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untanglingwebs
El Supremo
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Sun Apr 19, 2015 10:23 pm |
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untanglingwebs
El Supremo
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Home » Quid pro quo not required for Hobbs Act, Section 666 prosecutions
Quid pro quo not required for Hobbs Act, Section 666 prosecutions
BY ALAIN LEIBMAN ON MAY 7, 2009
POSTED IN OFFENSE ELEMENTS
A public official who accepts a bribe from a developer, both cash and a plot of land, but does not explicitly reach agreement with the bribor on an official act to be performed by the recipient may still be convicted of violating the Hobbs Act, 18 U.S.C. § 1951 and 18 U.S.C. § 666, according to the Sixth Circuit. United States v. Abbey, 560 F.3d 513 (6th Cir. 2009).
Abbey, a Michigan city administrator, was found to have accepted cash and a subdivision lot from a developer. There was no evidence at trial that Abbey had, in return, agreed to perform a specific official act in exchange, that is, there was no quid pro quo. In a pretrial motion to dismiss, a Rule 29 motion, and on appeal Abbey contended that, absent a quid pro quo he could not be convicted for extorting the money and property "under color of official right." Only in the area of campaign contributions is the government required to prove a quid pro quo to ensure that an otherwise permissible activity is not criminalized unfairly (citing McCormick v. United States, 500 U.S. 257 (1991)). In all other Hobbs Act areas, the government need only show knowledge by the defendant-official that he/she was expected to exercise some influence in favor of the bribor as opportunities to do so arose.
Likewise, under § 666, there is no requirement of proof of linkage between the thing of value given to the official and a specific official act. A conviction will be sustained on proof that the official merely intended to generally use his/her influence to benefit the bribor. |
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Sun Apr 19, 2015 10:34 pm |
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untanglingwebs
El Supremo
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| Several political observers have expressed the belief that local county officials who give no-bid contracts, like the one to HSS (now Value point) are merely helping out a friend (or friends)because cronyism and are not getting a quid pro quo/ |
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Sun Apr 19, 2015 10:38 pm |
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untanglingwebs
El Supremo
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Mon Apr 20, 2015 6:32 am |
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untanglingwebs
El Supremo
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LANSING - Michigan Attorney General Bill Schuette today announced former Macomb State Rep. Brian Palmer, 64, of Romeo, pleaded no contest at arraignment this morning to one count of Neglect of Duty by a Public Official, a misdemeanor punishable by up to one year or a $1,000 fine. The conviction stems from Palmer using his position as an elected official to assist the ring-leader of a $9 million Ponzi scheme. ......
"Public officials are sworn to uphold the law. Those who break the public trust should face the consequences," said Schuette. "We will continue to aggressively pursue justice for the elderly victims of the API Worldwide investment scam |
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Mon Apr 20, 2015 6:34 am |
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untanglingwebs
El Supremo
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FBI
Public Corruption
Why It’s Our #1 Criminal Priority
03/26/10
public_corruption.jpgPublic corruption is a breach of trust by federal, state, or local officials—often with the help of private sector accomplices. It’s also the FBI’s top criminal investigative priority. To explain why the Bureau takes public corruption so seriously and how we investigate, we talked with Special Agent Patrick Bohrer, assistant section chief of our Public Corruption/Civil Rights program at FBI Headquarters.
Question: Why is public corruption so high on the FBI’s list of investigative priorities?
Answer: Because of its impact. Corrupt public officials undermine our country’s national security, our overall safety, the public trust, and confidence in the U.S. government, wasting billions of dollars along the way. This corruption can tarnish virtually every aspect of society. For example, a border official might take a bribe, knowingly or unknowingly letting in a truck containing weapons of mass destruction. Or corrupt state legislators could cast deciding votes on a bill providing funding or other benefits to a company for the wrong reasons. Or at the local level, a building inspector might be paid to overlook some bad wiring, which could cause a deadly fire down the road.
Q: Can you describe the kinds of public corruption that the FBI investigates?
A: It really runs the gamut. Bribery is the most common. But there’s also extortion, embezzlement, racketeering, kickbacks, and money laundering, as well as wire, mail, bank, and tax fraud. Right now, based on our intelligence on emerging trends, we are focused specifically on several major issues: corruption along our national borders; corrupt officials who take advantage of natural disasters or economic crises to divert some of the government’s aid into their own pockets; and a myriad of officials who may personally benefit from the economic stimulus funding.
Q: Where do you find this corruption?
A: Just about everywhere—at the federal, state, and local levels throughout the country. And I should point out, the vast majority of our country’s public officials are honest and work hard to improve the lives of the American people. But a small number make decisions for the wrong reasons—usually, to line their own pockets or those of friends and family. These people can be found—and have been found—in legislatures, courts, city halls, law enforcement departments, school and zoning boards, government agencies of all kinds (including those that regulate elections and transportation), and even companies that do business with government.
