28-month sentence for businessman who funneled cash to Hillary Clinton campaigns

A Northern Virginia businessman convicted of illegally funneling cash from his banking firm to Hillary Rodham Clinton’s senate and presidential campaigns was sentenced to two years and four months in federal prison Friday — bringing to a conclusion a case that drew national attention as it briefly challenged a longtime federal ban on corporate donations to political candidates, authorities said.

William P. Danielczyk Jr., 51, the founder of a McLean-based banking firm known as Galen Capital Group, had pleaded guilty in February to one count of making illegal conduit campaign contributions. Federal prosecutors had asked U.S. District Judge James C. Cacheris to send him away for five years, saying in court filings he was the leader of a far-reaching conspiracy that “undermined one of the core goals of the federal campaign finance laws — transparency.”

“Danielczyk left a wake of devastation in his path,” federal prosecutors wrote in court filings, noting three of his employees had also pleaded guilty in the conspiracy and coverup.

One of those, Eugene R. Biagi, 78, was sentenced Friday to two years of supervised probation for his role in the scheme. Biagi, who now works as a handyman, was Galen’s treasurer and Danielczyk’s longtime friend.

The case garnered national headlines when Cacheris threw out one charge against Danielczyk and Biagi because — in his opinionthe Supreme Court’s controversial Citizens United v. Federal Election Commission decision made corporate donations to candidates permissible. The U.S. Court of Appeals for the 4th Circuit in Richmond reversed that ruling and the Supreme Court declined to take up the case.

Prosecutors had accused Danielczyk and Biagi of lining up individual donors to contribute to former secretary of state Clinton’s senate and presidential campaigns in 2006 and 2008, then reimbursing them with money from Galen. They used at least 35 other employees or friends to disguise more than $186,000 in contributions, then paid back the so-called straw donors with money from Galen’s corporate coffers, court filings show.

Campaign finance law prohibits both direct corporate contributions to federal political candidates and disguising individual donations by reimbursing the donors.

“His conduct was far from aberrant,” prosecutors said in court filings. “On multiple occasions throughout the duration of the scheme, the defendant reimbursed the contributions of no fewer than thirty-five different individuals, most of whom were dependent upon him for their livelihoods.”

Todd Richman, Biagi’s attorney, declined to comment. Daniel­czyk’s attorney said his client “fully accepted responsibility for his actions and he appreciates the outpouring of support from his family, friends, and business associates.”

Prosecutors also accused Danielczyk and Biagi of taking extreme measures to cover up their misconduct. At one point, Danielczyk told his secretary to send a letter to some of the straw donors referencing their reimbursement checks as a “consulting fee” — an effort to hide the checks’ connection to campaign donations. He and Biagi also cut reimbursement checks that did not exactly match campaign donation amounts, another effort to throw off investigators.

Perhaps most brazenly, Danielczyk and Phil Layton, Galen’s information technology officer, tried to swap out the computer Danielczyk used during the scheme when they turned over materials to the FBI. Layton pleaded guilty in May 2011 to destroying, altering or falsifying records in a federal investigation and was sentenced to 60 days in prison. Danielczyk’s secretary, April Spittle, also pleaded guilty to aiding and abetting campaign contributions in the names of others that year and was sentenced to a year of unsupervised probation for her role in the scheme.

Court filings show that investigators did not uncover any involvement by Clinton or her aides in the scheme; one aide helping Danielczyk organize fundraisers specifically told Danielczyk and Spittle that the campaign could not accept corporate funds, and no one could reimburse donors.

Danielczyk’s attorney wrote in a court filing that there was no “quid pro quo” between Clinton and his client, and Biagi’s attorneys wrote that Biagi, a Navy veteran and grandfather of seven, did not even support her. The attorneys said Biagi only did what Danielczyk told him to do.

“Mr. Biagi was a die-hard Republican who strongly disliked Hillary Clinton and had no desire to help fund her campaign, either legally or illegally,” the attorneys wrote.

Matt Zapotosky covers the federal district courthouse in Alexandria, where he tries to break news from a windowless office in which he is not allowed to bring his cell phone.
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