Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 1 of 52 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division UNITED STATES, ) ) v. ) ) WILLIAM DANIELCZYK, Jr., & ) 1:11cr85 (JCC) EUGENE BIAGI, ) ) Defendants. ) M E M O R A N D U M O P I N I O N This case involves an alleged scheme of recruiting donors and reimbursing their contributions to Hillary Clinton’s 2006 and 2008 Senate and Presidential Campaigns. Defendants’ motions to dismiss raise significant questions of statutory construction, mens rea, and Congress’s ability to ban direct corporate contributions in the wake of the Supreme Court’s decision in Citizens United v. FEC, 130 U.S. 876 (2010). For the following reasons, the Court will grant in part and deny in part Defendants’ motions. I. Background On February 16, 2011, a grand jury sitting in the Eastern District of Virginia returned a seven-count indictment against William P. Danielczyk, Jr. and Eugene R. Biagi (together, “Defendants”), charging them with illegally 1 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 2 of 52 soliciting and reimbursing contributions to Hillary Clinton’s 2006 Senate Campaign (“Senate Campaign”) and 2008 Presidential Campaign (“Presidential Campaign”). (Indictment [Dkt. 1] (“Indict.”).) The Government alleges that Mr. Danielczyk, as Chairman of Galen Capital Group, LLC, and Galen Capital Corporation (together, “Galen”) and Mr. Biagi, as an executive at Galen, subverted federal campaign contribution limits by reimbursing their employees’ costs of attending two fundraisers Mr. Danielczyk co-hosted for the two campaigns. Count One charges conspiracy in violation of 18 U.S.C. § 371, Counts Two and Three charge making campaign contributions in the name of another in violation of 2 U.S.C. § 441f and 18 U.S.C. § 2, Count Four charges corporate contributions in violation of 2 U.S.C. § 441b and 18 U.S.C. § 2, Count Five charges obstruction of justice in violation of 18 U.S.C. §§ 1519 and Two, and Counts Six and Seven charge causing false statements in violation of 18 U.S.C. §§ 1001(a)(2) and 2 and are directed solely towards Mr. Danielczyk. Joint trial is set for July 6, 2011. Defendants filed motions to dismiss a number of these counts on April 6, 2011. [Dkt. 23 (“Biagi MTD”); Dkt. 28 (“Danielczyk MTD”).] The Government filed a brief in opposition on April 19, 2011 [Dkt. 37 (“Opp.”)], and Defendants filed briefs in reply on April 25, 2011 [Dkt. 46 (“Danielczyk Reply”); 2 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 3 of 52 Dkt. 49 (“Biagi Reply”)]. Defendants’ motions are before the Court. II. Standard of Review Federal Rule of Criminal Procedure 12(b)(3)(B) permits a defendant to move for dismissal pre-trial (or at any time while the case is pending) if an indictment fails to state an offense. “[A]n indictment need merely contain a ‘plain, concise, and definite written statement of the essential facts constituting the offense charged.’” United States v. Rendelman, --- F.3d ----, No. 08–4486, 2011 WL 1335781, at *5 (4th Cir. Apr. 8, 2011) (quoting Fed. R. Crim. P. 7(c)(1)). An indictment is legally sufficient if (i) it contains the elements of the offense charged and informs the defendant of the charges he must meet, and (ii) it identifies the offense conduct with sufficient specificity to allow the defendant to plead double jeopardy should there be a later prosecution based on the same facts. United States v. Jefferson, 562 F. Supp. 2d 687, 690 (E.D. Va. 2008) (citing Russell v. United States, 369 U.S. 749, 763-64 (1962)). The first prong of this standard tests the “legal sufficiency” of a charged offense, “namely whether the facts alleged satisfy each of the requisite statutory elements of a[n] . . . offense.” Jefferson, 562 F. Supp. 2d at 690. 3 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 4 of 52 In testing the sufficiency of an indictment, the indictment’s statement of facts controls the inquiry, not the statutory citations for the underlying offenses. United States v. Hooker, 841 F.2d 1225, 1227 (4th Cir. 1988). “[E]very ingredient of crime must be charged in the bill, a general reference to the provisions of the statute being insufficient.” Id. at 1228 (quoting Hale v. United States, 89 F.2d 578, 579 (4th Cir. 1937)). Generally, an indictment is sufficient if it alleges an offense in the words of the statute, as long as the words used in the indictment “‘fully, directly and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offence.’” United States v. Brandon, 298 F.3d 307, 310 (4th Cir. 2002) (quoting Hamling