NASHVILLE, Tenn. (WTVF) — A long-running federal criminal investigation has resulted in the indictment of a Tennessee state senator and the owner of an exclusive downtown Nashville social club that catered to state and local politicians.
Sen. Brian Kelsey, R-Germantown, was charged Friday, along with Joshua Smith, operator of The Standard, in a five-count federal indictment that accuses the pair of engaging in a conspiracy to steer illegal contributions into accounts used to finance Kelsey's unsuccessful campaign for Congress in 2016.
"According to the indictment, beginning in February 2016 and continuing through mid-October 2016, Kelsey and Smith conspired with others to violate federal campaign finance laws to secretly and unlawfully funnel 'soft money' ... from Kelsey’s Tennessee State Senate campaign committee to his authorized federal campaign committee," the U.S. Attorney's Office said in a news release.
"Soft money” are funds not subject to the limitations, prohibitions, and reporting requirements of the Federal Election Campaign Act, the release explains.
"Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission."
Kelsey responded to the allegations Monday in a video statement.
"Look, this is nothing but a political witchhunt," the Shelby County Republican said.
"The Biden administration is trying to take me out because I'm conservative - and I'm the number one target of the Tennessee Democratic Party.
"I won my seat 51-to-49 percent last time, and the Democrats think this will make the difference. They're wrong.
"These five-year-old allegations have been reviewed and re-reviewed. They were wrong then, and they are wrong now. I'm totally innocent, and I look forward to being cleared at trial."
Kelsey could be forced out of his chairmanship of the Senate Education Committee while the charges are pending.
Efforts to reach Josh Smith for comment have been unsuccessful.
The Standard, which has billed itself as "Nashville's private sanctuary," was "a members-only social club ... popular among politicians and Nashville businessmen," the indictment notes. Smith operated a political action committee that carried the club's name.
"Costing $3,300 a year, the club has 173 members, ranging from local politicians and health care executives to out-of-town celebrities," according to a 2014 profile in the Nashville Business Journal.
"It's private, but not secretive," Smith told the publication, explaining that the club "requires sponsorship from an existing member to join."
The indictment also refers to two unindicted co-conspirators, including former state Rep. Jeremy Durham, R-Franklin, who was forced to out of office after a sexual harassment scandal. While the indictment doesn't specifically name Durham, it states that "Unindicted Coconspirator 2" was ousted from the state House in September 2016.
WATCH: Sen. Kelsey releases statement following federal indictment:
Below is the news release from the U.S. Attorney's Office in Nashville:
A federal grand jury in Nashville Friday, returned a five-count indictment charging Tennessee State Senator Brian Kelsey, 43, of Germantown, Tennessee, and Nashville social club owner Joshua Smith, 44, with violating multiple campaign finance laws as part of a conspiracy to benefit Kelsey’s 2016 campaign for U.S. Congress.
Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee, Assistant Attorney General Kenneth A. Polite, Jr. of the Department of Justice Criminal Division, and Acting U.S. Attorney for the Western District of Tennessee Joseph C. Murphy, Jr. made the announcement.
According to the indictment, beginning in February 2016 and continuing through mid-October 2016, Kelsey and Smith conspired with others to violate federal campaign finance laws to secretly and unlawfully funnel “soft money” (funds not subject to the limitations, prohibitions, and reporting requirements of the Federal Election Campaign Act [FECA]) from Kelsey’s Tennessee State Senate campaign committee to his authorized federal campaign committee. Kelsey and others also caused a national political organization to make illegal, excessive contributions to Kelsey’s federal campaign committee by secretly coordinating with the organization on advertisements supporting Kelsey’s federal candidacy and to cause false reports of contributions and expenditures to be filed with the Federal Election Commission.
In 2016, the FECA limited campaign contributions to $2,700 from any one individual or organization to any one candidate in each election.
The indictment alleges that Kelsey, Smith, and other unindicted coconspirators orchestrated the concealed movement of $91,000 to a national political organization for the purpose of funding advertisements that urged voters to support Kelsey in the August 2016 primary election, and that the conspirators caused the political organization to make $80,000 worth of contributions to Kelsey’s federal campaign committee in the form of coordinated expenditures. The indictment alleges other meetings and communications between the conspirators, resulting in the illegal transfers, contributions, and expenditures associated with Kelsey’s federal campaign.
Kelsey and Smith are charged with conspiracy, illegally transferring “soft money” as a federal candidate and his agent, and illegally transferring “soft money” as a state officeholder and his agent. Kelsey is also charged with making excessive contributions to a federal campaign and accepting excessive contributions. If convicted, they face up to 5 years in prison and a $250,000 fine on each count.
A summons has been issued by the Court and Kelsey and Smith are directed to surrender to U.S. Marshals in the Middle District of Tennessee on or before November 5, 2021, at 10 a.m. and both will make an initial appearance before a U.S. Magistrate Judge.
This case was investigated by the FBI. Assistant U.S. Attorneys Amanda Klopf of the Middle District of Tennessee and David Pritchard of the Western District of Tennessee and Trial Attorney John Taddei of the Criminal Division’s Public Integrity Section of the Department of Justice are prosecuting the case.
An indictment is merely an accusation. The defendants are presumed innocent until proven guilty in a court of law.