The Trump campaign looks like a Mobius strip, with campaign money folding back on itself and ending up in the hands of Trump businesses and his family. Indeed, Donald Trump’s campaign has been doing this for months. The Trump campaign can choose any vendors it wishes for legitimate campaign expenses — even if they’re owned by his firm or family. In May, for example, he paid his businesses $1 million while the campaign was decidedly cash poor with only $1.3 million cash on hand.
To refill his campaign coffers, Mr. Trump can’t raise money from anyone on the planet — just Americans. This is a rule he may have broken emailing Members of Parliament in the UK, Iceland and Australia asking for campaign cash.
Moreover, Mr. Trump can’t use campaign money for anything his heart desires. Rather, as I explain in my new book on campaign finance, Corporate Citizen, money in a campaign for president is subject to special FEC rules and federal election laws.
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The Trump campaign should take some care to not violate the FEC’s personal use rules, which can result in criminal prosecutions. One time Democratic presidential hopeful John Edwards was prosecuted for personal use of campaign funds, including paying a mistress to keep quiet. Edwards walked free after a jury deadlocked in his case.
But not everyone is as lucky with the law as John Edwards. Running afoul of these rules is a bipartisan matter. Republican political operative Tyler Harber pleaded guilty to using Super PAC money for personal use, among other crimes like coordinating between a Super PAC and a candidate committee. He got two years in federal prison. Democratic campaign treasurer Kinde Durke also pleaded guilty to taking campaign money for personal use from multiple candidates. She got eight years in jail.
According to the Justice Department, federal campaign crimes include the restriction that “[n]o person may convert funds contributed to a federal candidate to his or her personal use.” This part of the federal law (2 U.S.C. § 439a) was updated in 2002 to clarify that “a contribution or donation shall be considered to be converted to personal use if the contribution or amount is used to fulfill any commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election campaign … including — (A) a home mortgage, rent, or utility payment; (B) a clothing purchase; (C) a noncampaign-related automobile expense; (D) a country club membership; (E) a vacation or other noncampaign-related trip; (F) a household food item; (G) a tuition payment; (H) admission to a sporting event [or] concert, … and (I) dues, fees, and other payments to a health club …”
The DOJ can prosecute conversions of campaign funds as honest services fraud if the wrongdoing was done by a campaign staffer. Otherwise the crime can be prosecuted as mail or wire fraud. For example in 2015, the Justice Department prosecuted a former New Jersey mayor for receiving “several campaign contributions from area businesses and businesspeople and then, instead of depositing the donations into his campaign accounts, either cashed the checks for his personal use or deposited the checks into his personal bank accounts.” Moreover, if FEC filings are falsified to hide personal use that opens up another avenue of prosecution under the false statements statute.
So as I told the New York Times, nothing so far looks like it is out of bounds in terms of the money in the Trump campaign going for meeting spaces in Trump-owned property and airplane rides on Trump-owned aircraft. But the Trump campaign, like all campaigns, needs to be careful not to violate the personal use laws because a campaign treasury is not a personal piggy bank. Just ask ex-Congressman Jesse Jackson Jr. who is on parole after nearly two years in jail for his personal use of campaign funds for buying clothes and memorabilia.
But Trump may be in hot water on the fundraising side as there is already a complaint at the FEC questioning the campaign’s solicitations of foreign donors — a decidedly illegal no-no.