September 21, 2007

Laffey's FEC Fine: Less than nefarious, more like a mistake

Marc Comtois

The headline says "Laffey agrees to pay FEC $25,000 fine", the details indicate something less nefarious than implied:

...the FEC, in a Sept. 6 conciliation agreement made public yesterday, said it had “found reason to believe” that Laffey’s Senate campaign committee and his treasurer, Richard J. Sullivan, violated federal campaign law by “failing to identify the conduit of certain contributions” in his publicly filed fundraising reports.

According to the agreement, Laffey’s Senate campaign committee received $366,378 in earmarked contributions from the Club for Growth, run by former U.S. Rep Pat Toomey of Pennsylvania.

The way it worked: the group — which favors cutting government spending, death tax repeal, school choice and “Social Security reform with personal retirement accounts”— would solicit contributions for Laffey from among its own supporters, then bundle and ship the earmarked checks to the Laffey campaign.

While Laffey...named the individual contributors in his filings, the FEC noted that, as charged, his disclosure reports did not identify the Citizens Club for Growth as the conduit for the money, as required by federal campaign law.

After receiving notice of the complaint, the FEC said, Laffey amended his 2005 year-end and 2006 April quarterly reports to reflect the Club for Growth’s role in raising the money. Had he not gone the step further and agreed to pay the $25,000 fine, an FEC spokesman said the agency could have filed suit against him seeking much heftier fines, including theoretically an amount equal to the $366,378 at issue.

Laffey did not respond to inquiries, but his onetime college roommate and campaign adviser — Albany, N.Y.-lawyer Thomas Marcelle — responded on his behalf. Marcelle said the Laffey campaign sought advice from a lawyer recommended by his consultant Jon Lerner at Red Sea LLC, who said the law was “ambiguous,” but “the current practice was not to indicate” which among the many groups raising money for candidates had been the conduit for earmarked donations of this kind. He said he could name “Senators on the Judiciary Committee” who have escaped penalty for doing the same thing.

But he said the “the cost to litigate it was significantly higher than the $25,000,” so “the economics dictated” a settlement even though “when you see people from Wyoming [contributing], it’s pretty clear that was earmarked through the Club for Growth.”

I'm not making excuses for the Laffey campaign--and maybe they're just spinning away--but I'm not sure they would gain much from not saying who bundled their money for them. I mean, it's not like The Club for Growth are a bunch of swindlers or anything.

{H/T to commenter "Thomas" for reminding me of this story}.

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Really, what's the big todo about. You had to be a dope NOT to know the Club for Growth was supporting Laffey. Nobody ever tried hiding that fact - either Laffey or the CFG. Furthermore, all of the contributions were declared.
This is a whole lot of - NOTHING!

Posted by: Jim at September 21, 2007 3:19 PM

A gnat compared to the Hsu elephant of the Democrats.

Posted by: Tom W at September 21, 2007 3:47 PM

From the second link:

"The jailed 56-year-old Hsu is set to appear today in a Mesa County, Colo., courtroom, where he is expected to waive extradition to the Bay Area for sentencing in a 1989 fraud that took advantage of friends, family and associates from Fremont to San Francisco.

And with authorities now probing more recent ventures in Southern California and New York, it appears the Ponzi scheme that Hsu carried out in the Bay Area may have set the pattern for his financial dealings in the years to come."

Posted by: Monique at September 21, 2007 9:36 PM

I'm a little surprised by the reaction here.

Hsu may well be a crook. I assume he is. But as far as I know, no Democrat has been accused of violating campaign finance laws, and several candidates have donated Hsu's contributions to charity. Most importantly, none of that has anything to do with Laffey.

Candidate Laffey's campaign apparently violated the law. I assume that his willingness to pay the fine constitutes an admission of that fact. (I hope that no respectable conservative will trot out the "I pled guilty, but I'm not really guilty" canard).

I'm happy to acknowledge that Laffey's violation may have been inadvertent and based on ahis attorney's misinterpretation of the law. That, of course, never constitutes a defense.

Why work so hard to minimize and deflect? Just admit error and move on. It seems the mature and responsible thing to do.

Posted by: Thomas at September 21, 2007 10:47 PM

There was no admission of "guilt," as it was not a criminal case, but a civil one. As a matter of law, settling a case has with it an implicit admission of the truthfulness of allegations that were originally brought. However, it also has the "benefit" to the defendant of not being an explicit admission, so it's something of a "win-win." From an objective point of view, he made the less costly decision, regardless as to whether or not one wishes to assign any admission of guiltiness to it.

There was an error made, though I would have no reason to believe (nor can I imagine a reason why it would have been beneficial to have done in the first place intentionally) it was an intentional one. Regardless, it's settled now, and we can all look forward to the future.

"Just admit error and move on."

That's exactly what Laffey just did. So, let's do it.

Posted by: Will at September 22, 2007 1:07 AM

pay no attention to that double standard behind the curtain!!!

Posted by: Pat Crowley at September 22, 2007 9:46 AM

Google "FEC and Club for Growth" and you'll find out that the FEC went so far as to issue a press release in 2005 that declared CFG to be a PAC. You don't have to dig to deeply--it comes out in the first 3 results.

You didn't need to be Johnnie Cochran to figure out what was legally correct and if there was any question, a quick call to the FEC would have resolved any legitimate questions.

Laffey broke the law, although he was probably directed to do so by CFG. At the time, CFG was maintaining that the government's position was wrong, much as some people reject the government's interpretation of the income tax code.

Laffey's error was probably the result of following bad advice, although a claim could be made that following the bad advice provided Laffey the opportunity to cover up the degree to which a single out-of-state special interest group was underwriting his candidacy.

Thomas is right. The more time that is spent discussing the issue only hurts Laffey.

However, I did chuckle when I read the story. If it had been Chafee, it would have been a Level 5 Alert--"How can we vote for a lawmaker who can't understand the law?!?!".

Posted by: Anthony at September 22, 2007 4:49 PM

>>"How can we vote for a lawmaker who can't understand the law?!?!"

This is Rhode Island - just look at the General Assembly - for RI's voters, understanding the law isn't considered a prerequisite to holding legislative office.

Neither is following the law.

Posted by: Tom W at September 22, 2007 7:18 PM

Tom W: good point

Posted by: Anthony at September 22, 2007 9:34 PM
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