Portland primary election challenges lead to proposed changes in campaign-finance law

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AUGUSTA — The Maine Ethics Commission fined losing candidate Rep. Diane Russell $500 on Wednesday for failing to disclose her contribution to her state Senate campaign of a valuable email list.

The action closed the books on a series of ethics complaints generated by the recent Portland Democratic Senate primary.

But the complaints – two against Russell and one against primary winner Rep. Ben Chipman – may end up having a broader effect on Maine campaign-finance law and how elections are run.

Two measures have emerged from the commission’s consideration of the complaints: Commission members have proposed tightening restrictions on contributions by volunteers to campaigns, and a new law preventing lawmakers from paying themselves out of PACs they control is being readied by Ethics Commission staff for consideration by commissioners and, ultimately, the Legislature.

And in a surprise move related to one of the complaints, the entire commission on Wednesday also supported a move to review the laws governing so-called “leadership PACs,” which are political action committees that current members of the Legislature who aspire to a leadership position use to raise money.

Lawmakers traditionally have used the money in their leadership PACs in support of fellow party members’ electoral ambitions, either directly or indirectly, such as through events.

The Democratic primary in Portland to succeed Sen. Justin Alfond, who could not run for re-election because of term limits, was a heated race among three candidates: Russell, an incumbent House member who had served Portland’s downtown and Munjoy Hill district for eight years; Chipman, another House member representing Portland’s Parkside and Bayside districts, who had served for six years, and political newcomer Dr. Charles Radis of Peaks Island.

Democrats have long held the Senate seat, and the primary winner is likely to win the general election in November.

Chipman won the June primary with 53 percent of the vote. Radis came in second at 24 percent and Russell last with 23 percent.

Chipman, who campaigned using public funding, was limited to spending $13,000. Radis, who ran as a privately funded candidate, spent $13,500 on his campaign. Russell, who had campaigned with public funds in previous races, switched to private funding for the primary and demonstrated her skills as a fundraiser, collecting and spending what Ethics Commission staff say may be a record amount for a primary: more than $90,000.

That money came mostly from out-of-state donors, and much of it was spent on anti-Chipman material that Chipman later complained misrepresented his positions on major issues.

Russell’s attacks on Chipman led Alfond, who had earlier declared he would not endorse a candidate for his seat, to throw his support to Chipman near the end of the race. “The actions by Rep. Russell and her campaign are beyond the pale,” Alfond said on the eve of Election Day, adding that Russell was engaging in “gutter politics.”

The first complaint of the three was lodged against Chipman’s campaign by Steven Biel, a Russell supporter. Biel alleged that Chipman’s campaign had violated the Maine Clean Election Act’s limitations on and requirements to disclose certain campaign spending. The violations were in connection with spending by volunteers on invitations to a Chipman campaign event.

At a meeting on June 29, commission members ruled that Chipman, who had consulted Ethics Commission staff prior to the campaign event, had not violated campaign-spending rules. But they said the incident exposed a loophole in the so-called “house party” exception to Maine elections law that allows multiple campaign volunteers with tenuous connections to the campaign to pay for costs related to campaign events.

“This is a huge loophole that could potentially result in thousands of dollars of private money in what is supposed to be a clean election process,” said commission member Richard Nass, a former Republican legislator.

Commission members voted to close the loophole by proposing a rule with two new provisions: first, that the only volunteer who could pay for campaign event invitations is the person providing the home or premises for the event, and second, that only volunteers taking part in the event can help pay for food and beverages served at the event.

The proposed rule means that “somebody couldn’t just volunteer in August by putting up campaign signs and then in September write a check for food and beverages” for an event, Ethics Commission Executive Director Jonathan Wayne said.

In both cases, each volunteer would be limited to a maximum expenditure of $250. Public comment will be taken on that proposed rule at the commission on Aug. 10 at 9 a.m.

The other two complaints filed with the commission were made against Russell’s campaign by Portland resident Michael Hiltz.

Hiltz’s first complaint cited facts reported in a March 2016 Maine Center for Public Interest Reporting story that detailed the expenditures of Russell’s “Working Families PAC.”

Established to “help support Democrats in winning seats in the Maine House,” the Working Families PAC had since 2013 instead paid Russell almost 20 percent of its total expenditures for “online organizing” and spent less than 4 percent of its payments to support candidates.

Hiltz alleged in his complaint that Russell’s Working Families PAC was run as an “unregulated money mill” for her benefit and that it was not living up to its stated purpose.

At the time the complaint was filed – 11 days before the primary election – Russell told the Maine Center for Public Interest Reporting: “This complaint is a distraction. … I am in a heated primary and the timing of this is clearly intended to influence the outcome of the race. I think Portland voters will see through these political tactics.”

A memorandum prepared by Ethics Commission staff in response to the complaint informed commissioners that, in the staff’s opinion, there were not sufficient grounds to believe that “a violation of the campaign finance laws has occurred.”

But, while noting that the payments to Russell were legal, commission staff wrote that they would once again propose legislation banning PACs from paying the legislators who control them. (After an October 2014 Maine Center for Public Interest Reporting story documented $17,000 in payments by the PAC run by a Sanford legislator to himself and his family members, a similar measure was submitted as part of a larger commission-drafted bill in 2015. The Legislature passed the bill, but then was unable to override Gov. Paul LePage’s veto.)

The commission agreed with staff Wednesday and found no legal violations in those payments. But commission Chairwoman Margaret E. Matheson said that kind of PAC spending caused her “a level of heartburn.” Matheson and other commissioners said they wanted to look further into leadership PACs and possibly propose changes to them.

“I think we need to get our arms around the issue of these PACs in a more meaningful way,” Matheson said. “I think a lot of us find it a bit troubling. I’m not speaking for the commission, I’m speaking for the public.”

The second complaint, also filed by Hiltz, alleged that a valuable email list of political activists used by Russell’s Senate primary campaign amounted to an unreported campaign contribution by the Working Families PAC.

In response to the commission, Russell and her attorney, Kate Knox, stated that the list was actually Russell’s personal property and distinct from another list of activists and donors used by the Working Families PAC.

Since the list was a personal donation to Russell’s campaign, she was required by commission rules to disclose it in filings, according to commission staff, who said that Russell had agreed to amend her filings to comply with the requirement. Commission staff did not recommend that a penalty be assessed for the lack of previous disclosure, but commission members disagreed Wednesday and required Russell’s campaign to pay a $500 fine.

Russell declined to comment after Wednesday’s meeting.

According to the Ethics Commission, Russell has a history of campaign finance violations related to her PAC and her participation in the public funding program known as Clean Elections. Those violations include:

• She was two months late in returning unspent Maine Clean Elections Act funds due in December 2014.

• She did not file her PAC’s report due Jan. 15, 2015 (her PAC filed reports late, resulting in the PAC paying a penalty of $1,575).

• She did not file the PAC’s report due July 2015 (her PAC filed reports late, resulting in the PAC paying a penalty of $556.80).

• Her PAC was fined $2,000 in December 2015 by Maine ethics regulators for leaving some expenditures unreported for more than a year.

The Maine Center for Public Interest Reporting is a nonpartisan, nonprofit news service based in Augusta. Email: pinetreewatchdog@gmail.com. Web: pinetreewatchdog.org.

Rep. Diane Russell, left, with her attorney, Kate Knox, during a meeting Wednesday, July 20, of the Maine Ethics Commission. Russell, a Portland Democrat, was fined $500 for failing to disclose an in-kind donation of an email list that she made to her campaign.

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