United States v. Emmons

• Decision Date: 09 August 2021
• Docket Number: Nos. 20-5869,20-5890,s. 20-5869
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dale C. EMMONS ; Gerald G. Lundergan , Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

8 F.4th 454

UNITED STATES of America, Plaintiff-Appellee,

v.Dale C. EMMONS ; Gerald G. Lundergan , Defendants-Appellants.

Nos. 20-5869

20-5890

United States Court of Appeals, Sixth Circuit.

Argued: April 29, 2021

Decided and Filed: August 9, 2021

ARGUED: Matthew M. Collette, MASSEY & GAIL LLP, Washington, D.C., for Appellant in 20-5869. Kannon K. Shanmugam, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, Washington, D.C., for Appellant in 20-5890. Robert J. Heberle, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Matthew M. Collette, Kathryn A. Robinette, MASSEY & GAIL LLP, Washington, D.C., Leonard A. Gail, MASSEY & GAIL LLP, Chicago, Illinois, for Appellant in 20-5869. Kannon K. Shanmugam, Aimee W. Brown, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, Washington, D.C., Shon Hopwood, Kyle Singhal, HOPWOOD & SINGHAL, PLLC, Washington, D.C., J. Guthrie True, TRUE GUARNIERI AYER, LLP, Frankfort, Kentucky, for Appellant in 20-5890. Robert J. Heberle, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., Charles P. Wisdom, Jr., Andrew T. Boone, Kate K. Smith, UNITED STATES ATTORNEY'S OFFICE, Lexington, Kentucky, for Appellee.

Before: COLE, CLAY, and GRIFFIN, Circuit Judges.

CLAY, Circuit Judge.

Defendants Dale C. Emmons ("Emmons") and Gerald G. Lundergan ("Lundergan") appeal the district court's entry of judgment against them following a jury trial for alleged criminal activity related to Alison Lundergan Grimes’ ("Grimes") campaign for the U.S. Senate seat held by Mitch McConnell in 2014. Emmons and Lundergan were convicted by a jury for knowingly and willfully making unlawful corporate contributions aggregating $25,000 or more, under the Federal Election Campaign Act ("FECA"), 52 U.S.C. §§ 30109(d)(1)(A)(i), 30118, and 18 U.S.C. § 2 ; conspiracy to defraud the United States, under 18 U.S.C. § 371 ; willfully causing the submission of materially false statements, under 18 U.S.C. §§ 1001(a)(2) and 2; and the falsification of records or documents, under 18 U.S.C. §§ 1519 and 2. For the reasons stated below, we AFFIRM the district court's judgment.

BACKGROUND

Gerald Lundergan is the father of former Kentucky Secretary of State, Alison Lundergan Grimes, and he is the owner of S.R. Holding Company ("S.R. Holding"), which operates catering, events, and emergency disaster businesses.¹ Lundergan has been actively engaged in Kentucky politics, having served as a member of the Kentucky House of Representatives and as the chair of the Kentucky Democratic Party. On July 1, 2013, during her first term as Kentucky Secretary of State, Grimes announced her intention to run against Mitch McConnell in the 2014 U.S. Senate race.² Jonathan Hurst ("Hurst") served as Grimes’ campaign manager, but Lundergan was heavily involved in the day-to-day operations of the campaign—namely campaign fundraising, expenses, and strategy—and often met with Hurst to discuss these topics. Lundergan negotiated with vendors, hired campaign staff, and reviewed and approved vendor invoices and campaign advertisements.

After Grimes announced her intention to run against McConnell, the campaign began planning a kick-off event to take place at the end of July 2013 that would serve as a more formal announcement of the campaign. The kick-off event took place at the Carrick House, which is owned by Lundergan. The Lundergan family, including Gerald Lundergan and Grimes’ sisters, Abby Lundergan Dobson and Alissa Lundergan, helped coordinate the event, and S.R. Holding made payments to four vendors who provided staging, lighting, an LED video wall, and audio-visual equipment and services for the event, at a total cost of $25,495. S.R. Holding only invoiced the campaign $3,706.25—which covered the expenses that the company incurred for the stage, audio-visual services, tent stations, bottled water, two banners, chairs, and the outdoor facility rental—and the campaign paid this balance in a check addressed to "Lundy's Special Events."³ (R. 211, Trial Tr. at PageID # 3814; Doc. No. 31, App'x at 144–45.) The campaign's FEC Report that was filed on October 15, 2013, included the $3,706.25 payment to S.R. Holding, and the report was sent to Grimes, Lundergan, and Hurst for their review to ensure that the listed disbursements were described accurately. After the company was served with a grand jury subpoena requesting records and information related to expenses incurred for the campaign, S.R. Holding invoiced the campaign for the unpaid expenses of the kick-off event.

