Coleman Hasn’t Sought FEC Permission to Use Campaign Funds for Legal Bills

Posted April 13, 2009 at 4:07pm

Late last year, Republican Norm Coleman said that he would seek Federal Election Commission permission to use campaign funds to pay legal bills relating to allegations that a supporter funneled money to the then-Minnesota Senator through his wife.

The allegations have persisted, and Coleman’s legal bills apparently continue to grow — driven primarily by the ongoing dispute over whether he or Democratic challenger Al Franken won the Senate election in November — but the campaign has never sought FEC permission to pay legal bills from campaign coffers.

Coleman’s campaign did not return repeated phone calls and e-mails requesting comment for this story, nor did any of his attorneys.

Campaign law experts said Coleman is under no legal obligation to ask FEC permission to spend donor money on lawyers. If a campaign requests and receives permission for expenditures from the FEC — called “advisory opinions— — the campaign is shielded from any future enforcement based on those expenditures. But if the campaign believes its circumstances are covered by prior FEC opinions, or that the expenditures are clearly within the rules, the candidate may conclude there is no reason to go back to the FEC for a new opinion.

Coleman has hired a stable of lawyers to contest the election results, which at last count had Franken up by 312 votes out of 2.4 million cast. Coleman’s year-end campaign filings showed he had already spent close to $300,000 in legal fees, and his legal team has expanded since then to include several of the Gopher State’s best-known criminal defense attorneys.

Beyond the recount contest, Coleman is apparently now generating legal expenses related to allegations that a longtime supporter funneled $75,000 payments to Coleman through his wife.

The charges were first made in the days leading up to the election by Paul McKim, the former CEO of Deep Marine Technology, a company primarily owned by Nasser Kazeminy, a longtime Coleman friend and supporter.

McKim alleged that at Kazeminy’s direction, the company made payments to an insurance broker in Minneapolis that employed Coleman’s wife, Laurie, despite the fact that the insurance company never provided any services to Deep Marine. McKim alleged that the only purposes of the payment was to provide cash assistance to the Colemans. Kazeminy’s spokeswoman declined to comment on this story.

In a March deposition, B.J. Thomas, the former chief financial officer of Deep Marine essentially corroborated McKim’s allegation, saying that the company did not need or use insurance services from the Minneapolis broker, and that the payments were intended for Laurie Coleman. The Colemans have not been directly accused of anything — and they are not parties to the litigation, which involves disputes among DMT shareholders.

In December, a Coleman spokesman told the Minneapolis Star-Tribune, “We intend to have any legal fees related to what we believe to be a politically inspired legal action to be covered by the Senator’s campaign.— The paper also reported that Coleman had hired former Assistant U.S. Attorney Doug Kelley to represent him in the matter, and Kelley told CNN that he would be monitoring the case for Coleman, but Kelly’s name does not appear among the payments Coleman’s campaign reported making for legal expenses in its year-end report.

New fundraising reports, covering the period of Jan. 1 to March 31, are due to be filed with the FEC this week.

Former FEC General Counsel Larry Noble said that FEC advisory opinions serve as legal protection for candidates, but “there is no requirement that you come in to the FEC for an advisory opinion prior to making expenditures. … You would come in if you thought there was some question about the expenditures.—

Noble said that in general, the FEC has “allowed the use of campaign funds for the defense against allegations arising from your activities as an officeholder or candidate.—

Jim Kahl, a former FEC deputy general counsel, pointed out that the FEC approved Sen. David Vitter’s (R-La.) uses of campaign funds to pay for an attorney assisting in his case before the ethics committee and responding to press inquiries after Vitter was named in the “D.C. Madam— scandal and admitted visiting a prostitute. But the commissioners could not reach a conclusion on using campaign funds to address legal matters in the madam’s court case, in which Vitter was tangentially involved.

Kahl notes that the FEC also allowed former Rep. Duke Cunningham (R-Calif.) to use campaign funds to pay legal expenses related to the bribery charges against him because the “legal fees and expense would not exist irrespective of Representative Cunningham’s campaign or duties as a federal officeholder.—