Apex Healthcare and Its President Agree to Pay $275,000 Civil Penalty

WASHINGTON -- The Federal Election Commission (FEC) has entered into a conciliation agreement with APEX Healthcare Inc. (APEX) of Wheaton Illinois and its President James Chao, in which the Company and Mr. Chao have agreed to pay a civil penalty of $275,000 for violations of the Federal Election Campaign Act (FECA). The Commission found reason to believe that Mr. Chao knowingly and willfully violated the act in an investigation stemming from a complaint filed by Gerald Jaecks.

      In 2003, APEX and Chao used corporate funds to reimburse $69,500 in contributions that were made in the names of others to Hynes for Senate (the committee for Daniel Hynes’ Democratic primary campaign in Illinois) and made a direct $1,500 in-kind contribution to the committee. APEX and Chao also used corporate funds to reimburse a total of $6,000 in contributions that were made in the names of others to three other federal political committees in 2002.

      The Act prohibits corporations from making contributions or expenditures from their general treasury funds in connection with any election of any candidate for federal office. The Act also prohibits any officer or director of any corporation from consenting to any expenditure or contribution by the corporation. In addition, it is unlawful for any person to make a contribution in the name of another, or for any person to knowingly permit his or her name to be used to make such a contribution.      

      In the conciliation agreement, APEX and Chao admitted to violating the Act by reimbursing contributions with corporate funds and by making an in-kind contribution with corporate funds. While the Commission found reason to believe Chao’s violations were knowing and willful, he neither admitted nor denied it in the conciliation agreement.    

     The conciliation agreement contains admissions of the violations, prohibitions on future misconduct, and a waiver of APEX’s right to refund of all impermissible contributions referenced in the agreement. The agreement also acknowledges APEX and Chao’s cooperation in connection with the Commission’s investigation of this matter.

      The Commission found no reason to believe that the recipients of the contributions were aware of the actual source of the funds.  They have been instructed to disgorge the illegal contributions to the U.S. Treasury.   The FEC also admonished Hynes for Senate for failing to report an in-kind contribution it received, along with the conduits used for the corporate contributions for knowingly allowing their names to be used as donors for the corporate reimbursements.

      This is the first conciliation agreement approved by the Commission involving knowing and willful violations of the Act committed following the passage of the Bipartisan Campaign Reform Act (BCRA) of 2002. BCRA imposed a new minimum civil penalty equal to 300% of the amount in violation and a new maximum civil penalty equal to 1000% of the amount in violation in cases where the Commission believes a knowing and willful violation has been committed. Prior to the passage of BCRA, the civil penalty for knowing and willful violations of the Act was not subject to a statutorily-mandated minimum, and the maximum civil penalty that could be sought was equal to 200% of the amount in violation.

*There are four administrative stages to the FEC enforcement process:

It requires the votes of at least four of the six Commissioners to take any action. The FEC can close a case at any point after reviewing a complaint. If a violation is found and conciliation cannot be reached, then the FEC can institute a civil court action against a respondent.

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