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.

Reports filed with the Minnesota Campaign Finance and Public Disclosure Board last week indicate that independent expenditure group Minnesota’s Future has shifted its behavior after a complaint was filed with the board last month by the Minnesota chapter of Common Cause. That complaint alleged that Minnesota’s Future had failed to detail the full extent of donor information required by law in their last finance report.

Minnesota’s Future is one of the conservative state organizations that has played a central role in outside spending during this year’s gubernatorial campaign between Democrat Mark Dayton, Republican Tom Emmer and Independence Party candidate Tom Horner. The group has received the majority of its funds from the Republican Governors Association (RGA), and used it to run a number of television ads attacking Dayton.

Minnesota’s Future exists as part of a complicated web of organizations all designed to operate harmoniously with the goal of diverting the original source of funding for political ads. The process starts with the RGA, a national organization that rakes in cash from a wide number of avenues ranging from small individual donors to major corporations. The RGA has not actually donated funds to Minnesota’s Future itself; instead the RGA has contributed $2.3 million to a group called Minnesota Future LLC an organization technically separate from Minnesota’s Future. The LLC does not directly engage in political campaigning, and instead sends all of its nonoperational funds directly to Minnesota’s Future.

In their complaint, Common Cause charged that the LLC needed to file paperwork with the state board, something the group had not done by the 42-day pre-general election report. Minnesota’s Future LLC appears to have taken that criticism to heart, as the LLC received its own separate filing when this week’s report was released. But other areas of concern in Common Causes’ complaint persist in the new report.

The reports from the LLC still do not disclose the original origin of the the money for the RGA donations. The pages titled “Source of Funding for Contribution” are left completely blank in the report. Compare that to one of Minnesota Future LLC’s rival organizations — WIN Minnesota — that has received a massive cash infusion from the Democratic Governors Association. Much like the two Minnesota’s Future organizations, WIN Minnesota operates in tandem with a group known as Alliance for a Better Minnesota (ABM). WIN collects the large cash donations from the national Democrats and funnels it to ABM to run ads.

Unlike Minnesota Future LLC, WIN Minnesota details the original source of the DGA’s funding. It is through these fully completed finance reports that voters can become aware of the fact that national corporations such as AT&T are funding commercials against Emmer. Though the overall source of the RGA’s money is disclosed through IRS filings, by leaving large portions of the campaign finance report blank, Minnesota Future LLC prevents citizens from learning who specifically has invested.

Common Cause Minnesota’s Executive Director Mike Dean responded to these latest filings in a post on the group’s blog earlier this week:

“We are concerned that all the secret money flowing into Minnesota’s Future in an attempt to influence the outcome of the governor’s race,” said Mike Dean, Executive Director of Common Cause Minnesota. “Disclosure of these contributions is not only important in preventing corruption, but it also is vital to enforcing the law.”

At the September reporting deadline, the RGA was Minnesota’s Future’s sole donor outside of a small amount contributed by the group’s registered agent. The vast majority of Minnesota Future LLC’s funds continue to come through donations from the RGA, but Minnesota’s Future has expanded its donor bank slightly beyond the funds from the LLC.

This time around Minnesota’s Future gained $100,000 from a group called State Fund for Economic Growth LLC. That organization serves as a front for a local business much in the same way Minnesota Future LLC allows the RGA to distance itself from the political advertisements it funds. The State Fund for Economic Growth LLC has received all of its funds from banking company TCF Financial International. The group has not directly spent money on any Minnesota races, but contributed an even $100,000 to both Minnesota’s Future and MN Forward, the other conservative organization backing Emmer that has been the center of controversies this election cycle. Minnesota’s Future also picked up $25,000 from Hubbard Broadcasting, another major backer of MN Forward.

Patrick Caldwell is the American Independent’s Minnesota correspondent.

The Republican Governor’s Associaton (RGA) plans to dump $1 million into the coffers of Minnesota’s Future, a group that has released attack ads against DFLer Mark Dayton. The group has gained notoriety for an ad that falsely claimed that Dayton wants to institute an email tax and for questionable financial arrangements that are currently being investigated by the Minnesota Campaign Finance and Public Disclosure Board.

“We believe Tom Emmer is going to win but we’re going to close the election right and get that message to the voters,” Minnesota’s Future chair Chris Tiedeman told Polinaut.

Dayton’s campaign slammed the expenditure in an email to supporters. “We need to stop this blatant attempt in the last days of the campaign to buy the election by distorting Mark’s record and distracting voters. That’s one million dollars of television ads in one week — a relentless barrage never before seen in this state!”

