Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Lundergan

United States District Court, E.D. Kentucky, Central Division, Lexington

March 18, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
GERALD G. LUNDERGAN and DALE C. EMMONS, Defendants.

          MEMORANDUM OPINION & ORDER

          Gregory F. Van Tatenhove, United States District Judge.

         A federal criminal defendant in the United States is generally charged by way of an indictment returned in open court by a grand jury. An indictment gives a defendant notice of the crimes charged against him so he can adequately prepare a defense. Federal Rule of Criminal Procedure 12(b) allows for the dismissal of an indictment prior to trial if the charging document suffers from certain defects. Defendants Gerald G. Lundergan and Dale C. Emmons seek relief under this provision. The Defendants have filed several motions for dismissal of the Indictment returned against them on the grounds that the Indictment fails to allege violations of law. Because the Indictment complies with the requirements of the United States Constitution, the multiple motions to dismiss filed by both Mr. Lundergan and Mr. Emmons will be DENIED.

         I

         In August 2018, a federal grand jury returned an Indictment against Gerald G. Lundergan and Dale C. Emmons, including ten counts against Mr. Lundergan and six counts against Mr. Emmons. [R. 1.] Both Defendants were charged with one count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371, one count of unlawful corporate campaign contributions in violation of 52 U.S.C. §§ 30118 and 30109(d)(1)(A)(i) as well as 18 U.S.C. § 2, two counts of making false statements in violation of 18 U.S.C. §§ 2 and 1001(a)(2), and two counts of falsification of records in violation of 18 U.S.C. §§ 2 and 1519. Id. Against Mr. Lundergan, the indictment adds two additional violations of 18 U.S.C. § 1001(a)(2) and two additional violations of 18 U.S.C. § 1519. Id. The thirty-page Indictment alleges Mr. Lundergan and Mr. Emmons conspired to make illegal contributions of corporate money to Candidate A and Political Committee 1 and then caused Political Committee 1 to make false statements to and file false records with the Federal Election Commission.

         At all relevant times, Mr. Lundergan was the owner of the Lundergan Companies, which include S.R. Holding Co., Inc., the Lundergan Group, Signature Special Events, and Lundy's Special Events. [R. 34-1 at 1; R. 1 at ¶ 1.] During the same time, Mr. Emmons worked as a political consultant and served as a corporate officer of Emmons & Company, Inc. [R. 1 at ¶ 2.] Candidate A, a family member of Mr. Lundergan, announced her United States Senate campaign on July 1, 2013, and held a kickoff event on July 30, 2013, at the Carrick House, a property owned by Mr. Lundergan. [R. 33-1 at 4; R. 1 at ¶¶ 5-6.] Candidate A won her primary election on May 20, 2014, but she lost in the general election on November 4, 2014. Id. Both Mr. Lundergan and Mr. Emmons actively participated in Candidate A's campaign, with Mr. Lundergan allegedly overseeing campaign fundraising activities and payments to consultants and vendors while Mr. Emmons provided political consulting services to both Candidate A and Political Committee 1. [R. 1 at ¶¶ 7-8.]

         The Government asserts that Mr. Lundergan coordinated consultants and vendors to provide campaign services to Candidate A and Political Committee 1, but rather than billing Political Committee 1, these vendors were directed to bill S.R. Holding Co., Inc. Id. at ¶ 14. Then, S.R. Holding Co. allegedly paid these vendors and consultants, but did not seek reimbursement from Political Committee 1 or Candidate A. Id. at ¶¶ 15-16. Mr. Emmons, working as a political consultant, purportedly sought and received payment for his services through S.R. Holding Co. and Mr. Lundergan, rather than through Political Committee 1. Id. at ¶ 17. Furthermore, the Government asserts that Mr. Emmons also directed certain vendors to bill Emmons & Company, Inc. for their services to the campaign, but instead of receiving reimbursement from Political Committee 1, Emmons & Company sought and received reimbursement from S.R. Holding Co. Id. at ¶ 18. Invoices associated with these payments ostensibly indicated the payments were for “consulting services.” Id. These payments potentially were submitted after the campaign, though they compensated for services rendered during the campaign. Id. at ¶ 19.

