April 5, 2014

Governor, attorney general candidates collected excess campaign cash

Representatives from campaigns said any errors were unintentional. Most of the contributions above the $3,500-per-election cycle maximum came from a timing wrinkle in state law. Some contributions meant for a runoff election were counted with funds raised during the primary cycle.

South Carolina candidates for governor and attorney general in 2010 received $336,345 in campaign contributions above state legal limits, an analysis of election finance filings by The State newspaper has found.

Republican Gov. Nikki Haley plans to refund money after The State informed her campaign of $51,522 in excess contributions to her 2010 primary win.

Current Democratic gubernatorial candidate Vincent Sheheen, who also ran in 2010, is talking with state regulators about $19,600 in extra contributions found in the newspaper’s analysis.

Republican Attorney General Alan Wilson already has refunded $42,500 in excess 2010 contributions after reviewing his campaign filings over the past year, his campaign said.

Campaign officials with former Republican state Attorney General Henry McMaster, a 2010 governor candidate, said if asked by state regulators, they would refund $51,850 in contributions that, based on S.C. Ethics Commission interpretations, exceed legal limits.

Representatives from all campaigns said any errors were unintentional. Most of the contributions above the $3,500-per-election cycle maximum came from a timing wrinkle in state law. Some contributions meant for a separate runoff election instead piled into the same primary cycle.

The rest of the excesses came from accounting issues associated with donations to help retire debt that pushed donors past state-mandated limits.

While the excessive contributions represent a fraction of the millions raised by these candidates, the newspaper’s analysis of state ethics commission data points to how campaigns can fail to follow South Carolina election finance rules without getting caught by regulators.

The S.C. Ethics Commission, which can send letters to campaigns for violations, blames understaffing and underfunding for its inability to check all campaign filings. The commission relies on complaints from the public in addition to its own investigative work.

“The state Ethics Commission has been on its deathbed for three or four years,” said John Crangle, director of Common Cause, a South Carolina government watchdog group. “The ethics commission is run like a police department that sees a homicide or burglary but won’t move until a citizen files a complaint.”

Some lawmakers and political operatives say the campaign law that led to much of the overages is contradicted in other state statutes. It also can hurt fundraising during the narrow two-week window between the primary and runoff elections. Legislators promised to fix the law in a sweeping ethics reform bill going through the General Assembly.

In the meantime, Crangle said candidates running for statewide office this year might take advantage of no one watching.

“There will be temptations – and opportunities – to violate the law,” he said.

‘Hit or miss’

The ethics commission’s statute of limitations on violations lasts four years, agency attorney Cathy Hazelwood said.

If the commission finds violations, regulators can send letters to candidates giving them 30 days to fix discrepancies and return extra money to donors, Hazelwood said. If they don’t fix problems, the commission could file a complaint, she said.

Contributors can give as much as $10,500 in an election season to a candidate – $3,500 each in the primary, primary runoff and general elections.

But there’s a catch: State law says any money given to candidates within seven days after an election must go toward the previous cycle. Contributions in the week after a primary are counted in the donor limits during the primary cycle, rather than a runoff.

Some donors and campaigns think money given soon after a primary counts toward the next cycle, especially if their candidate is in a runoff that takes place just two weeks after a primary. But the seven-day rule excludes donors who have already given the $3,500 maximum from contributing for a week after the primary.

“The runoff problem is common,” Hazelwood said.

That’s what happened in reports analyzed by The State newspaper. Candidates were not exceeding the overall contributor limits for the three cycles but receiving one set of donations too early to be counted in a new, separate cycle.

A problem is that runoffs are not a separate cycle for campaign filing with the ethics commission, Hazelwood said. They are part of the primary and must be separated to find possible mistakes.

“It’s hit or miss,” Hazelwood said. “Candidates are expected to review the law, and if they have questions to ask” the ethics commission.

Like others interviewed, Columbia attorney Leighton Lord, who ran for attorney general in 2010 and had $28,000 in excess contributions in the newspaper’s analysis, did not understand why the seven-day rule was added in 1991.

