UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

FEDERAL ELECTION COMMISSION, )

)

Plaintiff, )

)

v. )

)

 Case No. 8:06-cv-00068-SDM-EAJ 

CONSTANTINE KALOGIANIS, et al., )

)

 Defendants. )

PLAINTIFF FEDERAL ELECTION COMMISSION’S 

OPPOSITION TO DEFENDANTS’ 

MOTION FOR SUMMARY JUDGMENT 

Thomasenia P. Duncan 

Acting General Counsel 

tduncan@fec.gov

Richard B. Bader 

Associate General Counsel 

rbader@fec.gov

Colleen T. Sealander 

Assistant General Counsel 

csealander@fec.gov

Robert W. Bonham III 

Senior Attorney 

rbonham@fec.gov

March 23, 2007 

Claire N. Rajan 

Attorney 

crajan@fec.gov

For the Plaintiff 

FEDERAL ELECTION 

COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

(202) 219-0260 (facsimile) 

Case 8:06-cv-00068-SDM-EAJ Document 49 Filed 03/23/2007 Page 1 of 36
TABLE OF CONTENTS 

 Page

ARGUMENT ............................................................................... 2 

I. THE LOANS WERE MADE USING CORPORATE FUNDS 

PROHIBITED BY SECTION 441b, NOT “PERSONAL FUNDS” ....... 2 

II. 2 U.S.C. 441b IS CONSTITUTIONAL AS APPLIED TO THE 

CORPORATE CONTRIBUTIONS MADE TO THE 

KALOGIANIS COMMITTEE ................................................. 10 

III. DEFENDANTS VIOLATED 2 U.S.C. 434(b) BY FILING FALSE 

REPORTS ......................................................................... 14 

IV. THIS COURT SHOULD IMPOSE A CIVIL PENALTY SIZEABLE 

ENOUGH TO DETER THE TYPES OF VIOLATIONS FOUND, 

AND INJUNCTIVE RELIEF TO PROHIBIT THE REPETITION OF 

SUCH VIOLATIONS BY DEFENDANTS .................................. 15 

A. The Statue Authorizes A 100% Civil Penalty For Non-Willful 

Violations ..................................................................... 17 

B. In Assessing A Civil Penalty, This Court Should Follow The 

Statutory Scheme, Rather Than Defendants’ 10% Formula ............ 20 

C. Permanent Injunction Prohibiting Similar Violations Is 

Warranted ...................................................................... 25 

CONCLUSION ............................................................................. 28 

i

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TABLE OF AUTHORITIES 

Cases 

Athens Lumber Co., Inc. v. FEC, 531 F.Supp. 756, 758 (M.D. Ga 1982), 

 rev’d, 689 F.2d 1006 (11th Cir. 1982), rh’g, 718 F.2d 363 (11th Cir. 1983) 

 (en banc), cert denied 465 U.S. 1092.......................................................................11 

Atlas Roofing Co. v. OSHRC, 518 F.2d 990 (5th Cir. 1975).......................................25 

 aff’d, 430 U.S. 442 (1977) 

Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990) ............10, 11, 12, 13 

Avirgen v. Hull, 932 F.2d 1572 (11th Cir. 1991) ...........................................................2 

Bashir v. AMTRAK, 119 F.3d 929 (11th Cir. 1997)....................................................10 

Buckley v. Valeo, 424 U.S. 1 (1976)................................................................11, 12, 15 

Callahan v. Schultz, 783 F.2d 1543 (11th Cir. 1986) .....................................................9 

CFTC v. Hunt, 591 F.2d 1211 (7th Cir. 1979) .............................................................28 

CFTC v. Int’l Berkshire Group Holdings, Inc., No. 05-6158, 2006 WL 3716390 

 (S.D. Fla. Nov. 3, 2006)...........................................................................................26 

CFTC v. Sidoti, 178 F.3d 1132 (11th Cir. 1999)..........................................................27 

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)......................................................27 

FEC v. Beaumont, 539 U.S. 146 (2003)...........................................................11, 13, 14 

FEC v. Citizens for Senator Wofford, 1996 U.S. Dist. LEXIS 21501 (M.D. Pa) ........21 

FEC v. Democratic Senatorial Campaign Committee, 1:95-cv-2881-MHS, 

 at 2 (N.D. Ga) (Jul. 8, 1997) ...................................................................................21 

FEC v. Friends of Jane Harman, 59 F. Supp. 2d 1046 (C.D. Cal. 1999)..........15, 21, 23 

FEC v. Furgatch, 869 F.2d 1256 (9th Cir. 1989)....................................................21, 27 

FEC v. Massachusetts Citizens for Life, 479 U.S. 238 (1986)...................10, 11, 12, 13 

FEC v. National Rifle Ass’n of America, 553 F. Supp. 1331 (D.D.C. 1983) ..............22 

ii

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FEC v. National Rifle Ass’n of America, 254 F.3d 173, 185 (D.C. Cir. 2001) .............2 

FEC v. National Republican Senatorial Committee, 

 761 F. Supp. 813 (D.D.C. 1991)..............................................................................21 

FEC v. National Right to Work Committee, 459 U.S. 197 (1982)...............................10 

FEC v. Ted Haley Congressional Committee, 852 F.2d 1111 (9th Cir. 1988)...2, 15, 23 

FEC v. Toledano, 317 F.3d 939 (9th Cir. 1999)...........................................................21 

First National Bank of Arizona v. Cities Serv. Co., 391 U.S. 253 (1968)......................2 

Hecht v. Bowles, 321 U.S. 321 (1944) .........................................................................27 

International Union (UAW) v. NLRB, 459 F.2d 1329 (D.C. Cir. 1972)........................9 

Legal Environmental Assistance Corp. v. EPA, 276 F.3d 1253 (11th Cir. 2001)..........2 

Leigh v. Warner Brothers, 212 F.3d 1210 (11th Cir. 2000) ...........................................9 

McConnell v. FEC, 540 U.S. 93 (2003) .......................................................................13 

McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988).............................................19 

Nixon v. Shrink Missouri Government PAC, 528 U.S. 377 (2000).......................13, 14 

Rapanos v. United States, 547 U.S. __, 126 S.Ct. 2208 (2006)......................................9 

SEC v. Carriba Air, Inc., 681 F.2d 1318 (11th Cir. 1982)............................................27 

SEC v. Management Dynamics, Inc., 515 F.2d 810 (2d Cir. 1975).............................26 

SEC v. Spence & Green Chemical Co., 612 F.2d 896 (5th Cir. 1980).........................27 

Sene X Eleemosynary Corp., 479 F. Supp. 970 (S.D. Fla. 1979)........................... 26-27 

Torres v. INS, 144 F.3d 472 (7th Cir. 1998).................................................................19 

United States v. UAW-CIO, 352 U.S. 567 (1957)........................................................11 

United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316 (1964).......................16 

United States v. ITT Continental Baking Corp., 420 U.S. 223 (1975).........................25 

United States v. Gonzalez, 520 U.S. 1 (1997) ................................................................5 

iii

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United States v. Morton Salt Co., 338 U.S. 632 (1950) ...............................................12 

United States v. Oakland Cannabis Buyers’ Cooperative, 523 U.S. 483 (2001)..........16 

United States v. W.T. Grant Co., 345 U.S. 629 (1953) .......................................... 26-27

Statutes and Regulations 

Bipartisan Campaign Reform Act of 2002 (“BCRA”), Pub. L. 107-155, 116 Stat. 81 

(2002)..............................................................................................................................4 

2 U.S.C. 431(8)(B)(vii)...................................................................................................5 

2 U.S.C. 432(e)(2)...........................................................................................................5 

2 U.S.C. 437f ................................................................................................................18

2 U.S.C. 437g(a)(6)(B) .........................................................................17, 20, 25, 26, 27 

2 U.S.C. 437g(a)(6)(C) .................................................................................................17 

2 U.S.C. 437g(d)(1)(A) (2000) .....................................................................................17 

2 U.S.C. 441a ..............................................................................................................3, 4

2 U.S.C. 441a(a)(1)(A) ...................................................................................................4 

2 U.S.C. 441b.........................................................................................................passim

11 C.F.R. 100.7(b)(11)..............................................................................................5, 18 

11 C.F.R. 101.2...............................................................................................................5 

11 C.F.R. 102.7(d) ..........................................................................................................5 

11 C.F.R. 110.10.....................................................................................................2, 3, 4 

11 C.F.R. 110.10(a).........................................................................................................3 

11 C.F.R. 110.10(b) ........................................................................................................5 

11 C.F.R 110.10(b)(1).....................................................................................................3 

11 C.F.R. 111.24(a)(1) (2000) ......................................................................................20 

iv

Case 8:06-cv-00068-SDM-EAJ Document 49 Filed 03/23/2007 Page 5 of 36
Miscellaneous 

