3 things Beavers' trial revealed about Illinois political cash

March 25, 2013

(United States Attorney's Office)
This campaign check, entered as government evidence in William Beavers' federal tax evasion trial, was one of three the Cook County commissioner cashed during a single day of gambling in April, 2007.

Just minutes after a federal jury found him guilty of lying to the Internal Revenue Service, Cook County Commissioner William Beavers stepped before a crush of reporters in the Dirksen Federal Courthouse last week and told an unlikely truth.

“There’s no law against what I did,” Beavers said Thursday, before a stand of rolling television cameras. “There’s no law against gambling with campaign funds.”

Technically, he’s right.

There is, of course, a law against not paying taxes. And that’s why the 78-year-old Beavers, an unapologetically blunt Chicago Democrat, was convicted of trying to hide nearly $300,000 he took from his campaign and County Board contingency accounts in order to dodge federal income taxes between 2006 and 2008.

But legally speaking, Beavers was not accused of breaking any Illinois campaign finance laws. Federal prosecutors nonetheless spent hours of the trial meticulously documenting how Beavers fed his $500,000-a-year slot machine habit with money his supporters had donated to his campaigns.

Here are three surprising things the trial revealed about the state’s regulations on political money.

1. Politicians can gamble with campaign cash

Well, at the very least, they can’t not gamble with campaign cash.

The Illinois election code lists 11 personal expenses that are unquestionably verboten. Politicians can’t use campaign plastic to buy clothes, pay for dry cleaning, make car payments or join a gym, unless any of those things somehow relate directly to their efforts at getting re-elected.

But playing the one-armed bandit at the boat? Betting on the ponies at Balmoral?

 “It’s not addressed in the statute,” Andy Nauman, Deputy Director of Campaign Disclosure at the Illinois State Board of Elections, testified during Beavers’ trial last week. “But I wouldn’t say it’d be an election purpose, no.”

But Nauman’s caveat isn’t reflected in state law.

Because of that, Beavers’ defense team – the same colorful crew who represented imprisoned former Gov. Rod Blagojevich – argued their client was technically in the clear when it came to writing himself campaign checks, which he usually cashed on the same day he was feeding slot machines at the Horseshoe Casino in Hammond, Ind.

Several Illinois election lawyers and campaign strategists I talked to said Beavers may have been on the right side of the law if he had noted his gambling expenses on campaign finance reports (he didn’t). But at the very least, they say he’s guilty of bad political optics.

Beavers’ it’s-legal-because-it’s-not-illegal interpretation of the state law is “rather absurd,” said Thomas Bowen, a former top political aide to Chicago Mayor Rahm Emanuel who is now a consultant.

“You should be aware of the fact that a campaign fund is for campaign expenses, and gambling isn’t a campaign expense, unless it’s Las Vegas or something like that,” Bowen said. “He’s being too cute by half.”

2. Politicians can write themselves personal loans from campaign accounts

The less sexy (but perhaps more important) revelation to come out of the Beavers trial is that Illinois law doesn’t stop politicians from lending themselves cash from their own campaign accounts.

Beavers’ claim that he merely gave himself $226,300 worth of tax-exempt personal loans from his campaign accounts, always intending to pay it back, was central to his case. In the end, the jury didn’t buy the commissioner’s good intentions.

One possible reason: Beavers never scrawled on a single scrap of paper that any one of the 101 checks he wrote to himself were loans, according to testimony. There were no promissory notes, no repayment schedules, no interest documents, not even an I.O.U. on the back of a napkin, as one prosecutor put it.

Beavers also didn’t note any personal loans on his campaign disclosure documents between 2006 and 2008 (though he did in 2005).

But again, trial testimony revealed a gap in state law.

There’s nothing in the law that governs personal loans, Nauman, with the state Board of Elections, testified. Nor is there any guidance on whether personal loans even need to be documented in any way whatsoever, “but we recommend that it is,” he said.

It’s relatively common for candidates to loan their campaigns money out of their own pockets, then pay themselves back later. But I couldn’t find any strategist or election lawyer who said they would recommend a politician loan herself campaign cash (even though it has been done).

Why not?

“When you have a private interest putting money into a campaign fund, then you have a candidate taking that same money and putting it in their own pocket, that’s awfully close to bribery,” said David Morrison, acting Director of the Illinois Campaign for Political Reform, a Chicago-based campaign finance watchdog group.

Illinois candidates are allowed to pay themselves a salary from campaign accounts – provided they pay taxes on it.

3.Commissioner Beavers vs. Congressman Jackson Jr.

William Beavers’ shenanigans with his state-governed campaign money, which can be generously described as legal-ish, offers an illuminating counterpoint to disgraced ex-Congressman Jesse Jackson Jr.’s egregious violations of federal law.

Jackson wasn’t even pretending to be legal when he blew $750,000 of federal campaign money on lavish personal expenses, such as fur coats, a Rolex watch, family groceries and those now-infamous elk heads. Even Illinois’ comparatively lax state campaign laws would have prohibited some of his abuses.

But whereas even Illinois’ state election authority concedes Beavers didn’t technically break state law, he clearly would have run afoul of federal campaign laws, were he a federal officeholder. That’s because the feds use much tighter, broader language when it comes to banning personal expenditures of campaign cash.

Federal candidates generally can’t spend donors’ money on costs that would exist regardless of whether they were an elected official – say, tickets to an opera or personal mortgage payments. The federal law also takes a belts-and-suspenders approach and explicitly bans certain personal expenditures, including a blanket ban on “entertainment” that likely would have outlawed Beavers’ donor-funded trips to the Horsehoe Casino.

But this is Illinois – once the  “Wild West” of campaign money, as one election lawyer with the state told me – where it wasn’t all that long ago that there were almost no restrictions on campaign money.

Even after a round of post-Blagojevich reforms, state campaign finance law remains “very loose,” said U.S. Attorney Gary Shapiro, talking to reporters shortly after Beavers’ guilty verdict last week.

"It can be taken advantage of, and it’s important that politicians understand that if they take advantage of the system, that they risk something like this happening to them,” Shapiro said.

Morrison, with the campaign finance watchdog group, put it differently: “You can’t legislate against stupidity.”

William Beavers April 9, 2007 gambling spree by Chicago Public Media