“It’s impossible to raise money that quickly,” he said. “You’re raising money to spend as much as you can in those last two days” before the election

‘Legal technicality’

Three gubernatorial candidates in 2010 received contributions too soon after the primary.

A fourth, who lost in the primary, set up a general election account to collect debt-retirement cash that led to some donors exceeding state contribution limits.

Haley received an excess of $51,552 in contributions during the week after the June 8 primary from 21 donors who already had given her $3,500, the analysis found.

“The campaign in 2010 was clearly unaware of this legal technicality, but being that we have been now made aware, we are in the process of refunding all donations that exceeded the primary limit,” Haley campaign spokesman Rob Godfrey said.

Haley’s Republican opponent in the runoff, then-U.S. Rep. Gresham Barrett, received $142,843 in excess contributions from 51 donors in the week after the primary, the analysis found. Efforts to reach Barrett, now the director of stewardship at NewSpring Church in Anderson, and his campaign were unsuccessful last week.

Sheheen received $19,600 in excess contributions from seven donors in the week after winning the Democratic primary in 2010.

His campaign said it’s talking to state ethics officials about whether the state senator from Camden must refund the money. One section of state election finance law does not include the seven-day delay between races, his campaign said. But Sheheen will return the donations if asked by state regulators.

Based on an interpretation by state regulators, McMaster received excess contributions while trying to settle campaign debt after losing a Republican gubernatorial bid in 2010.

His campaign set up a general election account and accepted $149,500 in additional contributions, according to state ethics records. Since he never reached the general election, that money counted for the one cycle in which he ran – the primary, Hazelwood said.

“You can keep collecting money to retire debt as long as you don’t exceed the limit,” she said. “The problem is he changed election dates when he wasn’t in the next election.”

State law says a candidate can accept money to pay campaign bills if the contributions remain within the limits “applicable to the last election in which the candidate sought the elective office for which the debt was incurred.”

McMaster, who is running this year for lieutenant governor, received $51,850 in excess contributions from 34 donors after his 2010 primary loss, The State’s analysis found.

John Camp, who was McMaster’s campaign treasurer in 2010, said he understood a new election cycle allowed candidates to collect debt from donors – even those who had given the $3,500 maximum.

In working with other candidates over the years, Camp said, he has raised debt money over different election cycles but has never asked the ethics commission for an interpretation.

“If we have inadvertently gone over the limit, we’ll fix it,” Camp said of the 2010 McMaster race.

Three other 2010 gubernatorial candidates who lost in the primary did not receive excess contributions – Republican Andre Bauer and Democrats Robert Ford and Jim Rex.

Wilson’s refunds

The state attorney general prosecutes ethics violations.

Wilson was in charge of the campaign spending case that led to Lt. Gov. Ken Ard’s 2012 resignation. Wilson agreed recently with law enforcement and judicial officials to refer ethics allegations against House Speaker Bobby Harrell, R-Charleston, to the state grand jury.

Wilson’s campaign amended its election finance reports several times during the past year. News reports during that time had documented unrecorded contributions and a $200 donation from a lobbyist. His campaign updated 14 campaign reports from the 2010 and 2014 elections this month.

“Someone handling the books was not as tidy as they should have been,” said Rep. James Smith, a Richland Democrat who is Wilson’s campaign attorney.

Wilson’s current records contain $42,500 in excessive contributions from 15 donors in the 2010 campaign, according to The State’s analysis.

Wilson has returned the extra money, including some other excess contributions received during the 2014 cycle, Smith said. Those refunds will be reflected in Wilson’s quarterly campaign report due Thursday.

No money was misused, and the mistakes were accidental, said Richard Quinn, Wilson’s campaign spokesman.

After all the adjustments, “we will have the most perfect set of campaign filings in the history of South Carolina politics,” Quinn said.

Two other candidates for attorney general in 2010, Democratic nominee Matthew Richardson and Republican Robert Bolchoz, did not have excessive contributions.

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