Ex-Aides to Ron Paul Guilty of Falsifying FEC Reports

By Kenneth P. Doyle

May 5 — Three former aides to the Ron Paul 2012 presidential campaign—including political consultant Jesse Benton, who now heads a super political action committee that backs Donald Trump—have been found guilty of conspiring to falsify campaign finance reports filed with the Federal Election Commission.

The May 5 verdict of guilty on all counts came in a long-running federal criminal case in Des Moines, Iowa. The case arose from the Republican presidential primary campaign of Paul, a former U.S. House member from Texas.

Justice Department prosecutors charged that the Paul campaign aides—but not Paul himself—violated disclosure requirements by hiding $73,000 in payments to a key Iowa lawmaker, state Sen. Kent Sorenson. The secret payments allegedly were made in return for Sorenson's endorsement of Paul before the 2012 Iowa presidential caucuses.

A first trial in the case took place last year, resulting in a mixed verdict for the Paul aides. However, several charges dismissed without prejudice before the trial were refiled and prosecutors were allowed to reopen the case last fall.

In order to hide the payments to Sorenson, prosecutors said, campaign disbursements were listed in Paul's FEC disclosure reports as going to a film production company called ICT, which then paid a company owned by Sorenson.

Sorenson pleaded guilty during the Justice Department investigation and cooperated with prosecutors.

Focus on Benton

Defendants in the case included Benton and two other Paul campaign aides—John Tate and Dimitrios Kesari. Most attention in the case has focused on Benton, who was a top aide to Ron Paul and his son Sen. Rand Paul (R-Ky.) and is married to Ron Paul's granddaughter.

According to the court docket, the jury in the U.S. District Court for the Southern District of Iowa found Benton and Tate guilty on four counts, including conspiracy, causing false records, causing false campaign contribution reports and a false statements scheme. Kesari was found guilty of three of the same counts but not causing false records.

More recently, Benton has been helping to run a super PAC called Great America PAC, which supports Republican presidential candidate Donald Trump. Trump's campaign attorney disavowed the super PAC in a March letter first reported by Bloomberg BNA (4244 Money & Politics Report, 4/25/16).

The federal trial in Des Moines lasted more than a week, but the jury returned its verdict quickly. According to court documents, the facts in the case were not in dispute, but lawyers for the campaign argued strongly that what prosecutors presented as a criminal conspiracy was just common practice in campaigns and was not illegal.

In pre-trial motions, the defense attorneys pointed to a number of rulings by the FEC, which they said showed the commission did not require the type of disclosure Justice Department prosecutors said was required in the case. The FEC rulings said that a campaign report listing particular disbursements did not have to identify who ultimately received the money, defense lawyers argued.

Judge: ‘Regulatory Minutia' Irrelevant

A pre-trial ruling by the presiding judge, U.S. District Judge John Jarvey, said the case was not about what was required by FEC rules or the details of requirements of the Federal Election Campaign Act but about whether the Paul aides intentionally falsified campaign disclosure reports.

“The mere fact that certain payment structures do not violate the FECA’s reporting requirements has no bearing on the Government’s allegations against Defendants here,” the judge said in a written ruling. The government alleged that statements made on FEC disclosure reports regarding its payments to ICT “were false,” he said.

“The Government’s theory in this case is that the payments at issue were not payments to ICT for audio/visual expenses, and instead, the payments to ICT were used to disguise the [Paul campaign's] payments to Kent Sorenson (through his company, GSI) for his endorsement of Ron Paul,” the judge continued. “The Court recognizes the difficulty of the regulatory minutia regarding campaign payments to initial and ultimate payees that has been briefed by Defendants, but also recognizes that it is not necessary to delve into these distinctions in this case.”

The judge's ruling came after federal prosecutors filed a brief discounting the legal effects of “routine partisan deadlocks” at the FEC, which is divided evenly among three commissioners recommended by Democrats and three Republicans.

The government filing, signed by Raymond Hulser, chief of the Justice Department's Public Integrity Section, and Richard Pilger, director of the department's Election Crimes Branch, sought to counter a defense filing in the case, which argued that the defendants can't be convicted of disclosure violations because of FEC rulings.

The FEC has authority for the civil enforcement of the Federal Election Campaign Act, while the Justice Department has authority for criminal cases brought under the same law. The two agencies have sometimes clashed in the past over interpretation of the law and whether Justice is bound by legal rulings established in FEC matters, especially cases resulting in deadlocked votes of the FEC commissioners.

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