William P. Danielczyk Jr. and Eugene R. Biagi pleaded guilty today to reimbursing $186,600 in contributions to the Senate and Presidential campaign committees of a candidate for federal office, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office.
Danielczyk, 51, and Biagi, 78, both of Oakton, Va., pleaded guilty to making illegal conduit campaign contributions. The charge carries a maximum penalty of five years in prison. Danielczyk also faces a fine of not less than 300 percent of the amount involved and not more than the greater of $50,000 or 1,000 percent of the amount involved, and Biagi faces a potential fine of not more than $250,000 when they are sentenced on May 17, 2013.
“With today’s guilty pleas, Danielczyk and Biagi admit they used straw donors to circumvent the rules of the electoral process,” said AAG Breuer. “Our democracy depends on voters honoring campaign contribution limits and other campaign finance laws, and the Justice Department will continue to pursue corrupt individuals whose illegal tricks threaten the legitimacy of elections and undermine public confidence in the democratic process.”
“Today Mr. Danielczyk admitted that he tried to corrupt the electoral process by evading corporate contribution limits,” said U.S. Attorney MacBride. “Mr. Danielczyk abused his power as an employer and abused his power as a participant in a U.S. election. Direct contribution limits for corporations provide an important check in the integrity of our electoral process, and today’s convictions help ensure that those who illegally go beyond those limits are held accountable.”
“With today’s guilty pleas, Mr. Danielczyk and Mr. Biagi admitted their roles in a scheme in which they evaded FEC law to donate money to a Senate and Presidential candidate. By doing so, they funneled more than $186,600 through their company by creating fraudulent invoices for straw donors and falsely back-dating letters to those individual contributors,” said Assistant Director in Charge Parlave. “The FBI will continue to work with the U.S. Attorney’s office to investigate allegations of campaign finance abuse, which are in place to ensure openness and fairness in our elections so the people’s interests are protected.”
According to court records, Danielczyk was the Chairman of Galen Capital Corporation, and Biagi served as the corporation’s secretary and treasurer. In September 2006, Danielczyk co-hosted a fundraiser for a candidate’s campaign for the U.S. Senate and in March 2007 he co-hosted a fundraiser for the same candidate’s 2008 campaign for the President of the United States.
Danielczyk admitted that he recruited individuals, including Biagi and other corporate employees, to serve as “straw donors” to the campaigns, assuring the donors that they would be reimbursed for their contributions. Danielczyk’s assistant collected the contributions, and Danielczyk and Biagi then reimbursed the straw donors for their contributions using Galen Capital Corporation’s corporate funds.
Biagi admitted that he disguised the nature of the reimbursement payments by writing “consulting fees” on the checks’ memorandum lines and by issuing the checks for amounts slightly larger than the campaign contributions. Danielczyk and Biagi also created falsely back-dated letters to the individual contributors, which characterized the reimbursement payments as “consulting fees” or that a contributor would receive money for certain work.
Danielczyk and Biagi admitted they used corporate funds to reimburse a total of $186,600 to the two campaigns. The campaigns unwittingly reported the straw donations as lawful contributions from the individual donors.
This case was investigated by the FBI’s Washington Field Office. Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Mark D. Lytle and Timothy D. Belevetz from the U.S. Attorney’s Office for the Eastern District of Virginia are prosecuting the case on behalf of the United States.