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Ethics office report says Trahan may have concealed loans by husband from FEC

Office of Congressional Ethics details spouse contributions to campaign

Rep. Lori Trahan, D-Mass., has a matter that continues to be looked at by the House Ethics Committee. (Bill Clark/CQ Roll Call file photo)
Rep. Lori Trahan, D-Mass., has a matter that continues to be looked at by the House Ethics Committee. (Bill Clark/CQ Roll Call file photo)

There is “substantial reason” to believe Rep. Lori Trahan’s campaign accepted contributions that exceeded federal limits and that she failed to properly disclose required information, according to an Office of Congressional Ethics report released Tuesday. 

This matter began with complaints to the OCE about late injections of hundreds of thousands of dollars to Trahan’s campaign, prompting questions about where the funds originated. Trahan prevailed in a crowded 10-person Democratic primary in 2018; she loaned her campaign $300,000 from a joint checking account she shares with her husband en route to the win. 

The OCE report, released Tuesday by the House Ethics Committee — a separate panel that has subpoena power and can discipline members — found that on three occasions in 2018, Trahan may have loaned money to her campaign that originated from her husband, David.

The money from David Trahan’s personal funds was subsequently reported as a series of personal loans from the joint checking account the two share. On two occasions, Trahan dated the checks on the last day of the fundraising quarter and reported them to the Federal Election Commission as personal loans obtained on that date.

In those two instances, the joint checking account had insufficient funds to cover the amounts and shortly after the date appearing on the checks, David transferred money into the joint checking account, the OCE report says. 

On March 31, 2018, Trahan wrote a check from the joint checking account to the campaign for $50,000, but on that date the account had a balance of $55. In the quarterly report to the FEC, Trahan’s campaign said it was a personal loan from her, but her joint checking account was not able to cover that loan, OCE’s report says. 

On April 7, David wrote a check to himself for $50,000 from his personal bank account and then on April 9, the same amount was put into the joint account. Trahan’s campaign deposited the $50,000 check on April 9, nine days after the campaign reported it received the loan. 

“The documents obtained by the OCE establish that Rep. Trahan and her campaign committee may have intentionally misreported the date
on which the March 31, 2018 loan was obtained because the joint checking account had insufficient funds at the time,” OCE says in its report.

On June 30, 2018, Trahan wrote a check from the joint account to her campaign for $50,000, but at that time, the checking account had a balance of $625. The committee disclosed in an FEC quarterly report that the $50,000 was a personal loan from the candidate, but the joint account did not have enough money to cover that figure, the OCE report says. 

On July 9, 2018, David wrote another check to himself for $55,000 from DCT Development Inc, a business account he holds. This amount was deposited into the joint account that day. Ten days after the campaign reported its receipt of the loan — on July 10 — Trahan’s campaign deposited a $50,000 check when the joint account had enough money. 

On Aug. 20, 2018, the Trahans’ joint account had $2,769. The next day, David transferred $200,000 from his personal bank account into the joint account. On Aug. 22, Trahan wrote a check from the shared account to her campaign for $200,000. The campaign said in its quarterly FEC report that the $200,000 was a personal loan. 

“Rep. Trahan’s campaign committee reported the $300,000 in contributions as personal loans from Rep. Trahan when they appear to have been funds derived from David Trahan’s personal accounts,” OCE’s report states. “Consistent with FEC guidance, spousal funds are subject to contribution limits. The process of transferring these funds from David Trahan’s accounts to a joint account did not transform these funds into Rep. Trahan’s assets, or even jointly owned assets.”

The report notes that the maximum contribution limit for the 2017-18 election cycle was $5,400, a threshold David met by Sept. 2017, meaning the $300,000 in loans to Trahan’s campaign from David exceeded federal campaign contribution limits, the OCE report says. 

Neither Trahan nor David cooperated with OCE. 

[House Ethics needs more time on Rep. Lori Trahan case]

Mark McDevitt, a spokesperson for Trahan, said the original complaint that prompted the report is meritless and that her use of shared assets with her husband does not run afoul of federal law. 

“Congresswoman Trahan has previously communicated at length to her constituents about the circumstances surrounding her personal loan to her campaign consistent with the facts in the OCE report. The complaint that generated this referral came from a right-wing group with a long history of attacking Democrats, and is without merit,” McDevitt said.

“The Federal Election Commission has found no violations in numerous cases involving the use of marital assets that closely mirror Congresswoman Trahan’s use of funds, which is why we remain confident that any review will rule in her favor. We look forward to the Ethics Committee’s final decision on this matter.”

In a Medium post on Oct. 30, Trahan noted that she earned $361,000 in 2017 and $274,000 in 2018 as a consultant at the company she co-founded, Concire. She noted that in 2007, when she married her husband, they signed a prenuptial agreement in which the money they earned separately at work would be equally entitled to both of them.

“All of the income that each of us earned would be our marital property, and each of us would have an equal right to manage and spend it. What I earned was our money and what he earned was our money. We didn’t distinguish,” Trahan wrote. “In time, we fell into a routine. Certain expenses (e.g. family health care premiums) would be paid from accounts in my name; other expenses (e.g. tuition payments) would be paid from accounts in his name; and a variety of regular household expenses would be paid from joint accounts. That’s just the way we did things.”

The $300,000 Trahan loaned her campaign originated from her husband’s income and was moved into their joint checking account.

Jonathan Berkon, a partner at Perkins Coie, the law firm that represents Trahan, said that the prenuptial agreement allows Trahan to loan her campaign that money.

“Under the agreement and state law, the funds used by Congresswoman Trahan to loan money to her campaign were her ‘personal funds’ and were eligible for use in the campaign,” Berkon said in a statement shortly after Trahan’s Medium post.

“I now know that the way I contributed those funds constitute a gray area in campaign finance law,” she wrote.

Under Federal Election Commission laws, candidates can give an unlimited amount of their personal funds to their campaign and candidates can use, as personal funds, his or her portion of assets owned jointly with a spouse. If the candidate’s financial interest in the asset is not specified, the candidate’s share is deemed to be half the value. 

“I realize that I could have done it differently and that how I did has raised some questions,” Trahan also acknowledged.

She also noted that, in 2018, she found out that her campaign made several errors in personal financial disclosure statements and federal election reports. Trahan said she regretted the “inadvertent omissions and errors in my initial filings.”

In 2012, the Ethics Committee said it can investigate conduct that violated laws during an initial campaign for the House. This was in reference to the case of former New York Rep. Michael Grimm, who was alleged at the time to have violated federal campaign finance laws, in part, for accepting prohibited campaign contributions.

The House Ethics Committee will continue its review of the matter.

Katherine Tully-McManus contributed to this report.

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