Advisory Opinion 1994-26 .....................................................................................5, 6, 7 

MUR 3987 (Hughes Aircraft Co.) ................................................................................21 

MUR 5388 (Treffinger) ................................................................................................22 

MUR 5390 (Freddie Mac) ............................................................................................22 

MUR 5675 (ARMPAC)................................................................................................22 

FEC Press Release, FEC Posts Record Year, Collecting $6.2 Million In Civil 

 Penalties (Dec. 28, 2006).........................................................................................22 

H.R. Conf. Rep. No. 1057, 94th Cong., 2d Sess. 47 (April 28, 1976) reprinted in 

 FEC, Legislative History of the Federal Election Campaign Act Amendments

 of 1976 (1977)..........................................................................................................26 

Webster’s Third New International Dictionary 97 (1976)..............................................5 

v

Case 8:06-cv-00068-SDM-EAJ Document 49 Filed 03/23/2007 Page 6 of 36
As the Commission demonstrated in its opening brief, based on the affidavits, 

documentary evidence, official agency records and evidentiary and judicial admissions made by 

the Defendants, there is no genuine dispute that the corporate defendants made six loans and inkind contributions in the form of free office space and furniture to Mr. Kalogianis’s campaign 

committee. With regard to the Commission’s allegation that Defendants violated the Federal 

Election Campaign Act (“Act” or “FECA”) reporting provisions, Defendants now effectively 

concede that they violated those requirements of the Act by reporting those loans as if they had 

come from Mr. Kalogianis directly, and by misreporting the dates on which two loan refunds 

were made.1

While these facts establishing violations of the Act are not seriously disputed on the 

evidence in the record, Defendants have tried to obfuscate them with a variety of arguments that 

lack legal basis and evidentiary support. As the Commission explains below and in its Response 

to Defendants’ Statement of Material Facts2

 filed today, while Defendants’ characterization of 

the facts may differ from the Commission’s, any such dispute is not genuine because Defendants 

rely almost entirely on unsupported conclusory factual assertions, legal conclusions phrased as 

 

1 Indeed, just yesterday Defendants suddenly filed twenty-five new and amended 

disclosure reports, in which they identify the corporations as the source of five of the loans, after 

years of refusing to take any such remedial action. These new reports mischaracterize the 

Liberty Title line of credit yet again, however, this time as a loan from Wells Fargo to the 

campaign committee, rather than from Liberty Title Agency, Inc. (“Liberty Title” or “Liberty”) 

See p. 14-15, infra. 

2

 Citations to “FEC Exhibit xxx” are to the exhibits accompanying the FEC’s Motion for 

Summary Judgment and this Opposition. Citations to “FECxxxxx” are to Bates-numbered pages 

within the Commission’s exhibits. An updated Table of Exhibits and conversion table (FEC 

Bates-number to FEC Exhibit number) are provided as FEC Appendix A. 

Citations to “Facts” are to the FEC’s Statement of Material Facts (Docket # 41-1) and 

citations to “Def. Facts” are to the Defendants’ Statement of Material Facts (Docket # 40-1). 

References to “MUR” refers to a “Matter Under Review,” which is the Commission’s 

term for matters during the administrative enforcement proceeding.

1

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factual assertions, and claims that are contradicted by the record. It is black letter law that such 

materials are insufficient to avoid summary judgment. First National Bank of Arizona v. Cities 

Serv. Co., 391 U.S. 253, 289 (1968); Avirgen v. Hull, 932 F.2d 1572, 1577 (11th Cir. 1991). As 

a result, the Court should deny Defendants’ summary judgment motion and grant summary 

judgment to the Commission, because on the evidence in the record there is no genuine issue that 

Defendants violated the Act in the manner alleged by the Commission, and the Commission is 

entitled to judgment as a matter of law. 

ARGUMENT 

I. THE LOANS WERE MADE USING CORPORATE FUNDS PROHIBITED BY 

SECTION 441b, NOT “PERSONAL FUNDS” 

The Commission explained in its opening brief (at 19) that while candidates are free to 

use bona fide salary and dividends they receive from corporations for their campaigns, the 

Commission has consistently concluded that corporate assets do not otherwise qualify as 

“personal funds” under the Commission’s regulation at 11 C.F.R. 110.10, even when the 

corporation is owned by the candidate. See generally id. at 17-22. Time and time again, in 

advisory opinions and enforcement actions over the past thirty years, the Commission has 

decided that a candidate’s use of his own corporation’s assets violates the Act’s prohibition 

against corporate contributions that broadly applies to “any corporation whatever.” See Br. at 

20-22. The Commission’s construction of the Act is entitled to traditional Chevron deference, 

FEC v. National Rifle Ass’n of America, 254 F.3d 173, 185 (D.C. Cir. 2001); FEC v. Ted Haley 

Congressional Comm., 852 F.2d 1111 (9th Cir. 1988), and its construction of its own “personal 

funds” regulation is entitled to “controlling weight . . . “unless it is plainly erroneous or 

inconsistent with the regulation.” Legal Environmental Assistance Corp. v. EPA, 276 F.3d 1253, 

1262 (11th Cir. 2001) (internal citations omitted). See also FEC Br. at 21. 

2

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Instead of admitting that the Commission has, without fail, construed the Act and its own 

regulations otherwise for nearly thirty years and providing some sort of explanation for why this 

Court should not afford the Commission’s interpretation of its own statute and regulations the 

substantial deference it is due, Defendants adopt their own construction of 110.10(a) that permits 

Mr. Kalogianis to use his corporation’s assets without limit, and they claim that a single 

Commission advisory opinion demonstrates that Mr. Kalogianis’s use of his corporations’ lines 

of credit was proper. Defendants first assert that because Mr. Kalogianis “wholly owns and 

controls” Kalogianis & Associates and Liberty Title Agency, Inc., “[t]hese financial resources 

easily fit within the regulatory definition of assets to which he had a ‘legal and rightful title,’ or 

an ‘equitable interest,’” Def. Br. at 10. Relying on Mr. Kalogianis’s assertion at deposition that 

as an “officer of these corporations” he “could have transferred the funds from my corporate 

account into my personal accounts” (id.), and the claim that he “personally controlled and 

guaranteed the Wells Fargo BusinessLine [account]” (id.), Defendants then declare that because 

Mr. Kalogianis was a corporate officer, who had “control” over the assets and lines of credit of 

the corporations, the requirements of Section 110.10 are met. Id at 11. 

It is not surprising that Defendants cite no legal precedent for considering Mr. 

Kalogianis’s role as a corporate officer in determining whether he had the requisite “legal right 

of access to or control over” the funds under Section 110.10(b)(1). Section 110.10 does not even

refer to, much less create an exception to, the prohibition on corporate contributions in 2 U.S.C. 

441b, or to its explicit language making it illegal for “any officer or any director of any 

corporation . . . to consent to any contribution . . . by the corporation . . . prohibited by this 

section.” Section 110.10 implements 2 U.S.C. 441a, which imposes contribution limits such as 

the $1,000 limit on the amounts that an individual, other than the candidate himself, may 

3

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contribute to federal candidates.3

 Section 110.10 merely clarifies the contribution and 

expenditure limits imposed in Section 441a by stating that those limits do not apply when the 

candidate makes a contribution of his own money to his campaign. Indeed, that is why the 

Commission placed it in Part 110 of the regulations, which implements the Act’s general 

contribution limits and prohibitions, rather than in Part 114 where the regulations implementing 

Section 441b are codified. 

There is nothing in the text or history of the regulation suggesting that the Commission’s 

“personal funds” regulation was intended to override Section 441b’s proscription against 

corporate officers consenting to the contribution of corporate funds, where the corporate officer 

is a candidate. Under Mr. Kalogianis’s construction, any candidate who holds stock in a 

corporation and also serves as a corporate officer with a “legal right of access to or control over” 

corporate funds would be entitled to contribute whatever portion of the corporation’s assets 

represented his “equitable interest” in the corporation to his campaign. Such an interpretation 

would eviscerate Section 441b’s general proscription on the contribution and expenditure of 

corporate funds, and it would contravene the explicit statutory provision that makes it illegal for 

a corporate officer to “consent” to a corporate contribution. Thus, while Defendants complain 

(Br. 12) that “the FEC” says “a candidate for federal office cannot use his personal resources to 

challenge an incumbent [if] those resources [are] held” in a wholly-owned corporation, it is 

actually Section 441b of the statute that provides this since it explicitly applies to the assets of 

 

3

 As mentioned in the FEC’s opening brief (Br. 3, n.2), all the facts occurred prior to the 

effective date of the Bipartisan Campaign Reform Act of 2002 (“BCRA”), Pub. L. 107-155, 116 

Stat. 81 (2002). Under the Act as modified by BCRA, the individual contribution limit is 

currently $2,200. 2 U.S.C. 441a(a)(1)(A). Accordingly, unless specified, all citations to the Act 

or statements regarding provisions of the Act in this brief refer to the Act as it existed prior to the 

effective date of BCRA. Similarly, all citations to the Commission’s regulations or statements 

regarding any particular regulations refer to the 2002 edition of Title 11, Code of Federal 

Regulations, published prior to the Commission’s promulgation of regulations under BCRA.

