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Thursday, April 17, 2014

Hotel Magnate Pleads Guilty to Federal Election Campaign Spending Limits Evasion Scheme and Witness Tampering

Sant Singh Chatwal, 70, of New York – a businessman operating several restaurants, hotels and a hotel management company – pleaded guilty in the Eastern District of New York to conspiring to violate the Federal Election Campaign Act (the “Election Act”) by making more than $180,000 in federal campaign donations to three candidates through straw donors who were reimbursed and to witness tampering. There is no allegation that the candidates participated in, or were aware of, Chatwal’s scheme.

Acting Assistant Attorney General David A. O’Neil of the Criminal Division of the U.S. Department of Justice, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Chief Richard Weber of the Internal Revenue Service–Criminal Investigation made the announcement.

The guilty plea proceeding took place before United States District Judge I. Leo Glasser of the Eastern District of New York. As part of his plea agreement with the government, Chatwal agreed to forfeit $1 million to the United States.

“Chatwal admitted that he used straw donors to secretly funnel money to political campaigns so that he could gain access to the politicians, and he coerced another person to hide his crime,” said Acting Assistant Attorney General O’Neil.  “Chatwal went to great lengths to undermine both election laws and our system of justice.  Today’s guilty plea shows our vigilance and determination to prosecute those who damage the integrity of elections by masking the true sources of campaign contributions.”

“The Election Act’s spending limits are in place to limit financial influence in federal elections and to ensure transparency as to the identity of donors,” said U.S. Attorney Lynch. “Chatwal’s scheme sought to subvert the very purpose of the Election Act. Chatwal then rolled the dice to stymie the government’s investigation, thinking he could corruptly convince witnesses to his federal election crimes to stay silent. That gamble did not pay off. Today’s conviction sends a clear message that this office is committed to vigorously investigating and prosecuting individuals who are responsible for committing crimes in connection with federal campaign donations and witness tampering.”

“Attempting to buy elections through illegal campaign contributions is unacceptable. It is also illegal,” said FBI Assistant Director in Charge Venizelos. “Americans rightfully expect that elections will be free and fair. The FBI will continue investigating every case of abuse, wherever we find it.”

“Mr. Chatwal admitted his actions were designed to circumvent the Election Act,” said IRS-CI Chief Weber. “IRS-CI's ability to adapt our financial investigative skills to cases where they are needed uniquely equips our agents to defend and uphold America's trust in the fairness of the electoral process.”

The Election Act limits the amount and source of money that can be contributed to a federal candidate or to an individual candidate’s political campaign committee and multi-candidate political campaign committees, commonly referred to as “political action committees” (PACs). For example, in 2008, the Election Act limited primary and general election campaign contributions in a calendar year to $2,300 per campaign, for a total of $4,600, from any one individual to any one candidate. In 2010, the Election Act limited primary and general election campaign contributions in a calendar year to $2,400 per campaign, for a total of $4,800, from any one individual to any one candidate. The Election Act also prohibits making a campaign contribution in the name of another person, including giving funds to a “straw donor,” or a conduit, for the purpose of having the straw donor pass the funds to a federal candidate as the straw donor’s own contribution.

According to court filings and facts presented during the plea proceeding, Chatwal operated several businesses, including restaurants, hotels, and a hotel management company. From 2007 to 2011, Chatwal used his employees, business associates, and contractors who performed work on his hotels (the “Chatwal Associates”) to solicit campaign contributions on Chatwal’s behalf in support of various candidates for federal office and PACs, collect these contributions, and pay reimbursements for these contributions.

Further according to court filings, Chatwal and the Chatwal Associates induced straw donors to make these campaign contributions, promising them that they would be reimbursed. Chatwal orchestrated a scheme to make approximately $188,000 in campaign contributions to three candidates for federal office via straw donors, and he often arranged for the straw donors to be reimbursed through the Chatwal Associates, ultimately paying for the reimbursed contributions with funds belonging to Chatwal or one of Chatwal’s companies.

The evidence against Chatwal includes an October 2010 recorded conversation between Chatwal and a business associate who became an informant, in which Chatwal underscored his view as to the importance of political campaign contributions, stating that without campaign contributions, “nobody will even talk to you…That’s the only way to buy them, get into the system… What, what else is there? That’s the only thing.”

Also according to court filings, Chatwal sought to obstruct the grand jury investigation into his Election Act scheme by tampering with a witness, a person whose business performed construction work for Chatwal and Chatwal’s companies and who had recruited straw donors at Chatwal’s direction. In a June 2012 recorded conversation, Chatwal told the individual that if FBI and IRS agents approached him or his family, they should not speak with the agents and should instead refer them to a lawyer Chatwal would provide. During this conversation, the individual said that he would not tell agents that Chatwal gave him money to reimburse straw donors. Chatwal replied, “Never, never.”

A few days later, in a July 2012 recorded conversation, Chatwal directed the same individual to lie to agents about the Election Act scheme. Chatwal said he would pay for the individual’s legal fees in connection with the investigation and offered to conceal the money within a payment for work the individual’s company had performed for Chatwal. During the conversation, they discussed that investigators were seeking copies of campaign checks in the individual’s possession, and they then discussed that it was helpful that some of the straw donors had been reimbursed with cash. Chatwal added, “Cash has no proof.”

The case was investigated by the FBI’s New York Field Office and the IRS-CI. The case is being prosecuted by Trial Attorney Marquest Meeks of Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Martin Coffey, Carolyn Pokorny, Robert Capers and Brian Morris of the Eastern District of New York.


Press Release Number: 
Updated September 15, 2014