U.S. District Judge Concludes Ban on Corporate Contributions to Federal Campaigns Unconstitutional

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U.S. District Court Judge James C. Cacheris ruled last week on a motion to dismiss certain counts of an indictment charging an alleged scheme to make illegal contributions to a 2006 Senate campaign and a 2008 Presidential campaign. U.S. v. Danielcyzk, (11 Cr 85 (JCC), May 26, 2011). While rejecting most of the defendants’ arguments, Judge Cacheris granted the defendants’ motion with regard to Count Four of the indictment charging the defendants with illegally directing corporate money to the 2008 Presidential campaign. The defendants argued that under their interpretation of the Supreme Court’s decision in Citizens United v. FEC, the conduct alleged in Count 4 of the indictment was protected speech under the First Amendment.

In Citizens United, the Supreme Court concluded that corporations cannot be precluded from making the types of expenditures for electioneering communications which individuals can make (such as TV commercials directly advocating for or against a particular candidate). Citizens United held that, because these types of expenditures do not trigger the government’s interest in preventing corruption or the appearance of corruption, and because corporation’s are entitled to the same First Amendment protections as individuals, these types of expenditures are permitted.

Judge Cacheris reasoned that since Citizens United held that there is no distinction between an individual and a corporation with respect to free speech, “if an individual can make direct contributions within FECA’s limits, a corporation cannot be banned from doing the same thing.” As a result, Judge Cacheris ruled that the statutory ban on direct corporate contributions to federal campaigns is unconstitutional, and dismissed the count of the indictment charging the defendants with directing contributions of corporate money to the 2008 Presidential campaign.

Since an order dismissing a count of an indictment under these circumstances is appealable by the government, it is likely that this issue will be addressed by the Fourth Circuit Court of Appeals. As we head into a presidential election cycle this decision and any following appeals will be important elements of campaign finance compliance.

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