Grand jury indicts Kelsey on federal campaign finance charges

Sen. Brian Kelsey (R-Germantown), right, confers with then-Rep. Matthew Hill (R-Jonesborough) on the House floor in Nashville on April 30, 2019. (Erik Schelzig, Tennessee Journal)

A grand jury has indicted state Sen. Brian Kelsey (R-Germantown) on five counts of violating federal campaign finance laws related to his failed 2016 bid for Congress.

According to the indictment, Kelsey and Josh Smith, the owner of The Standard social club in Nashville, conspired with others to “secretly and unlawfully funnel ‘soft money'” between the senator’s state account and his federal campaign.

“Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission,” according to a Justice Department statement.

The conservative news site The Dispatch reported earlier this month that federal investigators were scrutinizing the dealings of Matt Schlapp and the American Conservative Union about what one person called their “knowledge of the events leading up to the endorsement of Brian Kelsey.”

Kelsey reissued his standard statement on the investigation to The Dispatch: “I welcome any investigation because all donations were made in compliance with the law and on the advice of counsel.”

Here’s the full release from the U.S. Attorney’s Office in Nashville:

NASHVILLE – A federal grand jury in Nashville Friday, returned a five-count indictment charging Tennessee State Senator Brian Kelsey, 43, of Germantown, Tennessee, and Nashville social club owner Joshua Smith, 44, with violating multiple campaign finance laws as part of a conspiracy to benefit Kelsey’s 2016 campaign for U.S. Congress.  

Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee, Assistant Attorney General Kenneth A. Polite, Jr. of the Department of Justice Criminal Division, and Acting U.S. Attorney for the Western District of Tennessee Joseph C. Murphy, Jr. made the announcement.

According to the indictment, beginning in February 2016 and continuing through mid-October 2016, Kelsey and Smith conspired with others to violate federal campaign finance laws to secretly and unlawfully funnel “soft money” (funds not subject to the limitations, prohibitions, and reporting requirements of the Federal Election Campaign Act [FECA]) from Kelsey’s Tennessee State Senate campaign committee to his authorized federal campaign committee.  Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission. 

In 2016, the FECA limited campaign contributions to $2,700 from any one individual or organization to any one candidate in each election. 

The indictment alleges that Kelsey, Smith, and other unindicted coconspirators orchestrated the concealed movement of $91,000 to a national political organization for the purpose of funding advertisements that urged voters to support Kelsey in the August 2016 primary election, and that the conspirators caused the political organization to make $80,000 worth of contributions to Kelsey’s federal campaign committee in the form of coordinated expenditures.  The indictment alleges other meetings and communications between the conspirators, resulting in the illegal transfers, contributions, and expenditures associated with Kelsey’s federal campaign.

Kelsey and Smith are charged with conspiracy, illegally transferring “soft money” as a federal candidate and his agent, and illegally transferring “soft money” as a state officeholder and his agent. Kelsey is also charged with making excessive contributions to a federal campaign and accepting excessive contributions.  If convicted, they face up to 5 years in prison and a $250,000 fine on each count.

A summons has been issued by the Court and Kelsey and Smith are directed to surrender to U.S. Marshals in the Middle District of Tennessee on or before November 5, 202, at 10 a.m. and both will make an initial appearance before a U.S. Magistrate Judge.

This case was investigated by the FBI.  Assistant U.S. Attorneys Amanda Klopf of the Middle District of Tennessee and David Pritchard of the Western District of Tennessee and Trial Attorney John Taddei of the Criminal Division’s Public Integrity Section of the Department of Justice are prosecuting the case.

An indictment is merely an accusation.  The defendants are presumed innocent until proven guilty in a court of law.