         In this alleged scheme, Mr. Lundergan and Mr. Emmons concealed these payments from Political Committee 1, the Federal Election Commission, and the public, resulting in Political Committee 1 filing reports that did not accurately portray the source and amount of contributions as required by law. Id. at ¶ 20. The Indictment continues on to allege a list of payments for campaign expenses made from bank accounts held by S.R. Holding Co. and Emmons & Company. Id. at ¶ 21.

         Mr. Lundergan filed six separate motions to dismiss. [R. 33; R. 34; R. 35; R. 36; R. 37; R. 38.] Mr. Emmons moved to join those motions and Mr. Lundergan's replies. [R. 41; R. 65.] The Government filed no objections to Mr. Emmons's requests for joinder, instead responding to Mr. Lundergan's motions as if the motions were filed by both Defendants. [See R. 51; R. 53; R. 54; R. 55; R. 56.] Accordingly, Mr. Emmons's Motions for Joinder [R. 41; R. 65] are granted, and the Court will address the motions to dismiss as to both Mr. Lundergan and Mr. Emmons, ultimately denying them all.

         II

         Federal grand jury indictments have a purpose. As the Supreme Court explained in Russell v. United States, our use of the indictment today is rooted in the guarantees set forth in the Fifth and Sixth Amendments to the United States Constitution. See 369 U.S. 749, 760-61 (1962). The Fifth Amendment provides that “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury . . ., ” U.S. CONST. amend. V, and according to the Sixth Amendment, “In all criminal prosecutions, the accused shall enjoy the right . . . to be informed of the nature and cause of the accusation . . . .” U.S. CONST. amend. VI. Out of this constitutional framework comes two criteria for federal indictments. An indictment must first set forth the elements of the offense charged, thereby giving notice to a defendant of the accusations he must face. Second, an indictment must be sufficiently specific so that a defendant may plead double jeopardy, if charged in a subsequent proceeding with the same crime based on the same facts. See Russell, 369 U.S. at 763-64; United States v. Martinez, 981 F.2d 867, 872 (6th Cir. 1992). With these requirements in mind, the Court finds the Indictment returned against Mr. Lundergan and Mr. Emmons passes constitutional muster.

         A

         At numerous times in each of the six motions to dismiss, Mr. Lundergan and Mr. Emmons attempt to litigate the facts of this matter. Motions to dismiss before trial are capable of determination if the motion raises questions of law, not facts. United States v. Jones, 542 F.2d 661, 664 (6th Cir. 1976). A District Court may make preliminary findings of fact if such findings are necessary to determine the presented questions of law, but such findings cannot “invade the province of the jury.” United States v. Craft, 105 F.3d 1123, 1126 (6th Cir. 1997). When a Defendant instead claims the allegations included in the indictment are false or untrue, this is not a question of law, but rather a fact to be tried by the jury. Universal Milk Bottle Service v. United States, 188 F.2d 959, 962 (6th Cir. 1951).

         Both Defendants vigorously argue they had no intent to violate campaign finance regulations, and therefore, the Indictment must be dismissed. [See e.g. R. 33-1 at 28-35; R. 36-1 at 21-32.] First, they claim that the payments were not reported to the Campaign because such payments were inadvertently categorized as “personal” and would potentially violate the personal use ban for campaign funds. [R. 33-1 at 30-31.] Additionally, in an attempt to demonstrate that their failure to report the spending was accidental, Defendants claim that once they became aware of their missteps, S.R. Holding Co. immediately billed and sought reimbursement from the Campaign for the very expenses outlined in the Indictment. [R. 36-1 at 26.] They maintain that the Government has failed to demonstrate Defendants' knowledge or intent to defraud. Id. at 27-28.

