Campaign Finance Board rules in favor of RGA and Minnesota’s Future

Minnesota’s Campaign Finance Board issued their finding Thursday for Common Cause’s complaint against Minnesota’s Future and the Republican Governors Association (RGA). The Board’s report — published online Friday afternoon — essentially goes with the principal of ‘no harm, no foul,’ noting that Minnesota’s Future and the RGA may not have strictly complied with Minnesota law initially but that the offense did not merit any fine.

“There is no probable cause to believe that the Republican Governors Association, Minnesota Future, LLC, or Minnesota’s Future political committee engaged in an intentional plan or strategy to circumvent the disclosure requirements,” the Board’s report reads.

Common Cause Minnesota’s Executive Director Mike Dean disparaged the decision in a press release Friday. “The CFDB has failed in its responsibility to enforce Minnesota campaign disclosure law,” Dean said. “The board is sending a message to special interest groups that no one will hold them accountable for violating campaign disclosure laws.”

The circuitous route of contributions that flowed from the RGA toward eventual spending in this year’s gubernatorial campaign is a prime example of complex world of campaign finance in the post-Citizens United world. The RGA donated $428,000 to an entity known as Minnesota Future LLC in August. The LLC did not file a report with the Finance Board at that time; it did not spend the money itself, instead directing that sum toward a political action committee named Minnesota’s Future, with the LLC dropped from its name. Minnesota’s Future then spent those funds on running ads against the Democratic gubernatorial candidate Mark Dayton or supporting his Republican opponent Tom Emmer.

Common Cause’s complaint alleged that the LLC was required to register with the Finance Board and that the whole arrangement was designed to obscure the original source of the group’s funding, which is information required under Minnesota law. If the Board had ruled in Common Cause’s favor, they could have levied fines of up to $1.7 million for each Minnesota’s Future, Minnesota’s Future LLC, and the RGA.

As sister-site TAI reported in October, Minnesota Future LLC adapted their disclosure habits after the complaint was filed. The LLC went back and retroactively filed the original report Common Cause claimed was required. The Board’s ruling on the complaint concurred that Minnesota Future LLC should have originally registered with the committee within 10 days after they starting making expenditures or taking contributions larger than $100. But since the LLC subsequently filed those reports preceding Election Day, the Board found no malicious intent in the organization’s oversight and chose not to levy any fines for the violation. “They have completed their registration and reporting obligations. Consequently, there is no probable cause to believe that an ongoing violation exists,” the report says.

The Board’s decision to ignore the RGA aspect of the complaint appears to stand on shakier ground. While Minnesota Future LLC changed course, the RGA never detailed the original source of the funding they provided to the LLC, even in donations given after Common Cause filed their complaint. The Board forgives the RGA’s initial lack of disclosure, as Minnesota Future LLC was not considered a political committee at the time. The Board then appears to argue that it does not matter that the RGA did not subsequently comply with Minnesota law since they filed the paperwork required at the national level with the IRS.

What was not clear to the RGA at the time is that the corporation to which it was donating should have been registered as a political committee under Minnesota law and, as a result, the RGA should have provided underlying disclosure of its sources.

The Board notes that the RGA disclosed all of its sources of income to the IRS under the requirements applicable to organizations registered under IRC section 527. The timing of that disclosure is different than what is required in Minnesota but the level of itemization is greater than Minnesota requires. This observation is noted because it suggests that avoidance of disclosure was not a motive for the RGA when it made its contribution to Minnesota Future, LLC.

This form of disclosure provides an important avenue for determining the original funding source for independent expenditures. Similar donations from the Democratic Governors Association to a liberal political committee included the information the RGA chose to ignore in its donations. The DGA’s reports revealed that money from corporations such as AT&T and Hewlett Packard were spent in Democratic candidate Mark Dayton’s favor during the gubernatorial campaign.

In response to Thursday’s ruling, Common Cause claimed that there was a lack of transparency in the Board’s decision making process, and said the Board should have employed the full use of their subpoena power to discover whether Minnesota’s Future and the RGA colluded to funnel campaign contributions outside the spotlight of the public eye. The group argued that the Board was too willing to take the organizations at their word rather than fully investigating the charges levied in the complaint.

From Common Cause’s press release:

Today’s ruling has severely weakened Minnesota’s campaign disclosure laws by allowing groups to use ignorance of the law as a defense. The board’s reluctance to punish groups for not following state law means that there are no consequences for those that don’t follow Minnesotans disclosure laws. The actions by the board have allowed groups like Minnesota’s Future, LLC to act with impunity, as evidenced by the fact that Minnesota Future, LLC again broke Minnesota campaign disclosure law by failing to disclose another contribution on October 27, 2010 from the Republican Governor’s Associations.

The American Independent was the first to report on Minnesota’s Future and their position as conduit for the RGA to funnel money into the governor’s election through independent expenditures.