Posted: October 4, 2010

Thoughts on the Alabama Indictments

The Department of Justice announced its indictment today of 11 people in Alabama for allegedly engaging in a “wide ranging conspiracy to buy and sell votes on legislation in Alabama that would directly benefit the business interests of two of the defendants.” The indictments remind us that election law, election administration, and lobbying rules are essential to a well-run democratic system. We often believe that bribery, corruption and vote buying are things of the past. In this context, campaign finance regulation, restrictions on lobbyists, and disclosure provisions may appear to be unneeded government regulation.

The indictment, however, reminds us that our system does need some controls and that unethical individuals will attempt to use money to subvert the democratic process. Opponents of government regulation will argue that if these actions in fact happened, bribery law will sufficiently punish those involved in this incident and that the government managed to indict these individuals without McCain-Feingold campaign finance regulation.

But, the indictment also highlights the fear of many election law advocates of the corruptive influence of money on politics. The indictment is full of alleged activity that shows that the accused were aware of election and ethics laws and were trying to subvert those laws. Obviously, the more lax the laws are, the easier they are to subvert.

The indictment alleges that some of the accused offered to provide payments and campaign contributions to legislators “in a manner that would conceal the true nature, source, and control of the money and the fact that it was being provided by [defendants] with the assistance of lobbyists . . . to the legislators in return for their favorable votes on and support of pro-gambling legislation.” The indictment further alleges that some of the defendants offered to provide “campaign contributions, campaign appearances by country music celebrities, political polls, media buys, fundraising assistance, offers to pay money to opposition candidates in return for their withdrawal from races, and other things of value, to incumbent legislators and candidates for election to the Legislature . . . in return for . . . promising to vote for, and voting for, pro-gambling legislation.”

One exchange printed in the indictment highlights the interaction between campaign finance regulation and the bribery alleged here. One defendant was quoted in the indictment as saying:

“I would suggest that that look something like—and, again, it is up to you for what you would want to use it for—but basically there is a million dollars of business that is going to come through that PR entity, one way or the another, you know, annually.”

The defendant then indicated:

"There are some oddities to how we would want to do it because, you, as you know on the ethics reporting, if there’s any tie to an organization that is lobbying a legislature, technically they have to announce that there is a business connection. And when they do then obviously everyone’s gonna look at it whether it’s totally legit or whatever.

So you got to find a backdoor way, which is basically you have, then, an entity that is not related per se to [GILLEY’s business] whatever that may be. Um, it’s some subsidiary that is disconnected and isn’t required to be registered as a lobbyist, and you meet all those thresholds. Um, we get all that worked out, that’s not a big deal. But, in effect, that PR entity does two things. One, it gives you ability to do some other things, um, have that structure. But then also you got that revenue that’s, I mean, use it for campaigns. You can use it individually or whatever."

What is clear from the indictment is that campaign finance provisions and ethics disclosure provisions were influencing the behavior of defendants and made their bribery scheme harder.

Because of the Supreme Court’s recent decision in Citizens United, there will be a significant increase of corporate and union money in political campaigns. Moreover, recent press reports have indicated that groups are attempting to use 501(c)(4) tax-exempt organizations as vehicles for campaign advocacy because those organizations are not required to disclose donors. While bribery laws may be sufficient to deter unwanted behavior here (if in fact it occurred), the law post-Citizens United provides more mechanisms for money to be funneled toward favored candidates. This indictment should remind us that election law and ethics regulations are important tools in limiting the corruptive influence of money in politics. At the very least, the recent indictment confirms that the health of our democratic systems depend on fair and honest elections and fair and independent legislators.

Donald Tobin is an expert on the intersection of tax and campaign finance laws. He served on Capitol Hill and in the U.S. Department of Justice before arriving at the Moritz College of Law in 2001. His two articles on the relationship of tax and campaign finance laws concerning the regulation of political groups having tax-exempt status under section 527 of the Internal Revenue Code, his work on charities and their involvement in political campaigns, as well as his co-authored work with EL@M Director Edward B. Foley, have been widely recognized as leading publications on this topic. View Complete Profile