Minnesota’s Future, its LLC and RGA are under investigation by the Minnesota campaign finance board following a complaint filed by Common Cause Minnesota. That investigation is expected to be complete by the end of next week.

The Democratic Governor’s Association has also poured big money into the race through WIN Minnesota for a total of $1.5 million. The RGA’s total is $1.8 million.

Common Cause Minnesota’s complaint against the Republican Governors Association (RGA), Minnesota’s Future and Minnesota’s Future LLC has entered the full investigation phase, according to Mike Dean, executive director of Common Cause Minnesota. The Campaign Finance and Public Disclosure Board cannot legally comment on any complaint until an investigation is complete and the board has made its ruling.

Common Cause Minnesota filed the complaint last week alleging that the three groups coordinated to funnel money from the RGA to Minnesota’s Future without disclosing all of the required donor information. The RGA has provided essentially all of the funding for Minnesota’s Future, which has used that money to run ads attacking Democratic gubernatorial candidate Mark Dayton.

“By the board moving forward it shows how serious [the complaint is],” Dean said. “I think that it is clear…that this is not a joke, and that they [the RGA and Minnesota's Future] need to take this seriously.”

If the Finance Board rules in Common Cause’s favor, each of the groups could be fined up to $1.7 million. Dean said that he expects to have the board’s decision after its next regularly scheduled monthly meeting on Monday, Nov. 1, the day before the general election.

Executive Director Gary Goldsmith said that the board generally tries to complete an investigation of a complaint before their next scheduled meeting. Because of the laws regulating what can be disclosed before the board rules, Goldsmith could not even confirm or deny having received a complaint from Common Cause, but offered an explanation for how the board investigates a typical complaint.

“Depending on the complaint, it may involve obtaining documents, reviewing reports that have been filed, getting documents from other sources,” Goldsmith said. “It may also involve discussions with parties or even testimonies from parties taken under oath. The parties are always given an opportunity to respond. Sometimes they’re asked specific questions, and sometimes they’re asked for a more general response.”

The investigation is handled by the board’s permanent staff, who then present their findings to the board itself at the monthly meetings.

“That investigation is prepared in written form then for board consideration,” Goldsmith said. “Typically what happens is staff will prepare a document that outlines the investigation, outlines the claims made by the complainant and the response that are received from the respondents.”

Patrick Caldwell is the American Independent’s Minnesota correspondent.

Elsewhere in Minnesota news this morning ….

HENNEPIN COUNTY: They told us it would come to this. The county’s medical center will stop seeing uninsured patients who don’t live in the county: fallout from  Gov. Pawlenty’s line-item veto of funding for indigent care. [Minneapolis-St. Paul Business Journal]

STATEWIDE: Cities face “horror show” from state budget cuts. Metro area city officials meet today to try to figure out how to avoid the slasher. [League of Minnesota Cities]

MOORHEAD: “Downward spiral” from underfunded schools feared. New residents drawn to new schools will simply leave.  [Minnesota Public Radio]

ST. PAUL: Gentrification coming down the track. Along the planned Central Corridor light rail line, property tax hikes can kill a neighborhood sure as bulldozers.  [Twin Cities Daily Planet]

UNIVERSITY OF MINNESOTA: Recreation and entertainment infrastructure not core to mission. The U of M’s “intransigence” (to use one key legislator’s word) on its Central Corridor complaints threatens funding for its budget requests at the state Capitol. [Minnesota Daily]

FOLEY: Native son nabs National Book Award. T.J. Stiles, a Carleton College grad, won for his biography of Cornelius Vanderbilt. [St. Cloud Times]

The announcement came this morning from Mississippi Gov. Haley Barbour, RGA chair, who last week named Pawlenty as one of the party’s “stars.”

Pawlenty had already been scheduled for a key speech at RGA’s annual meeting next month in Puerto Rico. This week, he’ll give what’s billed as a major address (at least for his own presidential prospects) to the Republican National Committee.

The RGA post gives T-Paw an excuse to rub shoulders with governors — and more importantly, donors — across the country. That could dovetail nicely with his need to raise a national profile for a 2012 run at the White House.

Pawlenty won’t count former Alaska Gov. Sarah Palin, the woman who did get the GOP nod for VP last year, as an RGA member. (She resigned yesterday.)

And different from Pawlenty, she has had trouble keeping her national speaking engagements.