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Complaint Filed with FEC Alleging Rangel Campaign Cash Irregularities

The New York congressman is being charged with illegally using money from his National Leadership PAC to fund his defense against ethics charges.

by
Patrick Richardson

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December 1, 2010 - 2:06 pm

The National Legal and Policy Center (NLPC), a non-profit watchdog group, has filed a complaint against Rep. Charles Rangel (D-NY) with the Federal Election Commission, alleging Rangel illegally used nearly $400,000 from his National Leadership PAC to pay the legal team defending him on ethics charges before the House of Representatives.

NLPC filed the complaint Monday and posted it on their website Tuesday.

Rangel was recently convicted of 11 of 13 ethics violations and is facing reprimand or censure by the full House. He retained former Clinton White House Counsel Lanny Davis to defend him. Rangel’s principal campaign committee, Rangel for Congress, paid Davis’ law firm, Onick, Herrington & Sutcliffe, $100,000.

That payment was legal, as a candidate’s principal campaign committee may pay legal expenses under certain circumstances.

However, on January 5, 2009, Rangel’s leadership PAC paid Onick, Herrington & Sutcliffe an additional $100,000 — a payment NLPC maintains is illegal.

A leadership PAC is a particular type of committee used by politicians to, among other things, funnel money to other candidates and to pay certain indirect costs of a candidate’s campaign.

In its complaint, NLPC maintains leadership PACs are specifically barred from paying legal costs for candidates because lobbyists are barred from contributing to legal defense funds.

Also in 2009, Rangel retained new counsel, the firm of Zuckerman Spaeder LLP. While in 2009 Rangel’s National Leadership PAC did not make any payments to his new firm, according to NLPC’s complaint it did pay an additional $293,000 in 2010 to the firm. In 2010, Rangel for Congress also made payments to Zuckerman Spaeder totaling some $282,000.

Tom Anderson, director of the government integrity program for NLPC, said Tuesday that the reason he believed Rangel used his National Leadership PAC to pay his legal fees was because Rangel did not want to set up a legal defense fund.

“He was urged on three separate occasions to set one up,” Anderson said. “He refused to do it.”

Anderson said he believes there’s a simple explanation for that as well.

“If you set one up you cannot take money from lobbyists,” he said. “The restrictions on a legal defense fund make it harder to raise money.”

And take money from lobbyists Rangel has.

Rangel’s National Leadership PAC took in well over $500,000 in this last election cycle after his legal troubles began.

There is only one reason, of course, for lobbyists to funnel money to politicians, and in particular to the head of the House Ways and Means Committee (which writes tax law): they’re hoping for favorable treatment.

In this case, Rangel was allegedly able to use money from those lobbyists to fund his defense.

AFLAC, for instance, gave $15,000 since Rangel’s troubles began and $51,000 since 1999. Likewise, the American Federation of State, County and Municipal Employees gave the maximum $15,000 since 2008 and has given Rangel $70,000 over the years. JPMorgan Chase, MetLife, the Service Employees International Union, and the American subsidiary of  Credit Suisse have all also given the maximum $5,000 per year since Rangel’s legal troubles began in 2008. This just scratches the tip of the iceberg of the multiple pages of donations on the FEC’s website.

Anderson said the reason for the payments from the leadership PAC is simple as well: “He started running low on cash in the campaign committee.”

“We break it down in the complaint,” Anderson said. “When he started running low on cash in his principal campaign committee you see huge sums of cash spent from the leadership PAC.”

Additionally, NLPC maintains in its complaint that the payment of Rangel’s legal fees by the National Leadership PAC amounted to an illegal campaign contribution.

The contribution limit for a multicandidate political committee to a candidate’s authorized committee is $5,000 per candidate, per election. As stated in the FEC’s Campaign Guide for Nonconnected Committees:

All contributions to federal candidates from non-connected committees during the 2007 to 2008 election cycle are subject to the following limits:

$5,000 per candidate, per election, from a non-connected committee that qualifies as a multicandidate committee. 1 10.2(b)

This contribution limit applies to in-kind as well as direct contributions. Therefore, the National Leadership PAC’s payment of $393,000 in legal fees for Rep. Rangel dramatically exceeded contribution limits mandated by 11 CFR 110.2(b).

Leadership PACs may make contributions to candidates, indeed that is one of their functions, but those PACs are subject to the same restrictions as individuals, corporations, and other PACs — $5,000 per year.

According to Anderson, the final reason Rangel paid his fees from his National Leadership PAC rather than form a legal defense fund may come down to one word: hubris.

“I think he thought with the Democrats in control of Congress this whole thing would just go away,” Anderson said.

Patrick Richardson has been a journalist for almost 15 years and an inveterate geek all his life. He blogs regularly at www.otherwheregazette.com, which aims to be like another SF magazine, just not so serious.
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