Tag: Senator Brian Kelsey

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News Politics Politics Beat Blog Uncategorized

Kelsey Co-Defendant Pleads Guilty to Federal Campaign Finance Violation

Joshua Smith leaving the Fred D. Thompson United States Courthouse in Nashville. (Photo: John Partipilo)

Joshua Smith, owner of The Standard social club, pleaded guilty Wednesday in a campaign finance scheme to funnel money from state Sen. Brian Kelsey’s campaign fund to his failed congressional bid in 2016.

Smith, 45, changed his plea to guilty in front of U.S. District Court Judge Waverly Crenshaw on count two of a federal indictment, admitting that he “solicited, received, directed, transferred, and spent” more than $25,000 in “soft money” as an agent for Kelsey’s 8th Congressional District campaign. It is illegal to spend that type of money not subject to federal limitations and reporting requirements on a federal campaign.

Smith “secretly and unlawfully funneled $67,000” in “soft money” from Kelsey’s Senate campaign committee to a national organization, the American Conservative Union, that paid for radio and digital ads backing Kelsey’s campaign, according to the indictment. 

Accompanied by attorney Phillip S. Georges, Smith waived his right to a trial and appeal Wednesday and told the judge he had spoken “extensively” with his attorney before making the decision. Sentencing is set for June 9th when he faces a maximum of five years in prison and a $350,000 fine. 

Kelsey’s trial is scheduled for late January 2023.

Georges said in a statement last week that Smith accepts responsibility for his involvement and if called to testify will be “truthful regarding the activities that took place.”

Joshua Smith leaving the Fred D. Thompson United States Courthouse in Nashville. (Photo: John Partipilo)

Prosecutors say Kelsey and Smith conspired with others from February 2016 through mid-October 2016 to violate campaign finance laws and illegally move “soft money” totaling $91,000 from the senator’s state account through the The Standard’s political action committee and Citizens 4 Ethics in Government to the American Conservative Union, which purchased advertising to support Kelsey’s federal campaign.

A Nashville grand jury returned the five-count indictment against Kelsey in October 2021 after more than four years of investigation. The Germantown Republican, who has called the investigation a “witch hunt,” is not seeking re-election this year.

The federal indictment claims Kelsey gave Smith a check for more than $106,300 in July 2016 during a gathering at The Standard, an upscale restaurant in downtown Nashville, to be transferred from his campaign account to The Standard PAC and Citizens 4 Ethics in Government, which was run by Andrew Miller, and ultimately to the American Conservative Union.

Kelsey’s future wife, Amanda Bunning, director of government affairs for the American Conservative Union at the time of the alleged incidents, also sent emails to Smith asking him about making contributions to her organization, according to federal documents.

Former state Rep. Jeremy Durham and Miller are believed to be unindicted co-conspirators in the scheme.

Bunning was director of government affairs for the American Conservative Union and a member of its senior management team from late 2015 to March 2017 and managed its political expenditures, according to the indictment. She and Kelsey got engaged around July 2017 and were married in January 2018.

She received and sent a list of Kelsey’s Senate achievements, according to the indictment, and worked closely with a member of the ACU’s senior management team, which oversaw daily operations and directed all aspects of its political activities, including political expenditures.

In July 2016, the ACU reported to the Federal Election Commission that it made independent expenditures for a radio and digital ads to back Kelsey when the expenditures were coordinated with Kelsey and his agents and were not independent, according to the indictment.

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Opinion Viewpoint

Vote No on Amendment Three

State Senator Brian Kelsey is a sponsor of Amendment 3. Like Senator Kelsey, I am opposed to a state income tax. Unlike him, though, I am opposed to Amendment 3, which would establish a constitutional prohibition of a state income tax.

Kelsey offers a number of arguments against Tennessee adopting an income tax, and I agree with them. I think the costs outweigh the benefits, and I have reasonable fears that a new source of revenue will be a great temptation to politicians, Republican and Democrat, to spend more in order to buy our votes.

But these are policy arguments, about which reasonable people can differ. Everyone would like to have their policy preferences embedded in a constitution, but to settle a policy question by using the state Constitution to prohibit all future reconsiderations is, at best, imprudent.

We can never know the future, and we surely cannot control it.

The federal government can — and often does — impose new costs on states. It will almost surely provide less money to states as it finally begins to deal with massive annual deficits, a massive national debt, and unsustainable social programs like Medicare and Social Security.

And the federal government sends Tennessee a lot of money. Intergovernmental transfers make up 38 percent of Tennessee’s current revenue, and much of that is federal money. One large chunk of that money, for example, is for highway construction and repair. The Federal Highway Trust Fund is, however, teetering on insolvency. Something needs to give. I doubt that Congress will increase the gas tax again, and it cannot make up the difference through general revenues without increasing the national deficit and debt, which I assume the supporters of Amendment 3 would oppose, as I would.

