NASHVILLE, Tenn. (AP) — A Tennessee state senator and a Nashville social club owner were indicted on charges that they violated campaign finance laws by illegally concealing the transfer of $91,000 during the Republican lawmaker’s 2016 failed congressional campaign, federal investigators announced Monday.
A federal grand jury in Nashville handed down the five-count indictment against state Sen. Brian Kelsey and Joshua Smith on Friday, the acting U.S. attorneys for the state's middle and western districts and an assistant attorney general from the federal Justice Department said in a news release.
Kelsey responded defiantly, calling the charges a “political witch hunt."
"I'm totally innocent and I look forward to being cleared at trial,” he said.
Kelsey and Smith “unlawfully and secretly” funneled funds from Kelsey's state Senate campaign committee to his federal congressional campaign committee, according to the indictment released Monday.
Prosecutors also allege that Kelsey and others caused a national nonprofit political organization to make illegal and excessive campaign contributions to Kelsey by coordinating with the organization on advertisements, and caused the organization to file false reports to the Federal Election Commission. Authorities did not name the national organization.
The indictment mentions, but does not charge, two alleged co-conspirators, one of whom is described as an attorney and former Tennessee House member expelled in 2016. Republican Rep. Jeremy Durham, a Republican from Franklin, was the only lawmaker expelled that year.
Kelsey, Smith and the unidentified co-conspirators moved tens of thousands of dollars to the political organization in 2016, according to the indictment.
“It was a purpose of the conspiracy to unlawfully and secretly funnel soft money from state committee 1 to (the political organization) to support Kelsey's federal campaign,” the indictment stated.
The indictment goes on to allege that the political organization filed several reports claiming that it made “independent expenditures” on Kelsey's behalf when “in truth and in fact, the expenditure was coordinated with Kelsey and his agents and was not independent.”
Kelsey took aim at Democrats as he responded to the charges.
President Joe Biden's administration "is trying to take me out because I’m conservative and I’m the No. 1 target of the Tennessee Democratic Party," Kelsey said during a brief statement made online to reporters, who were not permitted to ask questions. “I won my seat only 51 to 49 last time and the Democrats think this will make the difference. They’re wrong.”
Kelsey, a Republican from Germantown, was elected to the General Assembly in 2009 and serves as chairman of the Senate Education Committee. He's up for reelection in 2022.
Smith is the owner of The Standard, a restaurant and private club near the state Capitol that is often frequented by lawmakers. His attorney, Hal Hardin, said Monday that he and his client “look forward to presenting our proof to an impartial jury and judge.”
The claims in the indictment resemble a complaint against Kelsey’s campaign filed with the Federal Election Commission and the Department of Justice in 2017 by the Campaign Legal Center, a nonprofit focused on issues that include campaign finance laws, voting protections, ethics and redistricting. That complaint claimed that independent expenditures made by the American Conservative Union in the 2016 race were coordinated with Kelsey's congressional campaign. A spokesperson for the prominent nonprofit conservative organization said Monday that it has been “fully cooperating with this investigation since 2018.”
“We take compliance seriously, and are very proud of the work we continue to do to advocate for conservatism,” wrote Regina Bratton. “Neither ACU nor any member of the board is a subject or target of this investigation.”
Brendan Fischer, director of the Campaign Legal Center's Federal Reform Program, on Monday commended federal authorities for the charges.
“We’re certainly pleased that the DOJ has taken our complaint seriously. This is a serious, serious violation,” he said. “Kelsey concocted a scheme to disguise the illegal transfer of prohibited state money into his federal race.”
Republican Lt. Gov. Randy McNally, the leader of the state Senate, said he is reserving judgment for now.
“I am obviously saddened by this news," McNally said in a statement. "It is important to remember that under our laws, Senator Kelsey is innocent until proven guilty. He will have the opportunity to answer this indictment in the coming days.”
The first court appearance for Kelsey and Smith is scheduled for Nov. 5. If convicted, they face up to five years in prison on each count.
The indictment is the second time in a little more than a year that a Tennessee lawmaker has been indicted.
Last month, Democratic state Sen. Katrina Robinson of Memphis was convicted of four of five counts of wire fraud stemming from charges that she misused federal grant money awarded to a health care school she operated. A judge had acquitted her on 15 of 20 charges. Robinson, who was initially indicted in July 2020, is seeking an acquittal or a new trial and has not resigned her legislative post as Republican Lt. Gov. Randy McNally asked her to do after her conviction.
Meanwhile, several Republican state House lawmakers, including former GOP House Speaker Glen Casada, state Rep. Robin Smith and Rep. Todd Warner, had their homes and legislative offices searched by federal agents earlier this year. Warner told state regulators earlier this year that federal agents took all the files and documents related to his campaign. Federal authorities have release scant details about what they were looking for.