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Prosecutor: Father of Alison Lundergan Grimes made secret donations during her campaign

Lexington Herald-Leader — By Bill Estep Lexington Herald-Leader

Aug. 13-- FRANKFORT, Ky.-A former chairman of the Kentucky Democratic Party and a prominent political consultant flouted federal campaign law to make illegal contributions to the 2014 U.S. Senate campaign of Alison Lundergan Grimes, a federal prosecutor argued Tuesday.

It is illegal for corporations to contribute to campaigns.

However, Grimes' father, Lexington businessman Jerry Lundergan, and strategist Dale Emmons, a close family friend, schemed to make secret donations to Grimes through Lundergan's companies, Assistant U.S. Attorney Kate K. Smith said.

"They decided that rule did not apply to them," Smith told jurors as the trial for Lundergan and Emmons got underway in federal court in Frankfort.

But Lundergan's lawyer told jurors that some of the spending by Lundergan at issue in the trial was for activities that were not related to Grimes' campaign.

In other cases, Lundergan paid for some of Grimes' efforts in the early, hectic days before the campaign was fully staffed and unintentionally failed to get reimbursed by the campaign, Lundergan's attorney J. Guthrie True said.

When those oversights came to light later, Lundergan billed Grimes' campaign and it repaid the money, True said.

"The evidence is going to show that some mistakes were made," True told jurors, but Lundergan did not deliberately break any law.

Emmons' attorney, Brandon Wayne Marshall, said Emmons is an accomplished political consultant, but had no experience in the complex financial reporting required in federal campaigns.

Emmons "did not willfully break the law," Marshall told jurors.

Lundergan and Emmons are charged in an alleged scheme to make illegal corporate campaign contributions to Grimes in her unsuccessful 2014 effort to unseat the senior Republican U.S. senator from Kentucky, Majority Leader Mitch McConnell.

Smith said during opening arguments Tuesday that Lundergan hid his corporate spending for Grimes' campaign until the FBI began investigating.

Lundergan, 72, owns companies that provide catering services for events and food services after disasters such as tornadoes.

Lundergan was deeply involved in his daughter's campaign, and Emmons played a key role as well, helping hire vendors and set up events, Smith told jurors in her opening argument.

Smith said the alleged scheme to make illegal contributions worked through two channels, with Lundergan directly paying campaign costs with company money in some cases, and in other cases using company money to repay Emmons after he paid campaign expenses.

In one case, Lundergan paid nearly $25,000 for Grimes' high-profile kick-off rally, which among other things featured a video endorsement from former President Bill Clinton on a large screen.

Lundergan billed Grimes' campaign for only $3,706 and hid the rest, Smith alleged.

And after Emmons paid a company to make tens of thousands of robocalls to potential voters, Lundergan reimbursed him, Smith said.

"This case is about the secret payments Mr. Lundergan and Mr. Emmons were making for campaign expenses and hiding ... ," Smith said.

Lundergan began paying Emmons $20,000 a month in 2013, Smith said.

After Emmons began paying an assistant $3,500 a month, Lundergan upped the payments to Emmons to $23,500, Smith said.

True said the payments prosecutors have targeted did not represent an intent by Lundergan to break the law, and that the Federal Election Commission has never raised a question about the spending.

"It's not a crime to make a mistake," he said.

True said some of the payments at issue in the case were for what was known as the "coordinated campaign," a separate effort by the state Democratic Party to boost Grimes and thereby help other Democrats on the ballot in 2014.

Those expenses were not an obligation of Grimes' campaign, he said.

True also dismissed the idea that Grimes needed a few hundred thousand dollars in alleged illegal contributions from her father.

Grimes' campaign, called Alison for Kentucky, raked in nearly $19 million in contributions in 16 months and finished with money in the bank, he said.

"It's clear that the campaign had money," True said.

Marshall said Emmons would not have risked his career and his freedom to take part in the alleged conspiracy.

Lundergan was twice chairman of the state Democratic Party and also served as a state representative, while Emmons has worked on hundreds of political campaigns.

Grimes was seen as a rising star among state Democrats after winning the race for secretary of state in 2011.

Party operatives recruited her to run against McConnell in the 2014 race, but she and her family were torn about taking on the veteran campaigner with only one race under her belt, True said.

Grimes called supporters together in early July to announce she would not run.

With excitement high at the event, however, Grimes instead said she would run, True said.

In those early hectic days of the fledgling campaign Lundergan's company footed bills for a July 30, 2013, kick-off event and mistakenly failed to bill the campaign, True said.

A potentially key witness for the prosecution will be Jonathan Hurst, former executive director of the state Democratic Party. He managed Grimes' state races and her 2014 U.S. Senate bid.

Federal authorities agreed not to prosecute him in return for providing testimony against Lundergan and Emmons.

Hurst will testify about corporate contributions by Lundergan to Grimes' two state races as well, Smith said.

The defense will likely try to tear down Hurst's credibility.

True told jurors that any evidence about alleged improper conduct in the 2011 and 2015 races is about Hurst's involvement and his "self-dealing."

The first prosecution witness, Colleen Coffey, was finance director for Grimes' 2014 campaign.

She testified she considered Lundergan the finance chairman for the campaign, and that he was deeply involved in raising money.

However, she also said she felt Hurst was "micro-managing" her fundraising work, requiring her to let him sign off on tasks as small as approving the boilerplate disclaimer on a fundraising mailer and setting up a Federal Express account.

The trial is scheduled to continue Wednesday. It could last four weeks.

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