Scrutinizing Constitutional Officers’ Campaign Finance Reports

by Talk Business & Politics staff ([email protected]) 199 views 

The scandal leading to State Sen. Paul Bookout’s resignation over personal expenditures from his political campaign account has pushed new scrutiny and debate over the documents and processes candidates must follow.

While publicly disclosed, these documents are rarely reviewed until a citizen complaint warrants examination by the Arkansas Ethics Commission or media inquiries are made, usually from a source’s tips.

This past week, Matt Campbell with the Blue Hog Report blog reported on potential discrepancies and expenses in Lt. Governor Mark Darr’s campaign finance reports.

Talk Business Arkansas has taken this examination further and has reviewed the past three years worth of reports filed by all seven constitutional officers. For the most part, many of these filings have few transactions with minor clerical errors, such as small accounting miscalculations.

Penalties for incorrectly filing a report can range from a letter of caution from the Ethics Commission to a maximum fine of $2,000 and/or imprisonment for up to one year for a willful violation.

As part of this exercise, Talk Business Arkansas also tested a theory for installing a new review process for these documents in a way that might lead to legislative action, earlier awareness of problem reports, clarification on existing reports, and greater public confidence.

We reviewed contributions, expenditures, cash balances, loan disclosures, and other general information for these seven elected officials, which included three Republicans and four Democrats. Officials were given the opportunity to respond to the findings from this review, if warranted.

During the period reviewed, Gov. Beebe filed ten carryover fund reports, all of which appeared to be in perfect order. He began with a balance of $86,890, which is equal to his annual salary and disbursed a total of $29,088.22, most of which was itemized. The expenditures were primarily charitable donations and political contributions. His remaining balance at the end of the second quarter of 2013 was $57,866.49.

Lt. Gov. Mark Darr has a number of transactions on his campaign finance reports that have led to follow-up inquiries and the filing of a citizen’s complaint against himself to the Ethics Commission. He also plans to amend a series of his campaign filings.

“Today I self-reported several items to the Arkansas Ethics Commission regarding campaign and debt filings following my 2010 election. While my debt retirement forms are still being amended, I believe making the Commission and the public aware of our current findings is the right thing to do,” said Darr in a statement late Friday.

“As this was my first race for public office, the ins and outs of campaign finance reporting were new to both me and my campaign staff. As such, there were some mistakes made, and I am working hard to correct each and every one of them. I am committed to reporting all errors found during this review and will make any necessary corrections. While it’s important to note that I had no malice intent, I should have paid better attention to detail throughout this process. I believe it’s important to own up to mistakes, and I will accept any resulting penalty levied by the Ethics Commission,” he said.

All of Darr’s reports from 2011 to 2013 are to retire debt that was initially listed at $115,766.57. Darr said Friday (Aug. 23) the total amount of the personal loan to his campaign should actually have been reported at $120,551.83.

“I am currently in the process of amending that report and filing it with the Secretary of State’s office along with a transaction record of loans made, and repayments received, prior to Dec. 31, 2011,” said Darr.

In a number of his filings, contributors are identified as “unknown” for their occupations, and in some cases there are no cumulative totals for a donor who may have given previously. There are also missing cumulative totals for money raised and spent on some, but not all, of the home pages of the reports.

Darr spokesperson Chase Dugger said the campaign had been focused on sorting through financial corrections and has not addressed this issue yet.

Of the 11 reports he filed in the three-year time period, Darr reported total non-itemized monetary contributions of $16,035.57 and total non-itemized expenditures of $13,067.86. There are also a number of other expenses classified as “fundraisers” or “supplies” that include checks written to clothing stores, gas stations, restaurants and hotels.

Darr also reported spending $1,500 for a “fundraiser” at the University of Arkansas in Fayetteville.

Dugger said that “unless we can prove that the expenditure was a real fundraising expense, all items will be attributed to debt relief.”

Darr re-emphasized the point in his Friday statement.

“On all my debt retirement forms from January 1, 2011 through June 30, 2013, the only expenses paid through the campaign should have been directly related to fundraising or loan repayments to myself to pay off debt,” Darr said.

All told during the three-year period, Darr repaid loans to himself in a cumulative sum of $82,271.64 through the category of “repayment of loan.” As many of the “fundraiser” and “supply” expenses will be reclassified as “repayments of loan” under his amended reports, the cumulative sum is expected to rise substantially towards the $120,551.83 amount owed to Darr, but the totals were not known as of Friday afternoon.

Attorney General McDaniel had quite a bit of activity as he disbursed the remaining balance in his carryover funds from 2010 and began and ended a campaign for Governor in the past year.

