NLPC Alleges Rangel Illegally Used Leadership PAC Funds for Legal Defense
NLPC yesterday filed a Complaint with the Federal Election Commission (FEC) alleging that Rep. Charles Rangel (D-NY) violated the Federal Election Campaign Act by using almost $400,000 in funds from his National Leadership PAC to pay legal bills related to the House Ethics Committee actions against him. The Committee yesterday referred a censure resolution to the entire House after earlier this month finding Rangel guilty of violating House rules on 11 counts. Click here to download an 11-page pdf of the Complaint.
As the Complaint points out:
Members of Congress may use funds from their personal re-election committees for legal expenses related to their official actions. The National Leadership PAC is not Rangel's re-election committee but what is classified as a "leadership PAC," the purpose of which is make contributions to other candidates.
The Complaint cites an FEC rule that states:
To the extent that leadership PACs are used to pay for costs that could or should otherwise be paid for by the authorized committee, such payments are in-kind contributions, subject to the Act’s contribution limits and reporting requirements.
Thus, payments for legal fees by the National Leadership PAC should have been limited to $5,000. The National Leadership PAC paid $293,000 to the law firm of Zuckerman Spaeder LLP in the 2009-10 election cycle. It also paid $100,000 to the firm of Orrick, Herrington & Sutcliffe on January 5, 2009 for the services of Democratic fix-it man Lanny Davis.
Rangel’s ability to pay for high-priced legal help allowed him to delay Ethics Committee action for more than two years and push his trial past the election. When he was not attacking NLPC during his August 11 speech on the House floor, Rangel said that his legal expenses totaled two million. According to Federal Election Commission filings, Rangel paid $1.65 million to lawyers from his re-election fund, in addition to the money from his leadership PAC.
Rangel’s illegal use of leadership PAC funds for his legal defense was first raised by Politico reporter John Bresnahan in August 2009. Rangel’s spokesman told Bresnahan that since the National Leadership PAC was headquartered in one of Rangel’s rent-controlled apartments, it was therefore involved in the Ethics Committee investigation.
Our Complaint addresses this assertion:
The apparent “loophole” relied upon by Rep. Rangel that any payment by National Leadership PAC was for its own legal defense is not credible because the House of Representatives has no jurisdiction over the PAC’s actions. Moreover, the allegations which were central to the investigation and House proceeding’s barely touch on the actions of National Leadership PAC as only a minor part of one of the thirteen allegations in the Statement of Alleged Violation. Through this pretext, in 2010 Rangel’s PAC paid more legal fees ($293,000) to Zuckerman, Spaeder LLP than did Rangel for Congress which is quite remarkable since the law firm barely mentioned National Leadership PAC in their 32-page written response to the Committee on Official Standard’s Statement of Alleged Violation.
NLPC played a key role in exposing Rangel’s corruption. In August 2008, NLPC sent a staff member to the Dominican Republic who confirmed that Rangel’s beachfront villa was being rented out even though Rangel reported no rent on his financial disclosure forms. The controversy over Rangel’s tax evasion led to more far-reaching scrutiny of Rangel’s finances, resulting in Rangel amending his financial disclosure forms in August 2009 to show several hundred thousand dollars in previously unreported assets and income.
In November 2008, NLPC President Peter Flaherty took photographs and made audio recordings at a Rangel-led junket on the Caribbean island of St. Maarten funded by Citigroup and other big corporations. In March, the Ethics Committee admonished Rangel for accepting corporate-funded travel, prompting his resignation from the Ways and Means chairmanship.
Flaherty: Rangel Had to Know of Junket's Corporate Sponsorship (Fox News Channel video)
Flaherty: Rangel Dirty Even After Coming Clean (CNN/Anderson Cooper video)
Flaherty: Rangel is 'Serial Offender' (CNN/Anderson Cooper video)