The Ethics Omission

Enforcers of Missouri's campaign-finance laws would rather hide than seek.

Jeff Shore has a lot of balls in the air. Or maybe just balls.

The Springfield certified public accountant keeps the books for at least four political action and campaign committees. As deputy treasurer, he frequently signs financial-disclosure reports filed with federal and state agencies. All of the committees raise money for GOP causes. There's Friends of Roy Blunt (the campaign committee for U.S. Rep. Roy Blunt [R-7th]), the 7th District Congressional Republican Committee and Missourians for Matt Blunt (now Missouri's secretary of state).

Shore also keep records for another organization whose name, at first blush, obscures its actual purpose. Among political insiders, Rely On Your Beliefs is known as "Roy B." That's "Roy B" as in Roy Blunt, who serves as honorary chairman of the political action committee.

Each year, Rely On Your Beliefs collects hundreds of thousands of dollars from corporations, individuals and interest groups and distributes the money to congressional candidates who can't take the checks directly because of contribution limits in federal election law. In the spring of 1999, Rely On Your Beliefs decided to get involved in state politics and do the same thing for candidates in Missouri.

The money started as a trickle. During 1999, Missourians for Matt Blunt received $6,000 in contributions from Rely On Your Beliefs, which also gave $2,000 to gubernatorial candidate Jim Talent. By the end of the year, Rely On Your Beliefs had raised more than $64,500 to fuel GOP campaigns in Missouri, with most of the money coming from other states. The biggest single chunk was a $25,000 contribution from Houston-based Enron Corp. Five dairies in New Mexico also contributed, as did propane and bottled-gas companies in New Jersey and Wisconsin.

Fundraising remained brisk -- and mostly out-of-state -- in the first quarter of 2000, when Rely On Your Beliefs collected another $57,000. By the middle of 2000, the kitty had swelled to $200,000. Only then did Rely On Your Beliefs bother to tell anyone just where the money was coming from and where it was going. Disclosure reports hit the Missouri Ethics Commission, which polices compliance with state campaign-finance laws, less than a month before the primary. The law says that committees such as Rely On Your Beliefs are supposed to file quarterly reports.

Shore says the committee's late filing with the state was the result of a misunderstanding. Only when Rely On Your Beliefs gave $100,000 to the state GOP on June 15 of last year did Shore begin to wonder whether maybe he should call the Ethics Commission. After speaking with a staff employee, Shore says he prepared a bundle of state disclosure reports and sent them off to Jefferson City.

"We weren't trying to skirt around anything," Shore says. "It was just that the out-of-state-committee laws were unclear. We were trying to follow them. We did the best we could." Shore says Rely On Your Beliefs even consulted a lawyer on the question. "The fund hired an attorney in D.C., who was supposed to be an out-of-state-committee specialist," he recalls. "During this time, I was calling her and saying, 'Now, explain to me again what we're supposed to do.' She said to me, 'No, you don't need to report because it's an out-of-state committee.' So we were kind of following their guidelines. Later, it was, like, 'Oops, we need to do this.' So then we did it. Even now, the law's still unclear."

It sure doesn't sound ambiguous, reading straight from the statutes: "A committee domiciled outside this state shall be required to file a statement of organization ... provided that ... the aggregate of all contributions and expenditures made to support or oppose candidates and ballot measures in this state exceeds one thousand five hundred dollars in the current calendar year." Furthermore, the law says committees must report to the Ethics Commission no later than 20 days after they're organized.

Rely On Your Beliefs contributed at least $8,000 to state candidates in 1999, according to state reports filed by Talent and Matt Blunt; however, the committee's corresponding disclosure reports list just $2,000 in contributions to those candidates. (A $4,000 contribution to Blunt in 1999 shows up on a paper report filed with the Federal Election Commission by Rely On Your Beliefs, but the federal agency has no jurisdiction over state campaigns and lists only contributions to federal candidates in its searchable database.) Shore, who insists that Rely On Your Beliefs wasn't trying to hide anything, won't concede that the $2,000 in donations the committee eventually reported giving Blunt and Talent triggered the state reporting requirement. "The threshold may or may not have been met for an out-of-state committee in the fourth quarter of 1999, when we made those two contributions," he says.

