UNITED STATES DISTRICT COURT
 

FOR THE DISTRICT OF COLUMBIA
 

FEDERAL ELECTION COMMISSION, ) 

999 E Street, N.W. ) 

Washington, DC 20463, 

Plaintiff, 

v. 

) 

) 

) 

) 

) 

Case: 1: 12-cv-00958 

Assigned To: Jackson, Amy Berman 

Assign. Date: 6/11/2012 

Description: General Civil 

) 

CRAIG FOR U.S SENATE, ) COMPLAD'J"T FOR CIVIL PENALTY, 

11950 W. Chinden Ridge Road ) DECLARATORY, WJUNCTIVE, AND. 

Boise,ID 83714, ) OTHER APPROPRIATE RELIEF 

) 

KAYE L. O'RIORDAN, in her official ) 

capacity as Treasurer of Craig for U.S. Senate, ) 

c/o Craig for U.S. Senate ) 

11950 W. Chinden Ridge Road ) 

Boise,ID 83714, ) 

) 

and ) 

) 

LARRY E. CRAIG, ) 

11950 W. Chinden Ridge Road ) 

Boise,ID 83714, ) 

) 

Defendants. ) 

PLAINTIFF FEDERAL ELECTION COMMISSION'S
 

COMPLAINT FOR CIVIL PENALTY, DECLARATORY,
 

INJUNCTIVE, AND OTHER APPROPRIATE RELIEF
 

1. In 2007 and 2008, defendants converted more than $200,000 of campaign 

contributions given to Craig for U.S. Senate, the authorized campaign committee of then-United 

States Senator Larry E. Craig, to the personal use ofMr. Craig. Mr. Craig used these funds 

converted from his campaign committee to pay legal expenses he incurred in connection with his 

arrest, guilty plea, and subsequent efforts to withdraw his guilty plea in Minnesota. These legal 

costs were not made in connection with his campaign for federal office or for ordinary and 
necessary expenses incurred in connection with his duties as a Senator. The Commission seeks a 

declaration that this conversion of funds violated 2 U.S.C. § 439a(b), a permanent injunction 

against future similar violations, an order requiring Mr. Craig to repay the converted funds to 

Craig for U.S. Senate, and the assessment of appropriate civil penalties against defendants. 

JURISDICTION AND VENUE 

2. This action seeks declaratory, injunctive, and other appropriate relief pursuant to 

the express authority granted by Congress to the Federal Election Commission in the Federal 

Election Campaign Act of 1971, as amended ("Act" or "FECA"), codified at 2 U.S.C. §§ 431-57. 

3. This Court has jurisdiction over this suit pursuant to 28 U.S.C. § 1345 as an action 

brought by an agency ofthe United States expressly authorized to sue by an act of Congress. 

2 U.S.C. §§ 437d(a)(6), 437g(a)(6)(A). 

4. Venue is properly found in the United States District Court for the District of 

Columbia pursuant to 28 U.S.C. § 139l(b) and 2 U.S.C. § 437g(a)(6)(A) because all ofthe 

defendants in this action are found, reside, or transact business within this district and a 

substantial part ofthe acts or omissions giving rise to this suit occurred in this district. 

THE PARTIES 

5. Plaintiff Federal Election Commission ("Commission" or "FEC") is the 

independent agency ofthe United States government with exclusive jurisdiction over the 

administration, interpretation and civil enforcement of the Act. See 2 U.S.C. §§ 437c(b)(l), 

437d(a), 437g. The Commission is authorized to institute investigations of possible violations of 

the Act, 2 U.S.C. § 437g(a)(1) and (2), and to initiate civil actions in the United States district 

courts to obtain judicial enforcement ofthe Act. 2 U.S.C. §§ 437d(e), 437g(a)(6). 

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6. From January 1991 to January 2009, defendant Larry E. Craig was a United 

States Senator from Idaho. In 2007, Mr. Craig was a candidate, within the meaning of 

2 U.S.C. § 431(2), for the United States Senate in the 2008 election. Mr. Craig is currently a 

principal in New West Strategies LLC, which has its principal place of business in Washington, 

D.C. 

7. Defendant Craig for U.S. Senate ("Craig Committee") was and is a political 

committee within the meaning of2 U.S.C. § 431(4). Mr. Craig designated Craig for U.S. Senate 

as his authorized principal campaign committee, within the meaning of2 U.S.c. §§ 431(5)-(6), 

for the 2008 election for United States Senator representing Idaho. As such, Craig for 

U.S. Senate was authorized to receive contributions and make expenditures on behalf of the 

candidate, Mr. Craig. 2 U.S.C. §§ 432(e)(1),(2). 