4

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“any corporation whatever” and all candidates, challengers and incumbents alike. See United 

States v. Gonzalez, 520 U.S. 1, 5 (1997) (“[T]he word ‘any’ has an expansive meaning, that is, 

one or some indiscriminately of whatever kind”) (quoting Webster’s Third New International 

Dictionary 97 (1976)). 

Defendants assert (Br. 10-11) that Commission Advisory Opinion 1994-26 supports Mr. 

Kalogianis’s use of the Wells Fargo line of credit, but that opinion involved a candidate’s 

personal lines of credit, not a corporate line of credit such as the one provided by Wells Fargo, so 

that opinion is simply inapplicable to the Section 441b violation at issue here. Moreover, the 

Commission emphasized in that opinion that even a personal loan to a candidate for use in his 

campaign can only be accepted from a “state bank, a Federally chartered depository institution, 

or a depository institution whose deposits and accounts are insured by the Federal Deposit 

Insurance Corporation,” id. at 1 (citing 11 C.F.R. 100.7(b)(11) and 2 U.S.C. 431(8)(B)(vii)). The 

two corporations, the original source of five of the loans, were neither banks nor lending 

institutions, and thus were not permitted by the Act to lend funds to a campaign committee. 4

 

4

 Defendants assert (Br. 11) that in a footnote to this opinion the Commission “found” that 

the funds from the lines of credit “belonged to the candidate as a gift,” which is one of the 

permissible sources of personal funds under Section 110.10(b), and then go on to argue that in 

this case, “the funds loaned to [the Kalogianis Committee] were at least as accessible to Mr. 

Kalogianis as a gift, salary, or dividend from his corporations.” The Commission, however, did 

not conclude that even personal lines of credit are gifts, and explicitly stated in the opinion that

“an availability of funds from a line of credit . . . does not meet the definition of personal funds 

under Commission regulations at 11 C.F.R. 110.10(b) . . . .” Indeed, the Commission did not 

regard the loans as having been made to the candidate, but instead analyzed their permissibility 

as if they were made directly to the Committee, because when a candidate personally obtains a 

loan for use in connection with his or her campaign, the candidate receives the loan as an agent 

of the committee. AO 1994-26 at 1 n.1 (citing 2 U.S.C. 432(e)(2); 11 C.F.R. 101.2 and 

102.7(d)). Such loans are reportable and itemizable as loans from the bank to the committee, 

rather than as loans from the candidate to the committee. 

The Commission cited the personal funds regulation only by analogy in considering 

whether the lines of credit had been obtained by the candidate in contemplation of running for 

office, or had been granted by the banks knowing of his candidacy. Because the lines of credit 

5

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The advisory opinion goes on to explain that any campaign loan must be “made in the 

ordinary course of business,” which means that it bears the usual and customary rate of interest 

of the lending institution for the category of the loan involved, is evidenced by a written 

instrument, and is subject to a due date or amortization schedule. There is no evidence in this 

case that any interest was required or paid on the five loans the Kalogianis Committee received 

directly from the corporations, that there was any sort of written agreement for any of those 

loans, or that any had a due date for repayment or an amortization schedule. FEC Facts at 111. 

The Wells Fargo loan would not have satisfied the requirements of this Advisory Opinion 

either, even if it had been a personal loan instead of a business loan to a corporation, as Wells 

Fargo Operations Weber John Weber testified that it was. See Weber Decl. at ¶ 5 [229]. Like 

the other corporate loans, there is no evidence that this loan had either a due date or an 

amortization schedule. Moreover, Advisory Opinion 1994-26 specifies that a loan must meet the 

Commission’s standard for assurance of repayment, which requires either (1) traditional 

collateral, (2) a perfected security interest, (3) other sources of repayment, such as future income, 

that are properly assigned under the regulations, or (4) such other repayment assurances as the 

Commission may approve on a case-by-case basis. Id. at 2. Wells Fargo Operations Manager 

Weber testified that this loan was unsecured, so despite Defendants’ misleading claim that it was 

“guaranteed by [Mr. Kalogianis’s] assets” (Br. 12), Wells Fargo had neither the perfected 

 

long pre-dated the requestor’s candidacy, the Commission analogized them to “gifts of a 

personal nature that have been customarily received prior to candidacy” in concluding that two 

of the three lines of credit were “made in the ordinary course” of the banks’ businesses. In 

contrast, all six of the corporate loans at issue here post-dated Mr. Kalogianis’s candidacy, and 

the Wells Fargo line of credit was obtained after Mr. Kalogianis had decided to run for office. 

Moreover, Kalogianis & Associates and Liberty Title Agency are not accredited banking 

institutions, and there is no evidence that Mr. Kalogianis had any history of obtaining loans from

these corporations for any other purpose. In none of these essential features do the corporations’ 

loans resemble those permitted in AO 1994-26. 

6

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security interest nor the assignment of future income that the advisory opinion states is required 

for even a personal campaign loan to be permissible under the Act. See Weber Decl. at ¶ 10 

[229]. Indeed, the Wells Fargo loan was not even listed on Mr. Kalogianis’s credit report as a 

personal debt owed by him. FEC Resp. to Def. Facts at 24. 

Advisory Opinion 1994-26 also addresses the requirements for reporting for public 

disclosure the terms and conditions of loans that candidates or their committees take out for the 

purpose of providing funds to their campaigns, none of which Defendants followed in this case. 

The Commission explained that “when a candidate or political committee obtains a loan, or 

establishes a line of credit,” the committee must report the date and amount of the loan or line of 

credit, the interest rate and repayment schedule of each loan or draw on the line of credit, and the 

details of the basis of repayment, and must also file a copy of the loan or line of credit agreement 

when it first receives funds. AO 1994-26 at 3. The regulations require a certification from the 

lending institution attesting to the terms and conditions the committee reports, and stating that 

the loan or line of credit was made or established on terms and conditions no more favorable 

than those for similar credit granted to borrowers of comparable credit. Id. The Kalogianis 

Committee, however, amended its reports to state falsely that the last two loans were made by 

Mr. Kalogianis when in fact they were made by the corporations, and either falsely reported or 

failed to report almost all of this required information for all six of the loans, despite repeated 

requests from the Commission by letter and telephone over the course of several years that it do 

so. See FEC Facts at 62, 73, 74, 80, 81, 97, 104, 111, 112. In sum, if, as the Defendants suggest 

(Br. 12 n.4), they actually relied upon Advisory Opinion 1994-26, it would have provided them a 

detailed explanation of why their transactions were not in compliance with the law. 

7

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As we have shown, Defendants’ arguments for concluding that the corporate loans to the 

Kalogianis Committee met the Commission’s “personal funds” requirement, their arguments also 

rest largely upon conclusory factual assertions that are contrary to the evidence. For example, it 

is simply untrue as Defendants assert (Br. 12), that “[a]nother way of saying the same thing 

about the $27,000 Wells Fargo BusinessLine loan is that the loan was from the bank to the 

campaign.” In fact, Defendants never gave Wells Fargo any reason to suspect that the money 

from the Wells Fargo BusinessLine was being diverted from Liberty Title to Kalogianis’s 

campaign committee, and Wells Fargo Vice President Weber testified that this type of loan is 

only available to businesses. See Weber Decl. ¶ 9 [229]. Since this was a business loan to a 

corporation it is also not true, as Defendants assert (Br. 12), that Mr. Kalogianis, “not Liberty, 

used the funds and was obligated to repay the funds” – Liberty was the primary obligor for 

repayment of the funds and Mr. Kalogianis was only a guarantor for Liberty’s loan. See Weber 

Decl. ¶ 10 [229]. 

