8.29.15 Marks Letter to House Prohibited Loan

7/23/2019 8.29.15 Marks Letter to House Prohibited Loan

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7/14

FOLEY

FOLEY & LARDNER LLP

Office of General Counsel

Federal Election Commission

999 E

Street,

NW

Washington, D.C. 20463

RECEIVFn

t.

W4 nY 15 PM

/:

29

_ E MAIL

CENri:

L l

May 15,

2014

Re

: Complaint Against Respondents Mississippi

Conservatives and its treasurer, Brian Perry, both

individually and in his capacity as treasurer

of

Mississippi Conservatives, Trustmark National

Bank

and Mr. Harry Walker, President ofTrustmark Bank

To Whom

lt May Concern:

A

TT

ORNEl S AT

LAW

WASHINGTON

HARBOUR

3 K STREET. N

.W

SUITE

600

WASHINGT

ON, O.C

. 2000751 9

202.6 2.5300 T

EL

202.672.5399 FAX

WWW.FOLEY.

COM

WRITER S

DIRECT LINE

202.295.

4 81

cmrtcheQ

@oley.com EMAIL

CLIENT/MATIER NUM

BER

On

behalf

of Tea Party Patriots Citizens Fund and its Chairman, Jenny Beth

Martin (collectively, 'TPPCF ), and pursuant to 2 U.S.C.

437g a) l)

and 11 C.F .R.

111.4, the undersigned files this Complaint against Mississippi Conservatives, an

independent expenditures

only

PAC, its treasurer, Brian Perry, Trustmark Natio

na

l Bank,

located in Jackson,

MS,

and its President, Harry M. Walker (collectively Respondents ).

Tea

Party Patriots

Cit

izens Fund is

an

Independent Expenditures Only

PAC

registered

with

the Federal Election Commission, dedicated to electing true conservatives

to

the United

Sta

tes House and Senate who

will

help restore personal freedom, economic

freedom,

and a

debt-free future

to

America.

TPPCF

has endorsed state Senator Chris

McDaniel

for

the U.S. Senate in

th

e June 3, 2014 Republican Primary

in Mis

sissippi, the

first true challenge to incumbent GOP Senator Thad Cochran's (R-MS) aut

om

atic

reelect ion.

Identity

of

Respondents.

On

or about

January 13, 2014, Mississippi Conservatives filed its Statement

of Organization with the Federal Ele

ct

i

on

Commission and advised the Commission that

it

was being established as an [ndependent Expenditures Only federal political committee.

S

ee

Attached Exhib it A, Stateme

nt

of Organization and Letter from Brian

Perry,

Director

Treasurer.

BOSTON

BRUSSELS

CHICAGO

DETROIT

JACKSONVILLE

LOS ANGELES

MAOISON

MIAM I

MILWAUKEE

NE\\/ YORK

ORLANDO

SACRAMENTO

SAN

DIEGO

SAN FRANCISCO

SHANGHAI

SILICON

VALLEY

TALLAHASSEE

TAMPA

TOKYO

WASHINGTON,

O.C.


8/14

FOLEY

FOLEY

LARDNER

LLP

Mayl5,20 14

Page 2

The

depository bank

li

sted in the Form 1 is Respondent Trustmark Bank

in

Jackson,

MS . See Exhibit A, page 4, Line 9.

Trustmark Bank is a nationally chartered bank.

According to

key

demographic information as of

May

8, 20 14 on the website of

the Federal Deposit lnsurance Corporation ( FDIC ), Trustmark National Bank is the same

entity listed as

th

e depository bank

on

the Form 1

of

Mississippi Conservatives. Trustmark

National Bank is identified as a ' national bank ',

FD

IC Certificate# 4988, with its primary

federal regulator identified as the Comptro ll

er

of the Currency ( Office of the Comptroller

of

the Currency (OCC) - Primary Federal regulator responsible for nationally chartered

commercial banks

...

). See website

of

the FDIC,

http:

//

www2.fdic.gov/idasp/confitmation outside.asp?inCertl =4988, accessed May 14,

2014.