Q: How does the FBI investigate public corruption?
A: We’re in a unique position to investigate allegations of public corruption. Our lawful use of sophisticated investigative tools and methods—like undercover operations, court-authorized electronic surveillance, and informants—often gives us a front-row seat to witness the actual exchange of bribe money or a backroom handshake that seals an illegal deal…and enough evidence to send the culprits to prison. But we have plenty of help. We often work in conjunction with the inspector general offices from various federal agencies, as well as with our state and local partners. And we depend greatly on assistance from the public. So let me end by saying, if anyone out there has any information about potential wrongdoing by a public official, please submit a tip online or contact your local FBI field office. Your help really makes a difference.
Resource:
- Public corruption |
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Mon Apr 20, 2015 6:51 am |
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untanglingwebs
El Supremo
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FBI
Economic Stimulus Fraud/Corruption
The U.S. government recently enacted various economic stimulus programs that are injecting vast amounts of funding into the national economy through localized spending. Unfortunately, valuable programs like these—including the American Recovery and Reinvestment Act, the Troubled Asset Relief Program, and the Neighborhood Stabilization Program—also create opportunities for corruption and fraud.
Similar government fiscal spending responses to emergency situations, like Hurricane Katrina and the war on terrorism, have in the past resulted in numerous public corruption and government fraud investigations. To prevent and deter fraud from this latest spending, the FBI is working with its law enforcement partners to aggressively investigate allegations into the misuse of economic stimulus money.
Examples of potential criminal acts include public officials using their position for personal gain, theft of government funds, extortion, contract bid-rigging, false appraisals, falsifying documents to qualify for funding, and contractor fraud. These criminal acts, especially when they are perpetrated by public officials, strike at the heart of government by eroding public confidence and undermining the strength of our democracy. And the investigation of public corruption is the FBI’s number one criminal investigative priority. It is also a mission for which the FBI is singularly situation: we have the skills and experience necessary to conduct undercover operations and court-authorized electronic surveillance.
If you are aware of an allegation of corruption or fraud related to economic stimulus spending, please contact your local FBI office. |
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Mon Apr 20, 2015 6:53 am |
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untanglingwebs
El Supremo
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Mon Apr 20, 2015 7:02 am |
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untanglingwebs
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In Wichita, the need for campaign finance reform
Needed to prevent cronyism
December 16, 2014
by Bob Weeks
Actions of the Wichita City Council have shown that campaign finance reform is needed. Citizen groups are investigating how to accomplish this needed reform, since the council has not shown interest in reforming itself.
Consider recent actions by the council and its members:
The council voted to give a movie theater operator a no-interest and low-interest loan, after having already received the benefit of tax increment financing.
A minister dabbling in real estate development made a large contribution to his council representative just before he asked the city council for tax increment financing.
The council voted to give a construction company a no-bid contract for a parking garage. When later put out for competitive bid, the same company won the contract, but with a bid 21 percent less costly to taxpayers.
Executives of a Michigan construction company made contributions to the campaign of a city council member just before and after the council voted to give the company and its local partner a huge construction contract.
When a group of frequent campaign contributors wanted to win a contest for the right to build an apartment project, the city’s reference-checking process was a sham. City and other government officials were listed as references without their knowledge or consent, and none of the people listed as references were actually contacted.
A frequent campaign contributor, according to the Wichita Eagle, “represented himself as an agent of the city — without the city ‘s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza.” City officials expressed varying degrees of displeasure. But it wasn’t long before David Burk was receiving taxpayer subsidy again from the city council.
The council voted to grant $703,017 in sales tax forgiveness to frequent campaign contributors and the mayor’s fishing buddy.
Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.
Wichita Mayor Carl Brewer with major campaign donor Dave Wells of Key Construction. Brewer has voted to send millions to Key, including overpriced no-bid contracts.
What is the common thread running through these incidents? Council members have voted to enrich their significant campaign contributors. Each of these are examples of a “pay-to-play” environment created at Wichita City Hall. It’s harmful to our city in a number of ways.
First, overpriced no-bid contracts and other giveaways to campaign contributors isn’t economic development. It’s cronyism. It’s wasteful.
Second: Citizens become cynical when they feel there is a group of insiders who get whatever they want from city hall at the expense of taxpayers. At one time newspaper editorial pages crusaded against cronyism like this. But no longer in Wichita. The Wichita Eagle has reported on some of these issues — sometimes in depth, sometimes in passing, but some have escaped notice. The editorial page of the newspaper sometimes takes notice, but is rarely critical of the council or mayor.