We have shown that it is not true that “Liberty was not only dormant but incapable of 

functioning” (Def. Br. 12); Liberty made two other loans from its own bank accounts to the 

Kalogianis Committee, it filed annual reports for the next three years after the loans occurred, 

and more than $16,000 passed through its operating account, just a few months after November 

2000, when Defendants say that Liberty’s assets were sold. FEC Facts ¶ 29-31. Indeed, in 

December 2000 Mr. Kalogianis attested in the Wells Fargo loan application that Liberty Title 

still had substantial funds in its bank accounts and did not suggest that the corporation on whose 

behalf he was seeking a business line of credit was “incapable of functioning” (Def. Br. 12) as a 

result of selling its assets a month earlier. FEC Facts at 32.5

 

5 Contrary to Defendants’ assertion (Br. 16), it is not an undisputed fact that Mr. 

8

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Finally, Defendants’ assertion (Br. 12) that “KFC repaid [Mr. Kalogianis] and he repaid 

the bank” is belied by the evidence. According to the cancelled checks and bank records, the 

Kalogianis Committee repaid the original $27,000 drawn on the line directly to Wells Fargo, in a 

check made payable to the bank, and the committee made several interest payments on the 

subsequent $29,000 draw directly to Wells Fargo in the same manner. FEC Facts at 88-90. With 

these examples in mind, the Court should approach Defendants’ many conclusory factual 

assertions skeptically, and be particularly careful not to accept those that are not supported by 

actual evidence in the record.6

 

Kalogianis in fact could have qualified for a personal loan in the amount that his corporations 

loaned to the campaign -- $54,528 – or that Kalogianis & Associates “could have paid [him] a 

bonus, dividend, salary or used other mechanisms” to provide him money. But these factual 

assertions are also purely speculative and unsupported by evidence, such as a showing that Mr. 

Kalogianis had sufficient personal assets to qualify for a loan of that size. It is, however, an 

undisputed fact that none of these alternative ways of converting corporate assets into Mr. 

Kalogianis’s “personal funds” were used in this case. Thus, even if they had been supported by 

evidence, such claims are nothing more than “the familiar tactic of substituting the purpose of the 

statue for its text, freeing the Court to write a different statute that achieves the same purpose.” 

Rapanos v. United States, 547 U.S. __, 126 S.Ct. 2208, 2234 (2006). Moreover, Mr. Kalogianis 

and Ms. Jones testified at deposition that the decision to loan the campaign the bulk of the money 

was made only a few days before the close of the reporting period, and that there would not have 

been sufficient time for Mr. Kalogianis to obtain the money in any other way in time for the 

campaign to show the desired financial strength on its 2001 Mid-Year disclosure report. See CK 

Depo. [252] at 140-141 (“We could have gone to a bank. We didn’t have enough time. We only 

had a few days . . .”). 

6

 Although Defendants analogize (Br. 11) the corporate funds to a “salary or dividend” to 

Mr. Kalogianis, there is no objective evidence to support the notion that any such salary or 

dividends were owed. Although Ms. Jones testified that the loans “would have been shown” on 

the corporate books and tax returns as a “distribution” to Mr. Kalogianis (Def. Facts ¶ 20), 

Defendants have never produced any corporate records, ledgers, tax returns, or any other 

documents to prove the truth of this statement. The Court of Appeals has “consistently held that 

conclusory allegations without specific supporting facts have no probative value,” Leigh v. 

Warner Brothers, 212 F.3d 1210, 1217 (11th Cir. 2000) (citation omitted), and under this 

Circuit’s adverse inference rule, “when a party has relevant evidence within his control which he 

fails to produce, that failure gives rise to an inference that the evidence is unfavorable to him.” 

Callahan v. Schultz, 783 F.2d 1543, 1545 (11th Cir. 1986) (citing International Union (UAW) v. 

NLRB, 459 F.2d 1329, 1336 (D.C. Cir. 1972)). Moreover, as we describe in more detail in ¶ 20 

9

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II. 2 U.S.C. 441b IS CONSTITUTIONAL AS APPLIED TO THE CORPORATE

CONTRIBUTIONS MADE TO THE KALOGIANIS COMMITTEE 

As we explained in our opening brief (Br. 22), the Supreme Court has held that the ban 

on corporate contributions in Section 441b serves the compelling governmental interests of 

preserving the integrity of the electoral system and avoiding corruption and the appearance of 

corruption of the electoral process. The Supreme Court explained the constitutionally sufficient 

justification for prohibiting corporate contributions and expenditures in FEC v. Massachusetts 

Citizens for Life (“MCFL”), 479 U.S. 238, 257 (1986): 

[w]e have described that rationale . . . as the need to restrict the influence of 

political war chests funneled through the corporate form . . . , to eliminate the 

effect of aggregated wealth on federal elections . . . , to curb the political

influence of those who exercise control over large aggregations of capital . . . , 

and to regulate the substantial aggregations of wealth amassed by the special 

advantages which go with the corporate form of organization. 

(internal citations omitted). Thus, “[t]he statute reflects a legislative judgment that the special 

characteristics of the corporate structure require particularly careful regulation,” FEC v. National 

Right to Work Committee (“NRWC”), 459 U.S. 197, 209-210 (1982), which has led the 

Supreme Court to find constitutional a prohibition on independent expenditures by most 

corporations, as well as contributions, Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 

658-660 (1990), even though it has found limits on independent expenditures by those other than 

 

of our Response to Defendants’ Statement of Facts, the Commission sought Defendants’ tax 

returns during discovery, and they refused to provide them, citing an inapplicable privilege. 

Under a second adverse inference rule, an “adverse inference is drawn from a party’s failure to 

preserve evidence []when the absence of that evidence is predicated on bad faith.” See Bashir v. 

AMTRAK, 119 F.3d 929, 929 (11th Cir. 1997). It is beyond dispute that Defendants have 

control over the corporate records of Kalogianis & Associates and Liberty Title Agency, and if

there were anything contained in those records to support Ms. Jones’s assertion, they were 

obligated to provide it to the Court and to produce it to the Commission during discovery. 

Moreover, it appears that Defendants destroyed some records while this litigation has been 

ongoing. As a result, this Court should conclude that the records would not support Defendants’ 

claims. 

10

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corporations and unions to be unconstitutional. Buckley v. Valeo, 424 U.S. 1, 50 (1976). As we 

have demonstrated (Br. 23-24), courts have repeatedly upheld the application of Section 441b to 

contributions by corporations of every kind, including non-profit organizations, see, e.g., FEC v. 

Beaumont, 539 U.S. 146 (2003),7 and those that are closely held, like the ones in this case. See

Athens Lumber Co., Inc. v. FEC, 531 F.Supp. 756, 758 (M.D. Ga 1982), rev’d, 689 F.2d 1006 

(11th Cir. 1982), rh’g, 718 F.2d 363 (11th Cir. 1983) (en banc), cert denied 465 U.S. 1092 

(1984) (directors and shareholders of this closely-held corporation unanimously voted to make 

the contribution). In fact, no court has ever held Section 441b unconstitutional as applied to any 

kind of corporate contribution even though this prohibition has been the law of the land for 100 

years.8

Defendants ignore the Supreme Court’s recognition that the corporate form itself is 

properly subject to this special restriction on contributions and expenditures, and instead ask this 

Court to conclude that Mr. Kalogianis is not likely to be corrupted here because he is the 

candidate, a corporate officer, and allegedly the only stockholder in these corporations. 

However, if quid-pro-quo candidate corruption were the only interest supporting Section 441b, 

as Defendants argue, the Supreme Court would not have found such a prohibition constitutional 

as applied to independent expenditures. 

 

7

 In MCFL, 479 U.S. at 263-264, the Supreme Court found the prohibition on independent 

expenditures unconstitutional as applied to a small class of non-profit issue advocacy 

organizations, but in Beaumont the Court found the prohibition on contributions constitutional, 

even as applied to that same class of corporations. Defendants could not rely on MCFL even if 

this case involved independent expenditures, however, because the contributions in this case 

were from for-profit business corporations. 

8

 When the prohibition of corporate contributions was first adopted, “[a]lthough some

congressional proposals would have ‘prohibited political contributions by [only] certain classes 

of corporations . . . Congress acted on the President’s call for a outright ban, not with half 

measures.” Beaumont, 539 U.S. 146, 152 (internal citations omitted) (quoting United States v.

UAW-CIO, 352 U.S. 567, 585 (1957)). 

11

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Regardless of whether this danger of “financial quid pro quo” corruption ... may 

be sufficient to justify a restriction on independent expenditures, [a statutory 

prohibition on corporate campaign expenditures] aims at a different type of 

corruption in the political arena: the corrosive and distorting effects of immense 

aggregations of wealth that are accumulated with the help of the corporate form

and that have little or no correlation to the public’s support for the corporation’s 

political ideas. 

Austin, 494 U.S. at 659-660 (citation omitted). 

State law grants corporations special advantages -- such as limited liability, 

perpetual life, and favorable treatment of the accumulation and distribution of 

assets -- that enhance their ability to attract capital and to deploy their resources in 

ways that maximize the return on their shareholders’ investments. These statecreated advantages not only allow corporations to play a dominant role in the 

Nation’s economy, but also permit them to use ‘resources amassed in the 

economic marketplace’ to obtain ‘an unfair advantage in the political 

marketplace.’ 

Id. at 658-659 (quoting MCFL, 479 U.S. at 257). Corporations are, therefore, “endowed with 

public attributes. They have a collective impact upon society, from which they derive the 

privilege of acting as artificial entities” and such “[f]avors from government often carry with 

them an enhanced measure of regulation.” United States v. Morton Salt Co., 338 U.S. 632, 652 

(1950). This “unique state-conferred corporate structure that facilitates the amassing of large 

treasuries warrants the limit on independent expenditures,” and “[c]orporate wealth can unfairly 

influence elections when it is deployed in the form of independent expenditures” or “assumes the 

guise of political contributions.” Austin, 494 U.S. at 660. 

