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The legal lines Louis DeJoy’s alleged campaign contribution reimbursements may have crossed

Postmaster General Louis DeJoy is accused of giving employees bonuses to cover up his political donations to GOP candidates when he was chief executive of New Breed Logistics. (Tom Williams/AP)

Campaign finance laws are set up to prevent precisely what former employees of Postmaster General Louis DeJoy allege he did in a new Washington Post report: lean on employees to donate money to political candidates and then reimburse them for it using company money.

“There are a lot of things in campaign finance law you can get away with, a lot of gray area or places where the law is weak,” said Meredith McGehee, the executive director of Issue One, which advocates for stronger campaign finance laws. “This is one place where the law is clear and has been enforced.”

The law is clear, but it’s less certain whether DeJoy could face consequences. Let’s walk through specific ways this could be illegal and what, if anything, could happen to DeJoy.

First, here’s a summary of the allegations: Five people who worked at DeJoy’s former company, New Breed Logistics, told The Washington Post that they were encouraged to attend fundraisers DeJoy held and give thousands of dollars to GOP candidates. Two former employees said DeJoy engineered bonuses for these people that covered the cost of the donations, plus any taxes they would pay on their bonuses. Campaign finance records reviewed by The Post suggest that this could have gone on from about 2000 to 2014, when DeJoy sold the company.

DeJoy’s spokesman told the Post that DeJoy was not aware that any employees had felt pressured to make donations, but did not directly address the assertions that DeJoy reimbursed workers for making contributions. He pointed to a statement in which he said DeJoy “believes that he has always followed campaign fundraising laws and regulations.”.

Campaign finance experts say there are three federal laws these allegations seem to break, all of them serious.

1. Covering up the source of donations

Postmaster General Louis DeJoy on Aug. 24 said that he did not reimburse employees of his former company for political donations made to the Trump campaign. (Video: C-SPAN)

The Post tallied up at least $1 million in donations to Republican candidates from New Breed employees when DeJoy headed the company. DeJoy, already a prolific Republican fundraiser, couldn’t legally give all that money to candidates’ campaigns himself because there are limits on how much one person can give. So he’s accused of obscuring his donations by having other people — employees who worked for him — write checks, and then paying them back through the company.

Experts say that’s a pretty straightforward case of masking where the donations are coming from to give more than is allowed. It’s also common in these cases for the money to be masked via bonuses.

“With the facts presented, it’s a run-of-the-mill but very illegal corporate straw donor scheme,” said Adav Noti, a former top lawyer with the Federal Election Commission (FEC) and now with the Campaign Legal Center, a nonpartisan campaign finance watchdog.

“A wink and a nod to provide reimbursement crosses the [legal] line,” McGehee said.

2. Using corporate money to cover up these donations

Companies can’t give to political candidates. In fact, before the 2010 Citizens United case, they couldn’t give money to politicians at all. (Now they can contribute via political action committees.)

DeJoy’s company is accused of paying bonuses to employees who gave money directly to candidates since about 2000. That would be a clear violation of the most basic tenets of campaign finance law.

“Corporate contributions through bonuses and potentially coercing people to make this contribution are among the most serious violations of campaign finance laws,” said Lawrence Noble, a former general counsel for the FEC who is now with the Campaign Legal Center. “Because you are taking prohibited contributions from a corporation, and you’re funneling it through employees.”

In 2014, the former head of the Fiesta Bowl corporation was sentenced to eight months in prison for a scheme to have employees make political contributions and reimburse them with bonuses. In 2006, Freddie Mac had to pay nearly $4 million in fines for using corporate resources for political fundraising.

Noble said what stands out in the DeJoy allegations is how synchronized the donations-to-bonuses cycle is alleged to have been. “It’s rare to see it that blatant,” he said.

3. Potentially coercing employees to give

There’s a potential third allegation in the article, but it would be tough to prove based on what we know and the nature of the law. It can be difficult to know whether an employee was solicited or forced to donate. The former is legal in some cases and unethical in others; the latter is illegal.

The FEC has narrowed its definition of coercion over the years, making it even harder to pin that down, said Melanie Sloan with the government watchdog group American Oversight.

There is more leniency in the law for senior executives to be cajoled into giving, said Noti of the Campaign Legal Center. The law is stricter for rank-and-file employees.

A number of the New Breed Logistics employees quoted by The Post seem to be pretty senior. David Young, the company’s longtime human resources manager, said: “No one was ever forced to or lost a job because they didn’t, but if people contributed, their raises and their bonuses were bumped up to accommodate that.”

But another former employee told The Post that he thought his job or chance to move up was tied to giving, which experts said would be illegal. A former plant manager said his boss told him that donations to former New York mayor Rudolph W. Giuliani’s 2008 presidential campaign were “highly recommended.”

“I took that to mean my job is on the line here, or things won’t go smooth for me here at New Breed if I didn’t contribute,” said the plant manager, Steve Moore.

Other people backed up Moore on feeling coerced to give. As The Post reports:

DeJoy and trusted aides at the company made clear that he wanted employees to support his endeavors — through emails inviting employees to fundraisers, follow-up calls and visits to staffers’ desks, many said.
“He would put pressure on the executives over each of the areas to go to their employees and give contributions,” one former employee said.

What could happen to DeJoy?

Chief executives have gone to federal prison for similar schemes, but that’s unlikely to happen to DeJoy, according to experts who spoke with The Fix. They gave us a few reasons for that.

The statute of limitations on federal campaign finance violations is five years. These donations seem to have petered out six years ago, according to Post reporting.

The federal agency that would open a civil investigation, the FEC, doesn’t have a quorum right now because of a lack of appointees.

DeJoy’s status as postmaster general during an election that will rely heavily on votes by mail may protect him. The Justice Department could open a criminal investigation. It has a long-standing policy of not opening election-related investigations this close to an election.

The allegations facing DeJoy also violate campaign finance laws in North Carolina, which is where New Breed was headquartered. There is no statute of limitations for felonies there. Josh Stein, the state’s Democratic attorney general, released a statement noting the story.

Several officials said any state investigation would start with the State Board of Elections, and could wind up in the hands of either the district attorney in Guilford County, Where New Breed was headquartered, or the district attorney in Wake County, where the SBE is located. The SBE has not yet commented publicly on the allegations.

At the very least, these allegations dump fuel on the political fire surrounding DeJoy, which started over suspicions that he is conducting Postal Service business in a way that benefits President Trump.

This post has been updated.