Rep. Lori Trahan Lied About Campaign Funds. The House Ethics Committee Cleared Her Anyway.

Last December, the independent Office of Congressional Ethics released a report concluding that there was “substantial reason” to believe that freshman Rep. Lori Trahan had broken campaign finance laws in the final days of her tight Democratic primary in Massachusetts. OCE then kicked it over to the House Ethics Committee, which is run by a bipartisan panel of Trahan’s colleagues. They’ve now concluded their own investigation, with a starkly different finding: Trahan was cleared — despite not having cooperated with the OCE investigation nor providing key documentation to support her claims.

In 2018, Trahan faced a hotly competitive primary for Massachusetts’ 3rd Congressional District, in the Boston suburbs, which she ultimately won by just 155 votes. In the final days of the campaign, Trahan had deposited $300,000 into her coffers that was classified as a personal loan, which she used to launch a TV blitz that, given the narrow margin, most likely swung the election.

By the time Trahan filed a personal financial statement, her records suggested that she did not have enough assets to have been able to make the loan to her campaign, as revealed by a Boston Globe investigation. Where, then, had the money come from?

Trahan’s critics floated the possibility that her wealthy husband’s companies had financed her last-minute surge, a charge that Trahan called not just preposterous, but sexist. She was asked about the money at a town hall last March, in the wake of the Globe report. “The suggestion that I did not have the personal resources to make that loan to my campaign is just inaccurate,” she said. “There’s a lot of narratives you want to change when you are taking on a run like this, and you’re going back to Congress as one of those 131 women, and that’s one of them, right? That women can start successful businesses, they can earn income, they can have affordable day care, they can get paid the same as men who are doing the same job, and they can make a loan that they can afford to their campaign.” She said that when her next financial disclosure in spring 2019 was revealed, everything would be cleared up.

Alison King, from NBC Boston, put the question to her directly a month later. “Can you categorically deny that your husband helped beyond the $2,700 allowed by law?” she asked.

“Yeah, look,” Trahan said, “the suggestion that I personally did not have the funds is completely inaccurate.”

It is now clear that Trahan was lying. What was ultimately revealed, after a series of corrections made by Trahan and $400,000 in legal advice, was that her husband had shifted assets out of companies he owned into a joint checking account which was then quickly deposited into Trahan’s congressional campaign. That’s not what Trahan’s critics are claiming — that is now her own story.

Yet, earlier this month, the Ethics Committee cleared Trahan by finding that, while the loan had indeed been made out of funds from her husband’s companies, doing so was legal because a prenuptial agreement stipulated that such funds were joint marital property. Trahan’s financial disclosure, however, lists all of the assets her husband used to make the loan as “SP,” for spouse, rather than “JT,” for joint, as she lists other joint property. And the prenup, in fact, stipulates that separate property will remain separate and that “each party waives, discharges, and releases all right, title, and interest in and to the separate property that the other party now owns or acquires after the execution of this Agreement, or acquires from the proceeds of any separate property now owned, including but not limited to any real property which either party may acquire with funds derived from the proceeds of his or her own separate property.” But the prenup also says: “All wages, salary, and income of each party earned or received during marriage, together with all property purchased with such wages, salary and income, shall also be marital property.”

But even if the committee granted that the funds were indeed jointly owned, part of the loan came from a company that was not subject to the prenup. A $50,000 loan made to the campaign by Trahan on June 30, 2018 originated with a company owned by her husband, DCT Development. DCT Development was founded prior to their 2007 marriage and not listed in the prenup as joint property. That was an oversight, Trahan said. “According to Representative Trahan, she and Mr. Trahan intended DCT Development, Granite Rock Businesses, and the income he received from those entities to be marital property under the agreement. Representative Trahan did not provide the Committee with any documentary evidence to support her explanation,” wrote the Ethics Committee in its final report. Federal campaign finance law states that a spouse cannot contribute more than the legal maximum (at the time, $2,700).