v. United States, 418 U.S. 87, 117 (1974)). Moreover, each count of an indictment must itself be legally sufficient. Hooker, 841 F.2d at 1230-31. Thus, a missing element from a challenged count cannot be borrowed from another count if it is not incorporated by reference. Id. at 1231. Nonetheless, the determination of an indictment’s validity is based on practical not technical concerns. United States v. Matzkin, 14 F.3d 1014, 1019 (4th Cir. 1994). III. Analysis Defendants argue the following in favor of dismissal. First, that Counts Two and Three cannot apply to their charged 4 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 5 of 52 conduct as a matter of statutory construction. Second, that Defendants could not have had the requisite mens rea for Counts Two and Three, as well as Six and Seven. Third, that the statute underlying Count Four was rendered unconstitutional by the Supreme Court’s recent decision in Citizens United v. FEC, 130 U.S. 876 (2010). Fourth, that a bill of particulars is required for Count Six. And fifth, that the objects of the conspiracy alleged in Count One that rely on Counts Two, Three, and Four must be dismissed. The Court considers these arguments in turn. A. Statutory Construction of § 441f (Counts Two & Three) Counts Two and Three charge the Defendants with violating 2 U.S.C. § 441f, which states in relevant part: No person shall make a contribution in the name of another person. The mens rea for § 441f is stated in 2 U.S.C. § 437g(d)(1)(D), and applies to [a]ny person who knowingly and willfully commits a violation of § 441f. 2 U.S.C. § 437g(d)(1)(D). In addition, Counts Two and Three involve 18 U.S.C. § 2(b), which states, Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal. 5 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 6 of 52 The Indictment alleges that, in connection with fundraisers held on September 18, 2006, for the Senate Campaign and March 27, 2007, for the Presidential Campaign, Mr. Danielczyk “recruited individuals to make contributions” to Clinton’s campaigns “and assured contributors that they would be reimbursed for their contributions.” Indict. ¶ 12.a.i. Mr. Danielczyk’s assistant allegedly “collected certain contributions from the contributors,” which were “transmitted to the authorized campaign committees.” Indict. ¶ 12.a.ii. Defendants then allegedly caused Galen to “reimburse[ ] [the] contributions.” Indict. ¶ 12.a.iii.1 Count Two alleges that Defendants “caused $30,200 in contributions to the 2006 Senate [C]ampaign using” the names of others and “caused the reimbursement of those contributions” using money from Galen. Indict. ¶ 13.a. Count Three alleges that Defendants “caused $156,400 in contributions to the 2008 Presidential [C]ampaign using” the names of others and “caused the reimbursement of those contributions” using money from Galen. Indict. ¶ 13.b. Defendants argue that Counts Two and Three fail to state a violation of 2 U.S.C. § 441f. (Danielczyk MTD at 8.) 1 The Court notes that paragraph 12 of the Indictment is set forth in Count One of the Indictment. Indict. at pp. 4-6. Counts Two and Three of the Indictment each incorporate the Indictment’s General Allegations and incorporate Paragraphs 13(a) and 13(b), respectively, but do not incorporate Count One. Indict. at pp. 13-14. 6 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 7 of 52 According to Defendants, “[r]eimbursing another for his or her contribution is not the same thing as making a contribution in the name of another.” (Danielczyk MTD at 9 (emphasis removed).) Section 441f, on Defendants’ read, “prohibits making a contribution to a campaign by falsely using the name of another person, such as by using an assumed name to make a contribution,” but “[i]t does not prohibit reimbursing others for contributions they made in their own names.” Id. The Government counters that Defendants offer an “unreasonably narrow reading of the text,” and that “[i]n fact, the statutory text and the legislative history all make it plain that a pass-thru scheme using straw donors to conceal the identity of the actual donor, as alleged in the indictment, is unambiguously criminalized by § 441f.” (Opp. at 3 (internal quotation marks and citation removed).) The issue before the Court, then, is whether § 441f2 proscribes only (1) a donor making a contribution to a campaign but representing himself to the campaign as someone else, which the Court will refer to as a “false-name contribution,” or whether it proscribes also (2) a donor arranging for another person to contribute funds to the campaign in that other 2 Counts Two and Counts Three charge violations § 441f together with 18 U.S.C. § 2(b) and 2 U.S.C. § 437g(d)(1)(D). The Court’s analysis in addressing § 441f reads it in context with 18 U.S.C. § 2(b) and 2 U.S.C. § 437g(d)(1)(D) except where the Court addresses § 441f’s language standing alone. 