Did Suzan DelBene Break Federal Election-Ethics Laws? Sure Looks Like It

Following a tip, I began looking around recently for the federal Financial Disclosure Statements for the Democratic candidates involved in Washington's 1st Congressional District primary race, the election for which will be next week (but for which

Following a tip, I began looking around recently for the federal Financial Disclosure Statements for the Democratic candidates involved in Washington's 1st Congressional District primary race, the election for which will be next week (but for which mail-in voting is currently under way).

Delbene.JPG
I was particularly interested in digging up the information on Suzan DelBene, the Microsoft gazillionaire who is almost entirely self-financing her campaign this year. Indeed, she just wrote her campaign another $900,000 in checks to pay for all the TV-ad time she's bought and is now blanketing our local media airwaves with here in the Seattle area.

But when I contacted the office the Clerk of the U.S. House, where these statements are filed, I was told that DelBene had not filed any Financial Disclosure Statement for 2011.

This is most peculiar. These statements are in fact required by law -- the Ethics in Government Act of 1978, which clearly states:

Title I of the Ethics in Government Act of 1978, as amended (5 U.S.C. app. 4 §§ 101-111) (EIGA) requires Members, officers, certain employees of the U.S. House of Representatives and related offices, and candidates for the House of Representatives to file Financial Disclosure Statements with the Clerk of the House of Representatives.

Individuals are required to file a Financial Disclosure Statement once they qualify as a candidate by raising or spending more than $5,000 in a campaign for election to the House of Representatives.

It is, in fact, a federal felony to fail to meet these requirements, punishable by heavy fines of up to $50,000 and, in the case of falsification, jail time. (See Page 9.)

Yet we know, from the forms that she filed with the Federal Elections Commission, that Suzan DelBene spent well over $5,000 in 2011 on her campaign for Congress in 2012.

We also know, from looking at the first quarter 2011 report, that she was designating these expenditures as going toward the 2012 primary (see the check boxes on the individual listings beginning on Page 6), as they were indeed for all the subsequent FEC filings for 2011.

We also know that, beginning in the fall of 2011, she began paying a salary to her campaign's finance chief (see Page 6).

It was kind of a startling and disturbing discovery. Why would a major candidate for federal office even run the risk of being investigated for this?

So I wrote to the DelBene campaign last Thursday and asked them to explain it. Here's my letter:

Date: Thursday, July 26, 2012 10:23 AM
To: Viet Shelton [DelBene press secretary]
Subject: Ms. DelBene's Financial Disclosure Forms

Viet –

My name is Dave Neiwert. I’m a Seattle-based journalist and the managing editor of the political blog Crooks and Liars.

In the process of gathering financial information on the various campaigns for Washington’s 1st District, it has come to my attention that Ms. DelBene’s campaign did not file a Financial Disclosure Statement for 2011.

This might make sense if Ms. DelBene’s campaign expenditures in 2011 were for the purposes of shutting down her 2010 campaign. However, this is not the case when I look at the actual expenditures form from the first quarter of 2011:

http://query.nictusa.com/pdf/529/11930658529/11930658529.pdf

As you can see (beginning on Page 6), these expenditures are clearly marked as being for the 2012 Primary campaign.

Moreover, there is no indication in my searches (and we checked with the House Clerk in D.C.) that Ms. DelBene’s campaign ever filed the requisite paperwork to actually shut down the campaign committee after 2010.

All these indicate strongly that Ms. DelBene fell within the requirements for filing a Financial Disclosure Statement for 2011, and yet it does not appear that she ever did so. I should add that this failure is considered a felony under federal law.

Can you (or anyone at the campaign) give me a reasonable explanation for this failure to file? Are you concerned at all that this oversight will attract the attention of House Ethics Committee investigators?

Sincerely,

David Neiwert
Seattle
Managing editor, Crooks and Liars

On Saturday, I got this response:

Mr. Neiwart-

Suzan DelBene has filed all the financial disclosure reports required of her and filed them on time. And they are all easily available online for the public to view at the State PDC website.

Also, it's important to note that Suzan was not a candidate for federal office in 2011. She became a candidate in January of 2012.

-vs

I responded:

Mr. Shelton:

Your response is noteworthy for its non-responsiveness, considering that it blithely glides over the precise questions I raised. The disclosure statements I’m seeking, of course, have nothing to do with the state PDC, but instead would be found with the Clerk of the House in Washington, D.C.

... Primarily, I’m trying to comprehend how you can claim that Ms. DelBene was not a candidate for federal office in 2011 when I presented you, in my previous e-mail, irrevocable evidence that the DelBene for Congress committee spent well over $5,000 in the first quarter of 2011 alone:

http://query.nictusa.com/pdf/529/11930658529/11930658529.pdf

This is a Federal Elections Commission form.

