Ex-Senate Candidate Offers $10,000 Fine to Settle FEC Case

By Kenneth P. Doyle

Sept. 30 — Lawyers for Christine O'Donnell (R), a former U.S. Senate candidate from Delaware, said she and her campaign would pay a $10,000 fine to settle an FEC enforcement case, following a judge's ruling that she illegally used campaign funds to pay her rent ( FEC v. O'Donnell, D. Del., No. 15-17, joint status report 9/28/16 ).

A court filing Sept. 28 said Federal Election Commission attorneys had agreed to bring the settlement offer to the FEC commissioners for consideration.

The “joint status report,” filed in the U.S. District Court for the District of Delaware, said O'Donnell and her campaign committee, Friends of Christine O’Donnell, offered to pay $5,000 each within 18 months.

“Defendants are hopeful negotiations with the FEC can bring this matter to a close as quickly and efficiently as possible,” the status report said. “If the parties are unable to resolve the matter, Ms. O’Donnell and the Friends of Christine O’Donnell Committee will bring the remaining issues in the case to trial.”

FEC attorneys said the commission “is open to settlement negotiations,” according to the court filing.

The report was filed by attorneys from the FEC's Office of General Counsel and defense lawyers for O'Donnell, Chris Gober and Steve Hoersting of the Austin, Texas, law firm Gober Hilgers.

Judge Called for O'Donnell Testimony

The FEC had sought a $25,000 fine from O'Donnell and her campaign for illegal personal use of campaign funds. Judge Leonard Stark ruled on summary judgment motions that O'Donnell violated the personal use law but said further proceedings were needed to establish the penalty for this violation (See previous story, 09/23/16).

The judge indicated he wanted to have testimony from O'Donnell to determine if she acted in bad faith by claiming she was told by an FEC staffer in a phone conversation that her arrangements with her campaign committee did not violate the law. The FEC maintained that no such phone conversation occurred.

The Sept. 28 joint status report was the latest development in a long-running civil enforcement lawsuit against O'Donnell and her Senate campaign committee. The enforcement case was filed by the FEC, which has pursued a number of cases in recent years alleging illegal personal use of campaign funds.

Tea Party Favorite

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 the Senate primary. O'Donnell lost the general election that year to Sen. Chris Coons (D).

Stark said in a Sept. 21 ruling that O'Donnell illegally used campaign funds to pay her rent and utilities in 2010 and 2011. The judge rejected an argument by O'Donnell's lawyers that legal restrictions on personal use of campaign funds are unconstitutional because campaign money is equivalent to free speech.

The liberal watchdog group Citizens for Responsibility and Ethics in Washington (CREW) filed the original FEC enforcement complaint against O'Donnell. After an investigation, the FEC filed a civil enforcement lawsuit against O'Donnell last year, alleging 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.

FEC Settles With McConnell Embezzler

FEC enforcement lawsuits are rare, as most agency enforcement matters are settled or dismissed before going to court.

In a separate enforcement matter announced Sept. 30, the FEC said it settled a case against Samuel K. Pate Jr., a campaign vendor who pleaded guilty last year to embezzling more than $1 million from the campaign of Senate Majority Leader Mitch McConnell (R-Ky.) and others. The FEC civil settlement of Matter Under Review (MUR) 6980 followed a criminal case against Pate, which was prosecuted by the Justice Department in federal court in Kentucky.

The FEC settlement noted that Pate took money from three federal political committees—the campaign committees of McConnell and of Sen. David Vitter (R-La.), and a political action committee called the House Conservatives Fund. He took a total of nearly $600,000 from these organizations, along with money embezzled from other groups not registered with the FEC.

A five-page conciliation agreement between the FEC and Pate said that he “routinely misappropriated his clients' funds” and “used the stolen and misappropriated funds” to his own benefit. The agreement said the commission would not seek a fine in the case because Pate's financial hardship prevents him from paying anything. The settlement noted that Pate pleaded guilty in August 2015 to mail fraud and was sentenced to 24 months in prison and ordered to pay more that $1.1 million in restitution along with a $75,000 fine.

Pate is currently serving his prison sentence, the settlement noted.

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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