Third, when it is apparent that a “pay-to-play” environment exists at Wichita City Hall, it creates a toxic and corrosive political and business environment. Companies are reluctant to expand into areas where they don’t have confidence in the integrity of local government. Will I find my company bidding against a company that made bigger campaign contributions than I did? If I don’t make the right campaign contributions, will I get my zoning approved? Will my building permits be slow-walked through the approval process? Will my projects face unwarranted and harsh inspections? Will my bids be subjected to microscopic scrutiny?
Importantly: Will the Wichita city council prop up a competitor to my company with economic development incentives that place my company at severe disadvantage?
Wichita's mayor sells his barbeque sauce at movite theaters owned by a campaign contributor who receives city taxpayer subsidies.
Wichita’s mayor sells his barbeque sauce at movite theaters owned by a campaign contributor who receives city taxpayer subsidies.
We need laws to prohibit Wichita city council members from voting on or advocating for decisions that enrich their significant campaign contributors. A model law for Wichita is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”
We’d also need to add — as does New Jersey law — provisions that contributions from a business owner’s spouse and children will be deemed to be from the business itself. This is because for Kansas municipal and school district elections, only personal contributions may be made. Additionally the contributions of principals, partners, officers, and directors, and their spouses and children, are considered to be from the business itself for purposes of the law. These provisions are important, as many city council members in Wichita receive campaign contributions from business owners’ family members and employees as a way to skirt our relatively small contribution limits. For two examples of how companies use family members, employees, and friends to stack up campaign contributions, see Campaign contributions show need for reform in Wichita.
Such campaign finance reform would not prohibit anyone from donating as much as they want (up to the current limits) to any candidate. Nor would the law prevent candidates from accepting campaign contributions from anyone.
This reform, however, would remove the linkage between significant contributions and voting to give money to the contributor. This would be a big step forward for Wichita, its government, and its citizens.
Proponents see three paths towards campaign finance reform. One would be to press for a law in the upcoming session of the Kansas Legislature. Such a law would be statewide in scope, and could apply to city councils, county commissions, school boards, townships, and other elective bodies.
A second path would be to use the municipal initiative process. Under this process, a group writes a proposed ordinance. Then, it collects valid signatures on petitions. If a successful petition is verified, the city council must either (a) pass the ordinance as written, or (b) set an election to let the people vote whether the ordinance should become law.
There is also a third path, which is for the Wichita City Council to recognize the desirability of campaign finance reform and pass such an ordinance on its own initiative.
If we take the affected parties at their word, this third path should face little resistance. That’s because politicians who accept these campaign contributions say it doesn’t affect their voting, and those who give the contributions say they don’t do it to influence votes.
If politicians and contributors really mean what they say, there should be no opposition to such a law. Citizens should ask the Wichita City Council to pass a campaign finance reform ordinance that prohibits voting to enrich significant campaign contributors.
Some incidents
warren-bailout-poses-dilemmaIn 2008 the Wichita City Council approved a no- and low-interest loan to Bill Warren and his partners. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”
When questioned about election donations:
“I would never do anything because of a campaign contribution,” said [former council member Sharon] Fearey, who received $500 from David Burk and $500 from David Wells.
“I don’t think $500 buys a vote,” said [former council member Sue] Schlapp.
“One has nothing to do with the other,” [Wichita Mayor Carl] Brewer said.
Also in 2008, the Reverend Dr. Kevass J. Harding wanted to spruce up the Ken-Mar shopping center at 13th and Oliver, now known as Providence Square. Near the end of June, Kevass Harding and his wife contributed a total of $1,000, the maximum allowed by law, to the campaign of Wichita City Council Member Lavonta Williams (district 1, northeast Wichita). This was right before Harding appeared before the city council in July and August as an applicant for tax increment district financing (TIF).
These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.
Campaign contributions to Wichita City Council member Lavonta Williams from an applicant for tax increment financing.
Campaign contributions to Wichita City Council member Lavonta Williams from an applicant for tax increment financing.
But just before the Ken-Mar TIF district was to be considered for approval, the Hardings made large contributions to Williams, who is the council member representing Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.
In August 2011 the council voted to award Key Construction a no-bid contract to build the parking garage that is part of the Ambassador Hotel project, now known as Block One. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.
The no-bid contract for the garage was just one of many subsidies and grants given to Key Construction and Dave Burk as part of the Ambassador Hotel project. In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Ambassador Hotel project.
Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member, led the pack in accepting campaign contributions from parties associated with the Ambassador Hotel project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Ambassador Hotel project: $6,000. When Longwell ran for Sedgwick County Commission this summer, these parties donated generously to that campaign, too.
Council Member Lavonta Williams (district 1, northeast Wichita) received $5,000 from parties associated with the Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.
Wichita Mayor Carl Brewer received $5,000 from parties associated with the Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.
Council Member and Vice Mayor Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with the Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.
For his 2011 election campaign, Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with the Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.
For his 2011 election campaign, Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with the Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.
In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
In 2011 nearly all council members approved a no-bid contract for this garage. It was later re-bid at a much lower price.