8. Defendant Kaye L. O'Riordan was and is the Treasurer of Craig for U.S. Senate. 

No expenditure by or on behalf ofthe Craig Committee could or can be made without the 

authorization ofthe treasurer or her agent. See 2 U.S.C. §§ 432(a), 433(b)(4). 

RELEVANT STATUTORY AND REGULATORY PROVISIONS 

9. Under FECA, contributions accepted by a candidate may lawfully be used by the 

candidate, inter alia, (1) to finance authorized expenditures in connection with the candidate's 

campaign for federal office and (2) to pay ordinary and necessary expenses incurred in 

connection with duties of the individual as a holder of federal office. 2 U.S.C. §§ 439a(a)(1),(2). 

10. The Act specifically provides that contributions or donations described in 

2 U.S.C.§ 439a(a) "shall not be converted by any person to personal use." 2 U.S.c. 

§ 439a(b)(1). For purposes of this prohibition, a contribution or donation "shall be considered to 

be converted to personal use if the contribution or amount is used to fulfill any commitment, 

3
 
obligation, or expense of a person that would exist irrespective ofthe candidate's election 

campaign or individual's duties as a holder of Federal office." 2 U.S.c. § 439a(b)(2). The Act 

includes a short list of examples of conversion to personal use, including payments of home 

mortgages, rent, or utilities; clothing purchases; payments for vacation or other noncampaignrelated trips; and tuition payments. Id. 

11. Under the Commission's regulations, whether the use of campaign funds for the 

payment of legal expenses constitutes personal use is determined on a case-by-case basis. 

11 C.F.R. § 113.1 (g)(1 )(ii)(A). Expenses that a candidate can reasonably demonstrate resulted 

from the campaign or officeholder duties are not considered personal use. See Final Rule and 

Explanation and Justification, Personal Use ofCampaign Funds, 60 Fed. Reg. 7862, 7867 

(Feb. 9, 1995). However, legal fees and expenses "will not be treated as though they are 

campaign or officeholder related merely because the underlying proceedings have some impact 

on the campaign or officeholder's status." Id. at 7868. To illustrate this distinction, the 

Commission has explained that "legal expenses associated with a divorce or charge of driving 

under the influence of alcohol will be treated as personal, rather than campaign or office holder 

related." Id. In a series of advisory opinions, the Commission has determined that legal 

expenses and fees incurred for representation in legal proceedings regarding allegations that are 

not related to campaign activities or duties as a Federal officeholder constitute impermissible 

personal use of campaign funds. See, e.g., FEC Advisory Opinions 2009-10, 2006-35, 2005-11, 

2003-17,2000-40, 1997-27, and 1996-24. 

FACTUAL BACKGROUND 

Legal Proceedings in Minnesota 

12. On June 11,2007, then-Senator Craig was arrested at the Minneapolis-St. Paul 

4
 
International Airport while awaiting a scheduled flight to Washington, D.C. Mr. Craig was 

charged with violating Minnesota criminal statute § 609.72, disturbing the peace-disorderly 

conduct, and § 609.746, interference with privacy. On August 8, 2007, Mr. Craig pled guilty to a 

misdemeanor count of disorderly conduct. Pursuant to a plea agreement, Mr. Craig received a 

sentence of ten days jail time and a $1,000 fine. The jail time and one-half of the fine were 

suspended, conditioned upon one year of unsupervised probation. 

13. Mr. Craig retained the Washington, D.C., law firm of Sutherland, Asbill & 

Brennan ("Sutherland") to serve as lead counsel in an effort to withdraw his guilty plea, and the 

Minnesota firm ofKelly & Jacobson ("Kelly) to serve as local counsel for that effort. Craig also 

hired the media relations firm Impact Strategies to handle press inquiries regarding the arrest, 

conviction, and the legal efforts to overturn his conviction. 

14. Mr. Craig filed a motion to withdraw the guilty plea in Minnesota state district 

court on September 10, 2007. The state district court denied the motion on October 4, 2007. Mr. 

Craig appealed the district court's decision to the Minnesota Court of Appeals, which rejected 

the appeal on December 9,2008. Mr. Craig did not appeal further. 

15. After the arrest and conviction were reported in the press, Mr. Craig announced 

on September 1,2007, that he would resign from the U.S. Senate effective September 30,2007. 

16. The U.S. Senate Select Committee on Ethics ("Senate Ethics Committee") 

conducted an inquiry into Mr. Craig's conduct in connection with his arrest, conviction, and 

subsequent conduct. 

