Federal Appeals Court Upholds Ban on Corporate Political Contributions

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On Thursday, the U.S. Court of Appeals for the 4^th Circuit found that a lower court judge had erred in dismissing one count of federal election law violations against William Danielczyk Jr. and Eugene Biagi. The two men, well-known Hillary Clinton supporters, are fighting accusations that they illegally funneled huge amounts of donations to Clinton’s campaign. They had formerly succeeded in convincing the district court to dismiss one count of federal election law violations based on the Supreme Court’s 2010 Citizens United decision. But the Court of Appeals doesn’t agree.

The accused are former officers with Galen Capital Group LLC and Galen Capital Corporation. Last year, they were indicted on charges that they had used Galen funds to reimburse people more than $186,000 in contributions to Clinton’s 2006 Senate race and 2008 presidential campaign.

The charge that had been previously dismissed by the district court was for violating federal election law that makes it illegal for corporations to make direct contributions to political candidates. U.S. District Judge James Cacheris, had found that rule to be unconstitutional.

  

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The three-judge panel for the Court of Appeals 4^th Circuit, however, disagreed with the district judge’s reasoning. The lower court had reasoned that in the 2010 Supreme Court decision in the Citizens United v. Federal Election Commission case, a ban against “independent expenditures” by a corporate to elect or defeat a candidate had been struck down. In that case, the Supreme Court had observed, “The First Amendment does not allow political speech restrictions based on a speaker’s corporate identity.”

Judge Cacheris had found that it was reasonable to hold that corporations should be able to make direct contributions like human beings since both are entitled to equal political speech rights.

However, writing for the Court of Appeals in the instant case, Judge Gregory said, “Leaping to this conclusion ignores the well-established principle that independent expenditures and direct contributions are subject to different government interests.”

The case is USA v. Danielczyk, U.S. Court of Appeals for the 4th Circuit, No. 11-4667.