On October 31, 2007, the Commission announced that Mitchell Wade and MZM, Inc. have agreed to pay a $1,000,000 civil penalty. The penalty is part of a conciliation agreement in which Mr. Wade admits to knowingly and willfully violating the Federal Election Campaign Act (the Act) by making corporate contributions and contributions in the name of another to two federal candidates. This civil penalty is the second-largest in Commission history.
The Act prohibits any person from making a contribution in the name of another and from knowingly permitting his or her name to be used to make such a contribution. 2 U.S.C. §441f. In addition, no person may knowingly help or assist any person in making a contribution in the name of another. 2 U.S.C. §441f; 11 CFR 110.4(b)(l)(iii). This prohibition also applies to any person who provides money to others to effect contributions in their names. 11 CFR 110.4(b)(2).
The Act also prohibits corporations from making contributions or expenditures from their general treasury funds in connection with any election of any candidate for federal office and prohibits any officer or director of any corporation from consenting to any contribution or expenditure by the corporation. 2 U.S.C. §441b(a).
In addition, the Act contains certain prohibitions on government contractors’ contributions to any political party, committee or candidate for public office or to any other person for any political purpose. 2 U.S.C. §441c(a)(l).
MZM Inc. (now known as True Norte, Inc.) is a corporation and a federal government contractor. At the time the violations of the Act occurred, Mr. Wade was the principal owner and Chief Executive Officer of MZM. Mr. Wade used MZM corporate funds to reimburse employees and their spouses for contributions to the campaign committees of Representatives Virgil Goode and Katherine Harris. Richard Berglund assisted in the scheme by receiving cash from Mr. Wade from which Mr. Berglund made a contribution under his and his wife’s name and then distributed the remaining cash to other employees of MZM, and in some cases their spouses, to make contributions. In total, Mr. Wade and MZM reimbursed, directly and indirectly, $78,000 in contributions to two federal candidates.
On February 24, 2006, Mr. Wade pleaded guilty to multiple felony counts, including one count of election fraud by unlawfully making campaign contributions in the name of another. On July 23, 2006, Richard Berglund pleaded guilty to a misdemeanor violation by unlawfully making contributions in the name of another.
Respondents disclosed the violations of the Act to the U.S. Department of Justice and have cooperated with the Commission in resolving this matter. Mr. Wade and MZM have also taken responsibility for the liability of the former employees of MZM and their spouses who acted as conduits for the reimbursed contributions, and the Commission will take no further action with respect to those conduits. In addition to the $1,000,000 civil penalty to be paid by Mr. Wade and MZM Inc., Mr. Berglund has agreed to pay a civil penalty of $42,000.
The Commission found no evidence that either Goode for Congress or Friends of Katherine Harris knew that the contributions were illegal, and both committees have either refunded or disgorged all MZM-related contributions.