Even today, Shore contends that Rely On Your Beliefs isn't required to tell Missouri officials the names of its contributors who are giving money for state races. The reason, he maintains, is that the committee has a national perspective and makes donations in state races outside Missouri. "We made some to Mississippi," he says. "I think we just sent some to Vermont." But the amount of those contributions is very small. Just $5,000 of the $237,000 raised by Rely On Your Beliefs for the 2000 election was shipped outside Missouri, according to state reports the committee has been filing even though it doesn't think it should have to. "Because of the advice from the Missouri Ethics Commission, we've been reporting all the contributions in Missouri and all the payments in Missouri, even though that's not technically correct," Shore says. "It wasn't like we were trying to hide this money. That wasn't the idea at all."

But that's exactly what would have happened had Rely On Your Beliefs stuck with its lawyer's advice and not finally filed forms in July 2000 stating that the committee had been organized on March 22, 1999, and had been collecting big bucks for nearly a year. Until those reports were filed, none of the contributors to Rely On Your Beliefs were publicly disclosed. There were problems aside from tardiness and the fact that contributions reported by candidates didn't match up with what Rely On Your Beliefs reported giving: A quarterly disclosure report was missing. And the committee listed $80,000 in payments to a Virginia firm as "consulting" expenses, even though state law specifically says the word "consulting" cannot be used without providing more details.

To Democrats, it looked like a no-brainer.

The deadlines for filing reports are clear. The dates on which the Ethics Commission received reports are clear. The contents of the reports are clear. The ban against listing expenses as "consulting" is clear. The people who filed the reports -- CPAs with experience handling campaign finances -- surely should have known what they were doing. And the folks who sign the reports, such as Shore, certify under penalty of perjury that they're accurate. So Donna Mueller, an aide to state Sen. John Schneider (D-Florissant), filed a complaint with the Ethics Commission last fall.

To be sure, the complaint was politically motivated. It came less than two weeks before Election Day, even though the late reports that were the foundation of Mueller's complaint had been filed in July. "That's just the way the game is played," says Mueller, who readily admits the complaint was actually drawn up by attorneys for state Rep. Steve Gaw (D-Moberly), Blunt's opponent in the secretary-of-state race.

The commission wouldn't accept Mueller's complaint because her signature wasn't notarized, but there is nothing to prevent the commission from taking action on its own -- indeed, the law requires the commission to check disclosure reports for accuracy and follow up when there are discrepancies between what a committee reports giving and what a candidate reports receiving. At the rate of $10 a day for each late report (and $100 a day after the commission notifies a committee its reports are late), potential fines run into the thousands of dollars. To date, no fines or other penalties have been assessed. Nearly one year after Election Day -- and more than a year after Shore filed the late reports -- the commission isn't talking about Roy B's violations.

"There's currently some litigation involving Rely On Your Beliefs," says executive director Chuck Lamb. "I can't comment on litigation." What sort of litigation? Lamb won't say. Is the commission involved in a lawsuit with Rely On Your Beliefs? Again, Lamb won't answer. "Complaints are confidential, as far as this agency is concerned," he says.

Shore grows cagey when asked whether Rely On Your Beliefs is in trouble with the commission. "I'm not sure how to answer that," he says.

Pat Harvey, former director of the Missouri Alliance for Campaign Reform, isn't surprised that outfits such as Rely On Your Beliefs can bend or break state campaign laws with no apparent punishment from the Ethics Commission, which is supposed to enforce those laws, as well as statutes concerning nepotism and conflicts of interest involving public employees. "The staff has a tendency to be really, really timid in their interpretation of what constitutes a violation," Harvey says. As evidence, he points to a financial shell game played last year by Friends of Roy Blunt, Missourians for Matt Blunt and the 7th Congressional District Republican Committee.

On March 16, 2000, Friends of Roy Blunt, which was subject to contribution limits under state law, gave $50,000 to the 7th District Congressional Republican Committee, which wasn't bound by those limits. Eight days later, the 7th District Committee gave $40,000 to Matt Blunt's campaign. Plenty of things made the transactions suspicious aside from the fact that Matt Blunt is Roy Blunt's son. For one thing, the 7th District Committee hadn't previously been a big player in state politics -- it had just $256.94 in the bank before receiving $85,000 in contributions in March 2000, most of it from Roy Blunt's campaign committee. For another, Shore and Gordon Elliott -- also a Springfield CPA -- are the treasurer and deputy treasurer, respectively, of all three committees.