7 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 8 of 52 person’s name with the agreement to reimburse that other person, which the Court will refer to as a “pass-through contribution.” Defendants cite four reasons for limiting § 441f to false-name contributions: (1) the statute’s text, (2) the statute’s structure, (3) the need to avoid superfluity in statutory construction, and (4) the rule of lenity and constitutional concerns. The Court considers each in turn. i. Statutory Text Defendants first argue that § 441f’s text does not prohibit pass-through contributions. (Danielczyk MTD at 11.) In support, Defendants state that Congress addressed the issue of making contributions “directly or indirectly,” and through “intermediaries or conduits,” in other provisions of the Federal Election Campaign Act of 1971 (“FECA”), 2 U.S.C. § 431, et seq., such as § 441a(a)(8) and § 441b(b)(2),3 but omitted that language from § 441f. Id. Because the words “directly or indirectly” and through “intermediaries or conduits” are not in § 441f, Defendants argue, § 441f bans only false-name contributions, not pass-through contributions. (Danielczyk MTD at 12.) In interpreting a statute, courts begin with the text of the provision at issue. N.Y. State Conference v. Travelers 3 2 U.S.C. § 441b(b)(2) provides that “[f]or purposes of this section . . . the term ‘contribution or expenditure’ includes a contribution or expenditure, as those terms are defined in section 431 . . . and also includes any direct or indirect payment . . . to any candidate.” (emphasis added). 8 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 9 of 52 Ins. Co., 514 U.S. 645, 655 (1995). The “preeminent canon of statutory interpretation requires [courts] to ‘presume that the legislature says in a statute what it means and means in a statute what it says there.’” BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992)). The Court is mindful that “[i]n a statutory construction case, the beginning point must be the language of the statute, and when a statute speaks with clarity to an issue[,] judicial inquiry into the statute’s meaning, in all but the most extraordinary circumstance, is finished.” Ramey v. Director, Office of Workers’ Comp. Program, 326 F.3d 474, 476 (4th Cir. 2003) (citing Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475 (1992)). A court’s “inquiry begins with the statutory text, and ends there as well if the text is unambiguous.” BedRoc Ltd., 541 U.S. at 183 (citing Lamie v. United States Trustee, 540 U.S. 526, 534 (2004)). To review, § 441f states in relevant part that “[n]o person shall make a contribution in the name of another person.” According to Defendants, the Court would have to “rewrite § 441f to include terms that Congress deliberately excluded” for § 441f to reach to the conduct charged here. (Danielczyk MTD at 11- 12.) The Court disagrees. 9 Case 1:11-cr-00085-JCC Document 60 Filed 05/26/11 Page 10 of 52 As Defendants note, FECA is a comprehensive, reticulated statute. (Danielczyk MTD at 9.) As such, it has a comprehensive definitional section, 2 U.S.C. § 431. “Person” is defined to include “an individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons.” 2 U.S.C. § 431(11). “Contribution” is defined as including “any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office.” 2 U.S.C. § 431(8)(A)(i). Defendants are clearly “persons” and the donations to Clinton’s campaigns were clearly “contributions.” The issue, then, is what “make” and “in the name of another” mean for purposes of § 441f. As written, § 441f plainly embraces Defendants’ charged conduct. In § 441f, the action happens, literally, with the verb “make.” FECA, though comprehensive and reticulated, does not define “make.” “When a word is not defined by statute, [courts] normally construe it in accord with its ordinary or natural meaning.” Smith v. United States, 508 U.S. 223, 228 (1993). As for the ordinary or natural meaning of “make,” the American Heritage Dictionary defines “make” as, among other things, “[t]o cause to exist or happen; bring about; create.” American Heritage Dictionary of the English Language 1085 (3d ed. 1992). Black’s Law Dictionary defines “make,” among other 10