Giving the Wrong Way

In May of 1972, with the crucial California primary fast approaching, the beleaguered presidential campaign of Hubert Humphrey was badly pressed for funds. Humphrey knew that if anyone could help him in a hurry, it would be John L. Loeb Sr., his old friend and staunch backer (though he is a nominal Republican), senior partner of Loeb, Rhoades & Co., one of Wall Street's most prestigious brokerage houses. Within a matter of days, the resourceful investment banker had come through handsomely. At Loeb's request, seven of his firm's employees each wrote two checks in the amount of $3,000 to two Humphrey committees. An eighth employee wrote a $6,000 check on a joint account, making a total of $48,000. By confining the size of each contribution to $3,000, Loeb avoided having to pay federal taxes on the gifts. Loeb then reimbursed each of his employees for his contributions.

That violated the Federal Election Campaign Act, which had become effective the previous month. The law forbids making contributions "in the name of another person." Loeb, 70, insisted he was unaware of the new rules and that "the violation was totally innocent and unwitting," but did not contest the charges. Last week Judge John M. Cannella fined Loeb $3,000, the maximum possible, noting wryly that, "I'm aware, to use a medical expression, that he's not financially anemic."

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