"What you've got is a situation in which these two guys gave $50,000 to themselves and then passed it on to themselves and then claimed they didn't know at the front end what they were going to do with the money on the back end, all in the space of eight days," Harvey says. "It was a transparent case of using a surrogate to evade contribution limits, which is a violation of the law. It's the same two guys as treasurer and deputy treasurer. Under Missouri statute, they're responsible for signing reports and how the money moves -- by definition, they're not allowed to claim they're just sinecures who didn't know what was going on. I called up the Ethics Commission and said, 'We're going to file this complaint.' And the guy I spoke to at the Ethics Commission said, 'Go ahead, but I can tell you right now that the Ethics Commission will hold a conference call within 24 hours of you filing the complaint and they'll dismiss it.' He said 'It's our practice not to assume intent unless you can document it.' In other words, there would have had to have been a memo somewhere, written to themselves, that said, 'Let's give ourselves this money so we can launder it on to Matt Blunt.'"

For the record, Shore says that's not what happened at all. Three people who sit on the board of the 7th District Congressional Republican Committee control the purse strings, he says, and they had no idea they were going to write a big check to Matt Blunt when they got $50,000 from his father's campaign. "We just had a big slug of money we had to do something with," Shore says. "You've got a hometown guy, Matt, who has a very good chance of winning. They don't want to put all their eggs in one basket, but if you're going to a horse track, you're going to put your money on the best chance of winning."

Written confession or no, Harvey still wanted to file a complaint. He gave up after speaking with a commission staffer, whom he won't name. "It may be that there's no [written] proof of this," Harvey explains. "But what we want is for somebody to ask these people under penalty of perjury whether that was what they were doing, so they would either have to, with a straight face, perjure themselves and say, 'No, we didn't know where the money was going to go' or they would have to admit that this was what they were doing. And it would then be on the public record under penalty of perjury. And what the guy pointed out to me was, 'You might as well not bother.'"

Even if the commission investigated, there would be no public record. That's the way the commission does business -- complaints and investigations remain under wraps unless there is a finding of wrongdoing and the commission decides to make the matter public. An overwhelming number of complaints remain secret. Since its inception in 1993, the commission, which routinely receives more than 100 complaints during election years, has made public just 108 cases. Forty-four of those cases were handled without the levying of any fines. Last year, the commission logged 159 complaints and has completed inquiries into 140, opening just 27 files to the public. Nineteen cases from last year remain under investigation and under seal.

Some cases remain closed to the public even when the commission has solid evidence of a violation. Michael C. Reid, compliance director for the commission, says the commission must rely on prosecutors and the attorney general to enforce the law, but lawyers in those offices aren't much interested in pursuing such violations as not stating who paid for political advertising. "The commission has been closing them with a letter of reprimand -- in essence, a letter sent to the respondent: 'Here is the law. You did not do it. If you do it one more time, the penalty will be worse,'" Reid says. "Unfortunately, when they go out that way, they are closed." In more serious cases, it often takes years for a legitimate complaint to work its way through the process.

Secrecy applies even if the commission, after investigating the complaint, decides there are reasonable grounds to believe someone has broken the law. After deciding there's reasonable suspicion, the commission must convene a hearing at which the accused may present a defense. Such hearings are not open to the public. If, after a hearing, the commission still believes someone broke the law, the commission may refer the matter to the attorney general's office, local prosecutors, the accused's supervisor or ethics bodies in the state Legislature, but the commission won't discuss any aspect of a complaint referred to another agency, even to the point of confirming or denying there is a case at all.

"It's not a commission policy," Lamb says. "It's state statute." Lamb sees the Ethics Commission not as a particularly tough cop but, rather, a body that does the best it can with a complicated, often ambiguous law. "That's been the commission's focus, to do voluntary compliance," he says. Reid, who supervises investigations, wonders whether the commission has any real power. "The question people must ask is, 'Are we a police agency or a reporting agency?'" says Reid, who, without mentioning any names, cites an instance in which a prosecutor hasn't acted on a nepotism referral from the commission. "I don't think we have the authority to do much, other than be a reporting agency right now. The police-agency part is to send out reports to the local prosecutor, who may or may not file charges. Prosecutors must act within 60 days or write back why they haven't. But we don't have any authority to do much other than keep writing to [prosecutors] and pushing them to do that."