It clearly states that these expenditures are for the 2012 primary election.

It clearly states that these are expenditures by a committee seeking to elect Suzane DelBene to Congress.

What am I missing here?

Secondarily, I should point out here that among the expenditures by the committee in the fall of 2011 was $5,000 for her campaign’s new finance director. This, of course, is not the act of someone in the process of shutting down their 2010 campaign, which is what I believe you’re trying to claim the 2011 expenditures went toward. And as I pointed out previously, in order to actually qualify for shutdown status, the committee needed to file the paperwork declaring it was doing so. Instead, the 2011 committee simply continued business as usual between 2011 and 2012.

I consulted a well-known elections-law attorney in Philadelphia named Adam Bonin about this. Here is what he told me, and which I will quote him as saying in my post.

"By the time Suzan DelBene paid her new finance director over $5000 last fall, she became a federal candidate. Once she did that, she was no longer 'testing the waters,' and had to file her financial disclosure within thirty days. The law is clear on this. If I were a voter in the First District, I'd want to know why she didn't do so then, and why she won't just publish it on her campaign website now."

You can’t simply assert that Ms. DelBene was not a candidate for federal office in 2011, when the evidence to the contrary is irrevocable, and comes from the DelBene for Congress committee itself.

I look forward to seeing your reply. I’m proceeding apace with my post for Monday. -- DN

Now I've discovered that Dante Atkins at DKos had found the same problem back as early as May (when I was preoccupied elsewhere). Here's Dante's diary on it, complete with nearly identical correspondence with Viet Shelton -- who then provides even greater detail by claiming that Suzan's non-candidacy fell under FEC guidelines about "testing the waters".

I think Dante has the final word on this:

Viet,

This is not my first rodeo. Your "testing the waters" defense does not apply here. To begin with, "testing the waters" exempts an individual from having to file with the FEC. It does not allow a committee that has filed campaign expenses with the FEC to claim that those expenses are retroactively not campaign expenses. These are expenses that your campaign filed with the FEC; hence, they are campaign expenses, not testing the waters expenses.

Secondly: even if you wished to claim that these expenses were only for testing the waters and you mistakenly filed an FEC report, it doesn't change the fact that the expenses you reported were for staff (Nicholas Jackal) and a voter file (NGP VAN). These are not "testing the waters" expenses along the lines exemplified by the FEC, such as travel and polling.

And even if there were disputes on these issues, allow me to quote directly from the "testing the waters" provisions you are citing:

"Certain activities, however, indicate that the individual has decided to become a candidate and is no longer testing the waters. In that case, once the individual has raised or spent more than $5,000, he or she must register as a candidate. Intent to become a candidate, for example, is apparent when individuals:
- Make or authorize statements that refer to themselves as candidates (“Smith in 2012” or “Smith for Senate”);"

Your campaign filed a Q4 2011 FEC report wherein you spent over $5,000 under the byline "Delbene For Congress"--the EXACT example the FEC guidelines stipulate as a declaration of candidacy, as well as spending an amount that would have triggered a 30-day disclosure requirement.

Consequently, I am confident in my assertion that your "testing the waters" defense does not apply. I am not sure what assurances you have gotten from the Ethics Committee; if, however, you have gotten written assurances from the FEC or the Ethics Committee that your specific case will not result in problems (not based on the narrative you have advanced regarding "testing the waters," but a ruling regarding the specific filings made by your campaign), I would be more than happy to see it. Otherwise, I stand by my assertion that your campaign is at severe risk of being the target of a politically motivated ethics complaint that could severely damage your candidacy and risk handing the seat to the Republican, should you advance to the general.

The DelBene camp has a major problem. Not only is their campaign guilty of a substantial ethics violation that could doom them in a general election, but their campaign staff seems, at face value, to be at least incompetent, if not worse.

Now, I stand by my original comment to Shelton: if they can produce evidence that the Ethics Committee has promised them that given all the evidence, they still have nothing to worry about, I will post it. Until then, I stand by my assertion: DelBene can be easily damaged by a Republican in a general election, and she is not the safe choice for Congress, despite her ability to self-fund. Democrats who are supporting her for those reasons should seriously contemplate going in another direction.

I'd lay 10-1 odds that, should DelBene make it past the primary next week, the Republican-run House Ethics Committee will announce within a short time following that it is opening an investigation into Suzan DelBene's failure to file her 2011 Financial Disclosure Statement. Because her campaign's excuses and misleading replies simply don't pass the smell test.

And you know what? All the money in the world won't be able to stop that, let alone repair the damage.

UPDATE: [Headline tweaked.] Howie has more.

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