DeJoy Involved in Potential Straw-donor Scheme
In a new report, Postmaster General, Louis DeJoy, is being accused of creating an environment at his former company where employees would be pressured to make political contributions to Republican candidates. These employees would then be rewarded with bonuses for making such donations as a form of reimbursement.
This type of activity is known as a straw-donor scheme by which an individual makes a contribution to a political campaign and is then reimbursed so they can avoid contribution limits. Multiple employees at DeJoy’s former company, New Breed Logistics, have reportedly described how they were pressured to make the contributions and then rewarded after doing so.
While it is perfectly legal to encourage employees to make political contributions, reimbursing them for those contributions is a violation of federal election laws. A representative for DeJoy noted that he “sought and received legal advice to ensure that he, New Breed Logistics, and any person affiliated with New Breed fully complied with any and all laws”. The Washington Post goes into a deep dive of the campaign contribution activity and details its findings.
This is yet another example of the need to have a complete and multi-layered compliance program. While there are potentially multiple laws that were violated, pay-to-play is one that immediately comes to the forefront. In this instance, political contribution attestation and pre-clearance would not have been enough, a verification layer was missing. Had the compliance team been notified of all transactions even if they were not pre-cleared, they potentially would have been able to notice a pattern of activity. Political contribution monitoring at the federal, state, and local level is that final verification layer that helps you “know what you don’t know” when it comes to protecting against pay-to-play.