What citizens need to know is that the Wichita City Council was willing to spend an extra $1.3 million of taxpayer money to reward a politically-connected construction firm that makes heavy campaign contributions to council members. Only one council member, Michael O’Donnell, voted against this no-bid contract. No city bureaucrats expressed concern about this waste of taxpayer money.
Of interest to current mayoral politics: In 2012 while Jeff Longwell was campaigning for the Sedgwick County Commission, campaign contributions from parties associated with Walbridge, a Michigan-based construction company appeared on Longwell’s campaign finance reports. Why would those in Michigan have an interest in helping a Wichita City Council member fund his campaign for a county office? Would the fact that Walbridge is a partner with Key Construction on the new Wichita Airport terminal provide a clue?
Michigan contractors headline 500These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.
On July 16 — the day before the Wichita City Council heard the appeal that resulted in Key Construction apparently winning the airport contract — John Rakolta, Chairman and Chief Executive Officer of Walbridge and his wife contributed $1,000 to Longwell’s campaign for Sedgwick county commissioner.
Jeff Longwell vote to help Michigan CompanyThen on July 20, three days after the council’s decision in favor of Key/Walbridge, other Walbridge executives contributed $2,250 to Longwell’s campaign. Besides the Walbridge contributions, Key Construction and its executives contributed $6,500 to Longwell’s county commission campaign. Key and its executives have been heavy contributors to Longwell’s other campaigns, as well as to Wichita Mayor Carl Brewer and many other Wichita City Council members.
Bob Weeks
Bob Weeks is a blogger for liberty and economic freedom in Kansas: http://wichitaliberty.org. Find him onTwitter: @bob_weeks
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2.In Wichita, the need for campaign finance reform
3.Haupt’s Commentary: Get over it! It’s not about politics, it’s about the law
4.WichitaLiberty.TV: The Wichita Eagle fails the city and its readers
5.Here’s a Wichita sales tax election map by district |
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Mon Apr 20, 2015 7:06 am |
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untanglingwebs
El Supremo
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Sounds like Genesee County officials to me, especially on the overpriced no-bid contracts. Commission supporters allege it is only cronyism as they are not accepting bribes, only promises of campaign support.
The problem is the cost to the public for these deals.
Remember when the City of Flint made residents pay for the towers and then gave the towers to a downtown group. They even used our federal funds to demolish the building.
The problem may be who in government will be willing to prosecute abuses? Leyton worked a deal with the Lapeer County Prosecutor to "deep six" a money laundering deal after he old others that AG Cox said the case was a slam dunk. Cox wanted Leyton to prosecute as the AG office was extremely overworked.
Lawyers who argued with me month ago about the Mott Foundation, as well as some staunch Republicans, are suddenly angry about how the "foundation in the tall building" * is controlling all of Flint.
It seems the County Commission no-id contracts may be the triggering event.
* Oddly many seem to be using this term. |
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Mon Apr 20, 2015 7:12 am |
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untanglingwebs
El Supremo
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Donating Public Property May Raise Constitutional Problems
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Laura J. Genovich
Foster Swift Municipal Law News
October 30, 2013
As public servants, municipal officials and employees are often eager to help people and organizations in the community – even by contributing funds or property from the municipality. Unfortunately, although donations of public funds and property are well-intended, they may be unlawful.
Municipalities only possess the powers conferred on them by statute or the state constitution. Mosier v Bd of Auditors, 295 Mich 27, 29; 294 NW 85 (1940). The Michigan Constitution prohibits municipalities from loaning their credit for any public or private purpose unless provided for by law. Mich Const, Art 9, § 18. This means that municipalities may transfer public property or donate public funds only under limited circumstances.
TRANSFERRING PUBLIC PROPERTY
The Michigan Supreme Court has held that "municipalities may not give away public property without a consideration." Kaplan v City of Huntington Woods, 357 Mich 612 (1959). The consideration must have "fair value." Alan v Wayne Co, 388 Mich 210, 330; 200 NW2d 628 (1972).
For example, the Michigan Legislature has provided that a township may transfer public property under certain circumstances:
By resolution of the township board, a majority of the members serving may acquire property for public purposes by purchase, gift, condemnation, lease, construction, or otherwise and may convey or lease that property or part of that property not needed for public purposes.
MCL 41.2 (emphasis added). Thus, property that is not needed for public purposes may be transferred. Such a transfer, however, requires consideration if the public property has value. If the property does not have any value, then a transfer without consideration may be acceptable because there would be no "fair value" for the property.
