GOP Attorney Files Fundraising Complaint Against Deeds

A Hampton Roads attorney wants the State Board of Elections to investigate campaign contributions made to Democratic gubernatorial nominee Creigh Deeds.

Gary Byler, a Republican lawyer, filed the complaint Monday.

He’s asking the SBE to look into nearly $5 million in donations made to Deeds by the Democratic Governors Association and by several labor union groups.

The complaint states that Deeds “may have violated the law” and asks elections officials to “clarify and enforce the law prior to November’s election.”

The full complaint is posted after the jump.

October 16, 2009

 

Virginia State Board of Elections

c/o The Honorable Nancy Rodrigues, Secretary

Washington Building, First Floor

1100 Bank Street

Richmond, Virginia  23219

                                                                                                                  

    Re:  Complaint Against:     Deeds for Governor

                                                Several Labor Union Political Organizations

                                                Democratic Governors Association and Labor Union PACs

 

Dear Secretary Rodrigues & State Board:

 

Upon review of records on file with your office it appears the Democratic Governor’s Association (“DGA”), an out-of-state political committee, has served as a conduit for $3.7 million to Creigh Deeds current campaign for Governor of the Commonwealth of Virginia. Records on file with the Board indicate 72% of these funds have come from out-of-state labor unions and their political action committees (“PACs”).  In order to fully apprise Virginia voters of the source and extent of labor contributions to the Deeds campaign I ask that your staff consider the following analysis. This complaint sets forth the legal requirements, shows how Mr. Deeds, DGA and several labor unions may have violated the law, and requests SBE to clarify and enforce the law prior to November’s election.

 

Virginia Law

 

Va. Code § 24.2-949.9:1 requires each “out-of-state political committee” that makes contributions exceeding $10,000 to Virginia candidates to register with the State Board of Elections (“SBE”), and to disclose each of its contributors whose gifts exceed $2,500 in the calendar year.  An “out-of-state political committee” is “an entity covered by § 527 of the United States Internal Revenue Code that is not registered as a political committee or candidate campaign committee in Virginia and that does not have as its primary purpose expressly advocating the election or defeat of a clearly identified candidate.”  Va. Code § 24.2-945.1.

 

Additionally, subsection E of Va. Code § 24.2-949.9:1 requires any “political organization” that has contributed over $50,000 to an “out-of-state political committee” to register with SBE and disclose its contributors to SBE:

 

Any political organization as defined in § 527 of the United States Internal Revenue Code that is shown on the list of contributors required by this section and that has contributed $50,000 or more to the committee filing the list of contributors required by this section shall be required to file a statement of organization and the lists of its contributors and its contributions as provided in subsection D.[1]   

 

These two Code sections together appear to require registration and reporting by “out-of-state political committees” and by their “political organization” contributors.  

 

Va. Code § 24.2-949.9:4 further requires Virginia candidates to confirm each federal political committee and out-of-state political committee is fully compliant with Virginia’s registration and disclosure requirements before accepting more than $10,000 of their money. I believe this rule imposes an affirmative obligation on candidates, including Mr. Deeds, to refuse out-of-state and federal PAC contributions if the sources of the money are not fully disclosed. 

 

The Democratic Governor’s Association

 

Democratic Governor’s Association is a political organization registered in Washington, D.C. that claims federal tax exemption under § 527.  According to SBE’s online records, on March 19, 2009, DGA registered with SBE and disclosed that it had donated nearly $110,000 in cash contributions to “Common Sense Virginia,” a political committee DGA created for the sole purpose of funneling millions of dollars in out-of-state labor union and other money into the Virginia Governor’s race.  As reported by the Washington Post, DGA was the “sole” source of Common Sense Virginia’s initial funding, and DGA is known as its “patron saint.”[2]  DGA has admitted the organization’s purpose.[3]

 

Following its initial registration in March, DGA has failed to disclose its contributions as required by Virginia’s campaign finance laws.  In May of 2009, DGA’s failure to file disclosures was brought to the attention of SBE.  At that time the Board characterized DGA’s failure as “incomplete” reporting, as opposed to the more serious violation of failure to report.  SBE afforded DGA a ten-day grace period to comply with Virginia law.

