In the closing weeks of the 2010 campaign, the campaign consultant and fundraiser realized that Damon Dunn, the Republican candidate for Secretary of State, was in trouble. So they wanted to purchase a last-second ad buy. But money was tight.
Mr. Dunn’s political consultant, Matt Rexroad, and political fundraiser, Michael Sowers, identified Charles Johnson and his wife Ann as key supporters of Mr. Dunn. But there was one problem – they had already “maxed out” their contributions, each having contributed $13,000.
So Mr. Rexroad, who is not only a political consultant, but also an elected official in Yolo County, and Mr. Sowers came up with the idea to have the Johnsons donate to three Republican central committees and those central committees would key a small finder’s fee and then pass the rest on to the Dunn campaign.
The evidence is laid out in great detail in the Fair Political Practices Commission report which shows emails, text messages and phone records of how the two men coordinated the plan. Mr. Sowers communicated with the daughter of the Johnsons, while Mr. Rexroad coordinated with the central committees to ensure his client got the money – and when one county didn’t comply and tried to give it, ironically, to another Rexroad client, they killed the deal.
Mr. Rexroad would then send an employee to pick up the checks and deliver them to the central committee and would then send an email to the central committees chairmen with instructions on wiring the money to the Dunn campaign.
Ultimately, while they were successful in funding the ad buy, the plan failed and Damon Dunn finished 15 points behind the eventual winner, incumbent Democrat Debra Bowen.
The most troubling aspect of it is that the penalty for such a transgression is so light. So a campaign is in trouble and illegally launders money, from someone not eligible to donate additional money, through a third party intermediary.
What if the ad buy was enough to push Mr. Damon over the top? The penalty is extremely light.
The Fair Political Practices Enforcement Division is set up under the Political Reform Act which gives “the Division the authority to investigate and administratively prosecute violations of the Political Reform Act.”
But the penalty for violation is minimal – “A violation of the Act may be prosecuted for a penalty fine of up to $5,000 for each violation.”
That’s it. So if the campaign cheats, they get illegal money, they win the election because of it, all they have to suffer is a slap on the wrist. And in this case, the actions occurred in October 2010 and it was October 2014 before the penalties got assessed. Talk about justice delayed.
That is not much of a deterrent. In fact, it is the very opposite. It is an inducement to break the law and take the slap on the wrist later.
This is not a partisan attack on the Yolo County Republican Party or Supervisor Matt Rexroad.
In 2012, we had a strong indictment of the Democrats – “Local Democrats Hammered with Heavy Fines for Reporting Violations.”
At that time, the Vanguard learned that the Davis Democratic Club was being fined for multiple election law reporting and filing violations, from a period that began in 2007 and ended in 2010. According to the California Fair Political Practices Commission website, the Davis Democratic Club stipulated to four counts of violating state election laws.
At that time, Mark Pruner of the Yolo County Republican Party, who had filed the complaint, argued, “The YCDCC knew the laws requiring disclosure of political money received and spent. It hurts the democratic process when political organizations make the choice to operate in the dark. The playing field is now level, as it should have been all along.”
His words seem ironic because his organization has now admitted to illegally funneling money to the Secretary of State candidate two years before the FPPC came down on the Davis Democratic Club.
The $5000 that the Republicans now have to pay, however, is chump change. More importantly, the two operatives in this, Mr. Rexroad and Mr. Sowers, who masterminded this money laundering scheme are apparently not under the jurisdiction of the FPPC, which seems to only have authority over campaign committees.
It is unknown if this is severe enough to need investigation by the Attorney General’s office.
While many people criticized the Vanguard’s initial article, we are concerned about the integrity of the process. If the state is unable to more stringently enforce campaign spending laws, then perhaps it is time to remove those very stringent laws. Allowing for the abuse of those laws in such a blatant manner with almost no real penalty further erodes public confidence in the system.
The incentive structure right now leans toward breaking the law. If you lose the campaign, your only penalty is going to be a fine. In this case, it wasn’t even the campaign that received the fine, it was the party organization.
If you win the election because you cheated, you may have to explain away the offense, but that seems a small price to pay four years later.
It is for these reasons, that I happen to oppose many campaign finance rules as creating a huge incentive to lie and cheat. The best solution would be an instant disclosure system whereby watchdog organizations and the media could monitor campaign spending.
—David M. Greenwald reporting