United States v. Gerald Lundergan
20-5890
| 6th Cir. | Aug 9, 2021Background
- Gerald Lundergan (owner of S.R. Holding) and consultant Dale Emmons were heavily involved in Alison Lundergan Grimes’ 2014 U.S. Senate campaign; S.R. Holding paid vendors and reimbursed Emmons for services that benefited the campaign but many payments were not reported to the campaign or FEC.
- Key transactions included a Carrick House kick-off event where S.R. Holding paid ~$25,495 but invoiced the campaign only ~$3,706, and ~$90,500 paid by S.R. Holding to Emmons & Company for consulting (July–Nov 2013).
- Emmons coordinated robocalls and mailers; some vendor invoices explicitly referenced the Grimes campaign though S.R. Holding made many payments and did not seek campaign reimbursement.
- Lundergan and Emmons were indicted for unlawful corporate contributions (FECA), conspiracy, false statements, and record falsification; the district court denied motions to dismiss.
- The district court admitted 2011 and 2015 campaign-related acts under Rule 404(b); after a 21-day trial a jury convicted both defendants on all counts. Sentences were imposed and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FECA’s ban on corporate contributions is unconstitutional as applied to intrafamilial payments from a closely held family corporation | Government: ban validly serves the anti‑corruption interest (quid pro quo and appearance) and is closely drawn; applies to corporate payments even if owned by family | Lundergan/Emmons: intrafamilial payments pose little risk of quid pro quo; treating sole‑owner corporations like other corporations unlawfully burdens First Amendment rights | Court: rejected as‑applied challenge; contributions from closely held family corporations pose cognizable risk of quid pro quo and may be regulated; upheld application of corporate ban |
| Whether jury instructions adequately distinguished prohibited coordinated contributions from protected independent expenditures | Government: instructions correctly explained that coordinated expenditures are treated as contributions and independent expenditures (without coordination) are permissible | Defendants: instructions conflated statutory definitions and could mislead jury into treating any corporate expenditure as unlawful contribution | Court: instructions, read as a whole, accurately stated the law and made the coordination requirement and distinction clear; no reversible error |
| Admissibility under Rules 404(b) and 403 of 2011 and 2015 campaign transactions (other‑acts evidence) | Government: the other acts were probative of intent, knowledge, absence of mistake and were temporally and factually similar; limiting instruction would mitigate prejudice | Defendants: evidence was remote, not substantially similar, risked impermissible propensity inferences and unfair prejudice; some acts didn’t involve Emmons | Court: admissible under 404(b) to show intent/knowledge/absence of mistake; acts were substantially similar and near in time; Rule 403 balance did not weigh against admission given limiting instruction |
| Sufficiency of evidence that Emmons knowingly intended unpaid corporate payments would not be reimbursed or that he caused false reports | Government: Emmons had campaign involvement, attended finance training, received compliance materials, submitted vague invoices and helped conceal payments—supporting willfulness and knowledge | Emmons: no evidence he knew payments wouldn’t be reimbursed or that he handled campaign finance reporting; insufficient mens rea | Court: evidence, viewed most favorably to prosecution, was sufficient for a rational jury to find Emmons acted knowingly and willfully; denied acquittal |
Key Cases Cited
- Buckley v. Valeo, 424 U.S. 1 (U.S. 1976) (upheld contribution limits under a closely‑drawn anti‑corruption standard and distinguished contributions from independent expenditures)
- Citizens United v. FEC, 558 U.S. 310 (U.S. 2010) (corporate independent expenditure restrictions invalid; distinguishes coordinated (regulable) spending from independent expenditures)
- McCutcheon v. FEC, 572 U.S. 185 (U.S. 2014) (reaffirmed quid pro quo corruption as the relevant government interest for contribution limits)
- FEC v. Nat’l Right to Work Comm., 459 U.S. 197 (U.S. 1982) (upheld corporate contribution ban to prevent actual or apparent corruption)
- FEC v. Beaumont, 539 U.S. 146 (U.S. 2003) (reaffirmed constitutionality of corporate contribution prohibition and anti‑circumvention rationale)
- Bryan v. United States, 524 U.S. 184 (U.S. 1998) (mens rea: "willful" requires knowledge that conduct was unlawful)
- Ratzlaf v. United States, 510 U.S. 135 (U.S. 1994) (willfulness requires awareness of unlawfulness)
- United States v. Haywood, 280 F.3d 715 (6th Cir. 2002) (standards for admitting other‑acts evidence under Rule 404(b))
- Huddleston v. United States, 485 U.S. 681 (U.S. 1988) (admissibility of similar‑act evidence requires sufficient proof the act occurred)
- Old Chief v. United States, 519 U.S. 172 (U.S. 1997) (unfair prejudice defined as tendency to provoke decision on an improper basis)
- Schickel v. Dilger, 925 F.3d 858 (6th Cir. 2019) (explains government need only show a cognizable risk of quid pro quo corruption)