What We Know About Louis DeJoy’s Campaign Finance Scandal

Postmaster general Louis DeJoy during last month’s House Oversight and Reform Committee hearing. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images/Pool

Postmaster General Louis DeJoy may have violated campaign finance laws by pressuring his employees to make donations to Republican campaigns which he would later reimburse, the Washington Post reported this weekend. Former employees of New Breed Logistics, the North Carolina–based company DeJoy ran for more three decades, have alleged that employees were urged by him or his aides to attend fundraisers at DeJoy’s mansion, then were reimbursed for their donations through bonuses. If the allegations are true, it means that at least part of DeJoy’s rise as a major fundraiser for both the GOP and President Trump was facilitated illegally — and further imperils DeJoy’s already embattled position at the USPS.

Here’s what we know about the allegations and what they could mean for DeJoy, a major longtime donor to the GOP and President Trump.

The alleged “straw-donor” fundraising scheme

On Saturday, the Washington Post reported that five former employees at Louis DeJoy’s former business, the North Carolina–based New Breed Logistics, said that they were pressured to attend fundraisers for Republicans and then reimbursed for the donations they made, which is a violation of both federal and North Carolina election laws. It is not unheard of for employers to ask their employees to make political donations, but it’s illegal to coerce those donations or reimburse employees for them. According to the Post, the “straw-donor” scheme — which would allow donors like DeJoy to surpass the legal limits on individual campaign contributions — may have been extensive throughout the company for well over a decade:

A Washington Post analysis of federal and state campaign finance records found a pattern of extensive donations by New Breed employees to Republican candidates, with the same amount often given by multiple people on the same day. Between 2000 and 2014, 124 individuals who worked for the company together gave more than $1 million to federal and state GOP candidates. Many had not previously made political donations, and have not made any since leaving the company, public records show. During the same period, nine employees gave a combined $700 to Democrats.

Some of the employees who spoke with the Post requested anonymity, but one who didn’t was the company’s former head of HR:

“Louis was a national fundraiser for the Republican Party. He asked employees for money. We gave him the money, and then he reciprocated by giving us big bonuses,” said David Young, DeJoy’s longtime director of human resources, who had access to payroll records at New Breed from the late 1990s to 2013 and is now retired. “When we got our bonuses, let’s just say they were bigger, they exceeded expectations — and that covered the tax and everything else.”

Another former employee with knowledge of the process described a similar series of events, saying DeJoy orchestrated additional compensation for employees who had made political contributions, instructing managers to award bonuses to specific individuals.

“He would ask employees to make contributions at the same time that he would say, ‘I’ll get it back to you down the road,’ ” said the former employee, who, like others interviewed for this report, spoke on the condition of anonymity out of fear of retribution from DeJoy.

DeJoy and his aides reportedly made concerted efforts to encourage employees to contribute, including emailing invitations to fundraisers, following up by phone or in person at the office, and by pressuring executives to push the contributions within their departments. Some employees said they gave willingly, while others said they feared professional consequences if they did not. “I took that to mean my job is on the line here, or things won’t go smooth for me here at New Breed if I didn’t contribute,” one former plant manager in Illinois explained.

It appears that the reimbursements were paid in such a way that there was no explicit paper trail:

Plant managers at New Breed said they received strongly worded admonitions from superiors that they should give money when DeJoy was holding fundraisers. A program manager said that when he was handed his first company bonus, a New Breed vice president told him he should buy a ticket to DeJoy’s next fundraiser. Several employees said New Breed often distributed large bonuses of five figures or higher. Bonuses did not usually correlate with the exact amount of political contributions, but were large enough to account for both performance payments and donations, according to the two people with knowledge of company finances.

The response from DeJoy

DeJoy spokesman Monty Hagler claimed that DeJoy was not aware that his employees had felt pressured to make the campaign contributions. Hagler said that DeJoy “believes that he has always followed campaign fundraising laws and regulations” and suggested that the former CEO had cleared his and his company’s fundraising efforts with a former FEC head.

The issue also came up at the House hearing DeJoy appeared at last month, when Democratic representative Jim Cooper asked DeJoy if he has reimbursed company executives for contributions to the Trump campaign. DeJoy’s angry response: “That’s an outrageous claim, sir, and I resent it … The answer is no.”

A spokesman for XPO Logistics, the Connecticut-based firm which acquired New Breed in 2014, has released a statement claiming the company “stays out of politics but our employees have the same individual right as anyone else to support candidates of their choosing in their free time. When they do so, we expect them to adhere strictly to the rules.”

The potential legal and political consequences

In a follow-up article at the Post on Sunday, Amber Phillips spoke to some experts about the potential legal consequences, noting that the alleged scheme may have violated as many as three serious federal election laws: obscuring the source of donations, doing so with corporate money, and coercing employees to make donation. And it is clear that the tactics involved in the alleged scheme are hardly new to those who prosecute such cases.

Former FEC lawyer Adav Noti told Phillips, “With the facts presented, it’s a run-of-the-mill but very illegal corporate straw donor scheme.” Campaign finance reformer Meredith McGehee added, “There are a lot of things in campaign finance law you can get away with, a lot of gray area or places where the law is weak, this is one place where the law is clear and has been enforced.”

Former FEC general counsel Lawrence Noble told Phillips that “corporate contributions through bonuses and potentially coercing people to make this contribution are among the most serious violations of campaign finance laws because you are taking prohibited contributions from a corporation, and you’re funneling it through employees”:

Noble said what stands out in the DeJoy allegations is how synchronized the donations-to-bonuses cycle is alleged to have been. “It’s rare to see it that blatant,” he said.

Proving illegal coercion of employees would be harder, however:

It can be difficult to know whether an employee was solicited or forced to donate. The former is legal in some cases and unethical in others; the latter is illegal. The FEC has narrowed its definition of coercion over the years, making it even harder to pin that down, said Melanie Sloan with the government watchdog group American Oversight. There is more leniency in the law for senior executives to be cajoled into giving, said Noti of the Campaign Legal Center. The law is stricter for rank-and-file employees.

But while CEOs have gone to prison for this type of scheme, Phillips notes several reasons why DeJoy would be unlikely to face a federal prison sentence in this case: the violations appear to have happened beyond the five-year federal statute of limitations; the FEC currently lacks enough appointees to form a quorum to open a civil investigation; and the Justice Department may be unwilling to open a criminal investigation into the sitting postmaster general less than two months before what will be the most mail-in-ballot intensive election in American history.

On Sunday, North Carolina attorney general Josh Stein acknowledged the reported allegations and made it clear that it was illegal in the state “to directly or indirectly reimburse someone for a political contribution,” and “any credible allegations of such actions merit investigation by the appropriate state and federal authorities.” There is no statute of limitations for election law violations or other felonies in the state.

The political consequences for DeJoy are another matter, particularly since he is already facing significant scrutiny over his leadership of the U.S. Postal Service and possible mishandling of voting by mail. On Sunday, many Democratic lawmakers, including Senate Minority Leader Chuck Schumer, began calling for a probe into the new allegations. That call was answered by House Democrats, who announced that the Committee on Oversight and Reform is opening an inquiry into DeJoy’s reimbursements.

President Trump also weighed in on Sunday, indicating that he was open to an investigation of DeJoy and saying that the postmaster general should be replaced if the allegations are true — though the president also called DeJoy a “very honest guy.”

This post has been updated throughout to include additional reporting and analysis.

What We Know About Louis DeJoy’s Campaign Finance Scandal