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A Rare Campaign Finance Indictment

Chip Somodevilla/Getty Images News/Getty Images

Something pretty remarkable happened Thursday morning in Ohio: Two businessmen were charged with serious violations of federal campaign finance law. That doesn’t happen so much these days, what with the United States Supreme Court eviscerating limits on campaign giving and spending and with the Federal Election Commission in a state of permanent dysfunction.

But it happened in Cleveland, where a federal grand jury returned indictments against the owner and chief financial officer of a direct marketing company based in North Canton that sells a motley mix of products—space heaters, collectible coins, jewelry, and more. And if the charges hold up in trial that would suggest that—as I suspected—I was lied to last year, repeatedly.

I was in Ohio in April of 2012 reporting a cover story on the state’s political landscape heading into the election season, when I decided to check out something that I’d seen reported in the Toledo Blade the previous summer: an unusually large number of donations, more than $200,000, from the employees of the direct marketing firm, Suarez Corporation, to the campaigns of Josh Mandel, the Republican state treasurer challenging Democratic Sen. Sherrod Brown, and of Rep. Jim Renacci, a Republican congressman who represents the Canton area. The donations were a red flag—it is illegal for employers to urge employees to give to certain candidates in exchange for later reimbursement, as a way around the $2,500 per-donor limits ($5,000 for the primary and general election combined) on campaign contributions.

I was not far from Canton and figured I’d look into the matter—I went from one home to the other of Suarez employees who had cut big checks to Mandel and Renacci, asking if they had done so of their own volition. From my May 2012 account:

I first went to the home of Barbara Housos, listed in campaign records as an “accounting manager,” who last year gave both Renacci and Mandel the $5,000 maximum ($2,500 for the primary and again for the general election). Housos lives in northwest Canton, in a ranch house that the real estate site Zillow estimates is worth $128,000. When she came to the door, I asked her why she’d given so generously. “It’s personal,” she said. “I follow the news, that kind of thing.” Were the contributions of her free will? “Of course.” In a more upscale neighborhood not far away, I found Charles Stewart, the director of merchandising at Suarez, who had given Renacci only $250. He was setting out in his car with a woman whom I presumed to be his wife. I asked why so many Suarez employees were giving to the two candidates. “The owner of our company is very Republican,” he said. But, he added, “He doesn’t push the executives to give.” Then he said something that piqued my interest: “There was an investigation. I wasn’t involved in it, because I didn’t give the amount of money [others] gave.” The woman tugged on his arm, urging him to shut up. He apologized, saying he had to go and that his mind was a bit jet-lagged. “I just got back from the Orient,” he said.

On the other side of town, I learned what Stewart had been referring to. I visited the home of Michael Blubaugh, a copywriter at Suarez who had given $5,000 each to Renacci and Mandel last year—and whose wife, Donna, had done the same. They live in a modest subdivision, in a home valued by Zillow at about $142,000. When Donna came to the door, she said she had already been asked about the donations by the FBI. The inquiry had caught her by surprise, she said, “because I didn’t know about the rules, so I was like, ‘What?’” But she said the $20,000 had been given of her and her husband’s free wills. “Our house may not look it, because we’re saving for retirement, but my husband makes good money as a copywriter,” she said. But why give so much to the candidates? “My husband made the decision, not me,” she said.

Yes, it turned out the FBI had also decided to find out more about the donations, which company officials declined to comment on when I visited Suarez headquarters. After I broke news of their investigation, Mandel and Renacci (who had previously sworn the money was clean) eventually returned the contributions. (Ohio Gov. John Kasich received $22,400 from Suarez for his 2010 race—Ohio has looser limits for state elections—and has not returned it.*) Mandel lost his challenge of Brown, while Renacci narrowly won his race against Democratic Rep. Betty Sutton, whose district had been smushed into Renacci’s in a GOP-led redistricting.

And yesterday came the grand jury’s determination: the contributions were indeed funneled through the employees, against the law. As the Plain Dealer reports:

The 35-page indictment charges [Benjamin] Suarez, 72, with conspiracy to defraud the U.S. government; conspiracy to violate campaign finance laws; violation of campaign finance laws contributions by a corporation; making false statements, obstruction of an official investigation; witness tampering; and obstruction of justice. The indictment also charges Michael Giorgio, 61, of Cuyahoga Falls, the chief financial officer …with assisting Suarez in writing large campaign checks in the names of employees and their wives in an effort to "disguise and conceal from the public and from federal agents" the true source of the illegal contributions.

According to the indictment, Suarez and Giorgio recruited employees and others to act as conduits of the illegal contributions, and wrote checks in their own names and those of their spouses with the understanding they would be reimbursed by the company. Suarez and Giorgio at first disguised the payments as salary, and later as profit sharing. They inflated the payments to cover taxes, so the full amount of the contribution would be reimbursed, according to the indictment. Suarez and Giorgio are also accused of conspiring to obstruct justice from March 2011 to the present by creating phony documents and failing to turn over documents, records and evidence subpoenaed by a federal grand jury.

U.S. Attorney Steven Dettelbach praised the work of his office and the FBI in uncovering the alleged campaign financing crimes. Stephen Anthony, special agent in charge of the FBI's Cleveland office, said the laws are there to ensure fair, honest and transparent elections. “Benjamin Suarez and Michael Giorgio engaged in behavior that blatantly ignored and directly circumvented clearly established campaign financing laws,” Anthony said.

There is something almost quaint about this case: The fact is, Suarez could have gotten around campaign contribution limits by writing a big check to a SuperPAC like Crossroads GPS, which, under Supreme Court rulings, is allowed to spend as much as it wants, without disclosing its donors, in support of favored candidates. There are downsides to this approach—the money isn’t under the direct control of the candidate, and the candidate lacks the benefit that dozens of smaller individual contributions bring: the perception of a groundswell of local support. Who knows if Suarez had these factors in mind, or if he was (allegedly) simply operating under an archaic understanding of the law.

What we do know is that in this case, authorities decided that the law still meant something, and did their job in upholding it. For that small stab against cynical indifference they are to be commended.

*Addendum, September 30: Kasich's spokesman has informed me that, after this piece appeared, the governor donated to charity a sum equivalent to his contributions from Benjamin Suarez.