In Political Corruption

Money in American politics has always involved suspicious participants looking to influence the government by using “donations” as a pressure tactic. Banks and other financial institutions monitoring activity in accounts must know the basics of campaign laws to ensure that any attempt to disguise the source of campaign contributions in federal and local elections is identified and reported if necessary.

There have been many cases at the Federal, State and local levels where citizens, government employees and others have been found guilty of these activities. For example, on September 16, 2016, Eugenia C. Harris, a business owner in the District of Columbia, was sentenced to 90 days in a halfway house or community corrections facility and an additional 180 days of home confinement for taking part in a conspiracy to disguise the source of campaign contributions in federal and local elections, including the 2010 District of Columbia mayoral campaign, and then taking steps to conceal the illegal activities from investigators.

Harris, 79, of Washington, D.C., admitted to participating in a scheme with business owner Jeffrey E. Thompson and others, in which Thompson’s funds were used to make conduit contributions to various federal and District of Columbia political candidates and to finance “shadow campaigns” of unreported contributions and expenditures in support of candidates. Thompson is the former chairman, chief executive officer, and majority owner of Thompson, Cobb, Bazilio and Associates (TCBA), a corporation that provided accounting, management, consulting, and tax services. He also is the former chairman, chief executive officer, and owner of D.C. Healthcare Systems, Inc. (DCHSI), an investment holding and for-profit corporation. In his guilty plea, Thompson admitted using funds from those corporations to secretly finance campaign contributions and activities from at least 2006 until 2012. He was sentenced on August 15, 2016 to three months of incarceration, to be followed by 90 days of home confinement. Both Thompson and Harris ultimately cooperated with the investigation.

There are several ways citizens may support Federal, State or local candidates and political committees involved in the upcoming elections. These activities, however, are subject to the Federal and other campaign finance laws. For example, Federal law limits the amount of money a person may contribute and prohibits certain people and organizations from making contributions.

The Federal Election Campaign Act establishes limits on the amounts that individuals can contribute to individual and multi-candidate political action committees. It also prohibits a person from making a political contribution in the name of another person. The act bars a person from reimbursing a donor who has already given to a candidate. In addition, the law bans corporations from contributing money to candidates for federal public office. States and local governments may have similar laws and restrictions.

By studying these cases and knowing the applicable law, financial institutions may be able to spot these activities. Some of the red flags that can indicate suspicious campaign contributions are:

  • Lack of transparency or identification in sources of funding
  • Series of complicated transfers of funds from one person to another as a means to hide the source and intended use of the funds
  • Use of funds by the campaign is not consistent with the purpose for which it was established
  • Deposits were structured below the reporting requirements to avoid detection
  • Unusual activity involving foreign bank accounts
  • Lack of disclosure on which vendors are being paid from the campaign funds
  • Multiple cash deposits and/or withdrawals with suspicious references
  • Large payments to campaign staff for nontaxable expenses
  • Unusually high expense reimbursements to people associated with the campaign
  • Multiple cash deposits in small amounts in an account followed by a large wire transfer to another account
  • Contributions received from corporations (for Federal officials)
  • Parties involved in the payment activity have a history of improper payment practices, such as prior or ongoing formal or informal investigations by law enforcement authorities or prior convictions
  • Party has been subject to criminal enforcement actions or civil actions for acts suggesting illegal, improper or unethical conduct
  • Negative or derogatory news/media information on candidate and/or main supporters
  • Party is a company with an owner, major shareholder or executive manager who is a public official
  • Payments of meals, alcohol, travel, entertainment, gifts, services, benefits, hiring of relatives, political or charitable contributions, or any other favors
  • Payments to P.O. boxes or non-existent addresses
  • Payment advances to employees or third parties, particularly pressure to receive the payments urgently or ahead of schedule
  • Refusal to properly document expenses, unrecorded, or incorrectly recorded transactions and other failures to follow accounting procedures/policies
  • Invoices vaguely describe the services provided or lack detail (e.g., “services rendered”)
  • General purpose or miscellaneous accounts that can be used to hide improper payments
  • Large individual or aggregate payments/benefits to one payee
  • One-time payments to vendors and other third parties
  • Party has not been in business for very long or was only recently incorporated
  • Party is in a different line of business than that for which it has been engaged
  • Party’s business address is a mail drop location, virtual office, or small private office that could not hold a business the size that is claimed
  • Consultants “consulting agreements” include only vaguely described services or consultant is in a different line of business than that for which it has been engaged
  • Large/big “inauguration” donations
  • Contributions funneled to foundations and other non-profit entities not listed as political campaigns or PACs
  • Using personal accounts for campaign purposes
  • Contributions intentionally made very late in the campaign cycle, even after the election
  • Large donations from someone that does not fit the profile of a person who may be politically active; for example, a lawyer in comparison to a retired person on a modest fixed income
  • Structured contributions, all the participants banking at different financial institutions and cash reimbursements never deposited

A review of a candidate’s political account should also entail a review of the candidate’s personal account and financial profile to identify any “straw” donors using pass through transactions disguised as business or investment transactions.

Mr. Dominic Suszek is an experienced and successful executive with broad experience in bank operations, audit, information technology, and regulatory compliance. As a senior executive involved in all aspects of regulatory compliance, with more than 25 years of banking expertise in operations, technology, security, fraud and compliance, he has acquired extensive knowledge of the requirements from many regulatory agencies in the US, the Caribbean, along with Central and South America.
Recommended Posts
Contact Us

If you have any questions or if we can be of any further assistance, please do not hesitate to contact us.

Not readable? Change text.