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In one way, Christine O’Donnell’s unsuccessful 2010 campaign for Senate just ended. Last month, a federal judge ordered O’Donnell to disgorge nearly $6,000 in campaign funds that were spent on payments for a building used, in part, as her personal residence, and to jointly pay, with her campaign, a civil penalty of $25,000 for violating federal campaign law

Personal use violations are nothing new, but now campaign finance reports are publicly available and easy to access online. Several members of Congress and federal candidates have recently come under investigation as campaign finance information is routinely used by political and ideological opponents as a bludgeon. Compounding matters, numerous bodies have the jurisdiction to receive complaints and investigate violations of improper personal use, including the Department of Justice, FEC, House and Senate ethics commissions, and the Office of Congressional Ethics.

Moreover, personal use violations can be low-hanging fruit for investigators, as campaigns that fulfill their recordkeeping obligations under federal law leave an ideal paper trail for a savvy investigator to follow.  And if the DoJ finds that violations of the personal use rule are “knowing and willful,” a criminal investigation, prosecution and jail time can result.

As many campaigns are starting to ramp-up for the 2018 election cycle, and many first-time candidates are considering a run for office, a brief reminder of the rules for personal use of campaign funds can be helpful. Generally, funds donated to a federal political committee may not be converted to a personal use.

Money is considered to be converted to personal use if it’s used to pay for any commitment, obligation, or expense of a person that would exist irrespective of his or her election campaign or duties as a federal officeholder. Certain types of payments are always considered to be a conversion of funds, including payments for any of the following:

  • Home mortgage, rent, or utilities, for any part of the candidate’s personal residence or that of his or her family, unless the payment represents the fair market value for use by the campaign
  • Clothing, other than de minimis campaign giveaways like t-shirts
  • Non-campaign related automobile expense
  • Country club membership
  • Vacation or personal travel
  • Household food
  • Tuition payments, unless intended to train campaign staff
  • Admission to a sporting event, concert, theater, or other form of entertainment not associated with a campaign or officeholder activity
  • Dues, fees, or payments to a health club or recreational facility
  • Funeral, cremation or burial expenses (unless for a candidate or other certain exceptions)
  • Salary payments to a member of the candidate’s family over the fair market value of any bona fide service that person is providing to the campaign
  • Excessive salary payments to the candidate personally

Other types of payments may not necessarily result in personal conversion, but are subject to a case-by-case review, such as:

  • Legal expenses
  • Meal expenses
  • Travel expenses
  • Vehicle expenses other than as described above.

Still, other types of payments are generally permissible, unless other facts suggest that they may result in personal conversion, such as the receipt of payments by a family member or payments over fair market value. Generally permissible types of payments include:

  • Donations to a charitable organization
  • Transfers of campaign assets, such as a mailing list, for fair market value
  • Gifts of nominal value on special occasions or holidays

Also note that the FEC requires special record keeping requirements for payments described above that may result in personal expenses, including a contemporaneous log of those payments.

While these rules apply exclusively to federal campaigns, many states and localities maintain their own, unique rules regarding what constitutes personal conversion. These rules may take the federal statutes and regulations described above as advisory, or they may be dramatically different than what's described here.

Jason Torchinsky is a partner at Holtzman Vogel Josefiak Torchinsky PLLC. Steve Roberts is Of Counsel at the firm.