June 21, 2016
Friday of last week, the Federal Elections Commission issued a series of decisions on Complaints we prepared and filed for our client David Krikorian five years ago.
Those decisions found that former Congressman Jean Schmidt, and the Turkish Coalition of America violated federal campaign finance laws in accepting payment of her legal fees in legal proceedings against our client, and fined then respectively $2,500 and $25,000 for those violations.
Making a Difference
These decisions — which sat on the desks of bureaucrats in Washington, D.C. for an inexcusable years and years — capped a tremendous and frequently disappointing journey through the halls of power of Washington and the highest Court in the land.
In the end, we overcame a system of justice that is carefully designed to protect the wealthy, the powerful, and the well-connected, veiled in secrecy, and hidebound by bureaucratic inaction– although not in the manner that the proper administration of justice would provide.
Our firm — through the fine research and writing, and tremendous patience and persistence of Brian Shrive and Chris Finney — saw through to a successful end a complex, tortured and unfair series of legal processes to the advantage of our client.
This journey, perhaps better than any story we can tell, describes the commitment we hold to “making a difference” for our client in each and every assignment.
Ohio Elections Commission action and more
We originally were retained to represent former and future Congressional candidate David Krikorian in the defense of several “false claims” allegations brought by Congressman Jean Schmidt before the Ohio Elections Commission (“OEC”). She claimed that in the course of the 2010 Congressional campaign, David Krikorian made certain false statements about her, essentially that she was on the payroll of the Turkish lobby in America.
Ironically, through the course of these proceedings and otherwise, she herself proved the basic premise of these allegations.
But tangential to those proceedings, we became curious that Jean Schmidt appears to have unlimited access to “free” legal services from two expensive attorneys from Washington, D.C. and a second in Columbus, Ohio.
Our lead counsel in representing Krikorian was famous Los Angeles attorney Mark Garagos, who was simply fun to work with, and inspired in his legal strategy.
That original OEC action then led to an appeal, a First Amendment challenge to the jurisdiction of the Ohio Elections Commission, and then a defamation case brought by Schmidt. These were incredibly expensive proceedings that came at us in waves from the Schmidt camp.
The legal actions were unprecedented in that they made no economic sense, and were outside the scope of our experience with clients who have to make practical decisions about proceeding with litigation in the face of daunting obstacles of time, expense, and the difficulty of legal recovery.
Who was paying our Congressman’s legal fees?
As the matter progressed over a period of years — with depositions across the country, two days of trial before the Ohio Elections Commission and endless motions — it dawned on us that something was terribly wrong here, that Jean Schmidt was pursuing this matter because she was accepting an illegal gratuity as a Congressman and as a candidate.
Garagos had the ground-breaking idea to take the deposition of Jean Schmidt’s attorney, Bruce Fein. In all our years of litigation, it never occurred to us to take the deposition of the opposing attorney. Schmidt’s attorneys opposed the motion, but the OEC ruled that it would proceed.
In that deposition, we asked Schmidt’s attorney “who was paying all these legal fees?” and he admitted that at the commencement of the relationship he met personally with her and her Chief of Staff and told them both that the Turkish Coalition of America (“TCA”) would foot the whole legal bill for the proceedings.
[This sworn testimony would prove key thereafter, as Schmidt steadfastly denied through multiple proceedings thereafter that she had no idea how her legal bills were being paid, over a period of years, but only that she was never invoiced for the work.]
We estimated — correctly as it turns out — that Schmidt had received more than $500,000 in legal fees from the TCA.
A thicket of confusing rules and multiple whitewashes
Our firm then began to research whether it was legal and appropriate for a sitting member of Congress to accept the payment of her legal fees, to the tune of hundreds of thousands of dollars, from a lobbying group in D.C., dedicated to influencing legislation before Congress and policy in the administration.
The rules were complex, but the answer was pretty clearly “no” for a host of reasons:
- It violated House Ethics rules to accept the gift.
- It was a felony to fail to report the gift on federal financial disclosure forms.
- It violated federal elections law to accept the gift.
- The gift constituted taxable income to the Congressman, which must be reported to the IRS and on which income taxes must be paid.
Thus, following the key depositions, we waited for the Congressman to file her federal financial disclosure forms for 2011, and then filed Complaints with the Office of Congressional Ethics and the Public Integrity section of the U.S. Attorney’s office.
After waiting more than a year, we learned that the Office of Congressional Ethics had properly examined the gift and referred the matter for further action to the House Ethics Committee.
But in a curious move, the House Ethics Committee ruled that the gift was illegal, and had to be paid back, but found that because Schmidt did not know who was paying her fees (in direct conflict with her own lawyer’s sworn testimony) that she would not be disciplined by the House. It was, very simply a whitewash.
We then filed a Complaint with the IRS over the unclaimed income. They also saw nothing untoward. Another whitewash.
A challenge to the OEC False Claims statute and a trip to the U.S. Supreme Court
As a result of the tortured and unconstitutional proceeding before the Ohio Elections Commission, Finney Law Firm attorneys then decided to challenge the false claims statute in Federal Court. That commenced in two other actions in 2011 and 2012,
We lost those twin law suits in the U.S. District Court, in the U.S. Court of Appeals for the Sixth Circuit, and en banc before the Sixth Circuit. Ultimately, not a single trial or appellate Judge saw any merit to our arguments.
But then in January of 2014, the U.S. Supreme Court accepted our case for review, and the tide quickly turned. We had oral argument in April of 2014 and a decision by June of that year.
In a Clarence Thomas-authored opinion, we won 9-0, sending the cases back to the trial Courts in Cincinnati. It then took two more yeas of hearing and appeals, but we have prevailed in those actions and the OEC False Claims statute has been struck down as unconstitutional, a tremendous victory for justice against an entrenched bureaucracy in Columbus.
Waiting for the Federal Elections Commission
That left one more decision, a decision that curiously sat for years, and years and years in Washington. For normal people, what in God’s name takes five years — five years — to decide. Month after month and year after year, the FEC, shrouded in secrecy, sat and sat and sat on the Complaint that alleged that the $650,000 gift violated federal campaign finance laws.
Last week’s letter to our client from the FEC ended that waiting. They concluded that Schmidt deserved more than a $2,500 penalty but because her campaign committee had no money and she was no longer a candidate for federal office the pithy sanctions was appropriate. They fined the TCA more, but not nearly enough.
A Congressman loses her seat
To understand the hubris that would lead to this type of abusive conduct by a member of Congress, one needs to understand two things: (i) members of Congress simply never (almost never) lose their seats, with reelection rates reliably above 95% (read here) and (ii) they know that the House Ethics Committee and federal prosecutors won’t lay a glove on them.
Thus, it was sweet justice in May of 2012 when the voters resoundingly turned Schmidt out of office, in part because of her record of corruption as revealed by the House Ethics Committee and media reports of her mendacity. Chris Finney even gave a series of speeches to expose the incredible tale. (see here, here, here and here).
Making a difference
We would have preferred that the path of justice in this matter had taken several different turns — that prosecutors would have recognized the multiple felonies committed by these actors in giving and receiving the illegal gift. The House Ethics Committee, the U.S. Attorneys’ office, the IRS, and ultimately the FEC failed in discharging their duties to punish these overt and incontrovertible misdeeds.
But the voters had the final say, and the slow, weak and intellectually dishonest bureaucrats, in a strange way, both exposed Jean Schmidt’s corruption, and their own inability to administer justice.
Read more here>> Enquirer: FEC settles Jean Schmidt ethics case