17. On October 4,2007, Mr. Craig announced that he would not resign from the 

Senate but instead stated, "I will continue my effort to clear my name in the Senate Ethics 

Committee - something that is not possible if I am not serving in the Senate." Press Statement 

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of Senator Craig (Oct. 4, 2007). Mr. Craig continued to serve as United States Senator from 

Idaho until the conclusion of his term, and he retired from the Senate in January 2009. 

Craig Committee Disbursements for Legal Expenses 

18. From July 9,2007, through October 5,2008, the Craig Committee disbursed more 

than $480,000 for legal fees and other expenses. 

19. The Sutherland law firm received $284,610 from the Craig Committee during this 

period. Of this amount, the Sutherland law firm received at least $139,952 for providing legal 

services to Mr. Craig in connection with his efforts to withdraw his guilty plea. Defendants 

caused the Craig Committee's disbursements to be received by Sutherland's office in 

Washington, D.C. 

20. The Kelly law firm received approximately $77,032 from the Craig Committee 

for providing legal services to Mr. Craig in connection with efforts to withdraw his guilty plea. 

21. Craig also retained counsel at the Brand Law Group in Washington, D.C., to 

represent him before the Senate Ethics Committee inquiry. The Brand Law Group received 

approximately $101,015 from the Craig Committee in connection with that inquiry. 

22. In a letter to the Senate Ethics Committee, Craig's counsel represented that 

Craig's arrest and conviction was ''purely personal conduct unrelated to the performance of 

official Senate duties." Letter to the Honorable Barbara Boxer from Stanley M. Brand and 

Andrew D. Herman (Sept. 5,2007) (emphasis added). 

23. On February 13, 2008, the Senate Ethics Committee issued a "Public Letter of 

Admonition" unanimously concluding that, among other matters, Mr. Craig had not complied 

with Senate Rule 38.2, which requires Senate Ethics Committee approval of any payments for 

6
 
"legal expenses" paid with funds of a principal campaign committee. Specifically, the Ethics 

Committee wrote: 

[T]he Senate Ethics Manual states that "Members, officers, or employees may 

pay legal expenses incurred in connection with their official duties with funds of a 

Senator's principal campaign committee, but only ifsuch payment is approved by 

the Committee." It appears that you have used over $213,000 in campaign funds 

to pay legal (and, apparently, "public relations") fees in connection with your 

appeal of your criminal conviction and in connection with the preliminary inquiry 

before the Committee in this matter. It appears that some portion of these 

expenses may not be deemed to have been incurred in connection with our official 

duties, either by the Committee or by the Federal Election Commission (which 

has concurrent jurisdiction with the Committee on the issue of conversion of a 

Senator's campaign funds to personal use). However, without reaching the issue 

of what portion of your legal expenses in this matter may be payable with funds 

of your principal campaign committee, it is clear that you never sought the 

Committee's approval, as required, to use campaign funds for these purposes. 

Public Letter ofAdmonition, United States Senate (Feb. 13, 2008) (Select Committee on Ethics) 

(emphasis added). 

FEe Administrative Proceedings 

24. On November 10, 2008, the Commission received an administrative complaint 

alleging that Mr. Craig had violated the Act by spending more than $213,000 in campaign funds 

to pay legal fees and expenses incurred in connection with his arrest and conviction. 

The complaint was designated by the Commission as Matter Under Review ("MUR") 6128 for 

administrative purposes. See 2 U.S.C. § 437g(a)(1). 

25. By letter dated November 18,2008, the Commission notified defendants that the 

complaint had been filed and provided defendants with a copy of the administrative complaint in 

MUR 6128. On December 2,2008, the Commission received a response from Mr. Craig. 

See 2 U.S.c. § 437g(a)(1). 

26. After reviewing the then available information, on May 19, 2009, the Commission 

voted 5-0 (with one Commissioner recused) to find "reason to believe" that Craig for 

7
 
U.S. Senate, Kaye L. O'Riordan (in her official capacity as treasurer of Craig for U.S. Senate), 

and Larry E. Craig had violated 2 U.S.C. § 439a(b). See 2 U.S.C. §§ 437g(a)(1)-(2). 

Specifically, the Commission found reason to believe that the use ofthe Craig Committee's 

funds to pay for legal fees and expenses Craig incurred in connection with his attempt to 

withdraw his guilty plea constituted a conversion to personal use. The Commission concluded, 

however, that the use of Craig Committee funds to pay the Brand Law Group to respond to the 

Senate Ethics Committee inquiry and to pay Impact Strategies, a public relations firm, to respond 

to press inquiries regarding Craig's arrest and misdemeanor conviction was a permissible use of 

campaign funds. 

27. The Commission notified defendants ofits reason-to-be1ieve determination by 

letter dated June 30, 2009. Defendants responded by letter dated August 10,2009. 