 

The following chart, compiled from DGA’s disclosures appearing on SBE’s website to date, demonstrates the millions of dollars DGA has funneled into Virginia:

 

Donor Recipient Amount Nature Date
DGA Common Sense Virginia $9,500 Cash 3/12/2009
DGA Common Sense Virginia $100,000 Cash 3/19/2009
DGA Common Sense Virginia $740,000 Cash 4/28/2009
DGA Common Sense Virginia $505,000 Cash 5/4/2009
DGA Common Sense Virginia $850,000 Cash 5/8/2009
DGA Common Sense Virginia $750,000 Cash 5/19/2009
DGA Deeds for Virginia $100,000 Cash 6/10/2009
DGA Deeds for Virginia $400,000 Cash 6/27/2009
DGA Deeds for Virginia $7,500 In-Kind 9/21/2009
DGA Deeds for Virginia $250,000 Cash 9/21/2009

 

                                                            TOTAL:  $3,712,000              Sourcehttp://www.sbe.virginia.gov

 

Following its initial registration on March 19, 2009, DGA failed to disclose its contributors as required by Virginia’s campaign finance laws.  In May of 2009, DGA’s failure to file disclosures was brought to the attention of SBE, which let DGA off the hook by liberally characterizing DGA’s failure as mere “incomplete” reporting, as opposed to the more serious violation of failure to report.  SBE then afforded DGA a ten-day grace period to comply with Virginia law. 

 

DGA’s Donors:  Millions from Labor Union PACs

 

When DGA finally complied with the law, it became clear to the people of Virginia that DGA was funneling millions of dollars in out-of-state labor union money to support the Democratic nominee for Governor of Virginia.  Of the $3.7 million funneled thus far by DGA into the Virginia Governor’s race, over $2.8 million came from labor union sources.  (See Exhibit A.) Of particular significance to this Complaint, $1.1 million of the $2.8 million in out-of-state labor union money came from seven labor union political organizations before March 19, 2009, the date DGA registered with the SBE.[4]  The following out-of-state union political organizations funneled money into the Virginia Governor’s election by contributing to the DGA before DGA registered with SBE on March 19:

 

Contributor Location Date Amount
Laborer’s Political League[5] Washington, DC 1/23/09 $100,000
Machinists Non-Partisan Political League[6] Marlboro, MD 1/23/091/23/09 $50,000$50,000
Sheet Metal Workers PAC[7] Washington, DC 3/4/09 $50,000
DRIVE Committee[8] Washington, DC 3/17/09 $250,000
IUPAT PAC[9] Washington, DC 3/17/09 $250,000
NEA Fund for Children & Public Education[10] Washington, DC 3/17/09 $100,000
AFSCME[11] Washington, DC 2/25/09 $250,000

 

TOTAL:  $1,100,000

Sourcehttp://www.sbe.virginia.gov

 

PACs are political organizations that, by definition, claim their federal tax exemption pursuant to § 527 of the Internal Revenue Code.  Some of the organizations listed above are PACs.  Others are soft-money political organizations that have registered with the IRS as tax exempt pursuant to § 527.

 

Because all seven of these political organizations claim their federal income tax exemption pursuant to § 527 of the Internal Revenue Code, they are “defined in § 527 of the United States Internal Revenue Code.”  Each organization, according to DGA’s reports, contributed $50,000 or more to DGA for purposes of funneling the money into the Virginia Governor’s race prior to March 19, 2009, the date DGA registered as an out-of-state political committee with the SBE.  Therefore, pursuant to Subsection E of Va. Code § 24.2-949.9:1 (set forth above), each of the seven political organizations was required to register with SBE and disclose its contributors to the people of Virginia, in the same manner required of all out-of-state political committees, on March 19, 2009. 

 

According to a review of SBE’s online records and a review of paper records in SBE’s office four of the seven political organizations have registered with SBE.  Two appear in SBE’s online list of out-of-state committees and two appear in SBE’s online list of federal political action committees.  However, none of the labor union political organizations disclosed its contributors to SBE as required of out-of-state political committees on March 19, 2009 (or since), as required by Va. Code § 24.2-949.9:1(D) & (E)

 

Substantial Penalties Are Required

 

The failure to register and disclose donors as required by Virginia law carries significant penalties.  As to the donors, Va. Code § 24.2-953.5 provides that “[t]he failure of any federal political action committee or out-of-state political committee to comply with the provisions of § 24.2-949.2, 24.2-949.9:1, 24.2-949.9:2, or 24.2-949.9:3 shall result in a civil penalty not to exceed the amount of the contribution made to a candidate campaign committee or political committee.” 

 

Additionally, for Mr. Deeds—as the recipient candidate—“[a]cceptance of contributions of $10,000 or more in the aggregate in any calendar year from an unregistered federal political action committee or out-of-state political committee shall result in a civil penalty equal to the amount of the contributions made to a candidate campaign committee or political committee.”

 

Pursuant to these statutes, it would appear that a civil penalty of over one million dollars may be due to be collected by SBE for the benefit of Virginia’s General Fund from Mr. Deeds and these labor unions.  If it appears the violations are knowing and willful other consequences may apply.

