Law & the Courts

Donald Trump’s Hush Money Did Not Violate Campaign-Finance Law

Republican presidential nominee Donald Trump speaks at a campaign event in Grand Rapids, Mich., November 8, 2016. (Rebecca Cook/Reuters)
Precedents are inconclusive at best, and FEC regulations say otherwise.

In response to my recent column at National (and, in a sense, to earlier columns in the Washington Post and the Wall Street Journal), David French has written a piece arguing that President Trump’s payments to women alleging prior past affairs violated the Federal Election Campaign Act. The payments, and in particular the way they were funded and reported, are, he argues, “against the plain language and clear intent of applicable law.” I don’t know David, but I greatly admire his biography, his writing, and his reputation for integrity. I agree with David that the Cohen plea is a serious threat to Trump. The difference between us is that David seems to think that’s based on a correct interpretation of the law, and I think the U.S. Attorney is applying, and the courts are accepting, an incorrect interpretation of the law. That interpretation, I fear, will open a door to other breeds of corruption when applied outside of this case.

If you haven’t followed this debate, it’s probably best to go back and read my and David’s original columns in full. But in a nutshell, what David and the U.S. Attorney for the Southern District of New York have argued is that “hush money” payments can be regulated as campaign expenditures if “one of the reasons the payment is made is to influence the election.” (Internal quote omitted.) What I have argued is that not everything that is intended to influence an election is a campaign expenditure — that would open a loophole that would allow donors to ply candidates with funds for expensive clothing (have to look good on the campaign trail), lavish vacations (need to relax before that big debate), luxury vehicles (need a way to get to the campaign office), and more. Supporting my view is the statute’s requirement that campaign expenditures cannot be converted to personal use, and FEC regulations that define “personal use” to include obligations that exist “irrespective of” the campaign.

In response to the core of my argument, David says, “the best available evidence indicates that Trump’s commitments to Stormy Daniels didn’t exist ‘irrespective’ of his campaign but rather because of his campaign.” (Emphasis in original.) This misses the crux of the argument I presented.

A sufficiently egotistical and ambitious politician could come up with a plausible reason to pass off virtually any personal purchase and obligation as a campaign expenditure. A candidate has no legal obligation to join a health club to lose weight, to be more generous to charities, or (in many cases) to pay disputed bills. He might pay any of those, however, to positively influence his election. We might think of it as similar to the tax code. The tax code allows one to deduct certain unreimbursed business expenses, but it does not allow one to deduct everything that might positively influence one’s standing in the office.

In order for the prohibition on personal use of campaign funds to have any force, it cannot depend on the candidate’s subjective intent to influence an election. That would give cover to exactly the sorts of corrupt transactional donations that campaign-finance law is meant to prevent. Rather, “for the purpose of influencing an election” — the statutory phrase — is more a description of things than a state of mind. At a minimum, that intent must be connected to the kinds of things candidates routinely spend money on — polling, office space, bumper stickers, broadcast ads, a media spokesperson, travel costs, staff salaries, and so on. Hush money to cover up an affair? No way.

As I discussed in the previous column — and David does not suggest why these examples are wrong or how they meaningfully differ from the Trump payments — a businessman-candidate’s intent to protect his public image before an election by settling a lawsuit or other potential legal claim, paying to have old divorce records sealed, or settling up contested debts (none of which he has a legal obligation to pay, before or after becoming a candidate) does not make these payments campaign expenditures. If it did, many more politicians than Trump would be in trouble.

Here’s another example: It has recently come to light that many members of Congress had used taxpayer funds to pay settlements in sexual-harassment suits. In response, Congress is on the verge of passing legislation prohibiting that practice, and most voters probably approve of that legislation. Members will now be on the hook personally. Or will they? For almost certainly, lawmakers have paid these settlements to keep matters quiet, and they want to keep them quiet to help their reelection. But under David’s theory, that would make the settlements payable with campaign money.

Perhaps more importantly, disconnecting the phrase “for the purpose of influencing an election” from normal political expense would mean that the FEC could, and would often feel obliged to, investigate any expenditure where a candidate might have acted — even in part, according to David’s view — by a desire to be elected. It takes little imagination to anticipate the ways this would heighten the already too-risky legal environment for people trying to run for office or improve government. It may well discourage even very good people from seeking office. It would create grounds for bureaucrats and prosecutors to investigate almost any candidate, any time, with the threat of criminal wrongdoing.

