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Date : December 10, 2022
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‘So blatantly illegal’: Liam Madden admits to funneling money through family to inflate campaign finance numbers

‘So blatantly illegal’: Liam Madden admits to funneling money through family to inflate campaign finance numbers

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Liam Madden speaks during VTDigger’s debate between U.S. House Republican primary candidates at the Double E Performance Center in Essex on Tuesday, June 28, 2022. Photo by Glenn Russell/VTDigger

Liam Madden, the Republican nominee in the open race for Vermont’s lone seat in the U.S. House, during a radio interview Thursday morning described in detail a self-funded scheme to inflate his campaign donations during the primary cycle in order to qualify for candidate debates.

Appearing on WVMT’s talk radio program Morning Drive, Madden claimed to have “drained” his wife’s business’s bank account and distributed roughly $25,000 amongst family members — including his toddler son, June — who then donated the money to his campaign. Madden said he is now recouping the money by collecting a salary from his campaign.

Saurav Ghosh, who works as director for federal campaign finance reform for the Campaign Legal Center in Washington, D.C., told VTDigger on Friday that Madden’s self-described scheme “is so blatantly illegal.”

“He just appears to be ignorant of the fact that he’s just confessed on an interview on air to breaking campaign finance laws,” said Ghosh, an attorney who previously worked for five years in the Federal Election Commission’s enforcement division.

Reached by phone Friday afternoon, Madden insisted that the scheme is legal. Asked who told him it is legal, he said, “It’s just, I read the FEC rules.”

“You know, a family member can give another family member money for whatever reason, and then you can justify that just as a gift, and what they choose to do with that is up to them. They choose to donate to my campaign,” Madden said. “Those are all legal transactions.”

Paul S. Ryan, a Washington, D.C.-based campaign finance law expert best known for filing legal complaints against former President Donald Trump and Michael Cohen for hush money paid to Stormy Daniels, told VTDigger in a phone interview Friday, “I’ll cut to the chase. This sounds very illegal.”

“This guy is just making up law. I mean, it’s kind of wild that he’s so vocal and confident,” Ryan said. “If the laws were as easy to get around as he thinks they are through his clever little machinations, the laws would be pointless. They’re not that easy to get around.”

Namely, both Ryan and Ghosh said, Madden appears to have violated the FEC’s ban on contributions “in the name of another,” colloquially known as the straw donor ban. Ghosh said Madden’s case fits the “textbook definition” of the tactic.

In April, New York’s former Lt. Gov. Brian Benjamin resigned after federal prosecutors unsealed an indictment implicating him in a straw donor scheme allegedly conducted during his campaigns for U.S. Senate in 2020 and New York City comptroller in 2021.

“One of the essential elements of campaign finance transparency is that every contribution has to be made in the name of the true contributor, so it has to be attributed to whoever is actually providing the money,” Ghosh said. “It’s a serious violation because it fundamentally undermines electoral transparency and the rights of voters to know who’s actually paying to support candidates and their campaigns.”

To date, Madden has raised a total of $41,590, according to his FEC filings. Listed donors to his campaign include his wife Lauren Madden ($5,800), his mother Oona Madden ($5,800), his sister Darry Madden ($2,900) and his son June Madden ($5,300).

According to Madden’s website, June Madden was born in 2019. His occupation is listed as “student” on Madden’s FEC filings.

According to the FEC, a minor under 18 years old may make campaign contributions if “the decision to contribute is made knowingly and voluntarily by the minor,” and “the contribution is not made using funds given to the minor as a gift for the purpose of making the contribution, and is not in any way controlled by another individual.”

“If you’re talking about a toddler, I think one would look at that and say, ‘Well, who’s actually making that decision?’” Ghosh said. “I think that’s just more evidence of the fact that this was an intentional money-funneling scheme.”

Madden’s wife, Lauren, operates the online shop Lala Earth, where she sells “wild herbal tonics and nourishing skin care products.” She is also a social media influencer with more than 46,000 followers on Instagram. Lala Earth’s business registration with the Vermont Secretary of State’s Office expired in 2021. Corporations are also barred from donating directly to political candidates, according to the FEC.

It is legal for candidates to collect salaries from their campaigns. But Ghosh told VTDigger he does not view Madden’s repayments to himself as a salary “because that’s clearly not what he’s describing.”

“He’s describing not a genuine salary payment, but something that’s designed to repay them money that he first took out of his wife’s account and is then giving back to himself,” Ghosh said. “So the whole thing is, it’s just part of the same scheme, really.”

“It’s basically a total sham,” Ghosh said.

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Liam Madden is the Republican candidate for Vermont’s U. S. House seat. Seen at a job site in Andover on Thursday, September 29, 2022. Photo by Glenn Russell/VTDigger

Madden’s scheme first came to light Thursday morning when Morning Drive hosts Kurt Wright and Anthony Neri offered Madden an opportunity to respond to criticisms “from a candidate or someone else,” left unnamed, about Madden’s son’s donation.

Laughing, Madden responded, “Yeah, so, in order to qualify for a couple of debates in the primary, there was a minimum bar of fundraising you had to do, which I thought was BS. And so the legal loophole around that was to basically just drain all the funds out of my wife’s business operating account and distribute that to members of my family to donate to my campaign. And since we can’t actually afford to donate $25,000, we had to basically pay that back by, quote unquote, paying the candidate, which is also legal. So I basically just made some legal loopholes happen to be resourceful to actually get into the debates, which helped me win the primary.”

If legal charges were to be brought against Madden for the scheme, Ryan said his on-air interview would likely be admissible evidence in the courtroom as an “admission against self-interest.”

In his work with the Campaign Legal Center, Ghosh and his team file campaign finance complaints with the FEC. Asked if Madden’s case appeared to constitute a complaint by his team, Ghosh said he will “certainly discuss it with my colleagues and we’ll think about filing one.”

“I don’t think this would be a tough sell, even to the Commission,” Ghosh said. “If you know anything about the FEC, they often disagree, they often deadlock and they aren’t very strong on enforcing the law. So it’s not every case that is easy to get them to actually investigate and assess.

“But I think this is one that they might,” Ghosh said.

Madden’s on-air confession brought condemnation from both the state Democratic and Republican parties. Vermont Democratic Party Executive Director Jim Dandeneau said in an unusually punctuated written statement that the incident strengthens the case to vote for Madden’s Democratic opponent Becca Balint.

“If Vermonters needed another reason to support her, Liam Madden’s admitted multiple egregious campaign finance violations — apparently spearheading a straw donor scheme and funneling possibly illegal corporate money (!) through his child (!!) to his campaign to prove a point (?) about the campaign finance (??) and two-party systems (???) and the five years in federal prison this might entail (!!!) — should be the final nail in the coffin of his ridiculous candidacy,” Dandeneau said.

Madden, a self-described independent and staunch opponent of the two-party system, ran in the Republican primary in order to gain name recognition early in Vermont’s election cycle. When he won the Republican nomination in August, the Vermont Republican Party swore off providing him institutional support because Madden refused to commit to caucus with Republicans, should he win in November.

State GOP Chair Paul Dame told VTDigger on Friday that Madden’s self-induced lack of institutional support is what led him here.

“When you have somebody running a campaign without party support, you don’t have anybody that you can trust that you can run a scenario by,” Dame said. “If one thing has been clear about Liam, it’s that he is a true outsider, and that’s part of his appeal, is that’s refreshing to some people. But that also means you just don’t know where the landmines are.”

Read the story on VTDigger here: ‘So blatantly illegal’: Liam Madden admits to funneling money through family to inflate campaign finance numbers.

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