Fed. Election Agency Loses Bid to Dismiss Privacy Suit

The Federal Election Commission may have violated U.S. privacy laws by getting a couple's financial records from another federal agency even though that agency obtained the records legally, a federal judge in Chicago has ruled.

Jack and Renee Beam say the government obtained their records while investigating Michigan attorney Geoffrey Fieger's activities related to the 2004 presidential election. Jack Beam is of counsel to Fieger's law firm.

They filed suit in the U.S. District Court for the Northern District of Illinois against U.S. Attorney General Michael Mukasey, FEC Chairman David Mason and unnamed FBI agents who allegedly participated in the Fieger investigation .

Prosecutors ultimately charged Fieger and another partner in his firm with illegally reimbursing employees and associates for more than $100,000 in campaign contributions made to John Edwards' presidential campaign. A Detroit jury acquitted both partners after a June trial.

The Beams filed their suit in March 2007, claiming that the government targeted them in the investigation because they contributed to Edwards' campaign in 2004.

They allege that Mukasey ordered raids on the Fieger firm and on the homes of some of its employees and associates.

During the raids, federal agents allegedly "harassed" the firm's employees, asking them whom they voted for in the 2004 presidential election and questioning them about their contributions to the Edwards campaign.

The Beams also say the Justice Department or the FBI seized financial records of the firm's employees and associates, including the plaintiffs, and passed them along to the FEC.

In their first amended complaint they alleged, among other things, violations of the Right to Financial Privacy Act.

U.S. District Judge Rebecca Pallmeyer dismissed the suit with leave to amend, saying the Beams lacked standing because they had not alleged an actual injury.

In a second amended complaint the Beams renewed the RFPA claims against the same defendants, who again moved to dismiss on standing grounds.

This time Judge Pallmeyer denied the motion, finding that the Beams alleged an actual injury.

The first amended complaint alleged only that "federal agents raided 'the homes of the associates and employees of the Fieger law firm' but did not allege that their own home was raided or that the government actually seized their financial records," the judge noted.

"In the second amended complaint, by contrast, plaintiffs allege that federal agents 'had, in fact, obtained [the Beams'] financial records by engaging in acts and/or omissions that violate the Right to Financial Privacy Act,'" Judge Pallmeyer said.

The RFPA gives private citizens a legal right to sue and recover actual or statutory damages for violations, and the Beams' claim that that right was violated "causes an injury sufficient to create standing," the judge said.

However, the financial information at issue here was obtained through a grand jury subpoena, and the provisions of the RFPA do not apply to grand jury subpoenas, Judge Pallmeyer noted.

Therefore, the government did not violate the RFPA by obtaining the Beams' financial records in such a manner, which means the plaintiffs suffered no violation of a legally protected interest as a result of Mukasey's conduct, she concluded, dismissing the claim against him.

However, the judge allowed the Beams' claim against the FEC to go forward.

Under the RFPA, an agency that obtains financial records legally cannot transfer them to another agency "unless the transferring agency ... certifies in writing that there is reason to believe that the records are relevant to a legitimate law enforcement inquiry ... within the jurisdiction of the receiving agency."

Therefore, an agency may be liable under the RFPA if it obtains financial records from another agency that has not provided the required certification, Judge Pallmeyer explained.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@ThomsonReuters.com.

The Beams are represented by Michael Dezsi of Fieger, Fieger, Kenney & Johnson in Southfield, Mich. The U.S. attorney's office in Chicago represents the defendants .