Did Postal Chief Violate Campaign Finance Laws?

The Washington Post reported that five employees of DeJoy's former North Carolina company, New Breed Logistics, said they were urged by de Joy's aids or by DeJoy himself, to write checks to Republicans and attend fundraisers at his mansion, later to be reimbursed in bonuses. My guest is Mareth McGehee, the executive director of Issue One, which advocates for a stronger campaign finance laws. Merit. The basic scheme alleged here hiding where donations come from by having employees make them

and then reimbursing them. Is that considered illegal? Well, it's one of the bedrocks of financial and campaign finance disclosure. That the purpose of having it is you know the true source of the money, and so this notion of giving in the name of another has been something that has been illegal since the nineteen seventies in the campaign finance context, but it's often a problem when you have

disclosure rules. People's attempts to evade those rules kind of described the situation where getting in the name of another is this is often referred to, is one of the few places where both campaign finance law is clear and it actually has, unlike many other portions of law, been enforced robustly over the years. So there's a strong record

of enforcement precisely on this question. It doesn't get into all the other questions of dark money, what is coordination, all these other you know, places where lives and managed to make it fairly murky. This is a clear black line. So then if the joy was prosecuted for this, it would be a pretty straightforward case. Well, you have to show the facts, obviously, but they've had many instances of people trying to hide some of the giving and the

name of another through bonuses, through family members. There has been a record of many people who have tried to go down this path, and the law, and the record here is that if you have the facts and it can show what happens, and you don't really have much of an excuse for it. Companies can contribute through packs, But what did Joy did here was reimbursing employees with company money. Is that wrong? Well, there's a few factors

here to consider. So let's take your normal political action committee and this could be whether it as a corporate pack or a union pack, but especially corporate pack. The way they generally work is that the donations to that pack, by law, has to be voluntary. That's by law. They cannot be compulsory. Second most executives, and this is usually from you know, employees of a corporation. They get a slip in their paycheck that says now at the time,

for you to make your contribution to our pack. And then it is up to an individual to decide whetter to do that. And there might be a point at which you have a whole meeting and people are sitting around a room and one of the people, usually the general council or someone who runs the pack, gets up with this, Well, you want to make sure your voice is heard in Washington. Make sure you make your pack contribution. You know, this is going to be really important for

our company. All those happened regularly and are permitted by law. There can even be some part where somebody turns to you if you're a high level executive and says, hey, have you made your contribution this year? And you could, you know, certainly feel some pressure. Even though it's supposed to be voluntary, you could certainly conceivably feel pressure to make that contribution to show that you want to rise in the company. All those things happen on a regular basis.

So does it depend on how much pressure whether the employee feels like he or she might be losing their job. In this case, apparently there were emails were sent that invited employees to fundraisers. They were follow up calls and visits to employees desks. So there's the line between Okay, at what point is something that's supposed to be voluntary become compulsory? Right? You would have to look at the set of facts to determine whether that occurred. Something that

was supposed to be voluntary. Hey, if you want to get ahead of this company, you'll know what you'll do. Right. Then you've crossed into a line but that's I'm just drawing that picture because I think it's important understand that that kind of happens on a regular basis every day. Why are the line here? I think it sounds like according to the stories that come out, it's one thing for someone to say, hey, if you're a good company employee,

you'll give to the pack. It's a far far different thing to say, hey, you make your contribution and I'll make sure you know that it gets covered, or I'll get it, cover it and any taxes based on them on the bonus, or why don't you have your wife to it and I'll make sure that it gets covered. You've crossed the rubicon on legality when you start getting into the world of you know, and I'll make sure it gets covered. There's a separate question of whether or

not it's been voluntary based on the pressure. That's one question. There's a very different question about whether or not any contribution was then covered financially. I suppose a close investigation of the books would absolutely show whether or not there was a reimbursement of the employee contributions dollar for dollar. Yes, And you know, it's very interesting when you look at

some of the past cases. There was one involving the Fiesta Ball back many years ago, and uh, it almost sounds like a repeat of many of the instances where the x CEO of the Fiestable actually pleaded guilty in connection with this kind of um you know, evasion and

donation in the name of another. So they say, there's kind of a long record of where people have tried to gain this because they want to get the political credit, but they end up getting tripped up and in some cases in that case they were not only crying to excuse somebody actually went to jail, which was pretty unusual.

