Candidate reporting improved but money laundering & phony ‘issue advocacy’ by front groups undermine meaningful disclosure
Posted: October 28, 2002
Updated: October 29, 2002
WDC reviewed the campaign reports of 186 candidates for the legislature and three statewide offices and found that 85 candidates did not report legally required employer and occupational information for 668 large individual contributions worth $323,051 (Table 1) in two separate reports each candidate had to file covering contributions received from Jan. 1 through Aug. 26.
Campaign finance laws - Wis. Stats. 11.06 (b) - require candidates to identify the occupation and employer of all contributors who give them more than $100. This information is crucial to the public because it reveals the special interests seeking to influence the political process and sheds light on why elected officials vote on public policy the way they do.
Seven candidates earned an "F" including six incumbent legislators. Nineteen others earned a "D" or a "D-"; 20earned a "C"; 19 earned a "B"; six earned a "B+"; and 85 candidates earned an "A" or an "A-". Thirty candidates on the ballot received no grade - marked "NA" or not applicable - because they had no contributions of more than $100 for which occupational and employer information is required (Table 2).
The Democracy Campaign based its grades on the number and value of contributions over $100 that had missing employer/occupational information relative to the total number and value of all of the candidate’s contributions of more than $100. Points also were deducted if the contributions that lacked the required information came from people who had previously contributed to the candidate’s campaign.
WDC did not include contributions that failed to identify an employer because the contributor was retired, a homemaker, volunteer or student. It also did not include instances where the listed occupation clearly identified the employer such as legislator or farmer.
The latest grades continued to improve over grades issued on the two six-month campaign finance reports filed by candidates in 2001. For instance, the number of "F’s" fell to eight compared to 13 the last time the Democracy Campaign issued grades and 18 the first time WDC graded candidates. The number of candidates who received an "A" or "A-" increased to 85 on the latest reports, compared to 71 and 44 on the previous report cards.
"The number of F’s has dropped by more than half since we started issuing grades, and the A’s have nearly doubled. We’e seeing better disclosure by candidates with each reporting period, which is good for the public," WDC executive director Mike McCabe said.
However, WDC remains concerned about a number of disclosure issues, including:
- Charges against Democratic Senator Charles Chvala accuse him of laundering tens of thousands of dollars in campaign contributions using out of state groups that subsequently sent the money back to Wisconsin front groups created by Chvala in order to evade contribution limits and hide the donors’ identities. The contributions included corporate donations, which were banned in Wisconsin in the early 1900s. The charges allege Chvala’s groups spent the money on Senate Democratic candidates in the 2000 elections without even the candidates’ knowledge.
The number of groups using the issue ad loophole to escape disclosure has grown significantly in 2002. Organizations like Wisconsin Education Association Council and Independent Citizens for Democracy that reported their activity in past elections are running undisclosed issue ads this year. The state Republican Party also is running undisclosed issue ads in the governor’s race, thanks to a November 2001 decision by the State Elections Board to dismiss a Wisconsin Democracy Campaign complaint and significantly widen the loophole to allow state political parties to avoid campaign finance limits and disclosure requirements in Wisconsin law by running issue ads.
- Thus far at least a dozen issue advocacy groups - with innocuous names like Working Families of Wisconsin and Coalition to Keep America Working - tied to labor, education, abortion, realtors and the environment are running advertisements against or on behalf of dozens of candidates in races around the state. Antiquated state laws riddled with loopholes do not require these groups to identify who is behind their campaigns, how much they spend or where they get their money, but their spending is likely to run into the millions of dollars by Election Day.
- Governor Scott McCallum’s number of contributions showing little or no employer-occupational data represented 38 percent of the total number of incomplete contributions and 54 percent of the total value of incomplete contributions by all candidates.
- At least two candidates - Republican Senate candidate Tom Reynolds and Democratic Representative Antonio Riley - filed electronic reports that showed little or none of the required disclosure on large contributions, yet filed paper reports at the Elections Board with the information complete or nearly complete.
- Candidates filed their electronic reports in at least five different formats, some of which made the reports difficult if not impossible to view if the viewer does not have compatible software.
Page 662 of the governor’s six month report shows two contributions in a row by the same person - Scott Stearns - on the same day, March 25. One entry for his $500 contribution shows his occupation and employer, while the next entry - for $9,500 - lists the information as "Requested."
- In numerous cases, candidates indicated they "requested" employer/occupational data from big donors. However, there is no proof such requests were made, and in at least one case involving two contributions from the same person to McCallum, there is a clear indication the required information was not provided either because no request was made by the campaign or because of sloppy work on the report by the campaign.
Henri Wedell, a Tennessee contributor who gave $3,000 to eight candidates between January and August was identified as "retired," "a self-employed private investor," or as an executive with Corrections Corp. of America with which the state has a contract to house inmates out of state.
David Kachel, a Whitewater contributor who made 14 contributions totaling $3,350 had his employment status listed the following ways: retired, owner of DLK Enterprises, VP of Wisconsin Dairy Supply and a property owner/merchant who is self-employed.
- In some cases, a contributor’s employment status is listed in numerous ways by various campaigns, and is sometimes disguised using the term "self-employed". For instance:
"Unless candidates comply with the letter and spirit of our campaign finance disclosure laws, the public has no way of knowing the interests behind campaign donations," McCabe said. He noted, for example, that WDC has discovered $13,454 worth of improperly disclosed donations made since 1998 by law firms providing legal representation to legislators or legislative staff under investigation as part of the legislative caucus probe.