8.29.15 marks letter to house prohibited loan
TRANSCRIPT
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7/23/2019 8.29.15 Marks Letter to House Prohibited Loan
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FOLEY
FOLEY & LARDNER LLP
Office of General Counsel
Federal Election Commission
999 E
Street,
NW
Washington, D.C. 20463
RECEIVFn
t.
W4 nY 15 PM
/:
29
_ E MAIL
CENri:
L l
May 15,
2014
Re
: Complaint Against Respondents Mississippi
Conservatives and its treasurer, Brian Perry, both
individually and in his capacity as treasurer
of
Mississippi Conservatives, Trustmark National
Bank
and Mr. Harry Walker, President ofTrustmark Bank
To Whom
lt May Concern:
A
TT
ORNEl S AT
LAW
WASHINGTON
HARBOUR
3 K STREET. N
.W
SUITE
600
WASHINGT
ON, O.C
. 2000751 9
202.6 2.5300 T
EL
202.672.5399 FAX
WWW.FOLEY.
COM
WRITER S
DIRECT LINE
202.295.
4 81
cmrtcheQ
@oley.com EMAIL
CLIENT/MATIER NUM
BER
On
behalf
of Tea Party Patriots Citizens Fund and its Chairman, Jenny Beth
Martin (collectively, 'TPPCF ), and pursuant to 2 U.S.C.
437g a) l)
and 11 C.F .R.
111.4, the undersigned files this Complaint against Mississippi Conservatives, an
independent expenditures
only
PAC, its treasurer, Brian Perry, Trustmark Natio
na
l Bank,
located in Jackson,
MS,
and its President, Harry M. Walker (collectively Respondents ).
Tea
Party Patriots
Cit
izens Fund is
an
Independent Expenditures Only
PAC
registered
with
the Federal Election Commission, dedicated to electing true conservatives
to
the United
Sta
tes House and Senate who
will
help restore personal freedom, economic
freedom,
and a
debt-free future
to
America.
TPPCF
has endorsed state Senator Chris
McDaniel
for
the U.S. Senate in
th
e June 3, 2014 Republican Primary
in Mis
sissippi, the
first true challenge to incumbent GOP Senator Thad Cochran's (R-MS) aut
om
atic
reelect ion.
Identity
of
Respondents.
On
or about
January 13, 2014, Mississippi Conservatives filed its Statement
of Organization with the Federal Ele
ct
i
on
Commission and advised the Commission that
it
was being established as an [ndependent Expenditures Only federal political committee.
S
ee
Attached Exhib it A, Stateme
nt
of Organization and Letter from Brian
Perry,
Director
Treasurer.
BOSTON
BRUSSELS
CHICAGO
DETROIT
JACKSONVILLE
LOS ANGELES
MAOISON
MIAM I
MILWAUKEE
NE\\/ YORK
ORLANDO
SACRAMENTO
SAN
DIEGO
SAN FRANCISCO
SHANGHAI
SILICON
VALLEY
TALLAHASSEE
TAMPA
TOKYO
WASHINGTON,
O.C.
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FOLEY
FOLEY
LARDNER
LLP
Mayl5,20 14
Page 2
The
depository bank
li
sted in the Form 1 is Respondent Trustmark Bank
in
Jackson,
MS . See Exhibit A, page 4, Line 9.
Trustmark Bank is a nationally chartered bank.
According to
key
demographic information as of
May
8, 20 14 on the website of
the Federal Deposit lnsurance Corporation ( FDIC ), Trustmark National Bank is the same
entity listed as
th
e depository bank
on
the Form 1
of
Mississippi Conservatives. Trustmark
National Bank is identified as a ' national bank ',
FD
IC Certificate# 4988, with its primary
federal regulator identified as the Comptro ll
er
of the Currency ( Office of the Comptroller
of
the Currency (OCC) - Primary Federal regulator responsible for nationally chartered
commercial banks
...
). See website
of
the FDIC,
http:
//
www2.fdic.gov/idasp/confitmation outside.asp?inCertl =4988, accessed May 14,
2014.
