Longtime Kentucky Democratic operatives Jerry Lundergan and Dale Emmons were indicted by a federal grand jury in Lexington Friday for allegedly making illegal contributions to the 2014 U.S. Senate campaign of Secretary of State Alison Lundergan Grimes and then conspiring to cover them up.
Emmons was indicted on six counts and Lundergan was indicted on 10 counts after investigators found they “willingly and knowingly” made corporate contributions of more than $25,000 to Grimes’ campaign and then worked to cover up the contributions.
The indictment alleges that Lundergan and an employee of his company approached campaign consultants and vendors and told them to bill S.R. Holding Co. for work they did for his daughter’s campaign. The company paid those bills and then allegedly did not seek reimbursement from Grimes’ campaign. After a grand jury subpoenaed records from Lundergan in 2016, the company still only sought partial reimbursement, according to the indictment.
It also alleges that Emmons provided political consulting to the campaign, but billed Lundergan and S.R. Holding instead of the campaign, and was paid with corporate funds instead of campaign funds. When vendors billed Emmons’ business for campaign services, he was allegedly reimbursed by Lundergan and not the campaign.
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The payments referenced in the indictment totaled $194,270.39 over time, according to a Justice Department news release. Of that, $119,145.45 was paid by S.R. Holding to Emmons and his company for services provided to the campaign. Emmons also allegedly used his company to pay $38,603.80 to a campaign worker and vendors for automated telephone calls and other campaign-related expenses.
The indictment says the campaign did not know about the payments, causing it to unwittingly file false reports with the Federal Elections Commission.
Lundergan’s attorney, J. Guthrie True, denied the allegations against his client.
“The coordinated campaign efforts raised more than $25 million from thousands of Kentuckians and supporters across the nation,” True said. “The campaign didn’t need or seek any extra help from Jerry Lundergan or his family-run business. The government’s allegations are misguided, and the evidence will confirm that Jerry Lundergan is innocent of all charges.”
The indictments strike at the heart of the Democratic establishment in Kentucky and raise serious questions about the political future of Lundergan’s daughter, Secretary of State Alison Lundergan Grimes. Grimes is considering a run for either attorney general or governor in 2019.
“These allegations started as a result of a politically motivated complaint filed against my campaign nearly five years ago,” Grimes said in a statement Friday afternoon. “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.”
Lundergan, 71, has for years led a faction of the Kentucky Democratic Party, taking control of the entire party as its chairman twice: between June and August of 1988 and again from 2005 to 2007. He later would serve as the architect behind his daughter’s campaigns for secretary of state and U.S. Senate.
Emmons, 66, is a close friend of the Lundergan family and has worked on numerous statewide and legislative campaigns as a political consultant, including Grimes’ 2014 Senate campaign.
The two are charged with conspiracy, making corporate campaign contributions, causing the submission of false statements to the Federal Election Commission, and four counts of causing the falsification of documents with the intent to obstruct and impede a matter within the FEC’s jurisdiction.
The most severe of those charges could bring 20 years in prison and a $250,000 fine.
On his website, Emmons claims he has been part of more than 700 winning campaigns. Most recently, he helped with Lexington Mayor Jim Gray’s failed 2016 bid for U.S. Senate and 2018 bid for the U.S. House. Emmons’ son, Jamie, ran those campaigns, neither of which is mentioned in the indictment.
The website of Emmons & Company quotes Gray as saying “...Dale Emmons is the political Obi-Wan Kenobi of my generation.”
Rumors of a looming indictment of Lundergan have circulated around the state ever since a grand jury sought records related to Grimes’ 2014 Senate campaign and Lundergan’s businesses.
While Lundergan wasn’t the official campaign manager for his daughter as she challenged Mitch McConnell, he was heavily involved in the campaign. Several profiles of the campaign written by national news outlets that flooded into the state to cover the race mentioned Lundergan’s outsized influence on the race.
Over the course of the campaign, Grimes reported paying $111,831 to Lexington companies owned by Lundergan and $41,745 directly to him and other family members.
The Republican Party of Kentucky filed a complaint with the Federal Elections Commission in 2014 alleging that Lundergan made “prohibited corporate contributions” to Grimes, saying he charged her campaign below market value for his services. The complaint was dismissed in 2016.
It isn’t Lundergan’s first time running into trouble with the law. The Maysville-raised entrepreneur who made his money in restaurants, catering and disaster relief was forced to give up his seat in the Kentucky House of Representatives in 1989 after he was convicted of violating an ethics law barring legislators from doing work for the state under no-bid contracts. His conviction, however, was overturned on grounds it should have been prosecuted as a misdemeanor, not a felony. The statute of limitations had expired and he was never retried.
Later the FBI seized all records of a deal between Emergency Disaster Services, a Lundergan company, and Morgan County. The two struck a deal after a tornado hit the county in 2012 and the records were seized when the FBI investigated former Morgan County Judge-Executive Tim Conley. Conley was sentenced to a seven year prison sentence in 2014 for a bribery scheme unrelated to EDS.
Emmons has also faced legal claims related to previous campaigns. In 2016, he settled a defamation lawsuit brought by State Sen. Ralph Alvarado, R-Lexington, over an ad his company produced in the 2016 state Senate election between R.J. Palmer and Alavarado. Emmons signed a public apology and paid an undisclosed amount.
It has been a challenging week for Grimes. On Monday, she was accused of overstepping her authority with the Kentucky State Board of Elections in a searing letter the executive director of the board filed with the Executive Branch Ethics Commission.
The Repubican Party of Kentucky was quick to tie the indictment to Grimes and called for her to recuse herself from her role as Kentucky’s chief elections officer during the November election.
“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,” said Tres Watson, spokesman for the Republican Party of Kentucky.
Herald-Leader Reporter Beth Musgrave and Greg Kocher contributed to this story.