June 19, 2024

Former Sen. Kelsey can’t use PAC funds on legal fees – Tennessee Lookout

Tennessee’s top campaign finance watchdog advised former Sen. Brian Kelsey he can’t use his political action committee to pay attorneys as he tries to reverse a conviction for violating federal campaign finance law.

Kelsey, a Germantown Republican, transferred $196,833 from his state campaign account to his Red State PAC last summer, then sought a legal opinion on whether that money could be used for legal fees in his federal case, after switching attorneys twice.

Bill Young, executive director of the Bureau of Ethics and Campaign Finance, issued an advisory opinion to Red State PAC chair Jennifer Martinez of Memphis in November 2023 letting her know state law “prohibits the disbursement of campaign funds from a candidate’s campaign account for a candidate’s own personal use,” precluding PAC funds from being spent on Kelsey’s legal fees.

Young said it is his opinion that Red State PAC “may not use its funds for this purpose” and that the use would violate state law.

Kelsey pleaded guilty two years ago to directing a scheme in which funds from his state account were funneled through two PACs to the American Conservative Union, which made a large radio/digital expenditure on behalf of Kelsey’s failed 2016 U.S. Congressional race. Such a transfer of funds violates federal law, because state and federal campaign funds fall under different guidelines.

The former state lawmaker reneged on his guilty plea claiming his decision was adversely affected by the birth of twin sons and illness of his father, who has since died. He also said he didn’t understand the criminal justice system, even though he earned a law degree at Georgetown University and served as chairman of the Senate Judiciary Committee.

U.S. District Court Judge Waverly Crenshaw sentenced Kelsey to 21 months in prison but is allowing him to remain free on bond while he argues the case before the 6th Circuit Court of Appeals, attempting to reverse his plea or at least not serve time.

Needing money for new lawyers

Martinez, the PAC’s chairman, wrote in her letter that the bulk of Kelsey’s legal fees were made in a flat payment to lawyers that Kelsey then fired. He personally spent $422,570 in legal fee and a legal defense fund paid $107,000 on his behalf, bringing his total to $529,570, according to Martinez.

Kelsey initially hired Paul Bruno, David Rivera and Jerry Martin to represent him but then fired them when he decided to try to back out of the guilty plea. He also released another attorney, David Warrington, before settling on Alex Little and Zachary Lawson, who’ve represented him since mid-2023.

In her letter to the Registry, Martinez said Red State PAC had received numerous donations from Kelsey’s re-election account over the years to help other candidates, including a donation received June 1, 2023 for $196,883, after which Kelsey closed his re-election account. Martinez notes in her letter that Kelsey is a board member of Red State PAC and solicits and accepts PAC contributions and makes recommendations, but that she has “sole authority” to spend the funds.

Young, however, pointed out in response that the funds would be used to pay for Kelsey’s legal expenses in a matter “at best tangentially related” to his candidacy as a state senator. Further, Young said the funds would be used to defend Kelsey in his “individual capacity for violating federal statutes,” making it a personal use, which is prohibited by state law.

In addition, Young says he was “not persuaded” that Kelsey’s position as an officer in the PAC or Red State PAC’s possible involvement in an investigation leading up to the criminal proceedings allows the PAC to pay the legal expenses.

Ultimately, Young said his opinion is that Tennessee law “prohibits” Red State PAC from using the $196,883 from Kelsey’s campaign account to pay for legal fees in the federal case. Young encouraged Martinez to ask for guidance and clarification from the Federal Election Commission and the U.S. Attorney’s Office.

In a separate advisory opinion, Young also said Red State PAC can’t give the money to a nonprofit entity to pay Kelsey’s legal fees.

Young ran into some pushback from Registry members for making the advisory opinions, even though they were informal.

Registry board member Tom Lawless raised concerns, saying he didn’t like the board being “weaponized,” as it had in the past, or “second-guessing judicial action in a criminal matter, especially.” Lawless explained that was why he didn’t want to take up the advisory.

Young, however, pointed out the board had told him to make an informal advisory opinion and added that Registry staff felt an opinion needed to be formulated, otherwise Red State PAC could get the idea that it would be OK to spend the money on Kelsey’s legal fees.

“This is not the opinion of the Registry board. This is the executive director and the counsel’s opinion,” Young said.

Registry Chairman Hank Fincher also questioned whether the board should be getting involved in the matter and obligating itself to answer every hypothetical question that comes along.

Registry counsel Lauren Topping told board members this advisory turned out to be more “formal” because of the way the question was presented. Typically, Registry staff members don’t answer hypothetical questions, she said.

Topping also noted the Registry staff has no role in the prosecution but added, “It seems very much like this is an attempt to do what he’s already in trouble for. We didn’t want to be seen as just not voicing an opinion.”

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