Sounds good. Except that's not what the law says.

The Ethics Commission has a number of tools it can use to enforce the law if prosecutors or other disciplinary bodies won't do anything. The law says that if others don't act against violators within 60 days of receiving a commission report and recommendation, the commission can issue a public letter of reprimand, make investigative reports public or ask a judge to take action, including the levying of fines. Lamb says he cannot recall an instance in which the commission has publicly released reports after other bodies have failed to act. "Information relating to complaints is confidential, as far as this agency is concerned," he says. And there is no requirement that the commission refer cases to prosecutors or anyone else -- by a simple majority vote, the commission can take matters into its own hands.

The commission has taken action on its own, but when it does, punishment comes long after violations have occurred and those who benefited have been elected. In May, the commission levied its largest-ever fine, $12,100, against the House Republican Campaign Committee. The violations that prompted the fine occurred in 1998, when the committee filed reports showing no expenditures on behalf of candidates. After someone filed a complaint with the Ethics Commission, the committee filed a new report stating it had spent $94,487 on various campaigns. That wasn't true, either, according to a third report filed last March showing that the committee had actually spent $185,360 on 17 races. The unreported money may well have made a difference. Peter Meyers, a Sikeston Republican, beat an incumbent Democrat by 92 votes after the committee kicked in nearly $38,000, more than doubling the amount of money spent to get him elected to the state House of Representatives. Lanie Black of Charleston, who won his House race by 44 votes, got a $33,263 boost from the committee. In both cases, the men were five months into their second terms before the Ethics Commission levied fines for shenanigans committed during their first campaigns.

The GOP has long complained about uneven enforcement by the commission. As evidence, Republicans point to a 1998 case in which the commission gave GOP candidates 10 days to return contributions made by the state party that were over the legal limit. Republicans sued, claiming caps on political parties were illegal. Nearly two years later, the GOP noted that Democrats had done the same thing during the 1998 election, with no enforcement action taken. Only after Republicans complained did the Ethics Commission charge the Democratic Party and seven of its candidates with violating contribution limits. The Democrats now face fines as high as $133,000. The Republicans and five GOP candidates (two additional cases of over-the-limit contributions were found after Republicans sued the commission) could be fined as much as $416,000.

An injunction from the 8th Circuit Court of Appeals has prevented the commission from collecting anything, but that barrier is expected to come down soon in light of a recent U.S. Supreme Court decision upholding contribution limits on political parties and ordering the appellate court to revisit the case. After considering whether it could overlook the 1998 over-limit contributions, particularly in cases where scofflaw committees no longer exist, the Ethics Commission in July issued an unusual statement: It would enforce the law equally and punish both parties, although just how much remains to be seen. As an agency created to enforce the state's campaign laws in a just fashion, it was akin to a cop's repeating his oath of office before arresting someone.

Underlying the partisan bickering and suspicion, Harvey sees a fundamental problem. Noting that state law requires that commissioners be appointed by the governor from names submitted by Republicans and Democrats, the commission is a product of partisan politics, Harvey says. As such, it's hardly surprising that violations of campaign law remain secret or go unpunished.

The huge amounts of soft money that now fuel elections in Missouri have given both parties incentive to look the other way when laws are bent or broken. "The parties have gone from being vehicles of grassroots democracy to essentially being large financial operations -- to being money-launderers," Harvey says. "To get on the Ethics Commission, you have to essentially be either a recognized, trusted Republican or a recognized, trusted Democrat. People are on Ethics Commission by virtue of the fact that they've been signed off on by one of the two big institutions that are the problem." In the case of the nudge-nudge-wink-wink involving the Blunt campaigns and the 7th District committee, Harvey believes the commission didn't take action because Joe Maxwell, a Democrat who was running for lieutenant governor, had also been accused of dodging contribution limits. (Maxwell has publicly admitted referring donors to political committees that subsequently donated to his successful campaign). "If they do anything to Blunt, then they set a precedent that the Republicans can hold Maxwell accountable," Harvey says. "They are all essentially creatures of the same system."

