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Making a Campaign Contribution? Make Sure You’re Compliant

Anthony T. Verwey

Anthony T. Verwey

By Anthony T. Verwey

As the political season continues the rush toward November, all businesses and their employees should be paying attention to recent reporting regarding “conduit” campaign contributions, which have the potential to put both parties in jeopardy. While such contributions are illegal at both the federal level and the in the Commonwealth, one of the best descriptions of the offending conduct is provided by the Federal Bureau of Investigation, which has written that,

Person A goes to Friend B or Employee C or Associate D and says, ‘Hey, if you give me the money for Candidate X, I’ll pass along your check and then reimburse you out of my own pocket or from corporate funds.’ The friend, employee, or associate effectively becomes a ‘conduit’ for the real contributor, thus the name.

Election Fraud – Don’t Commit a Campaign Crime, FBI (2007).

The objective of the law is to ensure that the true sources of campaign contributions are known and subject to proper reporting. In the Commonwealth of Pennsylvania, the Election Code addresses conduits in stating that,

(a) It shall be unlawful for any person to make any contribution with funds designated or given to him for the purpose by any other person, firm or corporation. Each person making a contribution shall do so only in his own name.
(b) It shall be unlawful for any candidate or political committee to disburse money received from an anonymous source. All such money shall be handed over to the State Treasurer within twenty (20) days of its receipt.
(c) It shall be unlawful for any person to make contributions of currency of the United States or currency of any foreign country to or for the benefit of any candidate which in the aggregate, exceed one hundred dollars ($100), with respect to any candidate for election.

25 P.S. §3254.

Under both the federal and Commonwealth laws, the individual making the conduit contribution and the reimbursing person or entity face criminal peril. In Pennsylvania, the attorney general or county district attorney may prosecute conduit campaign contribution violations. The penalties for each violation range up to a $1,000.00 fine and one year in jail. 25 P.S. §3550.

Anyone engaged in making a political contribution must avoid reimbursing or being reimbursed for such contribution or face potential prosecution. It does not matter whether the reimbursement is labelled a bonus, gross-up, etc., it does not change the nature of the transaction, and it exposes both parties to criminal jeopardy.

Anthony T. Verwey is a partner at Gawthrop Greenwood, PC, where he focuses his practice in real estate law, as well as municipal law and litigation. Tony can be reached at averwey@gawthrop.com or 610-696-8225 

Gawthrop Greenwood

Gawthrop Greenwood, PC has offices in West Chester, PA and Wilmington, DE serving clients throughout the greater mid-Atlantic region and nation. For more than a century, the firm has stood behind its core principle of providing high-quality legal services with personal attention. Gawthrop Greenwood’s diverse portfolio of clients comprises entrepreneurs, businesses, and governmental entities that entrust the firm with their representation in a wide range of matters including mergers and acquisitions, commercial litigation, estate and tax planning, land use and development, and domestic relations. A complete listing of the firm’s practice areas and attorneys, as well as a variety of legal resources, can be found at www.gawthrop.com.

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