Political friends – with benefits

Special funds used for legal, recount, inauguration costs

When the Massachusetts Legislature passed its highly touted Ethics Reform Act in 2009, tucked inside was a change to the law that allows elected officials to set up funds separate from their regular campaign accounts to pay for legal fees, recount costs, and inaugurations. Unlike regular campaign accounts, which come with donation limits and disclosure requirements, the new funds allow donors to pony up as much money as they want with no requirement on the recipients to report when and how the cash was spent.

According to records at the state Office of Campaign and Political Finance, 13 officials have set up so-called segregated account funds. State Sen. Anthony Galluccio collected $857 for his defense fund when he was convicted of repeat drunken driving in 2009. Gov. Deval Patrick and former Lt. Gov. Timothy Murray pulled in more than $656,000 for their last inauguration, much of it from large corporations whose businesses are regulated by executive departments or do business with the state. Former Treasurer Timothy Cahill received more than $171,000 in donations to his legal defense fund, including $25,000 loans each from his sisters – Alicia Cahill-Watts of Boston and Sandra Pashley of Australia – and at least $15,000 from prominent Quincy developer and one-time Quincy mayoral candidate Peter O’Connell. He also received a $10,000 donation from a Maryland political consulting firm that was paid $15,000 by his campaign in 2010.

“Any time you have private money entering into the political sphere, there is room for concern,” says Pamela Wilmot, executive director of the Massachusetts chapter of Common Cause. “Any time you have money coming into a fund that is related to a public official, there is the possibility of access and influence.”

The 2009 ethics provision on segregated accounts was an attempt to bring some transparency to a practice that had gone on unregulated in the shadows previously. According to Wilmot, politicians previously could establish the segregated funds and report nothing to the public on the money they took in or how they spent it. Wilmot says the new law is a big improvement, although it still could use some revisions, such as requiring itemization of expenses and more strict penalties for violations.

Why segregated accounts are needed at all is a bit of a mystery. Legal fees, including fines and penalties, recount costs, and inauguration expenses can all be paid out of regular campaign accounts. The campaign finance office says any expenditure that is “made to enhance the political future of a candidate” is a valid expense. “Certainly, not getting put in jail goes to that level,” says Wilmot.

But some politicians prefer using a segregated account for these types of expenses because there are no donation restrictions (with regular campaign accounts, there is a $500-per-year limit for individuals and $200-per-year cap on lobbyists) and no confusion about what the money will be used for. Some donors to regular campaign accounts may not want their money going for legal fees or inauguration expenses, for example.

A review of some of the accounts raises questions on the propriety of both the donors and the potential for conflict among the recipients. Middlesex Sheriff Peter Koutoujian, who is running for Sen. Edward Markey’s vacated Fifth Congressional District seat, took over the sheriff’s office in 2011 and ran for reelection last year on a promise to clean up the problems of the prior administration over alleged pay-to-play donations from department employees. But when he set up his inauguration fund earlier this year, he collected a little more than $13,000 from just six donors, including at least two who profit from the department.

Barry Sloane, an officer with Century Bank, gave $2,500. Century is the landlord of the office building at 400 Mystic Avenue in Medford, where the sheriff department’s administrative offices are located. The state pays more than $219,000 a year in rent to the bank. Koutoujian’s inaugural fund also received a $2,000 donation from Daniel Durkin, president of the Durkin Company of Billerica, which has been paid nearly $500,000 since 2010 for laundry and maintenance service at the Middlesex jail, according to state records. The contracts include a monthly $18,750 for services for neglected children, under a contract that started last November.

Koutoujian’s campaign aides said the Century lease predated the sheriff and the Durkin contracts were competitively bid. They say there is no correlation between Koutoujian’s promise to clean-up campaign violations in his office and his accepting money for inauguration costs. The Koutoujian fund was dissolved earlier this year shortly after the inauguration was held.

“Peter is proud of the reforms he has instituted since taking over the sheriff’s office in 2011, including prohibiting campaign donations from department employees,” campaign spokesman Alex Goldstein wrote in an email. “The donations in question are completely within the guidelines of the campaign finance statute and have no bearing whatsoever on policies and procedures.”

In 2011, Cape and Islands District Attorney Michael O’Keefe set up a legal defense fund after federal prosecutors revealed in court they were investigating a claim that he allegedly tipped off a bookie that State Police were targeting his betting operation. O’Keefe denied the allegations but said he did not have the personal resources to hire lawyers to defend himself. O’Keefe reported collecting more than $53,000 in donations from a range of friends and associates, including several thousand dollars from at least seven lawyers; a $10,000 donation from the retired chief executive officer of Sylvania Lighting, who is now a local businessman; and an array of high-profile sports, corporate, and political figures.

O’Keefe says he sees nothing wrong with friends helping out in a time of need. “The unfortunate thing is most public officials don’t have the kinds of resources a lot of people in the private sector do,” he says. “I’m fortunate to have a number of personal friends who have done quite well personally and professionally who wanted to help. These are private donations to help somebody to defray the costs of investigations that do nothing but ruin someone’s reputation.”

Meet the Author

Jack Sullivan

Senior Investigative Reporter, CommonWealth

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

Aside from requiring officials to report donations, the law does not mandate any reporting of balances or expenditures, only to notify state campaign finance officials when an account has been dissolved. According to Campaign Finance spokesman Jason Tait, only four accounts have been dissolved – Koutoujian; Boston City Council candidate Suzanne Lee, who raised $7,100 to pay for her recount in the 2011 race; former state Rep. Brian Wallace of South Boston, who raised $18,535 for The Friends of Brian Wallace fund to help pay his legal fees and fines arising from campaign violation charges; and Revere Mayor Daniel Rizzo, who raised and spent more than $13,500 for his 2012 inauguration.

Some donations can be just downright eye-opening. For instance, former state Rep. Paul Adams of Andover was charged by state officials with getting $45,000 in illegal loans and a $5,000 illegal contribution from his parents and brother. He entered into an agreement with the campaign office and he and his family forfeited the loan money and each paid fines. Adams subsequently opened the “Paul Adams Victory Fund” account to help pay his legal costs and received $18,350 in two donations — $13,350 from his father, Steven Adams, and $5,000 from his brother, Ammon Adams.