Dangerous Liaisons

The New York car dealer knew corporations were prohibited from contributing to federal election campaigns, but he wanted to do all he could to see his congressman reelected. Knowing individuals may contribute up to $1,000 per candidate, he and the congressman hatched a plan. The car dealer gave $2,000 "bonuses" to 29 current and former employees, telling them to deposit the money in their personal bank accounts. Then each employee and his or her spouse each wrote a check for $1,000 to the congressman's campaign. Suddenly, the campaign was flooded with $1,000 checks from secretaries and mechanics who'd never before donated a dime. The opposition got wind of it, uncovered the scheme, and started running ads charging the congressman with illegal campaign practices. In the end, the scheme cost the congressman the election, and the car dealer had to answer for it in court.

When you care strongly about a candidate or a ballot issue, you may want to invest your own resources and those of your business in hopes of influencing the election. Isn't that what democracy is all about? Well, yes, but federal and state election laws designed to prevent influence-peddling place strict limits on what any given individual or business can do. Make sure you understand both the federal and state laws that apply to elections so you don't inadvertently cross the line.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

This article was originally published in the October 1998 print edition of Entrepreneur with the headline: Dangerous Liaisons.