So yeah, you have to look at when what was the between the donations and any reimbursements set that occurs Nowadays we have email trails, so what was the understanding All that comes into the mix as part of the fact case that would be looked at. How often does this go on across the country because this would not have been discovered unless he had become Postmaster General and

there was all this investigation into his past. Unfortunately, these straw downers are they as they take contributions to the name of another are strictly prohibited. But we first have a federal election commission that currently does not even have a quorum. Even when they do, they're very weak and many times, uh you know, their investigative capacity is quite limited. It will only come cases only come to their attention like this if there's really just been either a press

report or there's been a whistle blore. So it's kind of hard to say how often it occurs. Usually, if you have a decent general counsel, part of their job to make sure you don't do some thing like this, which is kind of one of the it's easy to do, but it should be easy to know where the line is, and uh, you know, to me, this is a failure of whoever his campaign finance and company lawyers were to make sure that they didn't cross. But it is a

pretty clear line. As they say, there's a lot of murky lines when he comes to camping finance, and this isn't one of them. Joyce said that he wasn't aware that any employees felt pressured, right, there's a difference between feeling pressured and getting reimbursed. The statute of limitation seems to have run in this case, so he probably won't be prosecuted federally. But apparently North Carolina. He could be

prosecuted under North Carolina laws. Yes. In fact, the Common Cause I just saw on the news wire had just filed a complaint in North Carolina. So that has been brought to the attention in North Carolina. So the way I understand that North Carolina's is not a statute of limitations unlike federal law, which is five years. So that's why they filed that complaint calling for an investigation of

the straw Downers scheme. Because the company was in high Point, North Carolina, a new breed logistics would fall under North Carolina law. Does the federal government outside of the FEC do they often bring prosecutions for campaign finance violations? Well,

there's two ways that these investigations go. So the Federal Election Commission can conduct an investigation and decide their administrative fine, or if they believe that there has been a criminal violation, usually wilful and knowing, then they get referred to the Justice Department and there's a public Integrity section that would then, uh, you know, take that case on and do the investigation and bring any any you know, lawsuit against those folks.

So the Federal Election Commission does not have the ability under current law to adjudicate any criminal willful and knowing violation that all falls to the d o J and the House Democrats. The Oversight Committee has launched an investigation into this, not only for the campaign finance, but also for the fact that he may have committed perjury the last time he testified. Seems as if, you know, he gave sort of a non denial denial when he when

he testified that and perjury. Would perjury be difficult to get him on? Oh, you know, that's always a very difficult one. And obviously this is operating in a political arena, so you know, and the people that would have to bring those cases, that case in a criminal court of law again would be the Apartment of Justice. In this Department of Justice does not seem so inclined, So you know, it's out there. Lying to Congress should be a very

serious thing to do. Some people have, in fact, you know, open found guilty and end up either with with criminal sentences. But I think, look, I'm gonna say a word a little bit, and I'm only saying this in a very very small amount in defense of someone like to Joy. And you know, here's a CEO type that's running a company. And the reality is he probably is accurate and saying he has no clue himself. I'm not I'm not saying

this is in fact the case. But often with CEOs, you know, they don't pay a lot of attention to u the details and stuff. Sometimes they do, and like in the case of Charles Keating, he was he was directing all the Keating Five activities, so he knew exactly what was going on. But you know, in the case of someone likes the joy, you would have us to be able to demonstrate and perhaps there is the evidence to show that he personally kind of was involved in

the e effort. He says he wasn't, and there wasn't a kind of an email trail or a whistle blower that could say yes, Mr de Joy himself was involved in this. I wouldn't be shocked to find out that he didn't know, because a lot of you know, business types don't think they can be bothered. The answer of that is always he should know, right And in this case, we'll see if there is a record that shows he

personally was involved. And you know, with me, some of these decisions, so that's a matter of again, that's a matter of fact that a thorough investigation could actually determine that would be left to the state of North Carolina. Then, based on the information so far public, it looks like most of this activity so far has been beyond the statute of five year statute of limitations. Now there's a separate question whether or not he remains a Postmaster general.

That's a different question. It's not legal but political. Thanks so much for being on the show, Meredith. That's Mareth McGee, Executive director of Issue One. Census has been a legal mine field, with one trip to the Supreme Court over the edition of a citizenship question and with more than four cases now pending against the Trump administration over the census. Now, a federal judge in California has ordered the Census Bureau

to stop winding down operations until hearing next week. Joining me is Leon Fresco, a partner at Hollandon Knight, tell us about Judge Lucy Coe's order. So Judge Lucy Co issued a temporary injunction this weekend. She's in the Northern District of California, and there's two aspects of the census case.

So this aspect is called the winding down aspect. She said that the winding down aspect of the census case, which means that the government wanted to stop counting the amount of people who hadn't applied for the census, already using the online and other methods to enter the census.

They were supposed to stop on October, and instead it was stopping on September thirty if they got moved up a month, and in fact, people were already getting fired by the Census Bureau and they were already getting wound down.