The best solution would be to make the Ethics Commission a nonpartisan body, Harvey says, but he acknowledges that this may be a practical impossibility, given that partisan legislators write the laws that decide the commission's makeup and its authority. He suggests opening the Ethics Commission to public scrutiny so that the public can judge its efficacy. "If a list of the commissioners and how they voted is in the paper the next day, it's a lot harder for allegedly Democratic members of the commission to vote not to press the issue with Matt Blunt because they know the other side will come back and get Joe Maxwell," Harvey says.

State legislators in 1994 assigned the commission what seemed like a straightforward task: Get campaign-contribution reports and lobbyist files, which include the amount of money spent on elected officials, online by Jan. 1, 1998. It's a tremendously important task, given that paper files run into the thousands of pages and can only be reviewed by driving to Jefferson City or ordering photocopies. Today, despite the law, the campaign files are still on paper.

Lobbyist reports went online earlier this year, more than three years later than the deadline set forth by state law.

Schneider, who sponsored the bill requiring computerized reports, remembers he was prompted by a group that tried to get campaign-contribution information about then-Gov. John Ashcroft during the early 1990s. "The cost for obtaining the copies was thousands of dollars, which made it, as a practical matter, totally impossible," says Schneider, who also sponsored legislation that created the Ethics Commission in 1993. "The only good of this law is for people to know where the money's coming from." After more than three years of waiting, Schneider has given up hope. He predicts that the campaign information will get online "as soon as we take it away from the Ethics Commission and put somebody in who knows what they're doing and has a desire to get it done. I've lost patience."

Lacking a working system in Jefferson City, interested voters must rely on the National Institute on Money in State Politics, based in Helena, Mont., which collects campaign-contribution information for all 50 states and puts it online. Photocopies alone can cost more than $3,000 for one election cycle, and it takes about a month to get the copies from Missouri and another month to type the data into a computer system. The institute, a nonprofit, nonpartisan foundation that relies on grants for support, employs about 30 people to type numbers and names into a database. With 49 other states to worry about, the chore isn't finished until long after Election Day -- the 2000 election totals for Missouri weren't ready until April. In the end, the public has access to a searchable online database that performs the same functions assigned to the Ethics Commission. Until the Missouri Alliance for Campaign Reform disbanded last spring, Harvey helped collect the data and, in the process, became a source for journalists who had no other practical way to get the numbers. "Someone would call me up and ask me, 'How much did so-and-so give to so-and-so?'" Harvey recalls. "I was the go-to guy, up until May, for anybody who had questions like this. There was a palpable sense that it was goofy: Why are they having to call me?"

Experts agree that getting campaign information online isn't difficult. "It's not a complicated thing to do, especially in this day and age," says Larry Makinson, senior fellow at the Center for Responsive Politics in Washington, D.C., which tracks campaign money on the federal level. "Many states have done it. But it requires the will to do it. That's the one ingredient you can't live without. If they're not trying that hard to do it, they can probably find one excuse after another."

There were warnings that the Ethics Commission would botch the job. The commission received just one bid of $285,000 from SDR Technologies. At least one potential bidder complained that the process was rigged and that the commission didn't have sufficient computer expertise on staff. Concerned about the protests and lack of bids, Schneider tried to stop the project and assign it to the Office of Administration's computer division. But other legislators were reluctant. SDR was awarded the contract, as well as a $187,000 deal to get lobbyist information online, after Missouri Senate staff concluded that the bidding process didn't favor the company. But the staff review was hardly a glowing endorsement of the Ethics Commission's work. Although the commission's request for proposals was "not as well-written as it might have been, it was equally confusing and lacking in detail for all bidders," according to the review team's report.

The 1998 deadline to get the information online came and went. The commission subsequently sued SDR, but ended up paying the contract in full after a computer expert retained by a court-appointed mediator ruled that the software, in fact, did everything the contract required. The specs, just as critics had warned, were so poorly written that SDR could meet them without coming up with a system that worked. In addition, the contract drawn up by the commission's staff had no penalty provisions that made it enforceable. The online system for lobbyists also didn't work. Nonetheless, taxpayers paid. Not until the spring of 2000 did the Ethics Commission finally give up on SDR and start tackling the job on its own. By then, the commission had squandered about $500,000 on software, equipment and monthly maintenance fees for systems that never materialized.