Mr. Harry M. Walker is identified as the Regional President
of Ce
ntral
Mississi
ppi ofTrustmark
National Bank since September 201
l
Mr. Walker served as
President of Jackson Metro ofTrustmark National Bank at Trustmark Corporation from
February 2004 to September
20
11 .
Mr
Walker served as the President and Chief Operating
Officer - Commercial Services Division ofTrustmark National Bank since September
2002. See
http:
//
investing.businessweek.com/research/stocks/people/person.asp?per
sonld
=
30
9546&ti
cker=TRMK, accessed May 14,
20
14.
TPPCF files this complaint against Respondents for their violation of the
Federal Election Campaign Act of 1971, as amended ( the Act or FECA ) and the
regulations
of
the Federal Election Commission ( the Commission or FEC ), for
willfully and knowingly violating the prohibition under federal law for contributions to
political committees by national banks.
Applicable w.
2 U.S.C.
44Ib
prohibits a national bank from making contributions or
expenditures in connection with any election for any po
li
tical office, to-wit:
2
U.S.
Code 441 b - Contributions or expenditures
by national banks corporations or labor
or
ganizations
(a)
In general
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FOLEY
FOLEY L RDNER LLP
May 15, 2014
Page 3
It
is unlawful for any national bank, or any corporation
organized by authority
of
any law
of
Congress, to make a
contribution or expenditure
in
connection with any
election to any political office, or in connection with any
primary election or political convention or caucus held to
select candidates for any political office, or.
..
to make a
contribution or expenditure
in
connection with any
election at which presidential and vice presidential
electors
or
a Senator
or
Representative in, or a Delegate
or
Resident Commissioner to, Congress are to be voted
for, or in connection with any primary election or
political convention
or
caucus held to select candidates
for any of the foregoing offices,
or
for any candidate,
political committee, or other person knowingly to accept
or receive any contribution prohibited by this section, or
any officer or any director
of
. . . any national bank .. .
to
consent to any contribution
or
expenditure by the .. .
national bank ... prohibited by this section. (emphasis
added)
Further, FECA provides for severe punishment
of
knowing and willful violations
of
the campaign finance law involving amounts in excess of Twenty-Five Thousand
Dollars ($25,000). See 2 U.S.C.437g(d) l) A) (Any person who knowingly and
willfu
y commits a violation
of
any provision
of
this Act which involves the making,
receiving,
or
reporting of any contribution, donation or expenditure- (i) aggregating
$25,000 or more during a calendar year shall be fined under title 18, United States Code,
or
imprisoned for not
more
than 5 years, or both; )
Respondents, each of them, have acted in concert to deliberately, knowingly and
willfully violate the prohibition against contributions by national banks to federal political
committees involving
an
election for the United States Senate.
Facts o the Violation s)
Re
spondent Missi
ss
ippi Conservatives ( the PAC ) made its first independent
expenditures for television ads attacking Chris McDaniel
on
January 31, 2014, in the
amount of $219,540.00. ee Exhibit B, Report of Independent Expenditures against Chris
McDaniel, filed 01/31/2014. (First fndependent Expenditure ).
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FOLEY
FOLEY LARDNER LLP
May 15, 2014
Page4
However, as
of
the date when it made the
FiTst
Independent Expenditme, the PAC
had only received $160,000 in contributions. See Exhibit C, April 2014 Quarterly Report
ofMississippi Conservatives ( the PAC ).
The PAC's April Quarterly FEC
Repo11
filed on April 15, 2014 reflects the
following contributions received
prior
to the First Independent Expenditure:
01-30-2014
01 -17-2014
01-27-2014
01-21-2014
Hon. Haley Barbour
Mr. James L Barkdale
Mr. W.D. Mounger
Mr. Joe Sanderson
$ 10,000.00 (Page 6, Line A
$ 25,000.00 (Page 6, Line B)
$ 25,000.00 (Page 11 , Line B)
$100,000.00 (Page 13, Line A
The PAC repmts that it had spent $29,000 on January 23, 2014 for a poll. (Page 20,
Line B), leaving a balance of cash
on
hand as of January 31, 2014
of
$131 ,00.00
Yet, the PAC spent $219,540.00 for its First Independent Expenditure on January
31, 2014, almost $90,000 more than the amount
of
contributions the PAC had in the bank
at the time.
