When Louisiana State Treasurer John Neely Kennedy first began contemplating a campaign to replace David Vitter in the U.S. Senate, his state campaign fund, John Kennedy Campaign Committee LLC, was flush with cash, sitting on a mountain of more than $2.8M.
There was just one problem: Federal law prohibited Kennedy from transferring the bulk of the donations he received for his state campaign to his newly-launched federal campaign, which is subject to a number of different prohibitions, limitations, and restrictions. The most his state campaign could legally donate to his Senate campaign was $2,000.
He needed to somehow determine a way to free up that money; if he could, it’d make an enormous difference.
Today, more than a year after Kennedy’s victory, campaign finance experts and individuals associated with his former opponents are still adamant that Kennedy flagrantly violated federal campaign finance law, and some now are urging the Federal Elections Commission to investigate the junior senator’s enormous donations to a third-party SuperPAC, which subsequently invested a fortune in Louisiana in order to boost Kennedy’s electoral prospects. An attorney who worked for one of Kennedy’s opponents spoke with The Bayou Brief on the condition of anonymity, claiming, among other things, that a complaint to the FEC had been drafted but was never sent for fear of professional retribution.
Months before the election, one of Kennedy’s closest advisers, Jason Redmond, launched a pro-Kennedy SuperPAC, Make Louisiana Proud, and in 2016, Redmond’s organization received and then spent approximately $476,000 in support of the state treasurer’s campaign for U.S. Senate, though none of that money came from Kennedy himself or from his state campaign. Perhaps there was concern that if Kennedy had transferred the bulk of his state fund balance to a political action committee led by his former employee at the Department of Treasury and two-time campaign manager, it’d be much more difficult to argue that Redmond’s PAC wasn’t simply an extension of the official Kennedy campaign (Political action committees are prohibited from coordinating with candidates).
Instead, then-Treasurer Kennedy decided to drain a total of $2.4M to ESAFund (Ending Spending Action Fund), a SuperPAC headquartered in Florida that describes itself as “an independent organization that proudly supports candidates regardless of party affiliation who favor enhancing free enterprise, reducing the size of government, and balancing our nation’s budget.” The SuperPAC is primarily associated with the Ricketts family, the owners of the Chicago Cubs and Republican billionaires who were major donors to the presidential campaign of Donald Trump. “We are also proud to strongly oppose those who do not,” ESAFund notes.
The Louisiana arm of ESAFund, at the time, was under the direction of Kyle Ruckert, a former staffer for David Vitter and the husband of Lynette Ruckert, who was then serving as the Chief of Staff for House Majority Whip Steve Scalise and is now the Chief of Staff for Louisiana Attorney General Jeff Landry.
Kennedy’s state campaign donated $2M to ESAFund on August 2nd, 2016 and another $400,000 on October 5th, 2016, only a month before the jungle primary election. He became the single-largest donor to the SuperPAC, and in turn, the SuperPAC spent $3.46M in Louisiana during the 2016 election cycle, supporting John Kennedy’s bid for the U.S. Senate and pouring hundreds of thousands of dollars to oppose three of his rivals: Public Service Commissioner Foster Campbell, U.S. Rep. Charles Boustany, and U.S. Rep. John Fleming. (Redmond’s PAC, Make Louisiana Proud, also contributed an additional $125,000 to ESAFund throughout 2016).
At the time, to be sure, the Louisiana media did not entirely ignore Kennedy’s brazen decision to transfer $2.4M, but it’s clear that, for the most part, the press never fully understood the underlying legal issues, which is understandable.
Because of a confusing and misinformed decision rendered by Judge Marty Feldman of the U.S. Eastern District Court of Louisiana in 2014, a case known as The Fund for Louisiana’s Future v. Louisiana Board of Ethics et. al., state campaign committees could now donate unlimited sums of money to PACs and SuperPACs. Unfortunately, Judge Feldman’s decision did not address or even contemplate the possibility of a state campaign, like Kennedy’s, donating to a SuperPAC established to support their own federal election. Feldman had believed that Citizens United essentially eliminated any and all limitations on donations to political action committees, an expansive reading of Supreme Court precedent that immediately comes into conflict with existing federal law.
Federal candidates are prohibited by law from donating more than $5,000 to a political action committee; at the time Kennedy donated $2.4M to ESAFund, he was a qualified federal candidate. Furthermore, federal law is clear, according to 52 U.S.C. 30125 (emphasis added):
(e) Federal candidates
(1) In general
A candidate, individual holding Federal office, agent of a candidate or an individual holding Federal office, or an entity directly or indirectly established, financed, maintained or controlled by or acting on behalf of 1 or more candidates or individuals holding Federal office, shall not–
(A) solicit, receive, direct, transfer, or spend funds in connection with an election for Federal office, including funds for any Federal election activity, unless the funds are subject to the limitations, prohibitions, and reporting requirements of this Act; or
(B) solicit, receive, direct, transfer, or spend funds in connection with any election other than an election for Federal office or disburse funds in connection with such an election unless the funds-
(i) are not in excess of the amounts permitted with respect to contributions to candidates and political committees under paragraphs (1), (2), and (3) of section 30116(a) of this title….
We also learn from 52 U.S.C. 30116 exactly what those limitations are. Quoting (emphasis added):
(a) Dollar limits on contribution
(1) Except as provided in subsection (i) and section 30117 of this title, no person shall make contributions:
(A) to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate, exceed $2,000;
(B) to the political committees established and maintained by a national political party, which are not the authorized political committees of any candidate, in any calendar year which, in the aggregate, exceed $25,000, or, in the case of contributions made to any of the accounts described in paragraph (9), exceed 300 percent of the amount otherwise applicable under this subparagraph with respect to such calendar year;
(C) to any other political committee (other than a committee described in subparagraph (D)) in any calendar year which, in the aggregate, exceed $5,000; or
(D) to a political committee established and maintained by a State committee of a political party in any calendar year which, in the aggregate, exceed $10,000.
To put it as simply as possible, John N. Kennedy, a candidate for federal office, could not use his state campaign fund to donate more than $5,000.
He exceeded that donation limit by $2,395,000.
Here’s just a snapshot of the money ESAFund spent in Louisiana during the waning weeks of the 2016 election:
Several months before the election for U.S. Senate, when John Kennedy had floated the idea of transferring large amounts of money to a supportive SuperPAC, Mark Ballard of The Advocate posed the question about whether Kennedy’s plans would actually be legal. Quoting (again, emphasis added):
The question is whether a state official can use the millions in money leftover from a campaign.
A memo, backed by one of the nation’s preeminent lawyers on campaign law, that is circulating around Louisiana political circles, asks that very question.
“The answer is no,” the memo stated.
Such a move would violate federal law, specifically the part that forbids a federal candidate — or his agent — from directly or indirectly establishing or financing an organization that aids his campaign.
Ben Ginsberg, a Washington, D.C. lawyer, said he helped write the memo and agrees with its content.
The Federal Elections Commission examines 10 factors listed in federal regulations to determine whether the Super PAC was indirectly established, financed or controlled by the candidate. Factors include whether the candidate or his agent played a significant role in forming the Super PAC and whether the candidate has control over the hiring and firing of the Super PAC personnel, according to the memo.
This may seem petty to some. A person very close to Sen. Kennedy, who asked to speak on the condition of anonymity, believes the complaints are nothing more than sour grapes and fake news promoted by his opponents and his most vociferous partisan critics. However, there are many others who contend that Kennedy’s actions violated both the spirit and the letter of the law and demonstrated a clear-cut lack of integrity and willingness to dismiss the values to which an ethical leader should aspire.
Bienvenue en Louisiane.