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Beam v. Petersen

September 30, 2010

JACK BEAM AND RENEE BEAM, PLAINTIFFS,
v.
MATTHEW S. PETERSEN, FEDERAL ELECTION COMMISSION CHAIRMAN, DEFENDANT.



The opinion of the court was delivered by: Rebecca R. Pallmeyer United States District Judge

Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiffs Jack and Renee Beam claim that Defendant, the Federal Election Commission ("FEC") improperly obtained their private financial records from the Department of Justice ("DOJ") without following certain requirements outlined in the Right to Financial Privacy Act of 1978 ("RFPA"), 12 U.S.C. § 3401 et seq. Defendant denies Plaintiffs' claim, arguing that Plaintiffs have failed to prove that the DOJ transferred their financial records to the FEC. Defendant moved for summary judgment and the court denied the motion. The court then conducted a two-day bench trial and heard testimony from various DOJ and FEC officials, as well as Plaintiffs themselves. The court presents below its findings of fact and conclusions of law pursuant to FED. R. CIV. PRO. 52(a).

Based on the evidence presented at the trial, the court now finds in favor of Defendant.

FACTUAL BACKGROUND

This case had its origin in 2005 when the DOJ suspected that a Michigan law firm, Fieger, Fieger, Kenney & Johnson, was violating the Federal Election Campaign Act ("FECA"), 2 U.S.C. § 441f, by reimbursing its employees in return for their contributions to John Edwards' 2004 presidential campaign. Beam v. Petersen, No. 07 C 1227, 2010 WL 476018, at *1 (N.D. Ill. Feb. 4, 2010). Such violations of § 441f violations are referred to as "conduit contribution cases," in which a person or entity advances or reimburses another individual for a campaign contribution, so that "the [conduit] whose name is reported as making the contribution is not the true source of the funds." (Trial Tr. vol. 1, at 159.) In 2006, the FEC opened its own inquiry into the Fieger law firm to determine whether there was "reason to believe"*fn1 the firm or its associates had violated § 441f through a reimbursement scheme. (Def.'s Proposed Findings of Fact and Conclusions of Law (hereinafter "Def.'s Mem.") ¶¶ 4.) During this initial inquiry, the FEC searched the Fieger firm's website and discovered several names that also appeared in a FEC database of federal campaign contributions to the Edwards campaign. (Id. ¶ 5.) The name of Jack Beam, an attorney who is of counsel at the Fieger firm, appeared on the firm's website, and the database showed that he and his wife, Renee Beam, had each contributed $2,000 to the Edwards campaign in 2003. (Letter from FEC to J. Beam of 9/26/06, Ex. A to Def.'s Reply Mem. in Supp. of its Mot. in Limine (hereinafter "J. Beam RTB Letter"); Letter from FEC to R. Beam of 9/26/06, Ex. A to Def.'s Reply Mem. in Supp. of its Mot. in Limine (hereinafter "R. Beam RTB Letter").) At trial, Mr. Beam testified that sometime in 2006 he began to suspect that a federal agency had accessed his brokerage account at Merrill Lynch.*fn2 Mr. Beam explained that he first contacted his personal banker who said, "I can't really talk to you," and later he received a letter from the bank stating that it was against "Merrill Lynch internal policy" to "inform clients whether [it had] provided information about them to the government." (Trial Tr. vol. 1, at 192-93; Trial Tr. vol. 2, at 355-56; Letter from Feldman to Beam of 6/9/06, Ex. 25 to Trial.)

The FEC eventually found "reason to believe" that the Fieger firm and certain employees, including Plaintiffs, had violated § 441f, which prompted a formal civil investigation of the firm referred to as Matter Under Review ("MUR") 5818. (Def.'s Mem ¶¶ 9, 17). As a result, in September 2006, the FEC sent letters to Plaintiffs describing the factual basis it found to "investigate whether the [Edwards campaign] contribution attributed to [the Beams] actually was a contribution from the [Fieger firm] in the name of another," and stating that if Plaintiffs "accepted reimbursement for [their] contribution[s] to the Edwards committee, then [they] may have violated the Act." (J. Beam RTB letter at 3-4; R. Beam RTB letter at 3-4). In response, Plaintiffs vigorously denied ever receiving any reimbursement for their campaign contributions.*fn3 (Letter from J. Beam to FEC of 10/6/06, Ex. A to Def.'s Mem. in Supp. of its Mot. in Limine (hereinafter "J. Beam Resp. Letter"); Letter from R. Beam to FEC of 10/6/06, Ex. A to Def.'s Mem. in Supp. of its Mot. in Limine (hereinafter "R. Beam Resp. Letter").