So the court judge co eatued a temporary restraining order saying stopped doing that, stop firing people, stop winding this down, and continue with whoever you have on staff counting people who haven't been responsive to the census like you were intending to do, which was going to be a deadline of October to the October thirtieth deadline come about because of COVID nineteen was the end of September, the original deadline.

It was changed and then changed back correct. What actually happened was the original deadline was at the end of April, and because of COVID nineteen, it got moved to October. So everybody adjusted all their operations to moving it until October, and then suddenly in the middle of the summer in August, the Census Bureau said, no, we're actually changing this again and we're winding this down and we're ending this on September.

But then they started winding it down immediately if they started firing people immediately, and so that was going to diminish the resources available to actually count people who hadn't responded to the census. And so the nature of these claims are, well, that's our Venturian capricius for you to say, because of COVID nineteen, we needed this extra time until October, and now suddenly we don't need it. And there was no good reason given it wasn't like there were certain

metrics of counting them had been met. They simply just wound back the date. Is there any evidence as to why they wound that the date? Did an order come from above? Well, so they're One of the interesting aspects of the case is there's a whistle blower who talked to the court, and the court said that they have to go through a federal whistle blower process. So that's interesting if we find out out at some point later

what will happen with regards to that whistle blower. But in the meantime, the other issue that's very fascinating is that the only reason that they give is that the administration came to some determination that the census part couldn't be completed by December, which was what they believe is

their satutory deadlines to produce a portionment count. They said, there's no way to do this if we collect past September, and that wasn't something they were uncomfortable with when they made these extension of these deadlines, So it's unclear why they're suddenly uncomfortable with it now. And Judge co also

pointed out some conflicting statements made by a top SENUS official. Yes, correct, there were certainly serious questions there about the accuracy of the census data that were generated by the declaration that individual made. Albert Fontano, who was the associate director for the Senial Census Program. He had originally declared that the lack of field staff would be a barrier and there

wasn't a way to do this. But at the time, there was a May twenty six webinar organized by the National Congress of American Indians where they've already said, we passed the point where we could even meet the current legislative requirement of December thirty one, we can't do that anymore.

That was sim Olsen, the head of the field operations for Census, and so because he had said that, it may the idea that now we have to get this done by December thirty one, there's a way that that's already been said that I was going to be inaccurate. So the one reason given that we have to meet in December thirty first deadline isn't a valid reason because I was already known in May that we weren't going

to be able to meet that deadline. So is the challenge to the Trump administration not counting undocumented immigrants part of this lawsuit. Well, so there's two separate lasses that those they're going on in parallel, and one of the lawsuits is about this issue of whether you can count

undocumented individuals in the census. But the real basis for these plains that are being made at the moment in these lawsuits is that it was just arbitrary and capriitus to have a deadline, change the deadline, and then change it backward again because people had developed enough of a reliance interest in these deadlines that that shouldn't have been

done at that point. Be I mean, if it's being made as a sort of sub textual claim that yes, there might be this intense that the bigger cities which had more of these individuals don't get counted. Experts have warned that shortcuts would lead to inaccurate census counts, missing the poor, the young, and minority groups. Traditionally the hardest account.

Is there any evidence that that's true? Well, I think everybody who's in general fearful and hiding from law enforcement in general because they know that at the moment to their advantage that they be seeing less than as opposed

to be seen more will be harder to count. And so the complication than becomes if you're intensive to actually count every human being in the in the United States in order to apportion this properly, the less resources you're putting towards that goal, you're gonna get more people who want to be counted as less people who don't want to be counted. And so that would have some natural

relationship to I'm documented individuals. That is the third count of the complaints, That is done by the City of Los Angeles, the County of Los Angeles, and others filing this lawsuits, they're saying it is a pretext to exclude a documented forces from the apportionment count. But again, you know this, this wasn't the basis so far for the

courts temporary injunctions. Of the basis was that the justification given by the government doesn't match what they said previously, and because there was a deadline given in the past, they haven't given a good reason why they would change the deadline against. So what happens if the Census Bureau

is not able to complete the census by December thirty one? Well, I think the concern that this administration would have is that if it ran into late January, that if the president President drump was defeated, that Joe Biden could actually and said the count as their belief was, this count would be more this advantageous to Republicans, I suppose, than

the count that this president would set. That's sort of the theory that's undergirding these lawsuits is that this would be the only possible as some explanation that is clear and provable. This explanation is the only explanation that that they can surmise for why all of this is happening. And there was a request to the Senate to extend

the deadline beyond December one, and they never took that up. Correct, And that's one of the issues that's actually going to be under debate right now during this period, right before

the Continuing Resolution needs to pass on September. And there is some beliefs that there is some bipartisan consent this here to move defenses because you know, there are states like Texas also that are large states that want everybody COUNTID in Texas, that are more read you know, and say things with Florida than just states like California or New York. So it will be interesting to see if the Congress is part of the Continuing Resolution actually ends

up expending these deadlines but not needing these lawsuits. So tell us more about the second aspect of these lawsuits and where that stands right well. The second aspect is the issue that has now been argued in oral argument in New York and will be argued soon in California, which is can you actually include undocumented immigrants from the census.

