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April 18, 2006

Public Citizen Complaint Against Freddie Mac Lobbyist Results in Record Fine

Statement by Craig Holman, Legislative Representative for Public Citizen’s Congress Watch Division

Public Citizen hails the record-setting fine issued today by the Federal Election Commission (FEC) against the Federal Home Loan Mortgage Corporation (Freddie Mac) in response to Public Citizen’s 2003 complaint of campaign finance violations. Public Citizen filed the complaint against Robert Mitchell Delk, former lobbyist for Freddie Mac, with the FEC on October 15, 2003. The FEC issued its largest penalty ever in a civil enforcement action: $3.8 million.

The amount of the fine indicates the magnitude of the violations. The complaint came in the wake of an alarming number of lavish fundraisers hosted by Freddie Mac’s lobbyist – nearly half of which directly benefited lawmakers responsible for overseeing Freddie Mac and mortgage lending practices. During the 2002 election cycle, Delk hosted at least 45 fundraising events for lawmakers. More than half of these extravagant affairs featured Rep. Michael Oxley (R-Ohio), chair of the House Committee on Financial Services, which regulates mortgage loan practices, and at least 19 of these events were held directly for the benefit of lawmakers with oversight responsibilities for Freddie Mac.

While it is not illegal for lobbyists to host fundraising events for lawmakers whom they are trying to influence, it certainly raises the specter of corruption. The corrupting nexus between lobbyists, campaign cash and lawmakers is far more prevalent than just the practices of one or two shady lobbyists. Campaign fundraising by lobbyists – even constant, round-the-clock fundraising by lobbyists for those whom they lobby – is considered business as usual on Capitol Hill.

The complaint was based on the appearance that the numbers reported to the FEC by Delk did not add up. Delk’s personal in-kind contributions to the 45 events appeared to exceed his aggregate contribution limits. And the company enlisted to promote these fundraising events – Epiphany Productions, run by a former Republican Party official – routinely was not paid for its services. These possible violations of campaign finance law suggested by public records formed the basis of Public Citizen’s complaint.

All along, however, the shadow of Freddie Mac loomed. Public records available at the time of Public Citizen’s complaint did not prove that Freddie Mac was footing the bill illegally for these fundraising events, but a close FEC investigation of Freddie Mac’s finances and business practices led the commission to conclude that Freddie Mac used corporate resources to support Delk’s fundraisers, which is illegal. The corporation also solicited and forwarded contributions from its employees to federal candidates and contributed $150,000 to the Republican Governors Association, all in violation of federal law. Freddie Mac has admitted the latter violation and has agreed not to contest the rest, thus settling the case.

The action of the FEC to punish illegal corporate contributions to lawmakers is a great step in the right direction. But because in most cases such direct corporate involvement is difficult to prove, what is needed is a clear prohibition on lobbyists acting as fundraisers for federal candidates – whether on their “own time” or, as here, when on the corporate payroll.

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