How?
On
January 29, 2014, Respondent Trustmark National Bank and its President, Harry
M. Walker, made an unsecured, uncollateralized loan to the PAC, which the PAC used to
pay for television attack ads against Chris McDaniel. See Exhibit C, April Quarterly FEC
Repo11
, Schedules C and C-1.
The
PAC had no cash collateral to support the loan, the loan is reported
as
being
unsecured, Trustmark Bank has no pe1fected security interest in any collateral, no future
contributions were pledged and no persons guaranteed the
loan
, therefore converting
this loan into a contribution, which violates federal law.
The
Loan from Trustmark National Bank was an illegal contribution.
Regulations
of
the FEC describe when a loan from a national bank is not a
contribution to
a po litical committee:
11 C.F.R. 100.82. Bank loans.
(a)
General provisions.
A loan ofmoney to a po litical committee ... by a ...
federally chartered depository
in
stitution (including a national bank) or a depository
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FOLEY
FOLEY
L RDNER LLP
May , 2014
Page 5
institution
whose
deposits and accounts
are
insured
by
the Federal
Deposit
Insurance Corporation ... is not a contribution by the lending
in
sti tution
i
uch loan
is made in accordance with applicable banldng laws
nd
regu lations
nd
is made in
the ordinary course ofbusiness
A loan will be deemed
to
be
made
in
the
ordinary
course
of
business if it:
(1) Bears the usual and customary interest rate of the lending institution for
the category of loan involved;
(2)
ls made on a basis that assures repayment;
(3) Is
evidenced by a written instrument; and
(4)
Is subject to a due date or amortization schedule. (emphasis added)
The FEC regulations further define the terms of a loan 'made in the ordinary course
of business', to-wit:
11 C.F.R. 82 (e) Made on a basis that assures repayment A loan,
including a line
of
credit, shall be considered made
on a
basis that assures
repayment
if
it is obtained using either of the sources of repayment described
in
paragraphs (e)(l) or (2) of this section, or a combination of paragraphs (e)(l) and
(2)
of this
sec
tion:
(1).
(i)
The lending institution making the loan has perfected a security interest
in
collateral owned by the ... political committee receiving the loan, the fair
market value
of
the collateral is equal to or greater than the loan
amount
and any
senior liens as determined on the date of the loan, and the ...political committee
provides documentation to show that the lending institution has a perfected
security interest
in
the collateral. Sources
of
collateral include, but
are not
limited
to, ownership
in
real estate, personal property, goods, negotiable instruments,
certificates of deposit, chattel papers, stocks, accounts receivable and cash on
deposit.
...
or
(2)
The
lending institution making the loan has obtained a written
agreement whereby the . .. political committee receiving the loan bas pledged
future receipts, such as
...
contributions, or interest income, provided that:
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FOLEY
FOLEY
& L
RONER LLP
May 15, 20 14
Page 6
(i)
The amount
of
the loan
or
loans obtained
on
the basis
of
such funds does
not exceed the amount of pledged funds;
(ii)
Loan amounts are based on a reasonable expectation of the receipt of
pledged funds. To that end, the ... political committee must fwnish the lending
institution documentation, i.e. cash flow charts or other financial plans, that
reasonably establish that such future funds will be available;
(iii) A separate depository account is established at
the
lending institution or
the lender obtains an assignment from the candidate or political committee to access
funds in a committee account at another depository institution that meets the
requirements of 11 CFR 103.2, and the committee has notified the other institution
of
this assignment;
(iv) The loan agreement requires the deposit of the contributions and interest
income pledged as collateral into the separate depository account for the purpose of
retiring the debt according to the repayment requirements of the loan agreement;
None of the above requirements outlined in the FEC regulations governing a
permissible loan for federal political committees are present in the facts of this matter.
