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.”
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.
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.