Some of the assets used by Trahan’s husband were not his alone. On April 2, 2018, the committee report reveals, Mass Eagle Development LLC deposited $100,000 into David Trahan’s personal account. He lists himself as just a one-third owner of Eagle Development in Lori Trahan’s financial disclosures (which list it as David Trahan’s separate property).

On August 21, David Trahan transferred $200,000 to the joint checking account with his wife. A few weeks earlier, he had drawn $180,900 from Middlesex Land Holdings LLC and $110,000 from Poplar Hill Development LLC. He lists himself as a half-owner of Poplar Hill.

The ethics committee noted in its report that those companies are not listed as separate property in the prenup and therefore can be considered joint property, but unanswered is the question of whether they were purchased from proceeds of his other separate property, which could render it off limits, or whether the withdrawals count as income that becomes a joint asset. In any event, the argument was enough for the committee to clear her.

Trahan’s argument about the prenup came after she spent an eye-popping amount of money on the top Democratic campaign finance firm, Perkins Coie. Federal Election Commission records show that the firm has done more than $400,000 worth of work for her.

“Congresswoman Trahan fully cooperated with the Ethics Committee’s inquiry and has provided detailed documentation which supports the Committee’s findings,” said a spokesperson for Trahan. “The Republicans and Democrats on the Committee unanimously upheld what she has said all along: that the allegations against her were without merit.”

Trahan has little plausible deniability as to campaign finance law — she wrote it. She was chief of staff to former Rep. Marty Meehan, who was the lead Democratic sponsor of the McCain-Feingold Act in the House. “As a staffer, I was proud to work on the historic campaign finance reform legislation, Shays-Meehan,” Trahan said in a 2019 release.

The House Ethics Committee declined to comment.

As her campaign owes her and her husband $300,000, Trahan, a member of both the business-friendly New Democrats and the Congressional Progressive Caucus, has been an aggressive fundraiser — apparently breaking her commitment to not accept corporate PAC money by accepting $4,500 from the PACs of corporate lobbying firms.

Regarding the donations from the corporate lobbying firm PACs, Trahan’s spokesperson argued that they fit within the narrow definition created by End Citizens United.

“The Congresswoman does not accept contributions from political action committees set up by for-profit corporations,” they said. “She will continue to follow End Citizen United’s standards for rejecting corporate PAC contributions.”

“Trahan gave a number of conflicting and inconsistent responses” to queries from the Boston Globe, said Brendan Fischer, federal reform director at the Campaign Legal Center, “and ultimately it appeared it came from an account individually owned by her husband. The Office of Congressional Ethics recommended that the Ethics Committee find that Trahan did violate the law, but the Ethics Committee cleared Trahan. A big part of that is that the House Ethics Committee is made up of other members of Congress and there’s often an aversion to members of Congress holding other members accountable for ethics violations.”

“Throughout this process, there seems to be one reported error after another,” added Fischer. “Both the campaign finance and financial disclosure report were amended multiple times. The public statements changed over time the assertions that these LLCs not being included was an error. Taken together there have been an awful lot of errors.”

Beth Rotman, national director of Money in Politics and Ethics for Common Cause, argued that the key issue with Trahan’s conduct was that the public had no idea about this issue until after the primary and general election were concluded.

“Common Cause sees this as a public disclosure issue that has to be done in real time for everyday Americans to evaluate somebody running for office,” said Rotman. “The public lost here. To figure all of this out many months later is a loss for the public. In this case, delayed disclosure equated to nondisclosure.”

“It’s very challenging to have an in-house Ethics Committee do the investigation,” Rotman continued, “as they can absolutely bend over backwards to see themselves in the same shoes as the person they are evaluating. They all find the campaign finance laws burdensome. It’s very difficult to ask the legislature to police itself when it comes to campaign finance. Watchdog agencies like the OCE are not burdened by subconscious awareness where they could see themselves making the same mistake.”