The FEC report filed by Respondents on April
15
2014 clearly states that there is
no collateral for the loan and Trustrnark National Bank has no perfected security interest in
any collateral as required in Section 100.82(e)(l). Nor did the PAC and the Bank establish
a proper repayment source of a pledge of future contributi.ons as described
in 11
C.F.R.
100.82(e)(2). Schedule C and Schedule C-1 of Exhibit C specifically state that neither
repayment source exists and, accordingly, the proceeds from Trustmark National Bank are
deemed a contribution to Mississippi Citizens
y
operation of aw.
Further, the contribution from Respondent Trustmark National Bank to the PAC
was authorized and approved by its President, Hany M. Walker, in a separate violation of
federal law. 2 U.S.C. 441b provides that is unlawful for ... any officer or any director of
any national bank to consent to any contribution or expenditure by the . .. national
bank prohibited by this section.
And, it should be noted, on the same day as the illegal contribution Trustmark
National Bank made to the PAC, Respondent Harry Walker personally contributed $1,000
to the re-election campaign of incumbent Senator Thad Cochran - the beneficiary of the
expenditures by Mississippi Citizens. See Exhibit D April 2014 FEC Quarterly Report of
Thad Cochran for Senate Committee, Page 350, Line C.
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FOLEY
FOLEY L RDNER LLP
May 5, 2014
Page 7
The PAC did not have sufficient funds to make the First Independent Expenditure
absent the illegal infusion of money from Trustmark National Bank. That fact was readily
apparent to Respondents because the depository bank for the PAC s bank account(s) is
Trustmark. As the bank president, Respondent Walker had access to know the PAC s cash
on hand and was clearly knowledgeable as to the insufficiency of the funds spent by the
PAC for its First Independent Expenditure.
Mr.
Walker cannot claim to have been
unaware that, absent the funds from Trustmark, the full amount of the First Independent
Expenditure could not have been made.
Because the ' loan' does not qualify as a legally permissible loan under FECA and
the FEC regulations, it is an illegal contribution from the bank - authorized by
it
s president,
Respondent Walker.
Thus, approximately 90,000
ofMississippi Citizens' First Independent
Expenditure falsely attacking Chris McDaniel was paid for by illegaJly obtained funds.
All those involved in hatching and implementing this unlawful scheme in an
obvious knowing and wi
ll
ful violation of federal law must be punished. TPPCF is appalled
that the supporters of incumbent Sen. Thad Cochran (R-MS) are so dedicated to protecting
the st tus quo and maintaining their political power base they have resorted to engaging in
a concerted effort to violate federal law.
Conclusion
Upon information and belief, and based upon the facts set forth above,
Respondents Mississippi Conservatives, its treasurer, Br ian Perry, Trustmark National
Bank, located in Jackson, MS, and its President, Harry M. Walker have, each of hem,
individually and collectively, violated the Federal Election Campaign Act of 1971, as
amended and must be held accountable and liable for their unlawful actions.
Please contact me if you have further questions (202) 295-4081.
Respectfully Submitted,
Cleta Mitchell, Counsel
Tea Party Patriots Citizens Fund,
Jenny Beth Martin, Chairman
Complainant
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FOLEY
FOLEY L RDNER LLP
May 15 2014
Page 8
Statement
o
TPPCF Chairman Jenny eth Martin
I
m
the Chairman of the Tea Party Patriots Citizens Fund and hereby affirm and
state under penalty ofperjury that the above and foregoing statements are true and correct to
the best
of
my knowledge and belief.
Je
y Beth Martin Chairman
a Party Patriots Citizens Fund
1025 Rose Creek Dr
Ste 620-322
Woodstock
G
30189
Before me thi s JS _ day of May 2014 appeared Jenny Beth Martin and under penalty of
perjury did swear and affirm that the above and foregoing facts are true and correct to the
be
st
of her knowledge and belief.