Jerry Lundergan indicted on charges of illegal donations to daughter's campaign

Phillip M. Bailey | Courier Journal

Veteran Kentucky Democratic strategist Jerry Lundergan was indicted Friday by a federal grand jury on allegations that he made illegal donations to his daughter's 2014 U.S. Senate race and tried to cover them up.

Federal court records show Lundergan and longtime political operative Dale Emmons are being charged for donations to Secretary of State Alison Lundergan Grimes' campaign.

The indictment shows the two are accused of making illegal corporate contributions of more than $25,000 to Grimes in her bid to unseat Republican U.S. Sen. Mitch McConnell.

Lundergan and Emmons "knowingly and voluntarily conspired with each other, and other, known and unknown to the grand jury, to commit ... offenses against the United States," said the indictment filed in U.S. District Court.

Lundergan's attorney Guthrie True, of Frankfort said his client is greatly disappointed that federal prosecutors brought these charges.

"This indictment is wrong on the facts and wrong on the law," True said. "It is no secret that Mr. Lundergan supported his daughter’s bid for higher public service, but his efforts were always within the law."

Emmons did not immediately return phone calls seeking comment.

Alison Lundergan Grimes' campaign did not know about the payments, according to the indictment, which caused it to unknowingly file false reports with the Federal Elections Commission.

But the charges come at a critical time for Grimes, who is considered to be a top contender for either governor or attorney general in 2019. Just a few weeks ago she made a strong performance at the annual Fancy Farm political picnic.

Grimes immediately took to Twitter on Friday to defend her father after news broke about his indictment.

"These allegations started as a result of a politically motivated complaint filed against my campaign nearly five years ago," she said. "That complaint was already investigated and completely dismissed by the bipartisan Federal Election Commission."

I love my father, and I have faith in the judgment and fairness of the people of Kentucky, and believe when all of the facts are in, my father will be vindicated. 3/4 — Alison L. Grimes (@AlisonForKY) August 31, 2018

The Kentucky Republican Party pounced on the news, saying it represents, "the most egregious campaign finance crime in the history of the commonwealth." It also pointed out that Grimes was serving as the state's chief elections officer at the time the allegations occurred.

"Between this week’s revelations at the State Board of Elections and today’s indictment, it is clear Secretary Grimes has absolutely no regard for the laws governing our elections that she was elected to uphold," GOP spokesman Tres Watson said in a statement.

Read this: GOP demands feds investigate Alison Grimes over abuse of power claims

Republicans had slammed Grimes earlier this week after she was accused by the executive director of the state board of elections, who is a Democrat, of ignoring a federal court settlement to clear Kentucky's voter rolls of people who hadn't voted in the past six years.

The bipartisan board of elections — made up of three Democrats and three Republicans — met for several hours this week to consider that and other complaints and reaffirmed her role as the state's chief election official.

Watson said Grimes should recuse herself and her office from any and all election-related activities this election cycle and cede control to the board of elections.

Grimes ignored the suggestions, instead focusing on supporting her father.

"I love my father, and I have faith in the judgment and fairness of the people of Kentucky, and believe when all of the facts are in, my father will be vindicated," she said on social media. "Because this matter is in the courtroom and not the world of politics, I have no further comment."

Jerry Lundergan has been a charismatic fixture in state Democratic circles for more than three decades, serving as a state representative and party chair. He became a self-made millionaire through his catering business, which gave him vast political connections outside the Bluegrass.

Lundergan had his political career cut short when he was forced to resign from the state House in 1989 after a felony conviction connected to a $154,000 no-bid state contract. An appeals court overturned that conviction saying it should have been a misdemeanor no longer eligible for prosecution because the statute of limitations had expired.

He waged a political comeback as an early supporter of Bill Clinton during his 1992 presidential campaign. Lundergan also reclaimed his spot as party chairman in 2004.

The Courier Journal reported two years ago that Grimes’ financial records were subpoenaed as part of a federal probe into her political campaigns in 2014 and 2015.

Lundergan was deeply involved in his daughter's high-profile campaign against McConnell. When Grimes rolled out her campaign at a historic home in Lexington owned by one of his businesses, Lundergan said: "That's what daddies do for their little girls.”

The family connections to Grimes’ 2014 race were touted as an asset by campaign officials at the time, who pointed to Lundergan's personal friendship with Bill and Hillary Clinton, who both campaigned against McConnell.

“We’re a family campaign,” Democratic strategist Jonathan Hurst, who served as a senior adviser for Grimes, told TIME Magazine in 2014. “Chairman Lundergan is obviously very involved. We feel that that is a very big asset and we’re very, very excited and pleased. We feel that having someone who’s been elected chair of the party twice has been very helpful in the campaign.”

From 2016: Grand jury subpoenas Alison Lundergan Grimes campaign records

Lundergan and Emmons have been political allies for years but are now wedded in criminal charges, with the most severe carrying up to 20 years in prison and a $250,000 fine.

Lundergan, 71, is being charged with one count of conspiracy; one count of making corporate campaign contributions; four counts of causing the submission of false statements to the FEC; and four counts of causing the falsification of documents with the intent to obstruct and impede a matter within the FEC’s jurisdiction, according to the U.S. attorney for the Eastern District of Kentucky.

Emmons, 66, another Lundergan family confidant, has worked on various Democratic races as a political consultant. He is charged with one count of conspiracy; one count of making corporate campaign contributions; two counts of causing the submission of false statements; and two counts of causing the falsification of documents with the intent to obstruct and impede.

The U.S. attorney's office is alleging that Lundergan used money from one of his companies, S.R. Holding Company Inc., to pay for services provided by consultants and vendors to his daughter's campaign. He allegedly issued a number of payments from the businesses' accounts for services such as audio-video production, lighting, recorded telephone calls over a two year period.

The payments referenced in the indictment allegedly totaled $194,270, according to prosecutors. That money included roughly $119,145 paid to Emmons and his company, who allegedly turned around and used the money to pay other vendors and a Grimes campaign worker for services rendered to the campaign.

Over time, according to the indictment, Emmons paid $38,600 to these vendors for recorded telephone calls, technological support services, and other campaign-related expenses.

But Lundergan's attorney said the Grimes campaign was able to rake in more than $25 million from thousands of Kentuckians and supporters across the country. He said the campaign didn' need or seek any extra help from his client or his business.

"The government's allegations are misguided, and the evidence will confirm that Jerry Lundergan is innocent of all charges," True said.

Reporter Tom Loftus contributed to this story. Reporter Phillip M. Bailey can be reached at 502-582-4475 or pbailey@courierjournal.com. Support strong local journalism by subscribing today: courier-journal.com/philb.