she was running for federal office, so a payment for her living space was payment for a personal expense, not a payment to facilitate political expression.”

The judge didn't rule immediately on the penalty for O'Donnell and her campaign. He noted that the FEC had asked for a $25,000 fine and disgorgement of $5,000 to the U.S. Treasury but said he would take more time to determine the proper penalty.

The FEC declined to comment on the court ruling and a lawyer for O'Donnell did not respond immediately to a request for comment.

The liberal watchdog group Citizens for Responsibility and Ethics in Washington (CREW) filed the original FEC enforcement complaint against O'Donnell. CREW Executive Director Noah Bookbinder said in a statement e-mailed to BNA that the organization was pleased by the court ruling.

“It is clearly illegal for a candidate to use campaign funds to pay for personal rent and utilities,” Bookbinder said. “We are glad that our complaint in this case led the Federal Election Commission to take action to enforce the law and ultimately to prevail in court. We hope the FEC will continue to aggressively enforce the law when candidates convert campaign funds for personal use.”

In its civil enforcement lawsuit against O'Donnell filed last year, the FEC alleged that she illegally used at least $20,000 in campaign funds for her personal expenses. O'Donnell used money from her 2010 Senate campaign to pay rent and utilities for a Greenville, Del., townhouse where she lived, the FEC charged.

O'Donnell said that her campaign committee, Friends of Christine O'Donnell, rented the townhouse as its headquarters and that she reimbursed the campaign for part of the rent because she lived in the townhouse. The candidate's attorneys suggested the arrangement was legal under FEC rules, but they also raised a broader argument that the rules against a candidate's personal use of campaign money violate the First Amendment.

Judge Stark's opinion said O'Donnell made some payments to her campaign committee as reimbursement for rent costs, but he said the amount she paid was far below the actual rent paid and utility costs paid by the campaign. He also rejected their constitutional arguments.

“Defendants … fail to identify even one fact pattern in which a prohibited expense would interfere with political speech,” the judge said.

Other Personal-Use Cases

Despite frequent deadlocks between Democratic and Republican commissioners on other enforcement matters, the FEC has acted on a number of cases in recent years involving charges that a congressional campaign violated restrictions on personal use of campaign funds.

In addition to the O'Donnell case, court documents showed the commissioners last year voted unanimously to file a civil enforcement lawsuit against Edward Lynch, a Republican who ran unsuccessfully in 2010 for a U.S. House seat from Florida. The suit filed in the U.S. District Court for the Southern District of Florida charged that Lynch spent as much as $53,500 in campaign funds for a variety of prohibited personal items, including gym membership dues, payments on a personal loan, personal automobile expenses, and retail purchases.

The agency also recently prevailed in a federal appeals court ruling involving charges of illegal personal use of campaign funds by former Sen. Larry Craig (R-Idaho). The court ruled Craig had to pay $242,535 for using campaign funds to pay legal expenses in a scandal that began with his 2007 arrest for disorderly conduct in a Minneapolis airport men's room (4209 Money & Politics Report, 3/7/16).

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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