28. Following an investigation, the Commission's General Counsel notified 

defendants by letter dated April 8, 2011, that the General Counsel was prepared to recommend 

that the Commission find "probable cause" to believe that the defendants violated 2 U.S.C. 

§ 439a(b). See 2 U.S.C. § 437g(a)(3). The General Counsel also provided defendants with a 

brief stating the position of the General Counsel on the legal and factual issues of the case. 

The defendants filed a response with the Commission dated Apri125, 201l. 

29. After reviewing the information available, on February 7,2012, the Commission 

voted 5-0 (with one Commissioner recused) to find probable cause to believe that Craig for U.S. 

Senate, Kaye L. O'Riordan (in her official capacity as treasurer of Craig for U.S. Senate), and 

Larry E. Craig violated 2 U.S.c. § 439a(b). See 2 U.S.c. § 437g(a)(4)(A). 

30. The Commission notified all ofthe defendants ofits February 7,2012 findings by 

letter dated February 22,2012, and, for a period of not less than 30 days, endeavored to correct 

8
 
the violations through informal methods of conference, conciliation and persuasion. 

See 2 U.S.c. § 437g(a)(4)(A). Unable to secure acceptable conciliation agreements with the 

defendants, on May 3, 2012, the Commission voted 5-0 (with one Commissioner recused) to 

authorize filing this suit against defendants. See 2 U.S.C. § 437g(a)(6). 

31. The Commission has satisfied all of the jurisdictional requirements in the Act that 

are prerequisites to filing this action. 

FIRST CAUSE OF ACTION 

32. Paragraphs 1 through 31, inclusive, are incorporated herein by reference. 

33. Defendants Craig for U.S. Senate, Kay L. O'Riordan (in her official capacity as 

treasurer of Craig for U.S. Senate), and Larry E. Craig disbursed more than $200,000 in Craig 

for U.S. Senate funds to Sutherland, Asbill & Brennan and Kelly & Jacobson to pay for legal 

fees and expenses incurred by Mr. Craig in connection with efforts to withdraw his guilty plea in 

Minnesota in 2007 and 2008. These disbursements converted the Craig Committee's funds to 

personal use because they were not expenditures made in connection with Mr. Craig's campaign 

for federal office and were not ordinary and necessary expenses incurred in connection with his 

duties as a Senator. The expenses Mr. Craig incurred in his efforts to withdraw his guilty plea 

would have existed irrespective of his duties as Senator. 

34. By converting Craig for U.S. Senate funds to the personal use ofMr. Craig, 

defendants Craig for U.S. Senate, Kay L. O'Riordan (in her official capacity as treasurer of Craig 

for U.S. Senate), and Larry E. Craig violated 2 U.S.c. § 439a(b). 

9
 
PRAYER FOR RELIEF 

WHEREFORE, plaintiff Federal Election Commission prays that this Court: 

A. Declare that defendants Craig for U.S. Senate, Kaye L. O'Riordan (in her official 

capacity as treasurer of Craig for U.S. Senate), and Larry E. Craig violated 2 U.S.C. § 439a(b) by 

converting more than $200,000 in Craig for U.S. Senate funds to the personal use of Larry E. 

Craig; 

B. Order defendant Larry E. Craig to disgorge to Craig for U.S. Senate an amount 

equal to the disbursements made by the Craig Committee for the personal use of Larry E. Craig; 

C. Permanently enjoin defendants Craig for U.S. Senate, (Kaye L. O'Riordan, in her 

official capacity as treasurer of Craig for U.S. Senate), and Larry E. Craig from converting Craig 

for U.S. Senate funds to the personal use of Larry E. Craig; 

D. Assess an appropriate civil penalty against each of the defendants: for each 

violation not to exceed the greater of $6,500 or the amount of any contributions or expenditures 

involved, see 2 U.S.C. § 437g(a)(6)(B), 11 C.F.R. § 111.24(a)(2); 

E. Award plaintiff Federal Election Commission its costs in this action; and 

F. Grant the plaintiff Federal Election Commission such other relief as may 

be appropriate. 

Respectfully submitted, 

Ltvv\)vt'4-.\iv.. ~Y'- pC 

Anthony Herman to 

(D.C. Bar No. 424643) 

General Counsel 

O-J/kU /

David Kolker 

(D.C. Bar No. 394558) 

Associate General Counsel 

10 
June 11,2012 

Assistant General Counsel 

~:e c:::? III 

Robert W. Bonham III 

(D.C. Bar. No. 397859) 

Senior Attorney

t(?b 

K!evinp~ck Attorney 

FOR THE PLAINTIFF 

FEDERAL ELECTION COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

(202) 219-0260 (facsimile) 

11