Defendants rely (Br. 8) upon the ruling in Buckley, 424 U.S. at 58, that statutory 

provisions limiting the amount a candidate (or any other individual) spends of his or her own

money to advocate an election result were unconstitutional. However, Buckley did not consider 

the constitutionality of Section 441b, and it said nothing about a candidate having a 

constitutional right in any circumstance to use unlimited amounts of corporate money to finance 

his or her campaign. In Austin, however, the Supreme Court addressed the question of corporate 

12

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funds and upheld a prohibition on independent expenditures using corporate funds. Moreover, in 

doing so, it confirmed that its rationale for upholding the prohibition of corporate contributions 

and expenditures based upon the particular concerns about money accumulated through the 

corporate form of business, is fully applicable to closely held business corporations like the ones 

in this case.

Although some closely held corporations, just as some publicly held ones, may 

not have accumulated significant amounts of wealth, they receive from the State 

the special benefits conferred by the corporate structure and present the potential 

for distorting the political process. This potential for distortion justifies [the 

statutory prohibition’s] applicability to all corporations. 

Beaumont, 539 U.S. at 158 (quoting Austin, 494 U.S. at 661 (emphasis added)). 

Accordingly, regardless of what standard of review this Court would apply if the 

constitutionality of Section 441b’s prohibition of corporate contributions were still an open 

question,9

 the Supreme Court has already upheld that provision based on reasoning that is fully 

applicable to the corporations that contributed to Mr. Kalogianis’s campaign, and those decisions 

are controlling here.10 

 

9 Defendants’ argument (Br. 15) for strict scrutiny of this statutory restriction on 

contributions has repeatedly been rejected by the Supreme Court. All contribution restrictions 

indirectly affect expenditures by reducing the amount of money that may be available to a 

spender, but a candidate’s mere lack of additional funds to spend on advocacy no more violates 

his First Amendment rights when it results from contribution restrictions than when it results 

from his obligation to pay some of his money in taxes. The Supreme Court, therefore, “drew a 

line between expenditures and contributions, treating expenditure restrictions as direct restraints 

on speech ..., which nonetheless suffered little direct effect from contribution limits.” Nixon v. 

Shrink Missouri Government PAC, 528 U.S. 377, 386 (2000) (citations omitted). See also, e.g., 

id. at 387 (“We have consistently held that restrictions on contributions require less compelling 

justification than restrictions on independent spending’”) (quoting MCFL, 479 U.S. at 259-60); 

McConnell v. FEC, 540 U.S. 93, 137 (2003) (“[t]he less rigorous standard of review we have 

applied to contribution limits . . . shows proper deference to Congress’ ability to weigh 

competing constitutional interests in an area in which it enjoys particular expertise”). 

10 Since the prohibition of corporate campaign contributions has already been found 

constitutional, there is no need for the Commission to provide any new evidence to support it, as 

13

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III. DEFENDANTS VIOLATED 2 U.S.C. 434(b) BY FILING FALSE REPORTS 

As we have already demonstrated (Br. 26-28), after initially reporting the loans as having 

been made by the corporations, the Kalogianis Committee and its treasurer violated the Act’s 

reporting provision by falsely amending their reports to state that Mr. Kalogianis, rather than the 

corporations, made two of the loans at issue after the Commission pointed out to them that the 

corporate loans they had reported would violate the Act. Defendants also falsely reported that 

two of the loans were repaid in December 2002 when they were in fact repaid a year earlier. The 

Committee and its treasurer, until yesterday, refused to correct these reports, despite being told to

do so repeatedly by the Commission over the course of the past five years. 

Defendants have not disputed that they did not comply with the statute’s reporting 

requirements. Although Defendants assert that “[s]ubsequent amendment to the reports 

identifying Mr. Kalogianis as the source of the loans merely confirmed who was providing funds 

to KFC,” Defendants later admit (Br. 27) that the information in their amendments was 

“incorrect,” adding that Mr. Kalogianis has “never denied that the campaign violated § 441b.” 

While they do not even attempt to argue that these false reports comply with the statutory 

provisions they are charged with violating, Defendants claim (Br. 20-21) that their false reports 

still satisfy the purposes of the statute. Even if it were plausible that reporting false information 

could somehow satisfy the Congressional purpose of accurately informing the public about 

candidates’ actual campaign finances, the courts enforce statutes as written by Congress, not 

 

Defendants assert it should (Br. 18). In Nixon v. Shrink Missouri Government PAC, 528 U.S. 

377 (2000), on which Defendants rely (Br. 19), the Supreme Court explained that “[t]he quantum

of empirical evidence needed to satisfy heightened judicial scrutiny of legislative judgments will 

vary up or down with the novelty and plausibility of the justification raised.” Id. at 391. With 

regard to the corporate contribution prohibition in Section 441b, the Supreme Court did not find 

any new evidence necessary to decide that “[j]udicial deference is particularly warranted where, 

as here, we deal with a congressional judgment that has remained essentially unchanged 

throughout a century of careful legislative adjustment.” Beaumont, 539 U.S. at 162, n.9 (internal 

citation omitted). 

14

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some alternate requirement that a defendant might think would have served Congress’ purposes 

just as well. See n. 5, supra. In any event, the reports plainly did not provide the electorate with 

information as to where political campaign money came from and how it was spent, because they

state falsely that Mr. Kalogianis, not the corporations, was the source of the money. They did 

not serve the interest in “exposing large contributors . . . to the light of publicity,” Buckley, 424 

U.S. at 67, because the Committee and its treasurer did not identify the actual contributors. 

Finally, the false amended reports would preclude anyone from “gather[ing] the data necessary 

to detect violations of the contribution limits,” id., because they falsely state that the 

contributions came from Mr. Kalogianis, rather than from the corporations which actually 

provided the funds in violation of Section 441b. Thus, contrary to Defendants’ claim, the false 

reports they filed serve none of the compelling governmental purposes served by the statute’s 

requirement of accurate and timely disclosure of campaign finances to the public, but have 

served only to mislead the public about the actual source of Mr. Kalogianis’s campaign funds. 

Since there is no dispute that Defendants violated the Act’s reporting requirements, the Court 

should enter summary judgment on that issue against the Defendants. 

IV. THIS COURT SHOULD IMPOSE A CIVIL PENALTY SIZEABLE ENOUGH TO 

DETER THE TYPES OF VIOLATIONS FOUND, AND INJUNCTIVE RELIEF 

TO PROHIBIT THE REPETITION OF SUCH VIOLATIONS BY DEFENDANTS 

Defendants argue (Br. 21-29) that the Court should impose no remedy whatever – no 

civil penalty and no injunction – for any violations it finds them to have committed in this case. 

While Defendants cite two cases from the Ninth Circuit in support of the argument that a court 

finding violations need not provide any remedy,11 the Supreme Court has more recently made 

 

11 In FEC v. Ted Haley Congressional Committee, 852 F.2d 1111 (9th Cir. 1988) and FEC

v. Friends of Jane Harman, 59 F. Supp. 2d 1046 (C.D. Cal. 1999), the courts imposed no civil 

penalty or injunction despite finding that the defendants had violated the Act as alleged.

15

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clear that a court’s remedial discretion is not that broad. “A district court cannot . . . override 

Congress’ policy choice, articulated in a statute, as to what behavior should be prohibited,” and 

“[o]nce Congress, exercising its delegated powers, has decided the order of priorities in a given 

area, it is . . . for the courts to enforce them when enforcement is sought.” United States v. 

Oakland Cannabis Buyers’ Cooperative, 532 U.S. 483, 497 (2001) (citation omitted). Absent 

contrary statutory language, a court’s choice in formulating a remedy “is simply whether a 

particular means of enforcing the statute should be chosen over another permissible means; [its] 

choice is not whether enforcement is preferable to no enforcement at all.” Id. (emphasis added). 

Moreover, “[i]t is well settled that once the Government has successfully borne the considerable 

burden of establishing a violation of law, all doubts as to the remedy are to be resolved in its 

favor.” United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 334 (1961). 

In selecting a remedy, therefore, the Court should be guided by the provisions of the 

statute and by a consideration of what remedy, or combination of remedies, would best enforce 

the requirements of the Act in the circumstances of this case. Defendants do not address those 

questions, arguing instead that the violations here were not willful and the Court should, 

therefore, restrict a civil penalty to no more than 10% of the contributions at issue (without 

mentioning that the statute explicitly authorizes a penalty for non-willful violations equal to 

100% of the amount of any contributions involved). As we have shown in our opening brief, and 

elaborate below, the circumstances of this case call for a much higher civil penalty than 10%, if 

it is to serve as an effective deterrent to candidates tempted to skirt the law in the future to serve 

their own political ambitions. This case also calls for an injunction against repetition of these 

violations by the Defendants, who continue to insist they are entitled to engage in this type of 

16

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activity, and have repeatedly resorted to insubstantial legal arguments and factual assertions 

belied by the record to avoid all liability for their relatively blatant violations of the Act. 