DONATING PUBLIC FUNDS
Generally, unless specifically authorized by statute or the Michigan Constitution, municipalities do not have authority to donate funds, even to non-profit organizations. Without such specific authority, the Michigan Attorney General has written that public bodies may not appropriate or contribute public funds to private non-profit corporations, even if that corporation is performing activities for the public benefit. OAG, 1935-36, p. 5 (Village has no authority to appropriate public funds for lighting a recreation field controlled by a veterans’ organization even though the entertainment provided on the field was free to the public); 1 OAG, 1957, No. 3066, p. 476 (October 9, 1957) (City funds may not be used for contributing to the expenses of private voluntary groups operating recreation facilities for children); OAG, 1977-1978, No 5212, p 199, 200 (August 17, 1977) (prohibiting contributions by a county to a private, non-profit hospital). Thus, in most cases, municipalities cannot make monetary donations, even to good causes.
EXCEPTIONS
Expenditures may be authorized if they constitute a proper public purpose. For example, paying dues to the Michigan Municipal League has been held to be a proper public expenditure. Hays v City of Kalamazoo, 316 Mich 443; 25 NW2d 787 (1947). Paying dues must, however, be reasonably related to the services provided to the governmental units. OAG, 1989-1990, No 6563, p 28, 30 (January 26, 1989).
Additionally, public bodies may expend public funds to private, non-profit corporations pursuant to a contract. OAG, 1977-1978, No 5212, p 199, 200-201 (August 17, 1977). Typically, the corporation would then perform services on behalf of the municipality as consideration. For example, the Attorney General concluded that a county could pay public funds to a private non-profit hospital if the county enters into a contract and the hospital’s services aid the county in the performance of a governmental function. OAG, 1987-1988, No 6431, p 60 (April 16, 1987). The public body would have to receive adequate consideration in return.
CONCLUSION
Determining whether a proposed expenditure or transfer of property is lawful requires a review of the circumstances in light of the constitution, statutes, and case law discussed above. Municipalities should consult with legal counsel before donating money or property.
October 2013 Foster Swift Municipal Law News
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Mon Apr 20, 2015 7:28 am |
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Mon Apr 20, 2015 2:14 pm |
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Home → Your State → Michigan →
Michigan: The story behind the score
By Chris Andrews
The campaign finance system here has more holes than I-94 after a spring thaw. Big spenders and special interests can easily shovel millions of dollars into election activities — secretly if they choose. The lobby law is so weak that it was nearly impossible to determine which companies were spending millions to oppose construction of a new bridge. And the financial disclosure system for state elected officials?
Well actually, there isn’t one.
Welcome to Michigan, the “Trust Us” State when it comes to transparency. Reform efforts are frequently launched, sometimes debated, always shelved. Meanwhile, special interests continue to make greater use of loopholes that allow them to influence the system without leaving fingerprints on the money spent doing it.
“It appears we’re living with an honor system in an environment where there isn’t much honor,” said Rich Robinson, executive director of the Michigan Campaign Finance Network, a nonpartisan watchdog group that tracks campaign spending and lobbying records.
All those factors help explain why the state earns a grade of 58 — an “F” — from the State Integrity Investigation, a collaborative project of the Center for Public Integrity, Global Integrity and Public Radio International. Overall, Michigan ranks 43rd among the 50 states.
The analysis of 330 indicators of state accountability measures shows that this state of almost 9.9 million residents has major flaws in tracking money spent to elect officials and shape policy. The set of laws regulating campaign spending, lobbyist activity, and financial disclosure guarantee essentially says to the public: Mind your own business.
Even so, Michigan’s state government is not known for scandal. It gets many things right.
It is not plagued by pay-to-play allegations in procurement, or by nepotism or cronyism in the civil service system. Its Freedom of Information Act usually, if not always, works to give journalists and others the information they request at a reasonable cost. The sort of corruption that is common in Detroit rarely finds its way 90 miles north to Lansing. And Gov. Rick Snyder’s new push for transparency is giving residents greater online access to information about how the state spends billions of dollars annually than ever before.
But there are glaring holes, especially when it comes to the millions of dollars spent to wine and dine lawmakers, elect or defeat candidates and pass or kill legislation. Efforts at reform are frequent; and they almost uniformly fail.
Following the money: Good luck with that
The Michigan Campaign Finance Act was enacted as a post-Watergate reform in 1976 to limit the impact a few rich individuals or well-heeled special-interest groups can have on elections, as well as to shine light on who is spending how much.
More than thirty-five years later, the law misses the mark in at least three ways. In the real world of politics, individuals and groups can spend as much as they want to elect or defeat a candidate, or ballot issue. A growing share of the money goes, legally, unreported. Enforcement efforts are modest at best.
Campaign finance law does limit how much individuals, political action committees, and political parties can contribute to candidates’ campaign committees. For instance, individuals can give no more than $3,400 to a candidate for governor; political action committees can give no more than $34,000 and political parties are limited to $68,000.
But for political high-rollers, these restrictions are nothing more than speed bumps. They can make unlimited contributions to political parties and political action committees, which turn around and make unlimited independent expenditures on television ads and other communications to support or defeat a candidate.
