At least one of two interconnected groups that have spent heavily to attack a Montana Supreme Court candidate violated state campaign finance disclosure laws, Commissioner of Political Practices Jonathan Motl said Tuesday.
“It seems clear that there is a blatant campaign practice failure-to-report violation by a Montana political committee,” Motl wrote in his ruling. He added the violation of state law “would mean that the Montana public has been deprived of knowing the source of funds and the confirming amount of cash and in-kind expenditures.”
The ruling issued Tuesday resolves one of two complaints filed Friday against two groups that have reported spending at least $268,000 to attack longtime Cascade County District Judge Dirk Sandefur: the Republican State Leadership Committee’s Judicial Fairness Initiative – a national conservative organization operating in Montana via two organizations with similar names – and the StopSetEmFreeSandefur.com Committee.
Supreme Court races are nonpartisan.
The Stop committee reported receiving nearly all its funding from the Republican State Leadership Committee - Judicial Fairness Initiative Montana PAC, but that group did not report sending that money. Motl determined that another, similarly named 527 committee affiliated with the national organization actually sent the contribution to the Stop group. It did not report that spending, the source of its funding or register as a state political committee as required by Montana law.
The Montana PAC spent heavily in the 2014 Montana Supreme Court race.
The 527 committee Motl identified as the source of the funding for the Stop committee is a tax-exempt organization and partner of the Montana PAC that has a slightly shorter name: the Republican State Leadership Committee - Judicial Fairness Initiative. As a separate legal entity it must disclose its spending to the state, although it appears from the ruling that the group disputed whether it was subject to Montana’s disclosure laws.
“On the surface it seems clear that counsel involved in this effort viewed the Republican State Leadership Committee - Judicial Fairness Initiative as a ‘527’ entity that is not regulated by any campaign practice laws … but this position is foolhardy,” Motl wrote, noting that the spending was not in a federal race that might cause a conflict with federal campaign laws, and that the contribution was made to a group organized solely to oppose a Montana candidate.
“Montana law requires reporting and disclosure of contributions and expenditures regardless of an organization’s tax status.”
The group had filed a report to the IRS. In some cases, outside entities can submit a copy of their IRS filing in lieu of a state disclosure report, but none was submitted, and the spending required the group to disclose more detail than was provided in the IRS report, Motl wrote.
The three groups involved in the complaint have until Wednesday afternoon to file complete or updated reports. The 527 committee likely will face a civil fine for the violation, but could be subject to more stringent actions, such as a lawsuit, if they do not submit a report as outlined.
“While we disagree with the nature and spirit behind the paperwork filed by the head of the trial lawyers, we will continue to vigorously and proactively reach out to and work with the Montana Commissioner of Political Practices and his office in our ongoing, diligent commitment to comply with the Commissioner’s request and the letter and spirit of the law," Republican State Leadership Committee Spokesperson Ellie Hockenbury said in a written statement.
"Since its inception in 2002, RSLC has acted with the highest respect for transparency by disclosing all donors and expenses publicly to the IRS where it is available online to anyone who wishes to view our activity.”
The complaint against the StopSetEmFreeSandefur.com Committee will not be decided until after Election Day, Motl said, because it will require additional investigation that cannot be completed before then. In addition to the question of why the group listed the wrong group as its contributor, the complaint also raises questions about whether the organization delayed reporting some campaign spending activity for several weeks in violation of state law.
The treasurer for the StopSetEmFreeSandefur.com Committee, Jake Eaton, said that his group has gone “above and beyond to comply” with state law.
“There is no wrongdoing here. Everything has been fully reported. What we’re talking about is a confusion over a couple words,” said Eaton, a political consultant who briefly served as executive director of the Montana Republican Party.
He disputed the allegations in the second complaint, denying that the Stop committee had tried to hide the source of its funding. In an email to Motl, Eaton alleged that the use of the wrong name of the group was the result of the commissioner’s staff entering his first hard-copy report into the electronic system.
“The error of the CoPP staff was not fully realized by the committee until this complaint arose,” Eaton said, explaining why the wrong group’s name continued to appear in subsequent reports he filed without assistance. “However, it is clear the error was inadvertent and was caused by the entry of incorrect data by your staff and not by the committee’s staff.”
Motl acknowledged that his staff assisted Eaton in converting his first report, a hard copy, to the electronic system as required by law, which triggered an autofill function that suggested the Montana PAC name. However, he said it is the policy of his staff to inform assisted filers that they must carefully check for accuracy as the burden of correct reporting ultimately falls to them alone.
“He certainly could’ve changed it. He would’ve been the only one in the world at that point who would’ve known (it was a different group with a similar name),” Motl said. “He repeated the use of the Montana PAC (in future reports). The bottom line on it is the responsibility is his.”
Motl said a formal response from Eaton about the second complaint is not due until Nov. 21. Based on that and additional investigation, he said his office will determine whether the use of the incorrect name was simply the result of Eaton being confused by the similar names or if it was a deliberate attempt to obscure the source of the group’s funding.
“Why he reported it like that, we don’t know and we’d be speculating,” Motl said. “We’ll try to find out when we do the investigation.”
Eaton also said that not all campaign activity, such as an in-kind poll questioned in the second complaint, triggers immediate reporting requirements.
“(If polling had to be reported), Lee Newspapers would have had to report the polling it’s done,” he said. “What does trigger reporting is when we started to put the results of that data into electioneering communications.”
The two complaints were filed Friday by Al Smith, executive director of the Montana Trial Lawyers Association, a group that has made independent expenditures on the opposite side of the race.
"I'm glad the commissioner saw it the way we saw it. It seemed pretty straightforward that they weren't reporting where the money was coming from," he said about Tuesday's ruling. He disagreed with Eaton's interpretation of the law at the heart of the second complaint about when the Stop group had to disclose its poll and other spending: "I don't believe they reported that timely at all. ... We paid our pollster back in July and reported it."
Nearly $1.5 million has been raised by various groups advertising in the Supreme Court contest between Sandefur and Kristen Juras, a former adjunct law professor at the University of Montana, according to campaign finance records filed two weeks ago. Even more has been spent on television ads since those reports, although the value is unknown, according to federal filings about television ads.
Sandefur has raised more than $504,000. Political action committees almost entirely funded by the Montana Trial Lawyers Association and its members have collected at least another $1 million to support Sandefur’s bid. The Montana Democratic Party also spent $62,000 on radio ads and print mailers that highlight Sandefur’s experience.
Juras has raised nearly $210,000 for her campaign. The StopSetEmFreeSandefur.com Committee has been funded by the Republican State Leadership Committee’s Judicial Fairness Initiative. Motl’s ruling now makes clear exactly which arm of the interconnected nonprofits made the contributions.