A. The Statue Authorizes A 100% Civil Penalty For Non-Willful Violations 

Defendants argue at length that no civil penalty is warranted because their violations

were not willful, and were committed with good motives. As a legal matter, this argument is 

belied by the three different levels of remedies set out in the penalty provisions of the Act, which 

Defendants entirely ignore. Section 437g(a)(6)(B), which is the provision cited in the 

Complaint, authorizes the Court to impose a civil penalty up to the greater of $5,500 or the 

amount of the contribution involved for each violation of the Act that is found, without regard to 

scienter or intent. If the Court finds that a violation of the Act is “knowing and willful,” Section 

437g(a)(6)(C) authorizes a civil penalty double the amount permitted for a non-willful violation:

the greater of $11,000 or twice the amount of the contribution involved. Finally, a person 

prosecuted criminally for “knowingly and willfully” violating any provision of the Act involving 

“the making, receiving, or reporting of any contribution or expenditure aggregating $2,000 or 

more” can be fined up to the greater of $25,000 or 300% of the contribution involved, and 

imprisoned for up to one year. 2 U.S.C. 437g(d)(1)(A) (2000).12 Thus, Congress has already 

expressly provided for the measurement of a civil penalty in terms of the amount of money 

involved and the willfulness of the respondent, and the statute explicitly provides for a civil 

penalty up to 100% of the amount of money involved in any “contribution” for a violation that is 

not willful. There is no legal basis for the Court to ignore the penalty level explicitly authorized 

by the statute for a non-willful violation, on the grounds that the violation at issue was not 

willful. 

 

12 This provision was amended in 2002, but the amendments took effect after the violations 

in this case occurred. 

17

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In any event, as a factual matter, the record does not support any claim that Defendants 

tried in good faith to comply with the statute. According to the Defendants (Br. 27), they 

consulted the Commission’s Campaign Guide for Congressional Candidates and Committees to 

determine whether the loans were permissible, but the guide is explicit about the statute’s 

corporate contribution prohibition applying to all corporations. The guide instructs that 

“[c]ampaigns may not accept contributions made from the general treasury funds of corporations 

. . . This prohibition applies to any incorporated organization, including a nonstock corporation, 

an incorporated membership organization and an incorporated cooperative.” FEC Ex. 533 at 17 

(emphasis added). Defendants concede they understood from this that contributions from other 

corporations were prohibited (Br. 3), but the candidate guide makes no distinction between “third 

party” corporations and any other type of corporation. FEC Ex. 533 at 17.13

As a practicing attorney, Mr. Kalogianis knew how to research legal rules, find relevant 

precedents (such as the advisory opinions discussed on pp. 17, 20, and 21 of our opening brief), 

and seek advice from a government agency (see 2 U.S.C. 437f), if he had really wanted to find 

out what the law required. Instead, he chose the convenient path of “assum[ing]” (see n. 13, 

supra) that what he wanted to do to advance his political ambitions would be permissible, despite 

the fact that the Commission campaign guide, which he admits consulting, clearly indicated it 

was not. “Ignorance of a statute is generally no defense even to a criminal prosecution, and it is 

 

13 Mr. Kalogianis testified: “I actually recall seeing something in the handbook where bank 

loans were allowed. I then assumed I could make loans from my companies to the campaign as a 

result.” FEC SMF ¶ 64; CK Depo. [252] at 173. But, Mr. Kalogianis was well aware that his 

corporations are not banks. Moreover, the candidate guide clearly specifies that “[a] candidate or 

his or her committee may obtain a loan, including a loan of credit, from a bank, provided that the 

loan: bears the bank’s usual and customary interest rate for the category of loan involved; is 

evidenced by a written instrument; is subject to a due date or amortization schedule; and is made 

on a basis which assures repayment (see below). 100.7(b)(11).” FEC Ex. 533 at 18 (emphasis in 

original). As we have discussed, supra, pp. 5-7, none of the loans at issue here satisfied these 

requirements. 

18

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never a defense in a civil case, no matter how recent, obscure or opaque the statute.” Torres v. 

INS, 144 F.3d 472, 474 (7th Cir. 1998). A lawyer who knows that a statute is applicable to his 

actions, but chooses not to find out how it is actually applied, certainly cannot successfully argue 

that he made a good faith effort to comply with the law. Cf. McLaughlin v. Richland Shoe Co., 

486 U.S. 128, 133 (1988) (a violation is “willful” if defendant “either knew or showed reckless 

disregard as to whether its conduct was prohibited by [the statute]”). 

Moreover, by December 2001, the Commission had specifically called to Ms. Jones’s 

attention that contributions from the corporations were prohibited and that funds provided by the 

corporations to the campaign were not Mr. Kalogianis’s “personal funds” under the regulations. 

FEC SMF ¶ 80. Defendants’ response was to amend their reports to represent falsely that Mr. 

Kalogianis, rather than the corporations, had made the loans that were outstanding at that time, 

and they engaged in a purported “refund” of those loans that simply rerouted the same corporate 

money back to the campaign through Mr. Kalogianis’s personal bank accounts, all in a single 

day. See FEC Br. at 7-8; FEC Facts at 88-96. This evidences an effort to evade the Act’s 

requirements by covering up the corporate source of the money, rather than a good faith effort to 

bring themselves into compliance with the law. 

Defendants assert (Br. 21) that they used the corporations’ funds with the innocent 

motive of avoiding corrupting Mr. Kalogianis with contributions from others, but this is belied 

by Mr. Kalogianis’s own testimony that he actually authorized the corporate loans in order to 

induce others to make contributions to his campaign. 

The issue was showing strength to get the attention of the important people 

who could then parlay that to maybe getting some party support, because 

the party has their targeted races. And if you’re not on their radar screen, 

you don’t get any support from the party and you don’t get support from 

the entities, like the PACs, that look to the party, to say should we give to 

this candidate. 

19

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CK Depo. [252] at 139. Indeed, Mr. Kalogianis explained that the reason the corporations made 

loans, rather than direct contributions, was to enable the campaign to repay the corporations later 

using money raised from others. “We set it up as loans so that if I prevailed, the hope would be 

that someday I could get repaid that money,” CK Depo. [252] at 51. In short, the Defendants’ 

claim to this Court that Mr. Kalogianis’s motive was to make sure “that nobody owned [him]” is 

thoroughly impeached by his own testimony to the contrary.14

B. In Assessing A Civil Penalty, This Court Should Follow The Statutory 

Scheme, Rather Than Defendants’ 10% Formula 

As we have explained, the Act authorizes the Court to impose a civil penalty for nonwillful violations, for each defendant, up to the greater of (i) $5,500 for each violation or (ii) the 

amount of any contributions or expenditures involved in each violation. See 2 U.S.C. 

437g(a)(6)(B); 11 C.F.R. 111.24(a)(1) (2000). The maximum civil penalty the Act authorizes 

the Court to assess for all of the violations alleged in this case is almost $300,000. See FEC Ex. 

513. This figure includes penalties for making, consenting to, and accepting, six prohibited 

corporate contributions totaling more than $54,000; for making, consenting to, and accepting 

prohibited in-kind corporate contributions; and for falsely reporting the sources of two of the 

loans and the dates of the repayment of two others. 

The appropriate civil penalty is certainly a matter within this Court’s discretion, but as 

shown above, the touchstones for calculating a penalty are the remedial provisions of the Act and 

the need to punish violators adequately and to deter similar violations by Defendants and others 

 

14 Defendants suggest (Br. 26) that there is something unconventional about finding a 

violation of both the Act’s corporate contribution prohibition and its reporting requirement. 

Almost none of the cases Defendants cite involve reporting violations, however, and in none of 

them did the defendants falsely amend their reports to cover up the source of a loan after being 

questioned about it by the Commission, as Defendants did here. 

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with similarly overriding political ambitions. Ignoring these decisive factors entirely, 

Defendants argue (Br. 26) that their selective review of civil penalties awarded in some of the 

Commission’s enforcement cases over the past twenty years establishes a rule of thumb limiting 

civil penalties to 10% of the contributions involved. However, none of those decisions purport 

to follow any such 10% rule (which would conflict with the statute’s own 100% penalty 

standard) and each of these decisions turned on the particular facts and circumstances before the 

court. 15 In other cases, courts have imposed civil penalties between 75% and almost 100% of 

the amounts in violation. See, e.g., FEC v. Furgatch, 869 F.2d 1256, 1259 (9th Cir. 1989) (the 

court assessed a $25,000 penalty for a disclosure violation, which was eight dollars short of the 

expenditure involved); FEC v. Toledano, 317 F.3d 939, 953 (9th Cir. 2002) (upholding a $7,500 

penalty for a $10,000 violation,16 noting this was “quite generous to Toledano in light of his 

admitted misdeeds”). 

