AO 2009-12: Candidate may use campaign funds for certain legal fees

A Senator's principal campaign committee may use campaign funds to pay legal fees relating to ethics complaints, a possible FBI investigation and lawsuits implicating the Senator, but not for allegations unrelated to his campaign or duties as a federal officeholder.

Background

Senator Norm Coleman and Coleman for Senate '08, the candidate's principal campaign committee (the Committee), seek to use campaign funds to pay legal expenses associated with two lawsuits filed in Texas and Delaware, a possible FBI investigation and two complaints filed with the Senate Select Committee on Ethics (Senate Ethics Committee). While the Senator is not named as a defendant in the lawsuits, both suits, the possible FBI probe and one of the ethics complaints involve allegations that a company employing the Senator's wife received improper payments from a corporate entity. The other ethics complaint alleges a possible violation of Senate gift rules.

In the Texas lawsuit, the Chief Executive Officer of Deep Marine Technology, Inc. (DMT) and Deep Marine Holdings, Inc. (DMH) sued the companies, their controlling shareholder Nasser Kazeminy and others for using "the companies and their assets as their own personal bank account." Among the specified misuses of corporate funds is an alleged payment of $75,000 to the Hays Companies (Hays), an insurance brokerage company that purportedly employed Senator Coleman's wife. The lawsuit alleges that payments to Hays were "for the stated purpose of trying to financially assist United States Senator Norm Coleman."

In the wake of these lawsuits, the Alliance for a Better Minnesota (ABM) posted online a letter it had sent to the FBI seeking an investigation. ABM also filed a complaint against Senator Coleman with the Senate Ethics Committee. ABM alleged that Senator Coleman may have violated Senate gift and disclosure rules and the Ethics in Government Act as a result of the alleged payments from DMT to Hays described in the complaint in the Texas lawsuit.

In a separate ethics complaint, Citizens for Responsibility and Ethics in Washington (CREW) alleged that Senator Coleman accepted free or discounted lodging for his Washington, D.C., apartment, in possible violation of Senate gift rules.

Senator Coleman continues to incur legal expenses in connection with these matters, and he and his Committee seek to use campaign funds to pay those costs.

Analysis

Under the Federal Election Campaign Act (the Act) and Commission regulations, campaign funds may be used for expenses in connection with the individual's campaign for federal office, duties as a federal officeholder and for any other lawful purpose that is not "personal use." See 2 U.S.C. §439a(a); see also 2 U.S.C. §439a(b); 11 CFR 113.2. The Commission determines, on a case-by-case basis, whether the use of campaign funds to pay legal fees and expenses constitutes personal use. See 11 CFR 113.1(g)(1)(ii)(A).

In this case, the Commission determined that the Committee may use campaign funds to pay for legal costs incurred in the following: reviewing the complaints to the Senate Ethics Committee and ABM's letter to the FBI; representing Senator Coleman in the FBI’s investigation of alleged violations of federal law or rules governing the office of a Senator or the conduct of campaigns; monitoring and representing Senator Coleman in the Texas and Delaware lawsuits; and responding to media inquiries. However, the Committee may not use campaign funds to pay legal costs incurred representing Senator Coleman in an FBI investigation of allegations unrelated to Senator Coleman's campaign or duties as a federal officeholder.

The Commission has previously concluded that efforts to respond to the Senate Ethics Committee are directly related to an individual's duties as a federal officeholder, and that legal fees and expenses incurred in responding to the Senate Ethics Committee's inquiries or investigations are ordinary and necessary expenses incurred in connection with the duties of a federal officeholder. See Advisory Opinions 2008-07, 2006-35 and 1998-01. Accordingly, the Commission determined that the Committee may use campaign funds to pay for legal counsel’s review of the Senate Ethics Committee complaints.

In past advisory opinions, the Commission has concluded that a candidate’s authorized committee may use campaign funds to pay legal fees incurred in representing a candidate or federal officeholder before a non-congressional investigation or legal proceeding when the allegations in that investigation are directly related to a candidate’s campaign activity or duties as a federal officeholder. See AOs 2006-35, 2005-11 and 1996-24. To the extent that the FBI is investigating allegations that Senator Coleman may have received unreported gifts in violation of federal law or violated campaign finance law, the allegations would not exist irrespective of Senator Coleman’s campaign or duties as a federal officeholder. Therefore, the Commission determined that the Committee may use campaign funds to pay for counsel to review ABM's letter to the FBI and to represent Senator Coleman in the FBI's investigation into allegations that the Senator violated federal law or rules governing the office of a Senator or the conduct of campaigns. The Committee, however, may not use campaign funds to pay for Senator Coleman's legal fees that stem from allegations not directly related to his campaign or duties as a holder of federal office.

Although the causes of action in the Texas and Delaware lawsuits do not, on their face, relate to Senator Coleman’s campaign or his duties as a federal officeholder, factual allegations made in the suits do. For that reason, the Committee may use campaign funds to pay for the legal fees and expenses incurred in representing Senator Coleman in these lawsuits.

The Commission has recognized that "the activities of candidates and officeholders may receive heightened scrutiny and attention in the news media." AOs 2008-07 and 1998-01. The Commission determined that a candidate or officeholder's need to respond to intense media scrutiny would not exist irrespective of the candidate’s campaign or duties as a holder of federal office. Therefore, the Committee may use campaign funds to pay Senator Coleman’s legal fees and expenses incurred in responding to the press regarding the FBI investigation, Senate Ethics Committee complaints and the Texas and Delaware lawsuits.

The Committee may also use campaign funds to pay certain miscellaneous legal expenses, including copying and phone calls, to the extent that those expenses relate to legal fees the Commission has determined may be paid with campaign funds.

AO 2009-12: Date Issued: June 26, 2009; Length: 9 pages.