The only restriction is that the independent expenditures cannot be under the control of the candidate committee.
In practice, this has allowed wealthy individuals and powerful PACs to funnel huge amounts of money into campaigns.
In 2006, Republican businessman Dick DeVos contributed nearly $35 million to his own unsuccessful campaign for governor. That same year, Kalamazoo philanthropist Jon Stryker and his wife contributed more than $5 million to the new Coalition for Progress political action committee, which spent more than $3 million supporting Democrats or opposing Republicans. Democrats captured numerous swing seats to take control of the Michigan House of Representatives. Some Republicans think Stryker’s money was the difference.
Stealthy issue ads
At least those contributions were reported, and journalists and voters could track the money on the Secretary of State’s website. That can’t be said for issue-advocacy ads, which have emerged as the loophole of choice in the 21st century.
The ads look, sound and feel like standard candidate ads, but because they don’t directly ask voters to vote for or against a candidate, they don’t fall under the campaign finance act, according to the Secretary of State’s interpretation of the law.
Over the past several election cycles, the amount of money pumped into campaigns through issue-advocacy ads has grown enormously. Between 2000 and 2010, nearly $70 million in campaign advertisements for state office were not disclosed under the Michigan Campaign Finance Act. The figure comes from the Michigan Campaign Finance Network, which inspects the public files at television stations. There is no information available on money spent on radio ads, robo-calls or other issue-advocacy communication.
The Michigan Democratic Party spent $4.3 million on issue ads supporting Democratic candidate Virg Bernero in the 2010 gubernatorial election, and voters don’t know who gave the money to the party. Because these ads aren’t regulated by the campaign finance act, the donors aren’t disclosed. The Republican Governors Association pitched in $3.6 million for ads to elect Rick Snyder.
The Secretary of State’s Office is charged with enforcing the Campaign Finance Act but has relatively little power and little history of aggressive enforcement. The law directs elections officials to try to resolve disputes rather than prosecute. When Baxter Machine & Tool Inc. made an illegal contribution of $25,000 to a political action committee (state law prohibits corporate contributions to PACs) in 2004, the Secretary of State dismissed the complaint against the company “because this matter occurred in error,” and imposed a $1,000 fine, while allowing the political action committee to keep half the money.
Conciliation over punishment
The lack of subpoena power is a barrier to investigation of violations.
In 2010, the state was prepared to reach a $10,000 conciliation agreement with former Detroit Mayor Kwame Kilpatrick, who spent nearly $1 million of his campaign funds on legal services. The agreement fell through. In 2011, new Secretary of State Ruth Johnson took a tougher stand, citing Kilpatrick’s testimony in a civil suit that he paid his lawyers to defend himself against perjury charges related to an affair. Armed with information it could not get on its own, the secretary of state then filed suit seeking fines totaling $976,000.
In a state slowly pulling out of a decade-long recession, lobbying is a big and thriving business. In the first seven months of 2010, lobbyists spent nearly $20 million, up 12 percent from 2010, according to an analysis by the Michigan Campaign Finance Network.
Enacted in 1978, the Michigan Lobbyists Registration Act was designed to let the public know who is lobbying legislators and top administration officials, and how much they are spending to wine, dine and otherwise influence decision-makers. But the disclosure requirements are so weak that linking spending to political outcomes is virtually impossible.
“Frankly, lobbying reports themselves are almost meaningless,” said Robert LaBrant, general counsel for the Michigan Chamber of Commerce and one of the state’s leading authorities on the lobbying law.
The law requires lobbyists to list their clients, but not a whole lot more. Michigan’s major lobbying firms represent many clients with a variety of interests. From the reports, you can’t tell whether lobbyist expenditures are intended to shape business taxes, teacher tenure laws, movie industry incentives or a new bridge to Canada, all of which came up during the 2011 legislative session.
The Michigan Campaign Finance Network reported that the Detroit International Bridge Company spent $4.7 million on advertising opposing a second bridge that would present competition to the one it owns. But MCFN Executive Director Rich Robinson said he couldn’t find any evidence that the DIBC had registered to lobby, or paid a firm to lobby on its behalf.
Gift loophole
And then there’s the gift loophole. Lobbyists are barred from giving gifts to legislators or other officials. But what is a gift? According to the lobby law, it is something that cost more than $57 in 2012. (The threshold is adjusted annually for inflation.) So if a lobbyist gives a senator a ticket to a Michigan State University basketball game, it isn’t a gift after all.
A few years ago, several lobbyists attempted to enhance their generosity by pooling their money to give theater tickets to legislators and spouses without exceeding the threshold. The Secretary of State said no, in response to a ruling request from LaBrant, of the Michigan Chamber, and Robinson, of the Michigan Campaign Finance Network, two of the state’s leading experts on campaign finance and lobby regulation.