For those very reasons, the Federal Election Commission passed regulations nearly 25 years ago clarifying that campaign funds have to pay for obligations that exist only because of the campaign. If the obligation was created “irrespective of” the campaign, it’s not a campaign expenditure. In adopting that regulation, the FEC specifically rejected a test that would allow campaign funds to be used for an expense that “primarily” benefited the campaign, precisely because it wanted an objective test that didn’t give politicians wiggle room to spend campaign funds for personal benefit.

Any debt Trump owes to Daniels does not arise from his candidacy. I don’t think there’s much doubt that Daniels timed her request for money to Trump’s candidacy, when she thought Trump would be most likely to pay. And it is quite likely, to say the least, that the upcoming 2016 election influenced Trump’s decision on when and how much to pay. But as in all the examples I’ve given above, that doesn’t mean that the obligation to pay arose from Trump’s candidacy. Indeed, had Daniels thought Trump was going to win, she might have waited until after the election to make her demands. And had Trump never run, she might still have extracted a settlement at some point. The obligation was out there, irrespective of Trump’s candidacy.

David makes no real effort to respond to this argument, except to note that in the John Edwards case, a judge let the matter go to a jury on what is basically the same theory the prosecutor offers here — that it’s not the objective nature of the payments, but the subjective intent of the spender/contributor, that counts. David calls this “judicial precedent,” but it’s not precedent as lawyers typically use the term. There is no published opinion that binds even that court, let alone any other future court, or even offers persuasive authority. As David knows, judges often let cases go to juries precisely hoping for a verdict that will allow them to avoid ruling on a difficult legal issue. The flip side of the judge’s letting the case go to the jury, of course, is that the jury did not convict Edwards. David discounts this, arguing that “the Edwards prosecution failed not as a matter of law but of fact. The prosecution simply didn’t produce sufficient evidence to prove its case.” Maybe. Or maybe it did prove its case, but the jury reached the common-sense conclusion that payments to a mistress should not be not considered campaign expenses, regardless of motivation, and regardless of the judge’s instructions regarding intent. The fact is, we don’t know why the jury decided as it did. All we know is that it did not convict on the government’s theory of the case.

In short, the Edwards case is what it is — the Department of Justice decided to test-drive the same expansive theory of the law it is using now, and it failed. It got an indictment, and the trial judge let the case go to the jury. But DOJ did not get a verdict, and chose not to retry the case. I agree with David that some of those arguing that Cohen (and Trump) are innocent are putting excessive weight on the Edwards case, and for the reason David mentions — the judge did let the case go to a jury, and maybe the jury just didn’t think the evidence was there. But David seems to be guilty of the same fault, placing far too much emphasis on one trial judge’s unreported, unappealable decision to let the case go to a jury — a decision that even that judge might have reconsidered and overruled had a guilty verdict been returned.

There is, however, one other fact worth mentioning re the Edwards case: Two other former FEC commissioners, Scott Thomas and Robert Lenhard, testified that the payments did not, in their view, amount to a violation of the law. And that had also been the finding of the FEC’s career employees in the Audit Division. I should note that I don’t know what my former colleagues or staff think about the Cohen case as compared to the Edwards case, and perhaps for some reason they see it differently. But either way, perhaps the biggest lesson of the Edwards trial is that the prosecutors’ theory was a stretch — one that the FEC audit staff rejected, that the commission rejected, and on which the government was unable to convict. In sum, the case doesn’t tell us much, but what it tells us, bottom line, is not encouraging for the government.

To me, the more important precedents, as I argued in these pages, are those of the Supreme Court and lower federal appellate courts, which have consistently, for over four decades, given a narrow interpretation to the statutory phrase “for the purpose of influencing an election.” They have consistently rejected the idea that this phrase is intended to capture any intent of the actors, and instead interpreted the phrase as limited to specific types of clearly defined acts or expenditures. True, these cases, though interpreting the same statutory language, have arisen in very different circumstances, so they are not clearly controlling. But they indicate that the courts are not eager to take an expansive view of the type argued by the U.S. Attorney in the Edwards case, in the Trump/Cohen matter, and now by David French.

David sums up his dismissal of the argument that prosecutors have overreached by writing:

If you’re a campaign-finance lawyer, and a candidate asks your advice on how to buy the silence of a porn star and hide that payment entirely from the American people, your best response should be, “Have you considered not running for office?”