Mr. Harry M. Walker is identified as the Regional President

of Ce

ntral

Mississi

ppi ofTrustmark

National Bank since September 201

l

Mr. Walker served as

President of Jackson Metro ofTrustmark National Bank at Trustmark Corporation from

February 2004 to September

20

11 .

Mr

Walker served as the President and Chief Operating

Officer - Commercial Services Division ofTrustmark National Bank since September

2002. See

http:

//

investing.businessweek.com/research/stocks/people/person.asp?per

sonld

=

30

9546&ti

cker=TRMK, accessed May 14,

20

14.

TPPCF files this complaint against Respondents for their violation of the

Federal Election Campaign Act of 1971, as amended ( the Act or FECA ) and the

regulations

of

the Federal Election Commission ( the Commission or FEC ), for

willfully and knowingly violating the prohibition under federal law for contributions to

political committees by national banks.

Applicable w.

2 U.S.C.

44Ib

prohibits a national bank from making contributions or

expenditures in connection with any election for any po

li

tical office, to-wit:

2

U.S.

Code 441 b - Contributions or expenditures

by national banks corporations or labor

or

ganizations

(a)

In general


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FOLEY

FOLEY L RDNER LLP

May 15, 2014

Page 3

It

is unlawful for any national bank, or any corporation

organized by authority

of

any law

of

Congress, to make a

contribution or expenditure

in

connection with any

election to any political office, or in connection with any

primary election or political convention or caucus held to

select candidates for any political office, or.

..

to make a

contribution or expenditure

in

connection with any

election at which presidential and vice presidential

electors

or

a Senator

or

Representative in, or a Delegate

or

Resident Commissioner to, Congress are to be voted

for, or in connection with any primary election or

political convention

or

caucus held to select candidates

for any of the foregoing offices,

or

for any candidate,

political committee, or other person knowingly to accept

or receive any contribution prohibited by this section, or

any officer or any director

of

. . . any national bank .. .

to

consent to any contribution

or

expenditure by the .. .

national bank ... prohibited by this section. (emphasis

added)

Further, FECA provides for severe punishment

of

knowing and willful violations

of

the campaign finance law involving amounts in excess of Twenty-Five Thousand

Dollars ($25,000). See 2 U.S.C.437g(d) l) A) (Any person who knowingly and

willfu

y commits a violation

of

any provision

of

this Act which involves the making,

receiving,

or

reporting of any contribution, donation or expenditure- (i) aggregating

$25,000 or more during a calendar year shall be fined under title 18, United States Code,

or

imprisoned for not

more

than 5 years, or both; )

Respondents, each of them, have acted in concert to deliberately, knowingly and

willfully violate the prohibition against contributions by national banks to federal political

committees involving

an

election for the United States Senate.

Facts o the Violation s)

Re

spondent Missi

ss

ippi Conservatives ( the PAC ) made its first independent

expenditures for television ads attacking Chris McDaniel

on

January 31, 2014, in the

amount of $219,540.00. ee Exhibit B, Report of Independent Expenditures against Chris

McDaniel, filed 01/31/2014. (First fndependent Expenditure ).


10/14

FOLEY

FOLEY LARDNER LLP

May 15, 2014

Page4

However, as

of

the date when it made the

FiTst

Independent Expenditme, the PAC

had only received $160,000 in contributions. See Exhibit C, April 2014 Quarterly Report

ofMississippi Conservatives ( the PAC ).

The PAC's April Quarterly FEC

Repo11

filed on April 15, 2014 reflects the

following contributions received

prior

to the First Independent Expenditure:

01-30-2014

01 -17-2014

01-27-2014

01-21-2014

Hon. Haley Barbour

Mr. James L Barkdale

Mr. W.D. Mounger

Mr. Joe Sanderson

$ 10,000.00 (Page 6, Line A

$ 25,000.00 (Page 6, Line B)

$ 25,000.00 (Page 11 , Line B)

$100,000.00 (Page 13, Line A

The PAC repmts that it had spent $29,000 on January 23, 2014 for a poll. (Page 20,

Line B), leaving a balance of cash

on

hand as of January 31, 2014

of

$131 ,00.00

Yet, the PAC spent $219,540.00 for its First Independent Expenditure on January

31, 2014, almost $90,000 more than the amount

of

contributions the PAC had in the bank

at the time.