Although this amounted to a considerable amount of data to review, nothing appeared to be incorrect other than one minor mistake of placing $3,100 of funds designed for his primary runoff on his main primary account originally. This was corrected on his report filed in April 2013 as a “correction of a banking error.” The same report also properly disclosed that a campaign worker misspent around $7,000 unauthorized by the campaign.

McDaniel reported returning most of his remaining campaign funds from his Governor’s race to his donors on a pro rata basis. He does, however, still have a remaining balance on reports filed in July 2013 of $93,484.37. In addition during the second quarter of 2013, McDaniel set up a new carryover balance from funds from his abandoned Governor’s race beginning with a balance of $46,024.61.

Secretary Martin has only filed one report in the last three years, and it was in April 2011. There was nothing incorrectly stated or filed in his report. There was an unusual series of transactions, however.

Martin had a previously disputed debt with a radio station over money allegedly owed for campaign ads. The dispute was resolved and the debt was removed. As a result, Martin refunded several thousand dollars of contributions to donors that were received after his election.

State Auditor Daniels filed ten carryover funds reports for the period we reviewed. He began 2011 with $54,212 in carryover funds, which is less than his annual salary. Some of the expenditures reported raised questions that were posed to Daniels.

Daniels reported spending $760 for “event tickets” with the Razorback Ticket Center in Fayetteville. His spokesperson contends that this expense is allowable.

“Mr. Daniels bought tickets to Razorback football games for the purpose of attending and/or sponsoring various social events associated with the games, which increases his public visibility as an officeholder. His interpretation of Sec. 223 of the Rules for Campaign Finance and Disclosure is that the purchase of these tickets for this purpose is permitted, although since it is not expressly listed as a permitted expense, a factual determination would have to be made by the Ethics Commission,” said Janet Harris with the State Auditor’s office. She also noted that he did not purchase tickets for 2012 and 2013 after he decided not to run for re-election.

We also asked about six expenditures on various reports for catering totaling $1,676. Daniels’ spokesperson explained each of these were for various office events for the public and for staff.

Also, Harris explained that Daniels uses his carryover funds to pay for his smartphone from AT&T at about $100 a month. He does not have a state-provided phone or a computer.

A majority of Daniels’ expenditures are unitemized. You may recall that Sen. Bookout’s issues first began when a citizen complaint was filed noting the amount of his unitemized expenditures. Of the $21,738 in expenditures for Daniels for the period reviewed, $12,555 was not itemized. All expenditures of $100 or more are required to be itemized on the reports.

His office affirmed that all expenses over $100 are reported as required.

Harris noted that his unitemized expenditures average around $418 per month and include a number of items such as ads and sponsorships for political events, flowers and memorials, subscriptions to newspapers, smartphone and Internet access, fuel for travel related to his office, bank fees, office supplies, commemorative items, tickets to events related to his office, and postage.

Finally, we noted that it appears the carry forward balance was overstated due to an error. It appears the fourth quarter of 2011 used the ending balance from the second quarter of 2011 instead of the ending balance from the third quarter of 2011. This caused an overstatement of the carry forward balance of $2,163. If left uncorrected, this error could cause Daniels to spend more than is allowed.

On this, his office agrees. “Mr. Daniels will file an amendment to the appropriate report(s) to correct this clerical error and we appreciate your bringing it to our attention,” said Harris.

Errors on former State Treasurer Martha Shoffner’s reports have already been reported in several press accounts, yet we still examined the reports as part of our review.

Shoffner filed five carryover reports during this time period and amended three of these reports. She began 2011 with a carryover balance of $57,806 which was $3,502 above her annual salary of $54,304, the amount allowed by law for an official to carry forward from a campaign. She attempted to correct this in October of 2011 by retroactively distributing the excess amount to the Democratic Party of Arkansas.

Shoffner reported spending a total of $10,799 of her campaign funds on questionable expenses. Specifically, she distributed $900 monthly for the first six months of 2011 to James Motors in Newport for a leased vehicle. She amended her second quarter report for 2011 to show only two payments instead of three and stopped reporting this distribution. However, she did not repay the five distributions remaining for 2011.

In addition, her numerous amendments appear to have caused problems with the roll forward of her remaining carryover balance from period to period. On the last report she filed for the final quarter of 2012, she reported a balance remaining of $44,394.29. Based on the expenditures reported on her reports, this appears to be understated by $126. No report was filed for the first and second quarters of 2013, but assuming she did not have expenditures in those quarters of $500, she can file an annual report for 2013.

Commissioner Thurston has been fairly inactive in campaign fundraising since taking office. He’s only filed two reports since the end of 2010. There was a minor math error of  a wrong number being placed in a cumulative expenditure line item on a July 2013 report that was corrected and amended after being brought to his campaign’s attention.