Easley camp pushed donation law's limits

But a Democratic Party official says the Easley campaign gave much more money to the party than it took from it.

Staff WriterOctober 28, 2009 

  • State and federal authorities have been investigating former Gov. Mike Easley and his campaign. The probes follow a series of reports in The News & Observer about free cars, flights and how donors appeared to be funneling donations to Easley through the state Democratic Party. In July, the campaign finance watchdog group Democracy North Carolina alleged violations and requested hearings by the State Board of Elections.

    On Monday, former Easley confidant McQueen Campbell testified that Easley directed his campaign to pay for $11,000 in roof and bathroom repairs at his personal residence in Raleigh and kept it secret from the public.

    The board could fine Easley's campaign and declare that crimes occurred and refer those matters to state and federal prosecutors.

  • Former Gov. Mike Easley is expected to be called to testify today in the state Board of Elections hearing about possible elections law violations. Chairman Larry Leake said that Easley could be called to speak at about 9:30 a.m.

    Here are arguments that could be used on Easley's behalf:

    M Queen Campbell acted, not Easley

    Campbell, a friend and political ally of Easley, testified Monday that he paid $11,000 in home repairs and then submitted two false invoices to the campaign to get repaid. He listed them as travel, not home repairs. Campbell said that was the result of talking to Easley and "understanding" that was how Easley wanted him to do it.

    Easley lawyer Thomas Hicks of Wilmington said the former governor never authorized Campbell to submit false invoices and is offended by the allegation.

    Easley had different mindset

    An Easley campaign staffer testified she questioned one of Campbell's invoices because it didn't have supporting documents. She described the governor as saying he knew what the invoice said and to pay it.

    Hicks said "Easley had one thing that he was thinking about when he was talking about invoices and it was not exactly what had been submitted by McQueen Campbell."

    Campaign repairs, not home repairs?

    Hicks said there could be evidence about the repair work to "show it was not really a personal expense... perhaps it was caused when [the house] was being leased to the campaign." At the time, it was legal for a campaign to pay for a candidate's personal expenses as long as it was properly disclosed.

    No invoices submitted on flights

    Campbell, a pilot, acknowledged he never submitted paperwork seeking to get paid for any of 61 flights valued at more than $100,000 he provided for Easley between 1999 and 2006. He did say Easley had asked for a list of flights at one point, though.

    Hicks agrees that the Easley campaign should have reported all the flights but said as a practical matter it is difficult for a multimillion-dollar campaign to report its receipts and expenses if vendors do not file paperwork.

    J. Andrew Curliss

— Internal documents from former Gov. Mike Easley's campaign committee suggest a concerted effort to run donations illegally through the N.C. Democratic Party to circumvent contribution limits.

The evidence, released Tuesday by the State Board of Elections, included internal campaign memos that outlined ways to extract more money from donors than they could get with straightforward contributions to Easley's two campaigns for governor.

The board's questions about the memos were greeted with denials and fuzzy memories from two Easley campaign officials and a top donor. And attorneys for the state Democratic Party contended that Easley's campaign gave to the party far more than it got.

The board heard from Easley's former campaign treasurer, lobbyist Dave Horne; finance director Michael Hayden and strategist Mac McCorkle. Gary Allen, a Charlotte-area developer and major contributor, also testified about two $50,000 contributions he gave to the party in 2003 and 2004.

None said they were involved in or were aware of efforts to use the party to funnel large contributions to Easley's campaigns in 2000 and 2004.

"I would never intentionally break the law," said Hayden, who has also worked on governor's campaigns in South Carolina and Oklahoma.

Exceeding the campaign contribution limit laws is a misdemeanor, while filing false campaign reports is a felony, board chairman Larry Leake said. The state has limited individual campaign contributions to $4,000 per election cycle and prevented businesses from giving in order to limit the influence of well-heeled interests in elections. If the board believes a crime has been committed it will send evidence to prosecutors.

On Monday, two donors to the Easley campaign testified that campaign aides told them to donate to the Democratic Party and that their contributions would be forwarded to the Easley campaign. One of the fundraisers, Wilmington developer Lanny Wilson, also testified that Allen gave the party $50,000 in 2003, likely with the idea that it would eventually return to the Easley campaign.

Internal campaign documents the board introduced Tuesday bolstered those assertions. Two memos written by Easley campaign manager Jay Reiff in May 2000 urged the campaign to take advantage of a "loophole" in state law that allows unlimited non-cash contributions by the party to candidates.

"I propose we initiate a large donor program through the [state party] immediately," Reiff wrote. "We will be competing directly with the House and Senate committees over big donors, so it's critical we place someone within the [party] to get their hands on the money first. We can pay for all our expenses this way, including, research, polling, focus groups, phones, direct mail, salaries production costs, etc."

However, if donors gave to the party with the intent of the money going to a specific candidate, it would have been illegal.

A way around the rule

Reiff has been subpoenaed to appear at the board's inquiry but will not. Leake said Reiff is in Virginia, beyond the state's reach, and cannot be compelled to testify.

Another Easley memo from the 2004 campaign, written by Hayden and labeled "Finance Plan," discusses running contributions through the party or political advocacy groups. "This gives us the ability to raise money from entities thought prohibited such as corporations and sets new limits to how much we can receive," said the plan, which appeared to be intended for Easley to read.

Hayden suggested in the plan that "controversial individuals who we would not wish to show on our report can be run through" the Democratic Governors Association.

Repeated questions to Hayden and Horne brought no confirmation. They said they had limited discussions with Easley about fundraising. Hayden said he could not confirm that he wrote the finance plan, though he admitted it looked like something he might draft.

The former campaign officials also said they could not recall many details regarding the campaign's inner workings. Allen, the Charlotte developer who now lives in Florida, displayed a foggy memory and did not support Wilson's testimony regarding Allen's $50,000 donation.

At times, election board members expressed exasperation. The board tried to home in on a comment Horne made about a group of people involved in the campaign who would be involved in major fundraising decisions. But Horne could only name one other person, R.V. Owens, a nephew to Senate leader Marc Basnight, a Manteo Democrat.

"I was disappointed and surprised that they couldn't remember more than they did," board member Charles Winfree said after Tuesday's testimony. "Mr. Hayden, Mr. Horne and Mr. Allen in particular seemed like they were not able to remember things that I would think they ordinarily could remember."

Gave more than it took

McCorkle told the board that he dealt little with campaign finance, serving as an issues consultant who did not work directly for Easley's gubernatorial campaigns. McCorkle said he was a subcontractor to Easley's media consultant, Saul Schorr, who is based in Philadelphia.

Jim Cooney, an attorney for the state Democratic Party, dismissed the notion of an illegal fundraising scheme as he questioned Horne. Cooney said that Easley's campaign committee raised far more money for the party than it got back.

Cooney used an easel to list the hundreds of thousands of dollars that Easley raised for the party as part of coordinated campaigns for all statewide candidates.

"If the plan was to have the Easley campaign funded through donations from the North Carolina Democratic Party, it is fair to say it was a miserable failure," Cooney said.

But board members noted that the numbers Cooney displayed were not supported by any evidence presented Tuesday, nor was Cooney a sworn witness.

"Have they been verified by us?" Leake said. "No, they have not. But we are working on it."

dan.kane@newsobserver.com or 919-829-4861

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service