Washington state had a similar experience with SDR but managed to get information online within six months of dumping the company. It took a show of political will by the governor, who convinced legislators to give the state Public Disclosure Commission money to hire in-house computer experts, says Vicki Rippie, executive director for the commission. The ongoing cost is about $300,000 a year, she says. Lamb says comparing Missouri to Washington isn't fair because campaign laws and reporting requirements vary. "It's very difficult to compare what happened in one state with another state," he says.

Legislators professed outrage when the commission failed to meet the 1998 deadline. The St. Louis Post-Dispatch and Kansas City Star ran numerous stories and editorials about the fiasco. Yet, for all the indignation, no bills were introduced in this year's session to address the problem, and no stories or editorials have appeared in the state's two largest newspapers since the spring of 2000, when the commission announced it was giving up on SDR.

Joe Carroll, the commission's campaign-finance director, promises success is near. Earlier this year, the commission finally got lobbyist reports online. The campaign-contribution system is being tested by commission staff and local election officials throughout the state, he says, and so far no bugs have surfaced. "We never even got to that stage with the contractor," says Carroll, who, just like everyone else, must pore over paper files himself to determine whether campaign laws have been broken. "By the end of the year, we will have all the campaign stuff up on the Web site. It's been a long time coming. We're pretty pleased with it, and we hope the public is when it comes out later this fall."

Harvey says he'll believe it when he sees it. "We think it's ridiculous," he says. "It's outrageous. First of all, it's illegal. It's not like 'The dog ate my homework.' The law says they should have this stuff online. Beyond that, it's not rocket science." Using consumer software and the institute's database, which includes contributors' names, addresses, amounts given and dates of donations, Harvey has been able to analyze campaign contributions in Missouri and write reports on special interests that contribute to both sides in the same race, contributions by the utility industry to legislators who sit on regulatory committees and contributions by the insurance industry to lawmakers who've voted against health-care reform.

"I'm not a computer geek, and I can make it work on my old, beat-up PC," Harvey says. "The simple fact of the matter is, from doing our own research, when the actual numbers are exposed to the light of day, it's really embarrassing stuff."

For an agency that's supposed to ensure accountability from politicians and access to information for the public, the Ethics Commission itself is hard to find. Located several miles from the state Capitol, it's easy to drive past -- when giving directions, staff members tell visitors to use a nearby Sonic drive-in restaurant as a landmark.

During a recent visit, it's obvious that the commission has a lot of data on its hands. Dozens of boxes containing financial-disclosure reports and other documents ready for archiving are stacked 4 feet high in the lobby. But getting even the simplest information can be difficult.

In the case of Rely On Your Beliefs, the file containing the committee's disclosure reports contains not a single letter from the commission indicating that anything is amiss. Asked about correspondence between the commission and the committee, Lamb says everything that's supposed to be a public document is public. Presented with a written request under the state Sunshine Law for correspondence between the commission and Rely On Your Beliefs, Lamb says he can't supply any documents without first checking with the attorney general's office; the commission itself has no lawyer. Four days later, Lamb sends a written reply saying he can't locate any files that aren't confidential, but a staff member who is out of the office for several days may know about some documents that are public. When the employee returns to work, Lamb says he'll check and see whether there's anything that can be disclosed.

Lamb says he thinks the commission does a good job of enforcing the law. And when the commission finds a problem, it's usually an innocent mistake, according to Carroll, who reviews disclosure forms filed by candidates and committees. "Most of them [violators] are willing to sign stipulations that they were not aware that the law was violated, but we do have the evidence that the law was violated," Carroll says. "And most of the campaign-finance reports, except for those very high-profile candidates, are filled out by people who are volunteers to the campaign. The high-profile people, of course, hire CPA firms and those kinds of things."

Meanwhile, Rely On Your Beliefs keeps collecting money from interests as diverse as the Missouri Hospital Association and tobacco companies -- the Philip Morris Cos. contributed $50,000 last spring. The money totals nearly $275,000, according to the committee's most recent reports. Even Shore admits that the notion that the source of so much money could be kept out of public view, as the committee's lawyer advised, doesn't sound right.

"That's why I kept hounding her: What's the deal here?" Shore says. "Somebody's got to know where the money's coming from."

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