Commentary: Rexroad Case Illustrates Enforcement of Campaign Laws is a Joke

Rexroad-MattIn 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

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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  1. Biddlin

    “The most troubling aspect of it is that the penalty for such a transgression is so light.”

    The fines are proportionate to the magnitude of the infraction. American politics is and always has been a full contact sport. No autopsy, no foul. Such indignance is laughable, whether feigned or unimaginably naive.

    “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.”

    The best solution to satisfy your “fairness” issue would be public financing of campaigns. The realistic best solution is for people to ignore the flyers and TV adverts and vote for candidates and issues they approve of.

    Take some comfort, David. I have just learned that “indignance” is considered archaic usage and ironically can think of no other description of my own current state of being.

    1. Davis Progressive

      “The fines are proportionate to the magnitude of the infraction. ”

      the question is really what is the magnitude of the offense? the fppc, i looked it up, only has authority over campaign committees, but rexroad could be criminally prosecuted for illegal actions. this is very serious. i don’t know you are downplaying its severity.

  2. Dave Hart

    Two issues: (1) Fines as an equitable way to control behavior, and (2) the role of money in politics. (2) can only be resolved with a constitutional amendment that caps the amount that can be spent, so no need to go down that rabbit hole. (1) Fines are only effective in controlling antisocial behavior to the extent they have an equivalent impact on everyone who is in a position to break the rule. That is why fines should be means tested. $240 speeding ticket for someone making $30,000/yr would be $2,500 for someone making $80,000 and $75,000 for someone making $200,000, etc. In election politics, money no longer means anything in terms of fines, so it has to move to another area like participation. If you’re found guilty of violations, you’re barred from participation for a period of time. If you’re an elected official, you’re removed from office. Bam! For two election cycles. Bam! It doesn’t necessarily have to be a violation for the office you hold, either. Election violations result in removal from office if you hold office and were involved in the violation. Nothing else will be effective, because being in office is the only thing violators care about.

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