Howes & Howes, Attorneys at Law

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Bid Rig III:  Some of the Perils of Fundraising

In July 2009, the F.B.I. and the U.S. Attorney’s Office for the District of New Jersey arrested about four dozen people at the culmination of “Operation Bid Rig III”.  Most of the individuals arrested were politicians, and almost all of those were from Hudson County.  The FBI, through an undercover criminal-turned-informant, picked some low hanging fruit:  Candidates who were under pressure to raise money for their election campaigns.  Howes & Howes has been following the legal proceedings from Bid Rig III very closely.

It has been said that there are two types of people in the political world:  Those that can raise money and those that can’t.  When a candidate runs for office, even in the smallest town, it takes money.  You can’t pay for postage or for lawn signs or newspaper advertising without raising at least a little money.  If you are running in a larger race, such as a city or a county or a legislative district, you will need even larger sums.

Many of the politicians arrested during the July 2009 Operation Bid Rig III case were candidates for office in the May and June elections in Hudson County.  Election time is when a candidate or public official is at his or her most vulnerable.  During some of the guilty pleas and trials in the wake of these arrests, it has become clear that much of the alleged illegal activity and some of the proven illegal activity was related to campaign fundraising.

At this writing, the trial of former Secaucus mayor Dennis Elwell is in recess for the Independence Day holiday.  Elwell is on trial for allegedly conspiring to take illegal payments from FBI informant (or “rat”, depending on you point of view) Solomon Dwek.  It is alleged that an associate of Elwell accepted an envelope full of cash on Elwell’s behalf.  Elwell testified in the trial that this payment was not a bribe but a campaign contribution.  He testified that the $10,000 in cash could have been contributions to several different accounts, such as the local Democratic Party committee, to his own campaign committee, or perhaps others.

Ultimately, the jury will decide the answer to the question of whether the $10,000 cash-in-the-envelope was a campaign contribution.  It is clear, however, based on the Elwell case and other Bid Rig III cases, that these transactions happened because the candidates were raising money for the election.  Fundraising can be done effectively if done methodically and by the rules.  Playing fast and loose with fundraising rules, or finding legalistic ways to circumvent the fundraising laws is not the way to go.  Clearly, accepting an envelope full of cash is not a good idea.  New Jersey campaign finance law limits cash donations to $300.  A campaign should only accept cash in small amounts as admission to a low budget grassroots fundraiser, such as a pancake breakfast.  Accepting large amounts of cash could well earn you a painful legal proceeding and a trip to a place like Leavenworth Kansas.

We will continue to follow the Bid Rig III cases as they unfold since they continue to raise issues about campaigns and elections.

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