What funds will Tennessee use to cover new costs and decreasing national largesse? There is only so much that a sales tax can bear; sales taxes already produce more than 50 percent of our state’s revenue. Kelsey notes that Illinois had to increase its income tax by 67 percent. Can he know that Tennessee will not have to increase its sales tax by as much or more?

In other words, fiscal conditions, due to circumstances beyond our control, could get to the point where an income tax is actually more just — and less harmful — than the alternatives.

Again, I am not for an income tax now, but I do not know, and neither can Senator Kelsey, whether new circumstances will change these practical calculations and judgments.

Kelsey argues that the absence of an income tax attracts new residents and employers. Policy questions, however, involve many variables and considerations. Consequently, they ought to be left, as much as possible, to the legislature, which has the flexibility to adapt to changing conditions and public opinion. That is what legislatures are for.

The purpose of constitutions, on the other hand, is to establish the structure of the government that will make and implement policy decisions. A specific constitutional ban on income taxes makes the policy completely inflexible. No matter how dire the circumstances, the legislature could not even consider an income tax without first successfully removing the prohibition through the cumbersome amendment process. Kelsey is probably right when he says passing this amendment will, in effect, be banning an income tax “forever.”

Supporters of Amendment 1 argue that abortion policy ought to be determined by the elected and representative legislature, rather than by judges (interpreting the state Constitution). If a policy involving questions of individual rights should be left to the legislature, then a strictly practical matter, such as how the state raises revenue, surely ought to be.

Instead, Kelsey urges Republicans to use their democratically elected majority to deny all future democratically elected majorities the right to deliberate and legislate on the question of income taxes. Neither Republicans nor Democrats should take this astonishingly anti-democratic bait.

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Editorial Opinion

Senator Kelsey’s Bad Tax Logic

CREDIT: Lauren Rae Holterman

Sometimes truth is revealed inadvertently, through the medium of a remark intended to point in the very opposite direction. Such was the case last week during a speech by state Senator Brian Kelsey, who takes pride in having

authored the third of four far-reaching constitutional amendments on the November 4th ballot in Tennessee.

Lauren Rae Holterman

Addressing a meeting of the East Shelby Republican Club, Kelsey spent considerable time making the case for Amendment 3. That’s the one that, in explicit language, would outright ban an income tax in Tennessee forevermore. The amendment was considered necessary by Kelsey and other foes of the income tax who have always maintained that an income tax is unconstitutional in Tennessee, but, recognizing that there is debate on the point, consider Amendment 3 necessary to eliminate all doubt.

For those younger millenials who have no memory of the great income-tax controversy of just over a decade ago, Tennessee state government was convulsed over the subject during the second term of then-Governor Don Sundquist, which lasted from 1999 to 2003. Sundquist looked at the twin facts of budgetary scarcity and a regressive tax system (two noxious symptoms that, having never been cured, are still very much with us) and attempted to solve both problems through the implementation of a state income tax.

Sundquist’s reasoning was that an exclusive reliance on a state sales tax for revenue put the state in a box — in that the ebb and flow of commerce make it an unreliable basis for financing Tennessee government, given the fixed nature of so many state services. Moreover (and Sundquist was unusually eloquent on the subject, especially for a Republican), the sales tax, as regressive in its very nature, places a disproportionate share of the tax burden on low-income Tennesseans and working people.

After several years of the most intense public controversy, Sundquist became ostracized by his fellow Republicans, the state capitol building came under literal attack in the anti-tax riot of July 2001, and the whole idea of an income tax was scuttled. Later, to meet the rock-bottom needs of state government, a cowed General Assembly raised the state sales tax to the threshold of 10 percent, among the very highest in the nation.

In his speech to the East Shelby club last week, Senator Kelsey actually cited the state’s reliance on the sales tax as a boon to the state economy, and he dismissed the income tax by paraphrasing an idea briefly fashionable during the Reagan administration: Whatever you tax, you end up with less of it, and you don’t want to end up with less income, do you?

But hold on. By the same logic, the sales tax should produce fewer sales and a depressed state economy, shouldn’t it? Indeed, one of the actual consequences of the sales tax is that residents of the state’s border areas are seriously motivated to cross the state line and make their purchases in neighboring states — Mississippi’s DeSoto County, in the case of Shelby County.

This actually happens every day, and it depresses our state’s economy at the same time that it enhances the neighboring state’s.

Do the math on that, Senator Kelsey, and report back to us.