USA. v. Pornpimol Kanchanalak, 99-3019

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: Wald
• Citation: 192 F.3d 1037
• Parties: (D.C. Cir. 1999) United States of America, Appellant v. Pornpimol Kanchanalak a/k/a Pornpimol Parichattkal, and Duangnet Georgie Kronenberg, Appellees Consolidated with
• Docket Number: No. 99-3019,No. 99-3034,99-3019,99-3034
• Decision Date: 08 October 1999

Page 1037

192 F.3d 1037 (D.C. Cir. 1999) United States of America, Appellant
v.
Pornpimol Kanchanalak a/k/a Pornpimol Parichattkal, and Duangnet Georgie Kronenberg, Appellees No. 99-3019 Consolidated with No. 99-3034 United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT Argued September 8, 1999
Decided October 8, 1999

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Appeals from the United States District Courtfor the District of Columbia(No. 98cr00241)

Jonathan Biran, Attorney, United States Department of Justice, argued the cause and was on the briefs for appellant.Eric L. Yaffe, Attorney, entered an appearance.

Reid H. Weingarten argued the cause for appellees. With him on the brief were Erik L. Kitchen, Brian M. Heberlig, and James Hamilton. Michael Spafford entered an appearance.

Before: Wald, Silberman and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Wald.

Wald, Circuit Judge:

The government charged Pornpimol "Pauline" Kanchanalak (aka Pornpimol Parichattkal) and Duangnet "Georgie" Kronenberg with a scheme to disguise illegal hard money contributions and soft money donations from foreign nationals and corporations to national and state political committees. Defendants were also alleged to have caused political committees to file reports with the Federal Election Commission ("FEC") falsely identifying lawful permanent residents as the source of funds that actually originated with foreign nationals and corporations in violation of 18 U.S.C. 2 (b), 1001. The government argued that 441e of the Federal Election Campaign Act ("FECA") prohibits any infusion of money from foreign nationals into federal, state, and local elections and that section 104.8 of the FEC regulations requires that political committees report the true source of their contributions and donations. Defendants asserted that as to both hard and soft money, political committees were not required to report the true sources of their receipts, and as to soft money, FECA did not restrict such donations by foreign nationals.¹

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They also argued that the FEC reporting regulation could not reasonably be read to require disclosures of the original sources of soft money receipts.

Based on its prior rulings in United States v. Hsia and United States v. Trie, the district court dismissed the hard money counts, determining that the government needed to demonstrate affirmative conduct beyond using conduit checks for a false statement prosecution. See United States v. Hsia, 24 F. Supp. 2d 33 (D.D.C. 1998), rev'd, 176 F.3d 517, 523-24 (D.C. Cir. 1999); United States v. Trie, 23 F. Supp. 2d 55 (D.D.C. 1998). The district court also dismissed the soft money counts, holding that the disclosure regulation, section 104.8(e), did not require political committees to reveal the original sources of their soft money.

This court subsequently reversed the district court's ruling in Hsia, finding that, in fact, the government had sufficiently alleged affirmative conduct for a false statement prosecution by charging that the defendant utilized conduit checks, and that FECA requires the "true source" of hard money to be reported. See United States v. Hsia, 176 F.3d 517 (D.C. Cir. 1999). On the basis of that ruling, the government seeks reinstatement of the hard money counts in this case. We agree that our decision in Hsia mandates reinstatement of the hard money false statement counts, and thus we summarily reverse the district court's order with respect to those counts.

We also find that the FEC regulation, section 104.8(e), prohibits the reporting of conduit contributions with respect to soft money and that 441e of FECA also prohibits foreign soft money donations. Accordingly, we reverse the judgment of the district court with respect to the soft money counts as well.

I. Background

Defendants, Pauline Kanchanalak and Duangnet Kronenberg, were charged with "knowingly and willfully caus[ing] the submission of material false statements to the FEC." See Superceding Indictment, at 24. Defendants are officers of Ban Chang International (USA) Inc. ("BCI USA"), a foreign corporation. Kanchanalak is neither a citizen nor a permanent resident of the United States. Kronenberg is a permanent resident of the United States. The contributions in question are checks made out to political committees and signed by permanent residents of the United States, even though the signing individuals were not the actual source of the donated funds.