That’s clever, but of course, lawyers have to deal with actual actions, not hypothetical ones. If your candidate answers, “Yes, I did consider not running, but I chose to run, it’s now two weeks before the election, and I need your legal advice to comply with the law,” the lawyer looks to the law for an answer. The question is, once Trump was two weeks out from an election, what was his legal course of action?

Should he have used campaign funds to pay the settlements, and reported them to the FEC as “legal expenses,” risking prosecution for illegal personal use of campaign funds? Or should he have paid them privately, as he did, risking prosecution for failing to comply with campaign-finance laws?

A legal system that tells you that you must do A, and simultaneously that you may not do A, is not a legal system worthy of the rule of law. It is not against the law to run for office if you have had, or been accused of having, extramarital affairs. It is not against the law to try to conceal such affairs or allegations — indeed, candidates routinely conceal, or attempt to conceal, all kinds of unflattering facts and allegations about themselves.

David argues around this by claiming that “campaign-finance law is constructed from the ground up to require candidate transparency and guard against corruption.” To which I say, “Whoa.” Campaign-finance law is not an all-purpose “candidate transparency” law, whatever that would even mean. It is a statute that requires the disclosure of certain campaign contributions and expenditures, as defined by the statute and its implementing regulations. Neither the statute nor those regulations are intended to, and in fact they do not, force disclosure of all aspects of a candidate’s personal life or personal expenditures. Maybe we should have more laws requiring more disclosure — for example, requiring a candidate to reveal any medications taken, to publicly release old tax returns, or to reveal under oath any past extramarital affairs — but we don’t. The effort to say that some nebulous purpose (“transparency,” “guard[ing] against corruption”) overcomes the specific boundaries of written statutes is hardly conservative jurisprudence at its best.

David concludes his piece by noting that he thinks many of the campaign-finance laws on the books are bad policy. Yet over the last four decades, a fundamental goal of the campaign-finance “reform” community has been to define statutory terms in sweeping, vague language, such that no one can be sure when they are acting within the law and when they are not. The goal has been to make everything turn on “intent” or other vague standards, thereby allowing anything to go to a jury to determine that “intent.” In this way, speakers are easily silenced under the threat of legal fees and possible punishment.

When I first arrived at the FEC as a commissioner in the spring of 2000, the word among those appearing before the commission was, “the punishment is in the process.” The conservative goal has been to change this — to have statutes that clearly differentiate legal from illegal, with criteria that can be known in advance, and thus to encourage political participation. Since all participation in public affairs and discourse has, at some level, “the purpose of influencing an election,” we have tried, with considerable success, to demand that that vague phrase be given specific definition.

David, of all people, should understand this. No one has written more, or more eloquently, about the abuse of campaign-finance law in the infamous John Doe case from Wisconsin. There, prosecutors conducted pre-dawn raids on homes, seized personal computers, cell phones, and files, and pried deep into every corner of their targets’ private lives, all because of their participation in Wisconsin policy debates. David reported on these investigations with a proper mixture of fact and outrage. But the basis for the John Doe investigation was precisely that which David defends here — the idea that any spending coordinated with a candidate “for the purpose of influencing an election” was a campaign expenditure, subject to the state’s campaign-finance regime. The prosecutors and their apologists defended these raids as a mere necessity to gain the information needed to prove their case — that it didn’t matter how funds were spent, so long as the spending was done with the “purpose of influencing an election.” And if you don’t have tax fraud and other felonies you can use to squeeze a plea bargain out of your targets — as the federal prosecutors had in the Cohen case — how do you prove intent other than by rummaging through personal notes, memos, files, emails, and texts? The prosecution was stopped only when the Wisconsin Supreme Court stepped in and said, essentially: No. Mere purpose to influence an election is not enough. There have to be actual campaign expenditures using some more objective standard before you go off into every aspect of people’s lives looking for “purpose.” David seems to have forgotten that lesson.

There’s no general law against a president’s having a sleazy private life or trying to cover up sexual escapades, and it’s hard, in this post-Clinton era, to throw out a president on that basis alone. Voters certainly knew a lot about Trump’s private life by November 2016, and they voted for him. Yet many who did not vote for Trump believe that Trump is a uniquely bad guy who must be driven from office, with the fate of the nation literally depending on it. So the push is on to find some legal violation that can be hung on Mr. Trump. And that’s exactly when one’s commitment to the rule of law is most tested.

Bradley A. Smith is chairman of the Institute for Free Speech and the Blackmore/Nault Professor of Law at Capital University. He served on the Federal Election Commission from 2000 to 2005.


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