Similarly, lobbyists don’t have to identify the legislators they are taking out to breakfast, lunch or dinner as long as the cost is less than $57 in a month or $350 in a reporting period. “Generally, only if you are going out for a real night on the town with the wine and hors d’oeuvres and a nice dessert do you get over the financial threshold,” said LaBrant.
And Michigan is one of only three states without asset disclosure laws for top elected officials.
Unlike members of Congress, and lawmakers in 47 states, they aren’t required to let the public in on their personal wealth or financial holdings, which leaves voters unable to detect potential conflicts of interest. Governors and candidates for governor often voluntarily release their tax returns or summaries of them, but those disclosures are not required.
Various proposals have been made dating back to at least the 1980s to establish financial disclosure laws, similar to those required for candidates for Congress. But none have been enacted into law, so the public can only hope that legislators will disclose any conflicts and abstain when there are conflicts.
Conflicted about conflict
But there are no clear guidelines about what constitutes a conflict, and in reality, lawmakers almost never abstain for ethical reasons. Former Attorney General Mike Cox, who supported financial disclosure in 2009 when he was preparing to run for governor, researched House and Senate records between 2003 and 2009 and found there wasn’t a single instance when a state senator abstained from voting because of a conflict of interest. There were only 33 abstentions in 6,495 votes in the House.
In May 2011, Democrats in the state Senate formally challenged whether senators who had direct interests in limited liability corporations (and stood to benefit under a tax reform plan) should be required to abstain from voting. Republican Lt. Gov. Brian Calley, who serves as president of the Senate, ruled that senators must decide for themselves whether there are conflicts of interest. Everyone voted.
Michigan state law establishes a state ethics board designed to investigate wrongdoing. The members of the seven-person panel are unpaid volunteers, many of whom are former politicians with allegiance to one party or the other. The board has no budget, and its only staff is a civil service official who serves as executive secretary, and an assistant attorney general who is assigned to the board.
Over the years, the board has had little impact. It cannot accept anonymous complaints, which creates a barrier for anyone to come forward who might fear reprisal. Its authority extends to the executive branch but not the judiciary or Legislature. Lynn Jondahl, a former state representative who chaired the ethics board during the administration of Gov. Jennifer Granholm, said lawmakers occasionally approached him in search of guidance, but he had to tell them they were not within the board’s purview.
Even with its executive branch investigations, the ethics board has no power to take action other than to make recommendations to the agency where the alleged violation occurred. “It [the board] is very limited both in terms of its coverage of the executive branch and in terms of the sanctions, or lack of sanctions,” Jondahl said.
Legislator to lobbyist
Ethics reform advocates frequently call for legislation to establish “cooling off periods” before legislators and top administration officials become lobbyists or work in industries they oversaw, usually between six months and two years. But Michigan lawmakers have not been inclined to limit their future career options.
In fact, it is commonplace for legislators and other leading state officials to become lobbyists after their terms expire. Term limits restrict legislators to three two-year terms in the House and two four-year terms in the Senate. Former House Speakers Rick Johnson, Chuck Perricone, Lewis Dodak and Gary Owen are just a few of the legislators who turned lobbyist.
Former Michigan Insurance Consumer Advocate Melvin Butch Hollowell said that most of the state’s insurance commissioners have taken jobs in the industry after leaving government service. It raises questions about whether some of their decisions as commissioner were influenced by the desire to please their future bosses, he said.
Gov. Snyder is a strong proponent of transparency in government, and he proposed an ethics package when he was running for governor in 2010. Among other things, he called for banning all gifts from lobbyists, cooling-off periods, and regulation of issue advertising.
But while Snyder achieved many of his campaign goals after taking office in 2011, these reforms were put on the back burner. Robinson said lawmakers are unlikely to take action unless the public demands it, and so far citizens have shown little interest.
“The Legislature fundamentally is a position between interest groups and the citizens,” Robinson said, “and it’s easier to just throw in your lot with the interest groups.”
Want to get this information in the hands of those who need it most? Use the report card's "E-mail this score to your state official" button to automatically send Michigan's grades to your governor and state legislators. If you're from another state, use our map to find your state and send your state's report card to the people who represent you. |
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Jack Lessenberry
Michigan Among Worst for Risk of Corruption
March 23, 2012
DETROIT — Everyone knows that economically speaking, Michigan has been one of the most distressed states in the nation.
But what about issues of ethics? Government accountability? Transparent and open campaign finance and lobbying laws?
Guess what? We’re among the nation’s worst!
The Center for Public Integrity this week released a nationwide study that looked at the risk of corruption in every state. Michigan was one of the eight states receiving an F, or failing grade.
What may be even sadder is that state officials didn’t seem much concerned. Gov. Rick Snyder, who was in Europe, has in fact called for improving financial disclosure standards. But his communications director felt legislators had “other things on their plate.”
