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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)