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Murs 4322 Md 4650 Charles H. Roistacher

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Murs 4322 Md 4650 Charles H. Roistacher 1 BEFORE THE FEDERAL ELECTION CO~~I~SI~N In the Matrer of 1 ) 1 MURs 4322 md 4650 Enid '!I4 and Enid Greene. as Treasurer 1 I Enid '96 and Enid Greene. as Treasurer 1 I BRIEF OF RESPONDENTS ENID '94, ENID '96, AND ENID GREENE, AS TREASURER, IN OPPOSBTHON TO THE OFFICE QF GENERAL COWNSEE'S PROBABLE CAUSE ~~OM~E~~A~H~~ c.7 .- .-... .. .I -. * . c,c Charles H. Roistacher Brett G. Kappel POWELL, COLDSTEIN, FRAZER gL MURPHY LLP 100 1 Pennsylvania Avenue, NW Washington. D.C. 20004 Phone: (202) 347-0066 Fax: (202) 624-7222 Counsel to Enid '94 and Enid Greene. as Treasurer Counsel to Enid '96 and Enid Greene. as Treasurer TABLE OF c8 /TENTS I. INTRODUCTION. .... .................................................................................. I 11. BACKGROUND AND PROCEDURAL FUISTQRY ..................................... 3 A. The Criminal Investigation............................................... ........................ J B. Procedural History of FEC Investigation ...................................................... 9 111. ARGUMENT .. ..................................................................................... 14 A. The General Counsel’s Probable Cause Recommendation is Contrary to the Commission’s Long-Standing Policy of Not Pursuing Enforcement . Actions Against Campaign Committees in Cases Where FECA Violations Were Committed by Rogue Committee Officers In Order to Conceal Their Own Personal Criminal Activity ........................ .......................................... 14 B. The Enid Committees and Enid Greene, As Treasurer, Are Not Liable for FECA Violations Committed by Joseph P. Waldholtz as a Matter ofLaw .......... 24 1. Joseph P. Waidholtz Was Not Acting Within The Scope of His Employment And Authority as an Agent ofthe Committee When Me Committed the FECA Violations at Issue in These Matters ................... 24 2. Joseph P. Waldholtz So Completely Dominated the Enid Committees That He Became Their Alter Ego and, as Such. He is Personally Responsible for the FECA Violations That He Committed While Treasurer of the Enid Committees .... .......... 32 C. The Committees. and Enid Greene, As Treasurer, Were Victims Of Joseph P. Waldholtz’s Criminal Actions And It Would Be Fundamenealiy Unfair For The Commission To Impose Any Liability Upon The Committees, or Enid Greene. As Treasurer ................................................................................. 37 IV. CONCLUSION .................................................. ...................... ........ 39 i TABLE OF AUTHQBPTES CASES !Chemtall. lnc. v. CitiChem. lnc.. 992 F. Supp. 1390. 1402 (S.D. GA 1998)-------------------- 35 Costamar Shiauinr: Co. v. Kim-Sail Ltd.. 1995 U.S. Dist. LEXIS 18430 at 7 (December 12. 1995)---------~.7_). Fidenas AG v. Honc\?vell. 501 F.Supp. 1029. 1037 (S.D.NY 1980) ---------------------------3~ Gcrinecr v. Wildhorn Rmcli. Inc. et al. 706 F. Supp. 1442 (D. Co. 1988)--------------------------35 Mav Bell Schmid v. Roehm GmbH. 544 F.Supp. 272. 275 (D. Kan. 1982) ----------------------------- --JJ. 36 Standard Oil Co. of Texas v. United States. 307 F.2d 120. 128 (S* Cir. 1962)----------------------------------32 Trusrccs of The Colorado Cement Masons Aaorentice Trust Fund. et al. V. Burton Le\y. et al.. No. 78-1057 and 78-1058. at 3. published (10" Cir,. August 17. 1979)--- _I-_-----_--_---- __-.. __------ -------------------36 Weeks v, United States. 245 U.S. 618. 623 (1918) ______-.__-__-______-------------------.--------.. _------------75-_ William Wrielev Jr. Co. v. Waters. 890 F.2d 594. 600-01 (2ndCir. 1989) ----------------------------------------~4 William Wrielev Jr. Co. v. Waters. 890 F.2d 594. 601 (2" Cir. 1989) ............................................ 34 STATUTES REGULATW Restatement (Second) of Agency, I 231. Comment (a)- -26 Restatement (Second) of Agency. 8 235. Comment (a) --- 26 ... !!' in the Matter of 1 1 ) MURs 4322 and 4650 Enid ‘94 and Enid Greene, as Treasurer ) Enid ‘96 and Enid Greene. as Treasurer ) BRIEF OF RESPONDENTS ENID ’94, ENID ’96, AND ENID GREENE, AS TREASURER, IN OPPOSITION TO THE OFFICE OF GENERAL COUNSEL’S PROBABLE CAUSE ~~O~~~N~~~nON I. INTRODUCTION. On July 20, 1998, the General Counsel recommended that the Federai Election Cornmission (hereinrifter “FEC” or “the Commission”) find probable cause to believe that Enid ’94 and Enid ’96 (hereinafier “the Enid comminees”). and Enid Greene, as treasurer. violated 2 U.S.C. 8 434(b) by failing to report numerous contributions and for filing inaccurate reports: 2 U.S.C. 4 441a(f). by knowingly accepting contributions in violation of the limi?z;ions imposed by section 441a; 2 U.S.C. Q 441f. by accepting contributions in the name of another: and 11 C.F.R. 4 