More relevant to this Court’s deliberations than the old decisions cited by Defendants is 

the contemporaneous level of civil penalties that have been paid for similar violations in recent 

 

15 For example, unlike FEC v. Citizens for Senator Wofford, 1996 U.S. Dist. LEXIS 21501 

(M.D. Pa) (applying the Act’s contribution limits to a special election called after the death of a 

Senate candidate) or FEC v. National Republican Senatorial Committee, 761 F. Supp. 813, 824 

(D.D.C. 1991) (noting that “this is a matter of first impression” on which the Commission was 

initially “divided [in a 3-3 tie] over the meaning of its own regulation”), this case does not 

involve an issue of first impression or a point of law that was previously unclear. As we have 

demonstrated, the prohibition of all corporate contributions has been in effect for a century and 

the Commission has a thirty-year record of applying it to candidate-owned corporations. There 

is also no claim in this case, as there was in FEC v. Democratic Senatorial Campaign Committee 

(“DSCC”), 1:95-cv-2881-MHS, at 2 (N.D. Ga.) (July 8, 1997), that Mr. Kalogianis’s opponent 

was treated more favorably by the Commission for a “substantially similar violation” and thus 

there is no reason to reduce the civil penalty on that basis. It is also noteworthy that, while the 

court imposed no civil penalty on the candidate in Harman (see supra n.11, p.15, the corporation 

that had facilitated individual contributions to her campaign paid a $45,000 civil penalty in 

administrative conciliation. See MUR 3987 (Hughes Aircraft Co.) [FEC Ex. 530]. 

16 Defendants’ brief incorrectly states (Br. 25) that the court imposed a $7,000 penalty. 

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years. See, e.g., FEC MUR 5675 (ARMPAC) [FEC Ex. 526] ($115,000 civil penalty for 

reporting violations during the 2002 election cycle); MUR 5390 (Freddie Mac) [FEC Ex. 527] 

($3.8 million civil penalty for making prohibited corporate contributions); and MUR 5388 

(Treffinger) [FEC Ex. 528] ($171,000 civil penalty for campaign committee’s failure to refund 

$227,080 in excessive contributions before paying legal fees). See also FEC Press Release, FEC 

Posts Record Year, Collecting $6.2 Million In Civil Penalties (Dec. 28, 2006) [FEC Ex. 529]. If 

civil penalties imposed after full litigation and adjudication in court are not appreciably higher 

than those arrived at through the statutory procedure of voluntary conciliation, the Commission’s 

ability to administer and enforce the Act effectively through the conciliation process -- “the 

preferred method of dispute resolution under FECA,” FEC v. National Rifle Ass’n of America, 

553 F. Supp. 1331, 1338 (D.D.C. 1983) -- will be severely undermined. 

Defendants argue (Br. 26, emphasis added) that their good faith is shown because they 

“initially reported the loans correctly as coming from corporations [and] candidly admitted the 

substance of the transactions to the FEC RAD analyst”17 (emphasis added). See also Br. 27 (“All 

of the loans were reported to the FEC and the public more than a year before the election”). 

Such an assertion completely ignores Defendants’ subsequent effort to amend that report to 

cover up the fact that the loans had come from corporations, their reporting of the loans as 

having been made by Mr. Kalogianis personally in their subsequent reports, and their refusal to 

correct the reports to state that the loans were from the corporations, until just yesterday. 

 

17 Defendants’ claim (Br. 27) that “amendments were filed pursuant to the advice of the 

FEC RAD analyst” has no citation to the record and no support for it. As the Commission’s 

official records demonstrate, FEC RAD analysts requested over and over that the Kalogianis 

Committee file amendments to its reports to clarify the source and to disclose the terms of the 

loans and the details of the repayments, to no avail. FEC Facts at 62, 73, 74, 80, 81, 97, 104, 

111, 112. 

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Defendants also argue (Br. 27) that no penalty is warranted because “[t]he loans could 

have been made in a manner that did not violate 441b(a) wit[h] the same funds at issue in this 

case.” As discussed supra, n. 6, p. 9, Defendants produced no evidence at all to support the 

assertion that Mr. Kalogianis was in fact owed salary or dividends by his corporations at the time 

he needed the funds, or that he could have obtained a loan of this size personally from a bank. 

That alone distinguishes this case from Harman, in which the Commission explicitly “concede[d] 

that with only modest modifications, the events . . . would have been perfectly legal.” 59 

F.Supp.2d at 1057. Defendants assert (Br. 26-27) that they remedied their violations 

immediately by “refund[ing] most of the contributions as funds became available.” Unlike the 

candidate in Haley, however, who promptly corrected the illegal excessive loan guarantees he 

had received by paying off the guaranteed bank loan with his own personal funds, 852 F.2d at 

1116, Defendants only created the appearance of refunding the illegal corporate contributions, 

which they funneled back to the campaign the same day after routing them through the 

corporations’ and Mr. Kalogianis’s bank accounts. See p. 19, supra. 

Finally, in their effort to convince the Court that no meaningful monetary deterrent 

should be imposed, Defendants allege facts that are simply not true. There is no truth, for 

example, to Defendants’ remarkable claim (Br. 27) that Mr. Kalogianis “has never denied that 

the campaign violated 441b.” Before this Court, Defendants have not only vociferously denied 

violating Section 441b, but have also moved to amend their Answer and Rule 36 admissions to 

deny the undeniable underlying facts they previously admitted -- that the loans were actually 

made to the campaign using corporate funds and a corporate line of credit. Defendants therefore 

deserve no credit for acquiescing in the Commission’s view of the law, as they suggest (Br. 26), 

since they are actually continuing to resist that view of the law adamantly before this Court. 

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Even worse is Defendants’ assertion (Br. 7-8) that Mr. Kalogianis attempted to settle the 

matter during the administrative proceeding but the Commission’s staff acted in bad faith during 

conciliation by “refus[ing] to lower the amount of the fine they would recommend that the 

Commission accept” after he provided evidence that only $11,000 of the $42,000 loan made in 

June 2001 were from corporate funds. The evidence actually shows that the Commission 

initially offered in pre-probable cause conciliation a civil penalty totaling $64,000, divided 

equally between the corporations and Mr. Kalogianis as a corporate officer and director on the 

one hand, and the Kalogianis Committee, Ms. Jones as treasurer, and Mr. Kalogianis as the 

candidate, on the other. FEC Ex. 522 at 1. After Mr. Kalogianis provided evidence that $31,000 

of the $42,000 actually came from his personal account, rather than from the corporation, the 

Commission staff cut their civil penalty offer by more than half, reducing it to a total of $31,000 

for all of the Defendants. FEC Ex. 521 at 1. Despite the Commission’s flexibility, Mr. 

Kalogianis adamantly refused to offer more than $15,000, and also refused to admit in an 

agreement that any of the Defendants had violated Section 441b. See FEC Ex. 522, 524.18 

In sum, Defendants have provided no legitimate reason for this Court not to impose a 

substantial penalty for their violations. Civil penalties must be high enough to punish violators 

adequately and deter the Defendants and others with similar overriding political ambitions from

trying to circumvent the Act. Civil penalties assessed to enforce statutory schemes enacted by 

 

18 A discounted civil penalty of $31,000 was offered in the early stage of the administrative 

proceeding as an incentive to settle the matter without a full investigation or further proceedings 

before the Commission. FEC Ex. 521. After the Commission had investigated the matter, the 

General Counsel had briefed the case, and the Commission had made probable cause findings, 

the Commission again proposed conciliation, and after withdrawing the discount to induce early 

settlement, the Commission’s conciliation offer at that stage of proceedings was $60,000. FEC 

Ex. 523. As noted supra, p. 22, the imposition of lower civil penalties even later, after a 

respondent has continued to resist enforcement through full litigation, would be an incentive to 

respondents not to settle in conciliation. 

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Congress should “inflict a pocket-book deterrence.” Atlas Roofing Co. v. OSHRC, 518 F.2d 

990, 1001 (5th Cir. 1975), aff’d, 430 U.S. 442 (1977). According to the Defendants (Br. 3-4), 

Mr. Kalogianis willingly spent $169,000 of his own money “that will never be repaid” in pursuit 

of his political ambitions. The Court should take that into account in deciding just how much of 

a civil penalty is required to deter Mr. Kalogianis from violating the Act again should he run for 

office in the future. A person willing to commit that much money to achieving his political 

ambitions is not likely to be deterred by a judgment requiring the payment of only $20,000 or 

$30,000 more. To serve the purposes of enforcing the Act, a civil penalty in this case must be 

large enough to ensure that it will not be considered by the Defendants as an “acceptable cost” of 

doing business. See United States v. ITT Continental Baking Corp., 420 U.S. 223, 231 (1975). 

