A stash of cash for troubled pols
Funds let officials collect unlimited money from donors and companies
EARLIER THIS YEAR, on April 13, the city of Fall River signed a host community agreement with Northeast Alternatives, which already operates a medical marijuana dispensary in the city, to open up a retail recreational pot operation in a strip mall near the Rhode Island line.
Four days later, on April 17, J.H. Holdings Group Inc., whose principals are executives of the medical marijuana dispensary, donated $20,000 to Mayor Jasiel Correia’s defense fund.
And it was all legal.
“These are people who wanted to support me in some way or fashion,” said Correia, who insisted the agreement was a uniform pact that all pot dispensaries in the city receive. “We felt that was the most transparent and legal way to do it.”
The campaign finance law was amended by the Legislature in 2009 to allow elected officials to create the accounts in order to accept donations for legal defense, inaugurations, or recounts without having to dip into their campaign funds or personal savings. The law also allows political parties to set up legal defense accounts, though not account for recounts or inaugural expenses.
Unlike regular campaign accounts, to which corporate donations are not permitted and that cap contributions from any donor at $1,000 every two years, there is no such restrictions on segregated funds account. As long as the donors who give more than $50 are identified, the funds can accept unlimited amounts from individuals or companies. Correia’s is just one of nine accounts set up by elected officials for legal defense.
Two of J.H. Holdings’s partners, Christopher Harkins of Portsmouth, Rhode Island, and Jeffrey Johnson of South Boston, are listed as the president and treasurer, respectively, of Northeast Alternatives. J.H. Holdings, which is incorporated in Delaware, is listed as the owner of the property where Northeast’s medical marijuana dispensary is located and where the new retail operation is slated to go. Records filed with the Department of Public Health show the nonprofit medical marijuana dispensary pays nearly $146,000 a month in rent to J.H. Holdings. Harkins and Johnson did not return multiple requests for comment.
Lawrence Mayor Daniel Rivera has three segregated account funds, one each for his inauguration, a recount of his 2013 race against former mayor William Lantigua, and a legal defense fund. It’s not clear why he has formed the legal defense fund. Rivera, who did not respond to a call and email for comment, has amassed more than $25,000 in his legal defense fund, including a $10,000 donation from James Davis, the founder of New Balance, whose factory in Lawrence is one of the city’s biggest employers.
While the donations are legal under state campaign finance laws, some say it raises questions to allow such contributions.
“It’s a perception issue, isn’t it,” said former Massachusetts attorney general Scott Harshbarger, the one-time president of good government watchdog Common Cause. “It’s the classic perception, appearance of a conflict or appearance of potential influence. I hate to say quid pro quo but it raises enough issues that either [campaign finance officials] or [the] ethics [commission] should look at it. It sure raises eyebrows.”
The accounts receive little oversight by the Office of Campaign and Political Finance once they are set up. By law, the accounts are required to list the purpose, who has donated, and how much they gave. While the money can only be spent for the stated purpose, there is no mandate to report when and how the funds are expended.
But a review of the accounts shows no audit or probe has been conducted on any of the 39 segregated accounts funds, a fact Tait confirmed.
“There have been no full audits of segregated funds, to my knowledge,” Tait said. “We have also not resolved any cases concerning segregated funds.” He added he could not comment on whether there are any cases that might be pending.
The agency has sent letters to a number of officials telling them they need to close their accounts because there is no indication of activity. OCPF has also unilaterally terminated some accounts without a response.
Former state Senate president Therese Murray set up a legal defense fund in the wake of the federal investigation into the state Probation Department when her name surfaced in relation to recommendations she made. She received $17,500 in donations from three donors in 2015, including $10,000 from former Boston advertising magnate Jack Connors. But there has been no activity since that time and officials moved to “administratively close” the account until an objection was raised by Murray’s lawyer, Thomas Kiley.
“The account has not been active for a period of time and I do not foresee a period of significant activity moving forward,” Kiley wrote to OCPF director Michael Sullivan, “but I do not wish the account to be closed just in case we do succeed in securing contributions to defray the legal bills incurred and still outstanding from a misguided investigation.”
Correia declined to detail where his money was spent, citing the “privacy” that the statute affords him.
“I’m not going to comment on a private matter,” Correia said. “If there was an issue, ethics would have called me on it. We believe we have done everything by the letter of the law.”
Rivera did not respond to messages about his use of segregated account funds.
A spokesman for the state Ethics Commission declined comment but referred to the regulation governing the campaign finance law that allows contributions to be made as long as they are disclosed. He also referred a question about conflict of interest disclosure to a 1992 case where the commission ruled a lawmaker must disclose not only a donation from someone with business before the Legislature but file a disclosure of the nature of the business and the relationship to the official. It’s unclear whether that would apply to a municipal official and whether such donations to legal defense funds are viewed the same.Harshbarger said it appears Correia acted within the letter of the law, but said accepting the donation such a short period of time after the host agreement was signed is troubling. He said all officials who create legal defense funds need to ask themselves a series of questions before taking money.
“Was this appropriate? Did it raise the appearance of impropriety?” he said. “If [Correia] had waited six months, that would have been better. It doesn’t mean the mayor asked for it, but timing is everything in this business.”