Near the start of the campaign, Dale Emmons, a friend of the Lundergan family and a political consultant, and his associate Joey George began providing political consulting services to help Grimes’ and other Kentucky Democrats’ campaigns. Emmons wanted to be selected for the position of Kentucky Coordinated Campaign Director, so, as a means of demonstrating his capability for the role, Emmons and George began drafting a coordinated campaign plan for the Kentucky Democratic Party—working out of the basement of the same building where the Grimes campaign had its headquarters.⁴ At this time, the coordinated campaign was not operational, and it did not come into existence under mid-2014. From July 2013 to November 2013, S.R. Holding paid a total of $90,500 to Emmons & Company for Emmons and George's work,⁵ which were invoiced as "Consulting Services Retainer" until they both began directly working for the Grimes campaign in January 2014. (R. 274, Trial Tr. at PageID # 7463; R. 211, Trial Tr. at PageID # 3827–28; Doc. No. 33, App'x at 482.)

At trial, a major point of dispute between Defendants and the government was whether Emmons and George were working in anticipation of the coordinated campaign or were providing their services for the benefit of the Grimes campaign. For example, government witness, Agent Tylor Hanna, testified at trial that Emmons "did a variety of things for the Alison for Kentucky campaign, such as setting up robocalls, getting artwork for different marketing things, setting up fund-raiser events, accompanying the candidate to various events, organizing meetings, [and] communicating with the leadership of the Alison For Kentucky campaign." (R. 252, Trial Tr. at PageID # 6393–94.) Additionally, Hurst and Erin Tibe, the campaign's compliance director, testified that they did not know that S.R. Holding was paying Emmons and George for their work and thought they were working for the campaign in a volunteer capacity until January 2014. But, as demonstrated on cross-examination, Defendants asserted that Emmons and George were organizing events and preparing materials for events that promoted the plan they created for the coordinated campaign, part of which involved coordinating with Grimes’ campaign given that she was the lead candidate on the ballot.

In addition to payments for consulting services, Lundergan used funds from S.R. Holding to reimburse Emmons for the expenses he paid to third-party vendors for mailers and robocalls promoting campaign-related events as well as for an internet upgrade for the office. At trial, Brian Chism, the owner of Chism Strategies, Inc., testified that the company recorded robocalls to promote the Alison For Kentucky campaign and encourage voters to attend campaign events. Emmons was the primary contact for Chism Strategies and provided the content for the calls and direction on which voters to contact, and Lundergan and Hurst were copied on the emails to Chism Strategies regarding the content and scheduling of the calls. Although the calls were authorized by the campaign, the calls erroneously stated that they had been "Paid for by Alison For Kentucky," (R. 261, Trial Tr. at PageID # 6922; R. 274, Trial Tr. at PageID # 7478), as Chism Strategies invoiced Emmons & Company for the expenses related to the call. (Doc. No. 31, App'x at 79–81 (invoice from and checks made out to Chism Strategies, Inc., for "Rec call" and "Setup").)

Additionally, Emmons was reimbursed by S.R. Holding for payments he made to Bluegrass Integrated Communications for mailers promoting campaign events. For example, Bluegrass invoiced Emmons & Company for invitations it made for the "Women Leading Lexington" event held in September 2013, which it listed as being work for "Alison For Kentucky." (R. 229, Trial Tr. at PageID # 5670; Doc. No. 31, App'x at 85–90.) The invitation contained the campaign logo and a disclaimer that erroneously indicated that it had been "paid for [by] Alison For Kentucky," as Emmons & Company paid $1,605.58 for the invitations and was then reimbursed by S.R. Holding. (R. 276, Trial Tr. at PageID # 7697–98.) Lundergan also reimbursed Emmons for an internet maintenance upgrade in his office in the basement of the Grimes campaign headquarters. Emmons paid Wendell Wilson Consulting, LLC, $2,850 for the upgrade, and was later reimbursed by S.R. Holding. And Emmons hired Wendell Wilson Consulting to troubleshoot the campaign network, which S.R. Holding similarly reimbursed. None of these payments by S.R. Holding were reported to the campaign.

Lundergan also paid third-party vendors, Financial Innovations and Axxis, Inc., for campaign merchandise. The Grimes campaign entered a licensing agreement with Financial Innovations, through which the company set up a website and sold merchandise and from which the campaign received no proceeds. The Grimes campaign bought yard signs, rally signs, and table tents from Financial Innovations, and the campaign purchased lapel pins, t-shirts, bumper stickers, signs, and buttons, for which Abby Lundergan Dobson was the primary contact. Although the Grimes campaign treasurer, at Grimes’ direction, tried to have the campaign pay for this merchandise, S.R. Holding ultimately covered the payments due for the merchandise. Axxis, Inc., provided staging, lighting, and audio and visual services for two campaign rallies—one at the Kentucky International Convention Center and another on election night at Carrick House. The...