C. Permanent Injunction Prohibiting Similar Violations Is Warranted

The Act specifically provides that a district court “may grant a permanent or temporary 

injunction, restraining order, or other order, including a civil penalty . . . upon a proper showing 

that the person involved has committed, or is about to commit (if the relief sought is a permanent 

or temporary injunction or a restraining order), a violation of this Act.” 2 U.S.C. 437g(a)(6)(B). 

Although Defendants admit (Br. 28) that a “district court can exercise its discretion to issue an 

injunction pursuant to [2 U.S.C. 437g(a)(6)(B)] if there is a likelihood of future violations,” they 

also claim (Br. 29) that a permanent injunction can only be issued if the Defendants are “about to 

violate the law” again, and that a finding of a past statutory violation is not enough. 

This argument is contrary to the statutory language. Congress chose to authorize 

“permanent” injunctions in the provision of the Act that is applicable to non-willful violations, 

rather than limiting them to cases involving knowing and willful violations of the law. The Act 

plainly provides that the Court may issue a permanent injunction “upon a proper showing that 

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the person has committed, or is about to commit” a violation of this Act, 2 U.S.C. 437g(a)(6)(B) 

(emphasis added), and the Conference Report explained that this language was intended to 

ensure, inter alia, that “[t]he relief sought in any civil action may include a permanent . . . 

injunction,” H.R. Conf. Rep. No. 1057, 94th Cong., 2d Sess. 47 (April 28, 1976) (emphasis 

added), reprinted in FEC, Legislative History of the Federal Election Campaign Act 

Amendments of 1976 at 1041 (1977) [FEC Ex. 525]. Thus, Defendants’ claim that the 

Commission must provide evidence that they are “about to violate” the Act in order for this 

Court to issue a permanent injunction is contrary to the plain language and the legislative history 

of the Act. It is no wonder that they have found no precedent construing the statute as containing 

such a restriction on a court’s remedial authority.19

Courts have long recognized that a finding of a statutory violation is itself sufficient to 

support a permanent injunction because such a finding “is highly suggestive of a likelihood of 

future violations.” See SEC v. Management Dynamics, Inc., 515 F.2d 801, 807 (2d Cir. 1975); 

CFTC v. Hunt, 591 F.2d 1211, 1220 (7th Cir. 1979). See also CFTC v. Int’l Berkshire Group 

Holdings, Inc., No. 05-6158, 2006 WL 3716390, at *11 (S.D. Fla. Nov. 3, 2006). “Once the 

government establishes the existence of the statutory violation, the burden shifts to the 

Defendants to show that ‘there is no reasonable expectation that the wrong will be repeated.’” 

Sene X Eleemosynary Corp., 479 F. Supp. 970, 981 (S.D. Fla. 1979) (quoting United States v. 

 

19 Although Defendants do not really explain their assertion that the language of the Act 

only permits a permanent injunction where a Defendant is “about to commit” a violation of the 

Act, it may be based on a misunderstanding of the role of the parenthetical contained in 2 U.S.C. 

437g(a)(6)(B)-- “(if the relief sought is a permanent or temporary injunction or restraining 

order).” As a full reading of the statutory provision makes clear, that phrase does not restrict the 

Court’s authority to issue such relief to instances where a defendant is “about to commit” a 

violation. It specifies instead that when a Defendant “is about to” commit a violation, only

injunctive relief is authorized, and not civil penalties, which are permitted only when a defendant 

already “has committed” a violation of the Act. 

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W.T. Grant Co., 345 U.S. 629, 633 (1953)). Mere cessation of unlawful activities is not grounds, 

in and of itself, to deny a statutory injunction, particularly where “such cessation arises only as a 

result of official pressure or threatened litigation.” Id. 

Defendants also rely (Br. 28-29, n.8) on Furgatch, 869 F.2d at 1262, in claiming that only 

a finding of “extraordinary intransigence and hostility toward the FEC and the Act” would 

authorize a permanent injunction. However, that argument conflicts with the plain language of 

the Act, other federal regulatory regimes that provide for injunctive relief, and recent Supreme 

Court cases. As we have already explained supra at pp. 25-26, Congress explicitly provided in 

Section 437g(a)(6)(B) for permanent injunctions even for non-willful violations of the Act. 

Moreover, the FECA is not the only statute that relies upon injunctions as a major enforcement 

tool. More than sixty years ago, the Supreme Court noted that most federal regulatory statutes 

provide for enforcement by injunction. Hecht v. Bowles, 321 U.S. 321, 327-29 (1944). Both 

before and after Furgatch was decided by the Ninth Circuit, the rule in the Eleventh Circuit was 

that district courts have discretion to issue a permanent injunction against repetition of proven 

violations of law so long as there is a reasonable “likelihood” that the wrong will be repeated. 

See CFTC v. Sidoti, 178 F.3d 1132, 1137 (11th Cir. 1999); SEC v. Carriba Air, 681 F.2d 1318, 

1322 (11th Cir. 1982); SEC v. Spence & Green Chemical Co., 612 F.2d 896, 903 (5th Cir. 1980). 

To the extent that the Furgatch court purported to create a new rule for the Ninth Circuit that 

forbids permanent injunctions in a class of cases for which the statute explicitly authorizes them, 

the Supreme Court has rejected such an approach. A court is not permitted “to announce a 

categorical rule precluding an expressly authorized form of relief as inappropriate in all cases.” 

EEOC v. Waffle House, Inc., 534 U.S. 279, 291 (2002). 

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Finally, Defendants have not made any objective showing that it is unreasonable to 

expect that they will violate the Act again. Indeed, it has long been recognized that an injunction 

is warranted where, as here, “a violator has continued to maintain that his conduct was blameless 

. . . . ” CFTC v. Hunt, 591 F.2d 1211, 1220 (7th Cir. 1979). As Mr. Kalogianis asserted just six 

months ago: 

This was my money, and there’s nothing anybody can ever say to ever tell 

me otherwise. You cannot tell me that a company that I own a hundred 

percent – that I then make a decision to use that money i[n] a manner in 

which I personally see fit, is somehow not my money. You cannot tell me 

that, but you are. So here we are. 

 

FEC SMF ¶ 67. Mr. Kalogianis continues to this day to insist that he is entitled to engage in this 

activity, which is explicitly prohibited by the Act, and he continues his tenacious resistance to 

being held responsible for his violations and to taking any action whatever to remedy them. In 

such circumstances, the public is surely entitled to the assurances provided by an injunction that 

does nothing more than forbid the Defendants from engaging in the same sort of unlawful 

activity in the future. 

CONCLUSION

For the foregoing reasons, and those set out in the initial brief, the Commission 

respectfully submits that this Court should deny the Defendants’ motion for summary judgment, 

grant the Commission’s motion for summary judgment, and impose a substantial civil penalty 

and a permanent injunction as remedies for the violations of law at issue. 

Respectfully submitted, 

/s/ Thomasenia P. Duncan

tduncan@fec.gov 

Thomasenia P. Duncan 

Acting General Counsel 

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/s/ Richard B. Bader

rbader@fec.gov 

Richard B. Bader 

Associate General Counsel 

/s/ Colleen T. Sealander

csealander@fec.gov 

Colleen T. Sealander 

Assistant General Counsel 

 

/s/ Robert W. Bonham III

rbonham@fec.gov 

Robert W. Bonham III 

Senior Attorney 

/s/ Claire N. Rajan

crajan@fec.gov 

Claire N. Rajan 

Attorney 

For the Plaintiff 

FEDERAL ELECTION COMMISSION 

999 E Street, N.W.

Washington, D.C. 20463 

(202) 694-1650 

(202) 219-0260 (facsimile) 

March 23, 2007 

29

Case 8:06-cv-00068-SDM-EAJ Document 49 Filed 03/23/2007 Page 35 of 36
Certificate of Service

I hereby certify that on March 23, 2007, I electronically filed the foregoing with the Clerk 

of the Court by using the CM/ECF system, which will send a notice of electronic filing to the 

following: Stephen E. Hershkowitz and Charles H. Lichtman, counsel for Defendants. 

I further certify that I e-mailed the foregoing document and the notice of electronic filing 

to the following non-CM/ECF participant: Neil Reiff. 

/s/ Claire N. Rajan

Claire N. Rajan 

 Attorney 

crajan@fec.gov

FEDERAL ELECTION COMMISSION 

999 E Street, N.W.

Washington, D.C. 20463 

(202) 694-1650 

(202) 219-0260 (facsimile) 

Case 8:06-cv-00068-SDM-EAJ Document 49 Filed 03/23/2007 Page 36 of 36