Throughout the course of the two parallel federal investigations, staff members at the FEC and DOJ "interacted periodically . . . to share information and coordinate" their findings. (Def.'s Mem ¶ 13.) Given Plaintiffs' central claim here, much of the testimony at trial focused on the nature and extent of information shared between the DOJ and the FEC during the investigations of the Fieger firm and its employees. The court heard testimony from both Michael Kendall Day, an attorney at the DOJ, and Audra Wassom Bayes, an FEC staff attorney. Day and Bayes served as primary contact persons for each other at their respective agencies and met several times over the course of their investigations. (Trial Tr. vol. 2, at 255; Bayes Dep. 28:22-29:1-2.) Michael Day testified that after learning of the FEC civil investigation in late 2006 or early 2007, the DOJ sent several of its non-grand jury investigative reports ("FBI 302 reports") on the Fieger firm to the FEC. (Trial Tr. vol. 2, at 256.) But Day also testified that the DOJ never transferred Plaintiffs' financial records to the FEC, and Bayes confirmed that she never received any of the Beams' financial records. (Trial Tr. vol. 2, at 264-65; Bayes Dep. 77:3-16.)

The DOJ continued its criminal investigation of the Fieger firm through the spring of 2007, but the FEC deferred conducting its civil investigation for MUR 5818 during this time. (Def.'s Mem. ¶¶ 18, 21; Trial Tr. vol 1., at 170.) Mark Shonkwiler, an attorney in the Office of General Counsel at the FEC, explained that while the FEC has the power to conduct administrative discovery, it declined to issue administrative subpoenas for any suspected conduit's bank records, including Plaintiffs', while the civil investigation was on hold. (Trial Tr. vol 1., at 163.) The DOJ, did however, serve Merrill Lynch with a grand jury subpoena in April 2007 to obtain Plaintiffs' bank records for its criminal investigation. (Trial Tr. vol. 2, at 252-53.)

In August 2007, the DOJ's investigation of the Fieger firm led to the indictment of two partners of the firm-Geoffrey Fieger and Vernon Johnson. DOJ found no evidence of Plaintiffs' participation in the alleged reimbursement scheme, however, and Plaintiffs were never charged with any criminal wrongdoing. (Id. at 263, 282-83.) Beam, 2010 WL 476018, at *1. Day testified that before the Fieger trial, he met with a potential expert witness named Thomas Andersen, the acting Assistant General Counsel of the FEC at the time. Day explained that it was standard practice to show a witness trial exhibits, but the DOJ did not use any of Plaintiffs' financial records as exhibits during the Fieger criminal trial. (Trial Tr. vol. 2, at 263-64). Moreover, Andersen testified that he did not see Plaintiffs' bank records, nor did he take any documents with him at the conclusion of his meeting with Day. (Trial Tr. vol. 1, at 132-33.) Andersen further testified that after their second meeting in late March or early April 2008, he received a packet of trial materials from Day, which contained a CD with contribution information "on hundreds, if not thousands, of contributors to the Edwards [campaign]." Anderson reported that he did not share this information with anyone at the FEC. (Id. at 133-34, 139.)

In June 2008, a jury acquitted both Fieger and Johnson. Beam, 2010 WL 476018, at *1.

After the Fieger criminal trial ended, Schenkwiler directed Bayes to contact the DOJ to obtain copies of the trial transcripts and exhibits so that the FEC could continue its civil investigation. (Trial Tr. vol. 1, at 179.) Day testified that he met with Bayes and provided her with a CD of the DOJ's trial exhibits, including "summary charts . . . to document the flow of money from Mr. Fieger through the conduits to the campaign." (Trial. Tr. vol. 2, at 259, 261). In her deposition, Bayes stated that she remembered receiving more than one CD from the DOJ, but that she was not entirely certain because she might have conflated the number of original disks she received from the DOJ with the number of duplicate copies she made for her office. (Bayes Dep. 34:13-15; 69:9-13.) In terms of the financial information in the exhibits used at trial, Day stated that "personal identifiers," such as "birth dates, social security numbers, address information, and bank account information" were redacted. (Trial Tr. vol. 2, at 262.) Day also confirmed that the DOJ did not use Plaintiffs' financial information at the Fieger trial and did not "transfer to the [FEC or Bayes] or to anyone else associated with the FEC their financial information." (Id. at 264.)

Later that same month, a staff attorney at the FEC named Phillip Olaya assumed primary responsibility for MUR 5818 after Bayes was promoted, and he received all of the files that she kept on the case. (Trial Tr. vol. 2, at 293-94.) In his deposition, Olaya testified that among the files he received was a CD containing "financial records [that] were part of the exhibits [used] at [the Fieger] trial." (Olaya Dep. 21:3-6.) Opposing counsel ...


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