Lobbyist Pleads Guilty to Role in Illegal Campaign Contribution Scheme

Paul Magliocchetti, the founder and president of PMA Group Inc., a lobbying firm, plead guilty Friday in federal court in Arlington, Va., to making hundreds of thousands of dollars in illegal campaign contributions and making false statements to a federal agency, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.

Magliocchetti was charged in an indictment unsealed on Aug. 5, 2010. According to the indictment, Magliocchetti orchestrated a scheme to make illegal conduit and corporate federal campaign contributions in an effort to enrich himself and PMA by increasing the firm’s influence, power and prestige among the firm’s current and potential clients as well as among the elected public officials to whom PMA and its lobbyists sought access. The federal campaigns that received these funds were unaware of Magliocchetti’s scheme.

Magliocchetti admitted that, from 2005 through 2008, he used members of his family, friends and PMA lobbyists to make unlawful campaign contributions. Aware of the strict limits on individual federal campaign contributions – and the outright ban on corporate contributions – Magliocchetti admitted that he instructed the conduits to write checks out of their personal checking accounts to specific candidates for federal office and that, for the purpose of making these contributions, Magliocchetti advanced funds to or reimbursed these individuals using personal and corporate monies. Magliocchetti also admitted that, through this scheme, he caused various federal campaign committees to unknowingly create and file false reports with the Federal Election Commission (FEC) regarding the contributions they had received. These reports, which the FEC made available to the public, falsely stated that the conduits had made contributions, when in fact the contributions were made by Magliocchetti or PMA.

"For years, Mr. Magliocchetti, by using conduit contributors, hid the fact that he and his company were donating significant funds to campaigns in violation of the federal election laws. Mr. Magliocchetti, in an effort to cover his tracks, used family, friends and business associates to secretly funnel hundreds of thousands of dollars to political campaigns, all in an effort to enrich himself and increase his power and prestige," said Assistant Attorney General Lanny A. Breuer. "This case is an important reminder to all who seek to evade the federal campaign finance laws that they will be prosecuted to the full extent of the law."

"Mr. Magliocchetti is answering for his brazen disregard for the law to achieve political influence and enrich himself," said U.S. Attorney MacBride. "Campaign finance laws give transparency to political contributions, and protect the public’s ability to see who’s really funding a campaign."

"Americans should be confident that elections are not being influenced by illegal campaign contributions. Those who undermine this process and use it to gain power and influence should be punished" said Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office. "I’m proud of the diligent efforts put forth by special agents from the Defense Criminal Investigative Service and FBI who investigated this matter."

Magliocchetti pleaded guilty to one count each of making false statements, making illegal conduit contributions and making illegal corporate contributions. The maximum penalty for making false statements to a federal agency and making illegal campaign contributions from a corporation is five years in prison, and a $250,000 fine, to be followed by a term of up to three years of supervised release. The maximum penalty for making illegal campaign contributions in the name of another is five years in prison, a fine of not less than 300 percent of the amount involved in the violation and not more than the greater of $50,000 or 1,000 percent of the amount involved in the violation, and a three year term of supervised release. Magliocchetti is scheduled to be sentenced on Dec. 17, 2010.

This case is being prosecuted by Deputy Chief Justin V. Shur and Trial Attorneys M. Kendall Day and Kevin O. Driscoll of the Criminal Division’s Public Integrity Section, and by Assistant U.S. Attorney Mark D. Lytle of the U.S. Attorney’s Office for the Eastern District of Virginia. The case is being investigated by the FBI and the Defense Criminal Investigative Service.

Equifax Sued for Leaking Consumer Information to Lexis/Nexis

Equifax Information Services claims LexisNexis slipped up in selling its reports on a civil judgment, prompting a consumer to file a Fair Credit Reporting Act claim against it. Equifax says it was sued by a consumer who claims the credit agency failed "to adopt reasonable procedures to ensure maximum possible accuracy in its reporting of the status of judgments that have been set aside, vacated or dismissed with prejudice." Equifax sued LexisNexis, a "public records vendor," in Federal Court. It says LexisNexis has not responded to its demand for indemnification.

According to the complaint, the two companies have a 2008 agreement that requires "LexisNexis to provide Equifax with the 'status' of judgments." more

ABC Faces Revived Defamation Suit by Rev. Fred Price

Last Tuesday, the United States Court of Appeals overturned a federal judge's controversial ruling that ended Rev. Frederick K. C. Price’s defamation lawsuit against ABC "20/20" and correspondent John Stossel. According to the Court, Judge R. Gary Klausner had erroneously ruled in the matter.

In the lower court's decision, Judge Klausner found that even though Stossel's broadcast took Price’s words out of context, the prominent national television evangelist could not establish that the broadcast was false or misleading, as Price had made similar statements elsewhere.

But a three-member panel at the Federal Ninth Circuit Appeals Court determined that Judge Klausner had overreached. The Court found that Klausner erred both by comparing the statements in the clip with Price's actual wealth and possessions, and by agreeing with the network that the clip was "substantially true" based on that comparison.

"Under controlling Supreme Court precedent on when journalists' misquotations of statements made by public figures are false for purposes of establishing actual malice, there is a substantial likelihood that Price can establish that the publication of the clip was false," Judge Mary Schroeder wrote.

Price’s litigation stems from a heavily edited March 2007 broadcasted clip, wherein he states:

"I live in a 25-room mansion. I have my own $6 million yacht. I have my own private jet and I have my own helicopter and I have seven luxury automobiles."

The clip was edited to conceal that Price was speaking hypothetically about a wealthy person who was spiritually unsatisfied.

It is reported that ABC later apologized. However, the Ninth Circuit has ordered the case reopened.

Paul Weiss and Lowenstein Ordered to Pay $1.96 Million for Filing Frivolous Suit

Bergen County, N.J., Superior Court Judge Ellen Koblitz doesn't seem too worried about sparing the reputations of Paul, Weiss, Rifkind, Wharton & Garrison and Lowenstein Sandler. In June, you'll recall, she found that the two firms had filed a frivolous suit on behalf of billionaire Ronald Perelman in a family dispute over hundreds of millions of dollars. On Friday she issued a final opinion (pdf), rejecting the firms' arguments for mercy and ordering them to pay $1.96 million in legal fees to the defendants, Perelman's former father-in-law and brother-in-law.

"Paul Weiss and Lowenstein Sandler argue that since they are both such important, well-regarded law firms, the mere finding that they engaged in frivolous litigation is deterrence enough," Koblitz wrote. "They argue that this court's finding of frivolous litigation has been widely publicized and besmirches their reputation, which will cost them untold, unspecified damages. A monetary sanction, however, is clearly appropriate here." more