Monday, March 21, 2011

SBE Votes Against ICPR Complaint

In closed session this morning, the State Board of Elections voted not to hold a public hearing on our complaint against For a Better Chicago. We alleged that For a Better Chicago, the largest single donor to aldermanic candidates in the February elections, had to file disclosure reports. Today's vote means the complaint ends and For a Better Chicago will not be required to disclose the source of their funds.

Below is our statement to the Board.

Statement of David Morrison,
Deputy Director of the Illinois Campaign for Political Reform and
Complainant Against "For a Better Chicago, "
to the Illinois State Board of Election,
March 21, 2011
11 CD 003

ICPR filed this complaint in response to what appeared to be a significant violation of state campaign contribution disclosure requirements. For a Better Chicago is a new organization, formed in October of last year, which raised at least $855,000 in its first two months and used that money to support candidates in the February aldermanic elections. In fact, For a Better Chicago was ultimately the largest single source of funds for aldermanic candidates in that election. But For a Better Chicago has not filed any disclosure reports to indicate where the money came from. We believe the public has a right to know who is funding aldermanic campaigns, and so we brought this complaint to enforce the law regarding disclosure of campaign receipts.

The facts are these:
• Three people, Greg Goldner, Rob Nash, and Dave Smolensky, formed a new organization on October 27, 2010. They called the new organization For a Better Chicago, and they declared at the time that the sole purpose of their new organization was "political." (See the incorporation papers). They began to raise money for their new political corporation.
• Eight weeks later, on December 28, the exact same three people formed a political committee under the Election Code. The Committee has the same address, the same three officers, and the virtually the same name: For a Better Chicago PAC. Like the corporation, the PAC also has an explicitly political purpose: "to support candidates," (See the D-1 Statement of Organization). Collectively, Goldner, Nash, and Smolensky decided to move $855,000 from the political corporation they formed in October to the political committee they formed in December. They did so immediately before limits on giving to committees would have prevented them from making such a transfer, evidencing an awareness of Illinois' election laws. Essentially, they moved money from the left hand to the right hand, so that the right hand could give to candidates.

ICPR raises two objections.

One, we assert that For a Better Chicago is a non-profit entity under Section 5/9-7.5, and that giving to a political committee established "to support candidates" is an expenditure within the meaning of the election code triggering non-profit registration and disclosure.

Two, ICPR asserts that For a Better Chicago, by raising money for “political” purposes and then expending it "to support candidates" is itself a political committee under Section 5/9-1.8, and is bound by disclosure requirements. Moving money from their left hand to their right hand does not change the fact that the same people control the money. It is simply not credible, for the purpose of Article 9 of the Election Code, that Goldner, Nash, and Smolensky did not know where the money came from, money they raised for "political" purposes, when they decided "to support candidates."

At the closed preliminary hearing, counsel for For a Better Chicago suggested that his clients relied on Appellate Court rulings in the two cases ICPR brought against the State Board of Elections. However, both of those cases addressed the proper exercise of discretion by members of the State Board of Elections. The first resulted in a request that Members of the Board cite their reasons for reaching conclusions. The second found that the reasons cited were sufficient to justify each Member reaching their conclusion. The two cases affirm that you have discretion to apply the law to the facts before you. Indeed, the ruling found that the four Board members who agreed with ICPR's position in that earlier complaint were justified in doing so. Both cases attest that you can apply the law in this case to the facts before you. Neither of those cases binds this Board or any Member of this Board to any particular ruling in this case. (I would also point out that, contrary to the Hearing Officer's Report, ICPR did not have a political committee. The committee in question belonged to the Coalition for Jobs Growth and Prosperity).

The facts in this complaint are different from the facts in our previous complaint against the Coalition for Jobs Growth and Prosperity that triggered those Appellate Court cases. In our 2005 complaint against the Coalition, there was no statutory requirement that non-profits register and disclose their receipts. The Coalition formed more than six months before giving to candidates. The Coalition did not have an absolute identity of officers with the political committee. The eight of you can look at the facts in this complaint against For a Better Chicago, apply the law and reach a different conclusion than you did in the older complaint, and still be wholly in accord with those two rulings.

Respondent claims that it is engaged in activities beyond supporting candidates. (See Respondents #3) I would point out that there is no evidence that For a Better Chicago engaged in any such activities until after ICPR contacted For a Better Chicago with our concerns about their lack of disclosure. I would also note that there is nothing in statute to prevent a political committee from making in the kinds of statements that For a Better Chicago is making in New Jersey and Wisconsin. Their activities through the end of 2010 are sufficient to include For a Better Chicago in the scope of disclosure rules mandated by the Election Code.

Respondent submitted, as Exhibits 5 and 6, documents filed by other committees, one of which was the subject of the two appellate court rulings and the other being SEIU, the labor union. Respondents suggested that in order to find that For a Better Chicago is a political committee, the Board would have to find many other groups to be committees as well. This is a gross overstatement of the allegations in our complaint. There are clear, factual, cognizable distinctions between For a Better Chicago and the organizations whose forms they submitted: (1) there are differences in the leadership of the organization and their political committees, (2) labor unions like SEIU file disclosure reports with the US Department of Labor showing the source of their funds; (3) neither of those two groups were formed solely and explicitly for “political” purposes, and (4) reports filed by groups show that they have existed for years while For a Better Chicago has yet to celebrate its first half birthday. For all or any of these reasons, it would entirely appropriate for you to draw a bright line that requires For a Better Chicago to file as a political committee while not reaching the same conclusion with respect to those other organizations.

Finally, respondent offered affidavits from two officers of For a Better Chicago to the effect that the political corporation did not play a role in how the political committee decided to give to candidates. (See Respondents #2 & #4) To which I would suggest that both affidavits miss the point. Because both organizations are run completely and solely by the same agents, it is simply not credible that Goldner, Nash and Smolensky did not coordinate with Goldner, Nash and Smolensky. They know the true source of the $855,000 that was given to candidates. The public has a right to that information as well.

The fundamental issue here is whether the right hand knows what the left hand is doing. Is it credible that the same people can raise money for “political” purposes and spend that money “to support candidates” without triggering campaign disclosure? Can campaign disclosure be undone by having the exact same people form two separate-but-identical corporations? That is the question this complaint raises, and I urge you to support the public's right to know by enforcing the law on For a Better Chicago.

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