Should Democrats’ and Republicans’ political committees be able to keep $1.6 million in donations from R. Allen Stanford and his companies, after Stanford ran one of the largest Ponzi schemes in U.S. history through his companies? The 5th U.S. Circuit Court of Appeals answered that question yesterday with an enormous “no.”
The Oct. 23 decision in Ralph S. Janvey, et al. v. Democratic Senatorial Campaign Committee Inc., et al. affirms the judgment of a district court, which granted summary judgment in favor of Ralph Janvey, the court-appointed receiver tasked with recovering Stanford assets.
According to the 5th Circuit decision, Janvey filed suit under the Texas Uniform Fraudulent Transfer Act (TUFTA) to recover $1.6 million in political donations Stanford and his defendant companies made between 2000 and 2008 to the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee, the Republican National Committee, the National Republican Senatorial Committee and the National Republican Congressional Committee. After the trial court ruled for Janvey, the committees appealed, arguing that: The receiver may not stand in the shoes of Stanford defendants’ creditors as to the TUFTA claims; the receiver’s action was untimely under TUFTA; and federal campaign finance law pre-empts the receiver’s TUFTA claims.
The 5th Circuit rejected all of those arguments. As for the last argument, the 5th Circuit noted: “Finally, the Committees’ argument would lead to absurd results: under their interpretation, they would be allowed to keep funds that were, for example, stolen by force or fraud so long as the contributions did not run afoul” of federal campaign finance law.
--- John Council