And so that's the issue that is being argued, and there's all kinds of peripheral issues there about whether you have to wait to do that until after the show that you've been damaged by not counting people, or whether you can do it now preemptively. But it appears as the Second Circuit, where they have a three juch panel with some district court and some second Circuit and that would go directly to the Supreme Court if they actually

banned the memo that the President wrote. That panel seems to have some skepticism of the government's arguments here, and they seem to think that this policy is wrong to say that you can't count undocumented individuals, and that the timing is fine now at the moment to be able to make this claim. You don't have to wait until later to show that you were harmed by the accounts

that were subsequently done. And so because of that, I can foresee that kept getting to the Supreme Court relatively quickly. Who has the stronger argument at the Second Circuit as to whether or not you can count undocumented immigrants. Well, it seems that if the Second Circuit panel accepted the argument that it would be illegal and unconstitutional not to

count undocumented immigrants from the census have to see. They seem to be having some struggle perhaps with is this the right time to make that argument, or do you make it after you see the formula and after you see the counts so that you can better debate what

was actually counted or not. But it seems like they were convinced in that argument, although we need to see the order to see that at the end of the day, the the challenge could occur now and that there is an unlimited power on the President to determine how to apportion the districts. And so it seems likely that we're going to be getting an order in the next week or two that says that this memo is illegal, and

then that would be challenge to the Supreme Court. So now, remind us the Supreme Court has already ruled on the census once via five to four vote. Remind us what was decided then, right, the Supreme Court at that point invalidated the process and a five four decision by which the Census Bureau tried to ask a citizenship question in the census because they said that that process was arbitrary and capricius and didn't follow the process by which you

would insert such a question in the census. They didn't say. They didn't say one way or the other, definitively, what is the fate of whether you could ask such a citizenship questions? Nor did they say whether it would be illegal or not to exclude undocumented individuals from the census.

But nevertheless, that claim appears to be heading more squarely to a chord that appears to have for sure for judges that seems to think that that's fine to exclude undocumented immigrants, for the seems to think it's not fine to exclude. And then we're gonna be left to see what justice Roberts will be able to come up with his two as he was the swing vote in the prior census case to determine whether undocumented individuals can be

counted in the census. There are more than half a dozen other lawsuits you mentioned a few that are percolating through the system, and so could they be conflicting decisions.

They're absolutely could be conflicting decisions. But the point is, as long as there's one chord that is issuing either a temporary or training order or a preliminary injunction, then and and they comment on a nationwide basis that this means that the United States Department of Justice would have to go to the Supreme courts to get that I'm done. And so there's three bites of the apple that the

plaintiffs are trying. They're trying in the districts of Maryland, they're trying in the southern districts of New York, and they're trying in the northern districts of California. And they only have to be right one. And if they're right one, this will mean that that case will go to the Supreme Court. Who are the plaintiffs in these cases? Some are groups of our city, from our county, from our state, and they're sort of interspersed by where these locations are.

The New York case is the state of New York luck some localities. The the Dordan District of California case has a lot of California based localities. Of the Maryland case as more immigration group type places in it. Let's say Joe Biden wins the election and the census had been completed the information handed over by December thirty one. Can there be litigation then to dispute the findings of the census I mean, how would that even work out? Well, yes, technically.

So let's say let's say that the census comes out during a time where Joe Biden as president, and he said I don't want any of this immigration unrelated stuff impacting the census in any way, shape or ford. You still could have litigation where the states that don't want I'm documented individuals counted could do and and say that they shouldn't be counted because of a portion had been brief that their apportunateen is being negatively affective that you

know that wasn't filed or in any other decade. But maybe this issue is percolated to such a powerful political issue that you might see that this time around. Thanks for being on the Bloomberg Law Show. Leon. That's Leon Fresco, a partner at Hollandon Knight. The stakes are high in these cases. The census helps determine how one point five trillion dollars in federal funding is distributed and how many

congressional seats each state gets in apportionment. As of Saturday, more than eighty six percent of households have been counted. More than sixty five percent of households were counted from self responses online, by mail, or by telephone, and tent of households were counted by census takers who went to households that hadn't yet answered the questionnaire. And that's it for this edition of Bloomberg Law. Remember you can always get the latest legal news on our Bloomberg Law podcast.

You can find them on iTunes, SoundCloud, or Bloomberg dot com slash podcast slash Law. I'm June Grasso. Thanks so much for listening.