How?

On

January 29, 2014, Respondent Trustmark National Bank and its President, Harry

M. Walker, made an unsecured, uncollateralized loan to the PAC, which the PAC used to

pay for television attack ads against Chris McDaniel. See Exhibit C, April Quarterly FEC

Repo11

, Schedules C and C-1.

The

PAC had no cash collateral to support the loan, the loan is reported

as

being

unsecured, Trustmark Bank has no pe1fected security interest in any collateral, no future

contributions were pledged and no persons guaranteed the

loan

, therefore converting

this loan into a contribution, which violates federal law.

The

Loan from Trustmark National Bank was an illegal contribution.

Regulations

of

the FEC describe when a loan from a national bank is not a

contribution to

a po litical committee:

11 C.F.R. 100.82. Bank loans.

(a)

General provisions.

A loan ofmoney to a po litical committee ... by a ...

federally chartered depository

in

stitution (including a national bank) or a depository


11/14

FOLEY

FOLEY

L RDNER LLP

May , 2014

Page 5

institution

whose

deposits and accounts

are

insured

by

the Federal

Deposit

Insurance Corporation ... is not a contribution by the lending

in

sti tution

i

uch loan

is made in accordance with applicable banldng laws

nd

regu lations

nd

is made in

the ordinary course ofbusiness

A loan will be deemed

to

be

made

in

the

ordinary

course

of

business if it:

(1) Bears the usual and customary interest rate of the lending institution for

the category of loan involved;

(2)

ls made on a basis that assures repayment;

(3) Is

evidenced by a written instrument; and

(4)

Is subject to a due date or amortization schedule. (emphasis added)

The FEC regulations further define the terms of a loan 'made in the ordinary course

of business', to-wit:

11 C.F.R. 82 (e) Made on a basis that assures repayment A loan,

including a line

of

credit, shall be considered made

on a

basis that assures

repayment

if

it is obtained using either of the sources of repayment described

in

paragraphs (e)(l) or (2) of this section, or a combination of paragraphs (e)(l) and

(2)

of this

sec

tion:

(1).

(i)

The lending institution making the loan has perfected a security interest

in

collateral owned by the ... political committee receiving the loan, the fair

market value

of

the collateral is equal to or greater than the loan

amount

and any

senior liens as determined on the date of the loan, and the ...political committee

provides documentation to show that the lending institution has a perfected

security interest

in

the collateral. Sources

of

collateral include, but

are not

limited

to, ownership

in

real estate, personal property, goods, negotiable instruments,

certificates of deposit, chattel papers, stocks, accounts receivable and cash on

deposit.

...

or

(2)

The

lending institution making the loan has obtained a written

agreement whereby the . .. political committee receiving the loan bas pledged

future receipts, such as

...

contributions, or interest income, provided that:


12/14

FOLEY

FOLEY

& L

RONER LLP

May 15, 20 14

Page 6

(i)

The amount

of

the loan

or

loans obtained

on

the basis

of

such funds does

not exceed the amount of pledged funds;

(ii)

Loan amounts are based on a reasonable expectation of the receipt of

pledged funds. To that end, the ... political committee must fwnish the lending

institution documentation, i.e. cash flow charts or other financial plans, that

reasonably establish that such future funds will be available;

(iii) A separate depository account is established at

the

lending institution or

the lender obtains an assignment from the candidate or political committee to access

funds in a committee account at another depository institution that meets the

requirements of 11 CFR 103.2, and the committee has notified the other institution

of

this assignment;

(iv) The loan agreement requires the deposit of the contributions and interest

income pledged as collateral into the separate depository account for the purpose of

retiring the debt according to the repayment requirements of the loan agreement;

None of the above requirements outlined in the FEC regulations governing a

permissible loan for federal political committees are present in the facts of this matter.