 

Conclusion

 

I bring this issue to SBE’s attention with the expectation that SBE will work to ensure Virginia voters are informed of these large contributions to Creigh Deed’s campaign before they vote.  That is the purpose of Virginia’s campaign finance disclosure law.  I request that this issue be taken up at SBE’s earliest opportunity and resolved prior the election. 

 

As always please feel free to contact me directly at my office or cell with any questions or analysis I may have overlooked.

 

Sincerely,

 Gary C. Byler        

 


[1]               Section 527 of the Internal Revenue Code affords a federal tax exemption for organizations that engage in certain political activities to influence the outcome of elections for public office.  Any political organization that claims its federal tax exemption under § 527 of the United States Internal Revenue Code (26 U.S.C. § 527) is “defined in § 527,” including political action committees, political party committees, and candidate campaign committees.

 

[2]               Common Sense Virginia Hits McDonnell Again, http://voices.washingtonpost.com/virginiapolitics/

2009/05/for_the_moment_at_least.html.

 

[3]               New Anti-GOP PAC, Blog Debuts, http://voices.washingtonpost.com/virginiapolitics/2009/04/new_anti-gop_pac_blog_debuts.html (“The governors association will continue funding the group, officials say, to pay for an ‘aggressive TV and online campaign,’ said Yoni Cohen, the group’s spokesman. ‘We do expect to continue raising money, and raise and spend a significant sum,’ Cohen said.”).

[4]               DGA affirmatively identified several of its labor union contributors as “PACs,” and others easily were identified as PACs or soft-money political organizations by reference to their websites or from publicly available information on file with the Internal Revenue Service (“IRS”) or Federal Election Commission (“FEC”). 

 

[5]               The donor is Laborers Political League – Education Fund, 905 16th St., N.W., Second Floor, Washington, DC 20006.  The donor is a soft-money political organization that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor does not appear on SBE’s online lists of organizations registered with the SBE as a federal PAC or as an out-of-state political organization under Va. Code § 24.2-949.9:1(D) & (E).  (The donor is not the same entity as the Laborers International Union of North America (LIUNA) PAC, which is registered as a federal political action committee with the FEC and SBE.)  See Exhibit B.

 

[6]               The donor is Machinists Non-Partisan Political League of the International Association of Machinists & Aerospace Workers PAC, 9000 Machinists Place, Upper Marlboro, MD 20772.  The donor is a political organization (federal PAC) that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor does not appear on SBE’s online lists of organizations registered with the SBE as a federal PAC or as an out-of-state political organization under Va. Code § 24.2-949.9:1(D) & (E). See Exhibit C.

 

[7]               The donor is Sheet Metal Workers’ International Association Political Action League, 1750 New York Avenue NW, Washington, DC 20006.  The donor is a political organization (federal PAC) that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor does not appear on SBE’s online lists of organizations registered with the SBE as a federal PAC or as an out-of-state political organization under Va. Code § 24.2-949.9:1(D) & (E). See Exhibit D.  

               

[8]               The donor is D.R.I.V.E. – Democrat Republican Independent Voter Education – PAC for International Brotherhood of Teamsters, 25 Louisiana Ave., NW, Washington, DC 20001.  The donor is a political organization (federal PAC) that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor does not appear on SBE’s online list of organizations registered with the SBE as an out-of-state political organization in compliance with Va. Code § 24.2-949.9:1(D) & (E). (The donor is registered as a federal political action committee with the FEC and SBE.)  See Exhibit E. 

 

[9]               The donor is International Union of Painters and Allied Trades Political Action Together Committee, 1750 New York Ave. NW, Washington, DC 20006.  The donor is a political organization (federal PAC) that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor does not appear on SBE’s online list of organizations registered with the SBE as an out-of-state political organization in compliance with Va. Code § 24.2-949.9:1(D) & (E). (The donor is registered as a federal political action committee with the FEC and SBE.)  See Exhibit F. 

 

[10]             The donor is NEA Fund for Children & Public Education, 1201 16th Street NW, Suite 420, Washington, DC 20036.  The donor is a soft-money political organization that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor appears on SBE’s online list of organizations registered with the SBE as an out-of-state political committee, but the SBE website displays no disclosure of contributors to the organization as required by Va. Code § 24.2-949.9:1(D) & (E).  See Exhibit G.

 

[11]             The donor is AFSCME Special Account, 1625 L Street NW, Washington, DC 20036.  The donor is a soft-money political organization that claims its tax exemption under § 527 of the Internal Revenue Code.  The donor appears on SBE’s online list of organizations registered with the SBE as an out-of-state political committee, but the SBE website displays no disclosure of contributors to the organization as required by Va. Code § 24.2-949.9:1(D) & (E).  See Exhibit H.

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One Response to GOP Attorney Files Fundraising Complaint Against Deeds

  1. vjp says:

    I believe Gary Byler is the chairman of the 2nd District Republican Committee

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