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FEC Violation an Honest Mistake?

Defense attorneys for two Baltimore County businessmen spent hours quizzing prosecution witnesses yesterday in an attempt to show that federal election regulations are so complex the defendants likely made an honest mistake when they asked four employees to contribute to a congressional campaign in 1996.The businessmen, J. Mark Loizeaux and his brother, Douglas K. Loizeaux, president and vice president of Controlled Demolition Inc. in Phoenix, are charged in U.S. District Court in Baltimore with willfully causing the treasurer of Elijah E. Cummings’s 1996 congressional campaign to file false statements with the Federal Election Commission. They are not charged with making illegal contributions.Lois G. Lerner, FEC associate general counsel for enforcement, testified as a prosecution witness, telling the jury that campaign reports showed that each of the four employees contributed $1,000 to Cummings’s campaign in spring 1996.None complied with federal regulations that required each to identify his employer, Lerner told Assistant U.S. Attorney P. Michael Cunningham.Later, however, defense attorney Gregg L. Bernstein, who represents Douglas Loizeaux, pointed out while cross-examining Cummings’s 1996 campaign treasurer, Francine Allen, that all four employees provided the employment information to Cummings’s campaign volunteers.Federal prosecutors claim the Loizeaux brothers asked the employees to contribute to Cummings’s campaign and then reimbursed them with company funds.Corporations are barred from contributing to federal campaigns, and it is illegal to donate money to a campaign in someone else’s name, prosecutors said.Cummings was running in a special primary and special general election in 1996 to fill the 7th Congressional District seat vacated when former Rep. Kweisi Mfume retired to head the NAACP.Cummings, who is not accused of wrongdoing, supported replacing outdated federal high-rise housing projects with new, affordable housing. Controlled Demolition is a company that specializes in demolishing high-rise structures.Defense attorney Martin S. Himeles Jr., who represents Mark Loizeaux, cross-examined Lerner for more than two hours. He began by having her note for the jury that FEC regulations take up 297 pages.Could a corporation give to a campaign, Himeles asked. No, Lerner said, but a corporation may form a political-action committee to raise money.A corporation also may endorse a candidate and urge its senior management to contribute to a specific campaign, Lerner said. She also said a corporation might sponsor speaking events for specific candidates.Corporations may pay for “issue advocacy” ads, such as stating a position on abortion or gun control, Lerner said, and they may conduct voter registration drives and get-out-the vote campaigns, so long as the efforts don’t endorse specific candidates.Partnerships, unlike corporations, may contribute to federal campaigns, Lerner said.“Goldman Sachs [a banking and brokerage partnership] with tens of thousands of employees, can contribute?” Himeles asked. “Yes,” Lerner said.Himeles asked if the same rules apply to state elections.“No,” Lerner said. Corporations may contribute to state elections in Maryland, she said.Defense attorneys told the jury in opening statements Monday that Controlled Demolition is a family-run business with about 18 regular employees. The Loizeaux brothers were described as “political neophytes” who didn’t normally support political campaigns.The attorneys also sought to show that it might have been unnecessary for the Loizeaux brothers to violate campaign laws.Mark Loizeaux and Douglas Loizeaux, along with Mark’s wife and daughter, Lerner acknowledged on cross-examination, could have lawfully contributed a total of $4,000 to Cummings’ primary and another $4,000 to his general election.This total equals roughly the amount the brothers and their family members and employees gave Cummings’s campaign in combined legal and allegedly illegal contributions, Himeles noted.The trial is expected to go until the middle of next week.