United States v. Danielczyk, No. 11-4667

Decided: June 28, 2012

The Government appealed the district court’s grant of William P. Danielczyk, Jr. and Eugene R. Biagi’s (“Appellees”) motion to dismiss count four and paragraph 10(b) of the indictment, alleging that they had conspired to, and did, facilitate direct contributions to Hillary Clinton’s 2008 presidential campaign in violation of 2 U.S.C. § 441b(a) of the Federal Election Campaign Act of 1971 (“FECA”), and 18 U.S.C. § 2.  The Fourth Circuit reversed the district court’s grant of this motion.

This case began when the Appellees were indicted on seven counts involving their scheme to make illegal campaign contributions to Clinton’s campaign.  Count four and paragraph 10(b), the counts at issue on appeal, respectively charged the Appellees with knowingly and willfully causing contributions of corporate money to a candidate for federal office, aggregating $25,000 or more, in violation of § 441b(a) and 2 U.S.C. § 437g(d)(1)(A)(i), and conspiring to do so.  The two men moved to dismiss count four, contending that § 441b(a) is unconstitutional as applied to them in light of the Supreme Court’s decision in Citizens United v. Federal Election Commission, 130 S. Ct. 876 (2010).

To begin its analysis, the Fourth Circuit noted that “Citizens United left untouched § 441b(a)’s ban on direct corporate contributions.”  In contrast, in ruling in favor of Appellees’ motion, “the district court held that § 441b(a)’s ban on direct corporate contributions as applied to Galen [the corporation that the two men served as officers of during the time of the charged conduct] is unconstitutional because it impermissibly treats corporations and individuals unequally for purposes of political speech.”  The Fourth Circuit disagreed with the district court’s reasoning on this matter and held that “§ 441b(a) is not unconstitutional as applied to the Appellees.”  The Fourth Circuit determined that the district court erred in granting the motion to dismiss.

The Fourth Circuit reasoned that a 2003 Supreme Court case, Federal Election Commission v. Beaumont, 539 U.S. 146, “makes clear that § 441b(a)’s ban on direct corporate contributions is constitutional as applied to all corporations.”  The Fourth Circuit dismissed the Appellees’ argument “that Beaumont does not govern our inquiry here because its holding was limited to nonprofit corporations.”  The Court found that “Beaumont stands for the proposition that a nonprofit corporation does not differ from a for-profit corporation for purposes of § 441b(a) because all corporations implicate the asserted government interests, and § 441b(a) is closely drawn to further those interests.”  The Court also noted “Beaumont’s extensive discussion of Congress’s legitimate interests in regulating direct contributions made by all corporations.”

In dismissing the Appellees’ next argument that Citizens United repudiated Beaumont’s reasoning, the Fourth Circuit turned to Citizens United and found that the Supreme Court “did not discuss Beaumont and explicitly declined to address the constitutionality of the ban on direct contributions.”  The Court found that the Appellees’ analysis on this matter “ignores the well-established principle that independent expenditures and direct contributions are subject to different standards of scrutiny and supported by different government interests.”  The Court distinguished “independent expenditures” from “direct contributions,” noting that direct contribution limitations “require the ‘lesser demand of being closely drawn to match sufficiently important interest.’”  The Court reasoned that “independent expenditures, by definition, are direct means by which political speech enters into the marketplace … direct contributions, conversely, do not necessarily fund political speech but must be transformed into speech by an individual other than the contributor … .”

Full Opinion

– Allison Hite

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