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The Hottest Tool in Campaign Finance Law Enforcement Today Is More Than 100 Years Old

As with Michael Cohen, prosecutors involved in Paul Manafort’s plea deal could again deploy the 1907 Tillman Act, which bans direct contributions from corporations to campaigns

September 18, 2018

The hottest devel­op­ment in campaign finance enforce­ment these days may be the revival of a law that is more than 110 years old. 

It snared former Trump personal lawyer Michael Cohen, and now, with Paul Mana­fort cooper­at­ing with Special Coun­sel Robert Mueller, the Till­man Act could pose prob­lems for the seem­ingly thin line between Donald Trump’s numer­ous busi­ness interests and his campaign. 

Passed in 1907 and named for South Caro­lina Senator Benjamin Till­man, a white suprem­acist Demo­crat, the Till­man Act banned corpor­ate contri­bu­tions to campaigns. As campaign finance regu­la­tion has evolved, the Till­man Act is one of the few remain­ing barri­ers to corpor­ate and union influ­ence in polit­ics. The Act bans direct contri­bu­tions from a corpor­a­tion to candid­ates. 

This hurdle can be easily surmoun­ted, however. All a corpor­a­tion has to do is form its own polit­ical action commit­tee or contrib­ute to one formed by a trade asso­ci­ation, such as AMPAC, “the bipar­tisan polit­ical action commit­tee of the Amer­ican Medical Asso­ci­ation.” 

Defense contractor Northrup Grum­man is a good example of a corpor­ate PAC. About 85 percent of the company’s $25.8 billion in sales last year came from the U.S. govern­ment, so it’s not surpris­ing they have a keen interest in who’s in Congress. So far this elec­tion cycle, the PAC has already spent more than it did on the entire 2016 race, $4.1 million vs. $3.8 million.

And for those who expect the Federal Elec­tion Commis­sion, instead of prosec­utors, to police campaigns, think again. The moribund agency has prac­tic­ally aban­doned enforce­ment. A dozen years ago, the FEC issued $5.9 million in fines. By the 2016 cycle, that number had fallen to a mere $336,000 when $6.4 billion was spent on campaigns. 

Just how lax is the enforce­ment? Let’s put it this way: Your life­time chances of being struck by light­ning are far higher (.03 percent) than a dollar spent on a campaign result­ing in a fine (.006 percent).

Of course, this bleak state of affairs requires a massive over­haul. Until that happens, the Till­man Act is one of the few tools left in campaign law enforce­ment. The Act had a brief renais­sance during the Water­gate era when the iras­cible George Stein­bren­ner, better known as the owner of the New York Yankees, pleaded guilty to campaign finance viol­a­tions for his role in a scheme to funnel $100,000 (worth about $620,000 today) from his Amer­ican Ship Build­ing Company to Richard Nixon’s reelec­tion campaign. (Pres­id­ent Reagan later pardoned Stein­bren­ner for these crimes.)

The Till­man Act reappeared last month when Cohen pleaded guilty to eight crim­inal counts, includ­ing two campaign-finance law viol­a­tions. One of those involved the Till­man Act. Cohen admit­ted he “will­fully caus[ed] an unlaw­ful corpor­ate contri­bu­tion” of $150,000 from the National Enquirer’s publisher to pay for former Play­boy model Karen McDou­gal’s story about her alleged affair with Trump. Cohen poin­ted a finger directly at the pres­id­ent when he said under oath that the payment had been arranged at the direc­tion of “a candid­ate for federal office” who Cohen’s lawyer said was Trump.  

Just 10 days later, on the last day of August, former Kentucky Repres­ent­at­ive Gerald Lunder­gan, who also once chaired the state Demo­cratic party, and Demo­cratic polit­ical consult­ant Dale Emmons were indicted for viol­at­ing the Till­man Act by making illegal corpor­ate contri­bu­tions in the state’s 2014 U.S. Senate race. Lunder­gan’s daugh­ter, Alison Lunder­gan Grimes, who is Kentuck­y’s Secret­ary of State, made an unsuc­cess­ful bid to unseat GOP incum­bent Senator Mitch McCon­nell. 

Prosec­utors say the total amount of money involved was about $194,000, with Lunder­gan’s company pick­ing up some campaign expenses and paying Emmon­s’s consultancy, about $120,000. And Emmons allegedly spent about $39,000 to pay for the campaign to hire a staffer as well as other expenses. There are no alleg­a­tions that Lunder­gan’s daugh­ter knew about the payments. Both men pleaded not guilty at their first court appear­ance last week. 

When it comes to Trump, it’s possible we may not have heard the last of the Till­man Act. Before Mana­fort agreed to cooper­ate, Bloomberg repor­ted that Manhat­tan federal prosec­utors were “invest­ig­at­ing whether anyone in the Trump organ­iz­a­tion viol­ated campaign-finance laws.” Noting Cohen’s guilty plea, the story added, “Whether others in Trump’s orbit were compli­cit — steer­ing money to bene­fit his campaign without making proper disclos­ures or by exceed­ing federal limits — is not yet clear.”

During the campaign, I high­lighted that there was a heavy money flow from the Trump campaign to the Trump organ­iz­a­tion. That’s legal as long as the campaign paid fair market prices. What is unknown is whether money flowed in the other direc­tion — from the Trump organ­iz­a­tion to the campaign, a possible viol­a­tion of the Till­man Act.

Trump’s reac­tion to Cohen’s admis­sion of campaign misdeeds assumes more reson­ance in light of Mana­fort’s deal. “Michael Cohen plead [sic] guilty to two counts of campaign finance viol­a­tions that are not a crime,” the pres­id­ent tweeted moments after his former “fixer’s” court confes­sion. One need not be Eliot Ness to wonder whether Trump organ­iz­a­tion exec­ut­ives — which include his sons — viol­ated the Till­man Act.

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center for Justice.

(Image: erhui1979/Getty)