1 IC.4(c)(2). by faiiing to return cash Contributions in excess of $100. In addition, the General Counsel recommended that the Commission find probable cause to believe that Enid ‘94. and Enid Greene. as treasurer. violated 2 U.S.C. 0 441b(a). by accepting a corporate contribution from Keystone Productions. Inc. Counsel for the Enid committees and Enid Greene. as treasurer, respectfully submit this brief in opposition 10 the General Counsel’s probable cause recommendation. Counsel for the Enid committees and Enid Greene, as treasurer. also represent Enid Greene, in her individual capacity. as well as her father, D. Forrest Greene. We are simultaneously submitting briefs in opposition to the General Counsel's probable cause recommendation with regard to those individuals. The short response to the allegations against the Enid committees is that all of the purported violations were committed by Joseph P. Waldholtz. without Enid Greene's knowledge. during the time that he was the treasurer of Enid '94 and Enid '96. As a result. Joseph P. Waldholtz alone is solely and personally responsible for these acts. The Enid comminees. and Enid Greene, as the current treasurer, should bear no responsibility for the rogue actions of Joseph P. Waldholtz. who used the Enid committees as a tool in his various criminal schemes. The General Counsel's recommendation that the Commission hold the Enid committees and Enid Greene. as treasurer, responsible for the actions of a rogue treasurer is contrary to a long line of FEC precedent. iMoreover. as a matter of law, the Enid committees and Enid Greene. as treasurer. cannot be held liable for the actions of Joseph P. Waldholtz. Fundamental fairness dictates that the Commission reject the General Counsel's recommendation at the outset. 11. BACKGROUND AND PROCEDURAL HISTORY. Enid Greene represented the Second District of Utah in the U.S. House of Representatives during the I 04'h Congress. Enid Greene's principal campaign committee in the 1993 congressional election was named Enid '94. Enid '96 was established to be Enid Greene's principal campaign committee in the 1996 congressional election. but on March 5, 1996. Representative Cireene announced that she would not run for re-election. Joseph P. Waldholtz -- Enid Greene's former husband and D. Forrest Greene's former son-in-law -- served as the treasurer of Enid '94 from its inception on December 21, 1993 until November 14. 1995. when Enid Greene removed him from that position. Similarly. Joseph P. Waldholtz served as treasurer of Enid '96 from its inception on July 31, 1995 until November 14, 2 1995, when Enid Greene removed him from the position. Accordingly, Joseph P. Waldholtz was the treasurer ofthe Enid committees at all times relevant to the above-referenced MURs. A. The Criminal Investigation. On Saturday, November 11, 1995. Enid Greene's world fell apart when Joseph P. Waldholtz. her husband and treasurer of her campaigns. fled Washington. D.C. while under investigation for bank fraud by the U.S. Attorney's Office for the District of Columbia. the FBI. and a federal grand jury (hereinafter "the government" or "the government's investigation"). ' Over the ensuing weekend, Enid Greene was shocked to discover evidence among Joseph P. Waldholtz's papers that he had defrauded her and had embezzled a substantial amount of money from both of the Enid committees. On November 14, 1995. Ms. Greene notified the Commission that she had removed Joseph P. Waldholtz as treasurer of the Enid committees and had initiated an audit of the committees' records. Ms. Greene retained forensic accounting specialists with the national accounting firm of Coopers & Lybrand. LLP. and directed them to reconstruct completely the campaign records of Enid '91 and Enid '96. The forensic accountants from Coopers & Lybrand, working with a team of attorneys from Powell. Goldstein. Frazer & Murphy. LLP. spent more than six months reconstructing the Enid committees' records. which had been devastated by the criminal actions of Joseph P. Waldholtz. Then. at a cost of well over $150,000. the Committees filed corrected FEC reports for both Enid '94 and Enid '96 covering a// of calendar years 1994 and 1995. These amended reports revealed that Joseph P. Waldholtz had committed multiple violations of the Federal I The General Counsel's Brief incorrectly states that the federal criminal investigators began their inquiry into Enid '94 based on questions raised in Utah regarding the amount of money that Enid Greene was reponed to have contributed to her campaign. General Counsel's Brief at 4. lin fact, to our knowledge, the investigation was not broadened to include potential election law violations until Ms. Greene and the Enid committees uncovered evidence that Joseph P. Waldholtz had falsified records and had embezzled a substantial amount
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