SAN FRANCISCO (CN) - A lobbyist whose family, staff and acquaintances handed over the bulk of the $5,000 checks he'd written to each of them to Sen. Harry Reid denied at a 9th Circuit hearing Monday that he broke campaign-finance laws.
A federal jury convicted disgraced Nevada real estate mogul-turned-lobbyist F. Harvey Whittemore in 2013 of making excessive campaign contributions, making contributions in the name of another and making a false statement to the Federal Election Commission.
At issue are $5,000 checks that Whittemore gave as "gifts" and "bonuses" to family members, 29 employees and the employees' spouses. Nearly everyone who received Whittemore's good tidings turned around and wrote $4,600 checks to Reid's 2008 re-election campaign.
Prosecutors said Whittemore resorted to the "straw-donor" scheme after his promises of a $150,000 fundraising effort for Democratic senator from Nevada fizzled. The Senate Majority Leader was unaware of Whittemore's actions and was not accused of any wrongdoing.
On appeal before the 9th Circuit on Monday, Whittemore's attorney Vincent Savarese told the panel that, while his may have hoped the money he gave to family and employees would be donated to Reid, he relinquished his control of the money when he gave it away.
"The jury should have been instructed that an unconditional gift means that the donor gives up control of the funds, and the ownership of those funds are immediately divested by the donor," Savarese said.
Judge Paul Watford said the jury rejected that theory in finding Whittemore guilty, but Savarese that the government did not meet its burden.
"We were forbidden to argue that the money was unconditionally given or from distinguishing conditional and unconditional, so the jury had no legal framework to decide what Whittemore's gifts were," Savarese said. "The government had to prove criminal intent, and the jury instructions did not adequately inform that."
For the most part those who received Whittemore's gifts testified that they voluntarily gave the money to Reid's campaign, Savarese added.
"Whittemore had a constitutional right to give the money, but had no control of the money when it left his hand," Savarese said.
For Judge William Fletcher, however, "The crime is complete ... when he gave the money with the hope that it was passed on to Reid, whether that happened or not."
Elizabeth White, appellate chief of the U.S. Attorney's Office, said Whittemore exploited people he knew were financially dependent on him to make good on his fundraising promise and remain "king of the hill" in Nevada politics.
"Whittemore is conflating two definitions of an unconditional gift - Nevada law and the common-sense definition of 'no strings attached,'" White argued. "You can give someone a gift for a particular purpose and outside a contract they can do with it what they want. But that doesn't negate your original particular purpose."
Once the head of a billion-dollar real estate empire, Whittemore, 61, is now serving a two-year term in a minimum-security federal prison on the Central California coast.