Michigan didn’t flunk every category in the survey. The state got high marks, in fact for its internal auditing procedures, and a decent grade for an above-board procurement process.
But the state failed almost everything else. Rich Robinson, head of a non-partisan, non-profit watchdog group, the Michigan Campaign Finance Network, remembered that one local candidate used to have the slogan “No worse than the rest.“
“But we are worse than the rest,” he said, adding with a bit of black humor, “We could call it, ‘Michigan Exceptionalism.’”
Michigan racked up failing grades in everything from state pension fund management to redistricting, legislative, executive and judicial accountability, campaign financing and lobbyist disclosure.
The study was a joint effort by the center, Public Radio International and Global Integrity, a worldwide watchdog group.
The report noted that Michigan has no laws requiring elected officials to disclose their assets, investments or their financial entanglements. That caused one longtime Lansing journalist to quip that Michigan’s motto should be the “Trust Us State.”
But there seems to be little reason for trust. Three years ago, former state Attorney General Mike Cox found that over a six-year period, there wasn’t one case in which a Michigan state senator abstained from a vote because of a conflict of interest.
The Michigan Campaign Finance Network has been particularly concerned with the state’s abysmal requirements for reporting campaign spending. Political groups can pretty much get around any reporting requirements by giving money for “issue-oriented” ads.
As a result, over the past decade, nearly $70 million worth of campaign ads have been produced and aired, with no disclosure requirements whatsoever, Robinson said.
“It appears that we are living with an honor system in an environment where there isn’t much honor,” he added.
So, what changes he would recommend the legislature make? First of all, finding a way to compel disclosure of the issue-oriented ads. “This loophole is hiding a greater volume of political spending than the campaigns are reporting,” he said.
Next, “reporting of lobbyists’ spending needs to be more complete. (Last year) lobbyists reported spending $776,000 for food/beverage/travel” for legislators. “Only one-third of that amount identified a recipient of the benefit. That’s way too loose.”
Elected officials ought to be required to make personal financial disclosure statements as well, he said, at least within a range. As of now, only Idaho, New Hampshire and Michigan don’t do this.
“This isn’t about nosing around. This is about putting interests on the record to identify conflicts, and to give a benchmark,” so sudden big suspicious changes can be detected.
Rich Robinson would also like officeholders and top officials banned from leaving government and immediately taking jobs as lobbyists. He’d impose a one-year waiting period. He‘d also prevent those selling goods and services to the state from hiring those who give them contracts for at least a year.
Some legislators have indicated a willingness to fight for regulatory reform, notably Democratic floor leader Kate Segal, of Battle Creek. But her party is heavily outnumbered.
Majority Republicans mainly have shown little interest in such reform. State Rep. Peter Lund, (R-Shelby Township), the chair of the House elections committee, told the Detroit News he doubted that most voters are interested in ethics reform.
“When I talk to constituents, they talk to me about jobs,” he said. Robinson sees it slightly differently. He said he has been playing cribbage with an old buddy since the 1960s. “He says he trusts me, but he always cuts the cards.”
A note on Detroit’s ‘proposal’
You just can’t make this up: Facing the threat of an emergency manager, Detroit Mayor Dave Bing finally submitted a counterproposal for a consent agreement to the governor.
The city, which is billions in debt, is expected to run out of cash by the end of April. That would normally require the state to take the city over, something Governor Snyder says he doesn’t want to do.
But city officials balked at the conditions the governor’s plan set, which include turning most budget authority over to a nine-person financial review board, some to be named by city officials.
The governor then invited Detroit to offer its own proposal. On March 20, the city’s plan was leaked to the media. It included demands that Lansing give Detroit $137 million immediately, forgive the city’s debt, and allow Detroit to raise income and corporate taxes.
About all that lacked was a clause asking the governor to buy every small child a pony. The chance of the state Legislature approving such a consent agreement is, of course, zero.
Napoleon used to say, “audacity, audacity, always audacity,” when asked what his strategy was. Detroit clearly seems able to relate, but may also be close to its own Waterloo.
Veteran journalist and national Emmy Award winner Jack Lessenberry teaches at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.
March 22, 2012 · Filed under Jack Lessenberry Tags: corruption, michigan, politics
32 responses so far ↓
1 Dennis Neuner // Mar 23, 2012 at 8:29 am
Ethics reform was a part of the comprehensive bill that the Governor Milliken and the legislative leadership crafted in response to Watergate. Unfortunately, the Supreme Court struck down the ethics portions beyond campaign finance and lobbyist regulation and sadly, its never been seriously considered since. Time has long passed to address the very serious issues outline in this column.
2 Michigan Among Worst for Risk of Corruption | DomeMagazine.com « 3poisons // Mar 23, 2012 at 9:00 pm
[…] via Michigan Among Worst for Risk of Corruption |
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