         However, Defendants' arguments concerning these facts are premature and misplaced. The Indictment alleges clearly that both Mr. Lundergan and Mr. Emmons “knowingly and voluntarily” committed these crimes. [R. 1 at 5, 21, 22, 23, 24, 25, 26, 27, 28, and 29.] The Indictment is not meant to prove the facts of the case; such task is left for trial. Instead, an indictment is sufficient so long as the alleged facts, if true, give rise to the offense charged. United States v. Landham, 251 F.3d 1072, 1079-80 (6th Cir. 2001). “Allegations of the indictment essential to prove the offense charged and the pleas in answer to such allegations require a trial of the general issue.” Universal Milk Bottle Service v. United States, 188 F.2d 959, 962 (6th Cir. 1951). According to the Indictment, the Defendants “knowingly and willfully” made contributions, “knowingly and willfully” caused false statements to be made, and “knowingly and willfully” caused false records to be submitted to the United States Government. [See generally, R. 1.] After a lengthy recitation of the relevant transactions, the Indictment alleges the Defendants “knowingly and willfully caused contributions of corporate money” by S.R. Holding Co. to be made to Candidate A and Political Committee 1, they “knowingly and willfully caused the submission of a materially false, fictitious, and fraudulent statement, ” and they “knowingly concealed, covered up, falsified, and made false entries in a record and document, and caused others to do so, with the intent to impede, obstruct, and influence the investigation. . . .” [R. 1 at 21-29 (emphasis added).] Each charge of the indictment specifically alleges the element of intent, and in order to find the Defendants guilty of any charge, the jury will need to determine whether the Defendants possessed this requisite intent. Mr. Lundergan and Mr. Emmons insist that any such violation of campaign finance law was unintentional, and thus the charges must be dismissed. However, this is an issue of fact to be tried by the jury. Universal Milk Bottle Service, 188 F.2d at 962. Such is not a determination for the Court prior to trial.

         Similarly, Mr. Lundergan and Mr. Emmons ask this Court to determine whether the relevant payments were “vendor payments, ” and thus not subject to the same campaign finance regulations. [R. 35-1 at 10-22.] To host campaign events, candidates for public office necessarily must contract with commercial vendors, such as rental companies, caterers, audio and visual technicians, or venue spaces. The law recognizes that candidates do not typically have these resources available internally and sometimes must contract with outside vendors to facilitate campaign events. Therefore, the services of the vendors are subject to somewhat different regulations. For example, vendors are permitted to provide food and beverage at a discounted rate to a candidate, so long as the aggregate value of that discount is no more than $1, 000 per election and so long as the candidate is at least paying for the vendor's cost of the food and beverages. 11 C.F.R. § 100.78. Additionally, commercial vendors are permitted to extend credit to candidates, so long as the credit is extended within the ordinary course of business and the vendor followed established procedures and normal practice in doing so. 11 C.F.R. § 116.3.

         A “commercial vendor” is defined as “any persons providing goods or services to a candidate or political committee whose usual and normal business involves the sale, rental, lease, or provision of those goods or services.” 11 C.F.R. § 116.1. The Defendants here argue that S.R. Holding Co., the Lundergan Group, Signature Special Events, and Lundy's Special Events were all commercial vendors, and the payments at issue were made to the Lundergan Companies' sub-vendors. [R. 35-1 at 10-11.] Therefore, because these payments all went to vendors and sub-vendors, the payments for goods and services are not considered “contributions.” Id. at 12. As vendors, the companies also had the ability to extend credit to the candidate and then collect on that credit after the campaign, so the bills submitted to Candidate A and Political Committee 1 after the investigation began were simply in the normal course of business as a vendor. Id. at 12-20.

         Except, the Indictment alleges that Mr. Lundergan and Mr. Emmons caused contributions of corporate funds to be made to Candidate A and Political Committee 1. [R. 1 at 6, 21.] In order for a jury to find them guilty of these charges, the jury will need to decide whether the payments made were, in fact, contributions. Incorporated into their denial of the allegations, Mr. Lundergan and Mr. Emmons insist, again, that these services were simply “inadvertently not invoiced, ” arguing, again, a lack of intent. As stated previously, “Allegations of the indictment essential to prove the offense charged and the pleas in answer to such allegations require a trial of the general issue.” Universal Milk Bottle Service v. United States, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.