The assertion by the FBI agent was stark: As part of a scheme to conceal illegal campaign contributions, Marjorie Margolies in 2014 falsely reported a nearly $25,000 donation funneled through her personal bank account as a loan to her congressional campaign.
"The investigation has uncovered evidence which indicates that Margolies" and others engaged in a conspiracy "to violate federal campaign finance laws," special agent William Bezak wrote in an affidavit last year to obtain a search warrant for a political consultant's home.
Prosecutors outlined the scheme in a superseding indictment filed March 20 charging the consultant, Ken Smukler, of Villanova, with conspiracy, facilitating illegal campaign contributions, causing false statements, and obstruction.
Margolies, a former congresswoman who lives in Wynnewood, wasn't charged. She also isn't named in the indictment, but she matches its description of "Candidate C." The charging document says Smukler "instructed" her to make the bank transfer and "caused" the campaign to falsely report it as a loan.
Reached by phone Friday, Margolies declined to comment.
Some of the charges Smukler faces were announced in October and stem from his campaign work for another congressional candidate, U.S. Rep. Bob Brady. Like Margolies, Brady was identified as a participant in a scheme to skirt campaign-finance laws. But he, too, was never charged.
Experts said Margolies, 75, was almost certainly once a target of the criminal probe, given the language used in the application for the search warrant.
Why prosecutors decided to charge Smukler but not his former clients isn't known. Spokesmen for the FBI and the U.S. Attorney's Office in Philadelphia declined to comment.
That the two high-profile politicians were entangled in the cases but appear to have escaped prosecution has not gone unnoticed. Smukler himself has brought it up in his defense. That Brady wasn't charged is proof of a "vindictive prosecution," his lawyers wrote in a February motion to dismiss the indictment.
Adav Noti, a former federal prosecutor and lawyer with the Federal Election Commission, said candidates facing investigations into their campaigns typically argue that they stay at arm's length from their staff: "I don't micromanage that stuff. My campaign people do what they do and I trust them to do it."
"Hard to make that [argument] when you're receiving and cutting personal checks," said Noti, now senior director of trial litigation at the Campaign Legal Center in Washington.
Smukler previously pleaded not guilty though he hasn't been arraigned on the new charges.
But for his part, the 57-year-old communications specialist appears to be enjoying the fight, accusing the government of targeting him in retaliation for opinion articles he wrote that were critical of prosecutors for their work in other investigations. Smukler, publisher of the independent weekly newspaper Liberty City Press, also lashed out at the U.S. attorney in Harrisburg for failing to punish prosecutors there who had received salacious emails in a scandal known as Porngate.
His lawyers said in court papers that the FBI's surveillance of Smukler in the summer of 2016 — years after the alleged criminal activities and coinciding with the publication of his articles — showed the government was likely "motivated by animus."
(Prosecutors called this theory "absurd" and said they hadn't even read Smukler's articles.)
The conspiracy began with a February 2012 meeting in which Brady agreed to use campaign funds to pay the campaign debts of a rival, Jimmie Moore, the indictment says. In exchange, Moore would drop out of the Democratic primary. The men agreed that the payment would be concealed in part as the purchase of a poll, according to prosecutors.
The indictment, which refers to Brady as "Candidate A," characterizes that meeting as central to the criminal conspiracy.
In the following months, Smukler and fellow Brady aide Donald "D.A." Jones routed $90,000 in campaign funds through their companies to Moore's campaign coffers, well in excess of the $2,000 maximum contribution one candidate could make to another in the 2012 primary under federal election law. They conspired to conceal it from the FEC by causing false campaign reports, the indictment says.
Jones, Moore, and Moore's campaign manager, Carolyn Cavaness, have pleaded guilty and are cooperating with investigators.
Brady, the longtime chairman of the Philadelphia Democratic City Committee, has denied wrongdoing. He announced earlier this year he wouldn't run for reelection in November, saying he wanted to spend more time with his family after serving 20 years in Congress.
Authorities did try to build a case against him. A search-warrant affidavit signed by an FBI agent describes Brady as an active participant in the conspiracy. A judge authorized the warrant to search Brady's personal email account in November, after Smukler and Jones were first indicted, court records show.
But there's a higher bar to prosecuting a sitting member of Congress, which typically requires authorization from top Justice Department brass in Washington. Prosecutors likely wanted Smukler's cooperation to go after Brady, said Mark Lee, a white-collar criminal defense attorney at Blank Rome LLP and a former federal prosecutor.
Prosecutors might have had a stronger case on Margolies, given her personal involvement in one of the transactions they say involved an illegal contribution. But without a cooperating witness, the case is circumstantial and could be tough to win in court, legal observers say.
"Smukler isn't the big fish, but they can't get a bigger fish unless they flip him," said Lee, who represented former U.S. Rep. Chaka Fattah (D., Pa.) during his corruption trial.
Lee pointed to the failed prosecution of Sen. Bob Menendez (D., N.J.), who prevailed in a document-driven bribery trial that lacked damning government witnesses.
Margolies, formerly Margolies-Mezvinsky, was elected to the House in 1992 and served one term. Her son Marc Mezvinsky married Chelsea Clinton in 2010. Margolies is a lecturer at the University of Pennsylvania's School of Social Policy & Practice.
The indictment says that when the Margolies campaign ran out of money in the May 2014 primary, Smukler caused the campaign to use contributions designated for the general election, in violation of FEC regulations.
Smukler is accused of raising money from his brother to pay for advertising during the primary. After Margolies lost, Smukler raised more money from a friend to help the campaign repay donors who had earmarked contributions for the general election, prosecutors say. Those illegal campaign contributions totaled about $225,000, according to the indictment.
There's no evidence that Smukler's brother or friend knew that Smukler would use the money for the campaign.
The crime, according to prosecutors, occurred when Smukler broke contribution limits, lied about it by causing the campaign to file false reports, and obstructed an FEC investigation into the campaign. The FEC had dismissed a complaint against the campaign.
Smukler caused the campaign to report these contributions falsely as "refunds" of money it had set aside for his companies in advance of the general election, prosecutors say.
The FEC discovered that Smukler's companies had "refunded" the campaign more than it had initially paid the consultant in the first place. To fix this problem, the government says, Smukler wrote a $25,000 check from his company's PNC Bank account to Margolies and "instructed" her to transfer the bulk of that from her personal checking account at TD Bank to the campaign.
The campaign reported the money as a personal loan from Margolies, but it was in fact an illegal contribution from Smukler's company, prosecutors say.
Noti, of the Campaign Legal Center, said that "usually with these sorts of shifting-money-around schemes, it's usually because the treasurer has been embezzling."
"I can't think of one where the candidate was allegedly personally involved," he said.
Margolies may be cooperating — if so, the government would have to put her name on a list of potential witnesses, Lee said.
And Smukler may yet "have a conversion on the way to the courthouse, so to speak," Lee said. "That's always possible."
Staff writer Jeremy Roebuck contributed to this article.