On November 13, 1998, a federal grand jury issued an eighteen count superceding indictment against defendants. The indictment charged violations of FECA, 2 U.S.C. 431 et seq., and regulations issued by the FEC pursuant to FECA. The indictment generally alleges a scheme in which defendants illegally provided both "hard money contributions" and "soft money donations" to the Democratic National Committee ("DNC" or "the Committee") and other political committees.²"Hard

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money" refers to funds that have been deposited by the Committee into a "federal account" and are used to finance federal election campaigns. "Soft money" refers to funds that are deposited into a "non-federal" account and are supposed to be used for, among other things, state and local campaigns. See Trie, 23 F. Supp. 2d at 55. Defendants are alleged to have illegally used conduits to donate to the Committee both hard and soft money funds that originated with foreign nationals and corporations. The conduits were Duangnet Kronenberg and Praitun Kanchanalak, a relative of both defendants and an unindicted co-conspirator.³

More specifically, Count One charges that defendants engaged in a conspiracy to defraud the United States by disguising the fact that the true source of funds contributed to the DNC was BCI USA. See Appendix ("App.") 60-82;Superceding Indictment p p 1-66. Counts Two through Fourteen charge that defendants knowingly and willfully caused the DNC and other political committees to file false reports with the FEC, which erroneously identified the sources of contributions and donations, in violation of 18 U.S.C. 2(b), 1001.⁴ See App. 83-85, Superceding Indictment p p 1-2. The false statements were contained in thirteen reports filed with the FEC; each report is the subject of a separate count.

Counts Two through Four, Six through Eight and Thirteen of the superceding indictment were based solely on hard money "contributions."⁵ The remaining false statement Section 2(b) provides: "Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal." 18 U.S.C. 2(b). counts were based either partly or wholly on soft money funds that were not deposited into a federal account. Defendants sought dismissal of both the hard and soft money counts, arguing that under 18 U.S.C. 2(b), 1001, the government had failed to demonstrate adequately that defendants "caused" the submission of false statements. Additionally, on the soft money counts, defendants argued that soft money conduit contributions--even from foreign nationals-were not prohibited under FECA.

On December 31, 1998, the district court, largely agreeing with the defendants, dismissed Counts Two through Four and Seven through Fourteen. See United States v. Kanchanalak, 31 F. Supp. 2d 13, 14 (D.D.C. 1999) ("Kanchanalak I"). The district court's decision was based on its own prior reasoning in United States v. Hsia, 24 F. Supp. 2d at 33, and Trie, 23 F. Supp. 2d at 55. In both Hsia and Trie, the government had alleged only that the defendants signed conduit checks, or solicited others to act as signers for conduit checks. The court found that merely signing (or soliciting others to sign) checks was not sufficient to demonstrate that the defendants had "caused" the making of false statements

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about the actual source of the contributions.⁶ In Hsia, it also found that the "statements" at issue were literally true, since the check writers were a source (if not the only source) of the contributed funds. In Kanchanalak I, the court found that the allegations were "virtually indistinguishable from the allegations at issue in Hsia and Trie." Kanchanalak I, 31 F. Supp. 2d at 14. Again, the government had failed to allege any conduct that could satisfy the necessary causal elements of a violation under 18 U.S.C. 2(b), 1001. In Kanchanalak I, the district court did not reach the issue of whether there was a basis--statutory or otherwise--for the government to allege false statements at all with respect to soft money.⁷

On February 3, 1999, in United States v. Kanchanalak, 41 F. Supp. 2d 1 (D.D.C. 1999) ("Kanchanalak II"), the district court dismissed all of the remaining false statement counts as to Ms. Kanchanalak and all but one as to Ms. Kronenberg. Even as to those counts for which the government had sufficiently met its burden of alleging "affirmative conduct," the district court found that there was an additional reason supporting dismissal, namely, the inapplicability of FECA to soft money.

The court found only one provision in FECA that arguably provided a basis for alleging a false statement, namely 441f, which prohibits contributions in another person's name, and that indisputably applied only to hard money.⁸ In the court's words, "[o]n the thin reed of Section 441f, the government ... has a plausible argument that a report submitted by a political committee to the FEC that lists the identity of a 'conduit' or a person other than the true source of a contribution contains a false statement." Kanchanalak II, 41 F. Supp. 2d at 7 (internal quotations omitted). However, that argument "relied heavily on the definitions and operation of FECA, definitions that apply only to hard money 'contributions' regulated by FECA." Id. Although FECA requires political committees to report their hard money contributions, the court could find no corresponding FECA provision requiring political...