The FEC report filed by Respondents on April

15

2014 clearly states that there is

no collateral for the loan and Trustrnark National Bank has no perfected security interest in

any collateral as required in Section 100.82(e)(l). Nor did the PAC and the Bank establish

a proper repayment source of a pledge of future contributi.ons as described

in 11

C.F.R.

100.82(e)(2). Schedule C and Schedule C-1 of Exhibit C specifically state that neither

repayment source exists and, accordingly, the proceeds from Trustmark National Bank are

deemed a contribution to Mississippi Citizens

y

operation of aw.

Further, the contribution from Respondent Trustmark National Bank to the PAC

was authorized and approved by its President, Hany M. Walker, in a separate violation of

federal law. 2 U.S.C. 441b provides that is unlawful for ... any officer or any director of

any national bank to consent to any contribution or expenditure by the . .. national

bank prohibited by this section.

And, it should be noted, on the same day as the illegal contribution Trustmark

National Bank made to the PAC, Respondent Harry Walker personally contributed $1,000

to the re-election campaign of incumbent Senator Thad Cochran - the beneficiary of the

expenditures by Mississippi Citizens. See Exhibit D April 2014 FEC Quarterly Report of

Thad Cochran for Senate Committee, Page 350, Line C.


13/14

FOLEY

FOLEY L RDNER LLP

May 5, 2014

Page 7

The PAC did not have sufficient funds to make the First Independent Expenditure

absent the illegal infusion of money from Trustmark National Bank. That fact was readily

apparent to Respondents because the depository bank for the PAC s bank account(s) is

Trustmark. As the bank president, Respondent Walker had access to know the PAC s cash

on hand and was clearly knowledgeable as to the insufficiency of the funds spent by the

PAC for its First Independent Expenditure.

Mr.

Walker cannot claim to have been

unaware that, absent the funds from Trustmark, the full amount of the First Independent

Expenditure could not have been made.

Because the ' loan' does not qualify as a legally permissible loan under FECA and

the FEC regulations, it is an illegal contribution from the bank - authorized by

it

s president,

Respondent Walker.

Thus, approximately 90,000

ofMississippi Citizens' First Independent

Expenditure falsely attacking Chris McDaniel was paid for by illegaJly obtained funds.

All those involved in hatching and implementing this unlawful scheme in an

obvious knowing and wi

ll

ful violation of federal law must be punished. TPPCF is appalled

that the supporters of incumbent Sen. Thad Cochran (R-MS) are so dedicated to protecting

the st tus quo and maintaining their political power base they have resorted to engaging in

a concerted effort to violate federal law.

Conclusion

Upon information and belief, and based upon the facts set forth above,

Respondents Mississippi Conservatives, its treasurer, Br ian Perry, Trustmark National

Bank, located in Jackson, MS, and its President, Harry M. Walker have, each of hem,

individually and collectively, violated the Federal Election Campaign Act of 1971, as

amended and must be held accountable and liable for their unlawful actions.

Please contact me if you have further questions (202) 295-4081.

Respectfully Submitted,

Cleta Mitchell, Counsel

Tea Party Patriots Citizens Fund,

Jenny Beth Martin, Chairman

Complainant


14/14

FOLEY

FOLEY L RDNER LLP

May 15 2014

Page 8

Statement

o

TPPCF Chairman Jenny eth Martin

I

m

the Chairman of the Tea Party Patriots Citizens Fund and hereby affirm and

state under penalty ofperjury that the above and foregoing statements are true and correct to

the best

of

my knowledge and belief.

Je

y Beth Martin Chairman

a Party Patriots Citizens Fund

1025 Rose Creek Dr

Ste 620-322

Woodstock

G

30189

Before me thi s JS _ day of May 2014 appeared Jenny Beth Martin and under penalty of

perjury did swear and affirm that the above and foregoing facts are true and correct to the

be

st

of her knowledge and belief.

8.29.15 Marks Letter to House Prohibited Loan

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Transcript of 8.29.15 Marks Letter to House Prohibited Loan