Boswell campaign questions Fallon's ethics (part 1)

by: desmoinesdem

Thu Apr 03, 2008 at 08:31:08 AM CDT

I've been too busy in non-blog life to write up the day to day sparring following a recent e-mail from Leonard Boswell's campaign, which attacked Ed Fallon on several fronts.

The criticism of Fallon by Boswell's surrogates and supporters has focused on four issues in particular:

1. alleged ethical questions related to Fallon's work for the Independence Movement for Iowa (I'M for Iowa)

2. the salary Fallon drew from unspent campaign funds following the 2006 gubernatorial primary

3. allegations that Fallon pondered running for governor as an independent after losing that primary

4. Fallon's stand against taking contributions from PACs while allowing PACs to encourage their individual members to donate to his campaign.

I will cover each of those issues in a separate diary, because I don't have time to write about all of them at once. Today, I will address the allegations related to I'M for Iowa.

Chase Martyn of Iowa Independent published a piece on March 20 called "Fallon Faces Campaign Finance Questions." Martyn raised questions about I'M for Iowa's ability to collect unlimited donations without disclosing the sources:

Although I'M For Iowa participates in political advocacy and relies on contributions to stay afloat, its financial status does not fit the typical mold for this type of organization. Rather than registering it as a nonprofit organization with the Internal Revenue Service under sections 501(c)(3), 501(c)(4) or 527, Fallon runs the organization as a for-profit general partnership, making its tax status no different from most home businesses. He and his current campaign manager, Lynn Heuss, co-own the business.

But there is a difference between I'M For Iowa and most typical businesses: Rather than sell products and services to customers, it accepts donations for its political advocacy work. While the donations are not tax-deductible, the business can accept unlimited amounts of money. And because of its tax status, it is not required to disclose information about its sources of funding.

Martyn also noted that two e-mails sent to I'M for Iowa's distribution list appeared to have promoted Fallon's Congressional campaign:

On Feb. 29 an e-mail Fallon wrote to his I'M For Iowa group invited readers to visit his campaign Web site and participate in campaign activities to coincide with his 50th birthday. And on Jan. 12 he sent an I'M For Iowa e-mail announcing his candidacy for Congress and providing a lengthy critique of his primary opponent's voting record.

The result is a complicated question involving the nuances of campaign finance law. Can an unincorporated business accept unlimited contributions without the requirement to disclose its contributors and then use contributed funds to promote a congressional campaign?

Martyn suggested that even if no laws were broken, the questions could hurt Fallon's image, since he has been a strong advocate of clean-elections laws (such as the Voter-Owned Iowa Clean Elections Act, which would create a voluntary system of public financing of election campaigns).

The Des Moines Register didn't follow up on the Iowa Independent story until after the Boswell campaign drew attention to it a week later. Thomas Beaumont examined various questions related to I'M for Iowa in the Register on March 29:

The organization is a trade name registered with the Polk County recorder. Small businesses such as lawn care services and other sole proprietorships register this way.

However, some other advocacy organizations, such as the 15-year-old, Des Moines-based State Public Policy Group, is also registered the same way as Fallon's group.

I'M for Iowa is not a corporation, over which the Iowa secretary of state has regulatory authority.

Fallon's group does not have to report its sources of money or what kind of business it is. But it receives no money from corporations, said Lynn Heuss, Fallon's partner in the organization.

It runs on contributions from individuals who support its agenda, which includes limiting large livestock confinements, curbing global warming, promoting campaign finance reform and preventing abuse of eminent domain.

It seems clear that there is no legal barrier to using the I'M for Iowa e-mail list to promote Fallon's Congressional campaign.

Martyn wrote in Iowa Independent:

A representative of the Federal Elections Commission would not comment on any matters that regulators may have to rule on, but FEC regulations do not seem to explicitly prohibit coordination between a campaign and an unincorporated business entity owned by a candidate.

Beaumont's March 29 article for the Register notes that

Campaign finance law bars corporate contributions from federal races. However, the law specifies corporations and limited liability companies, which Fallon's group is not.

According to a press release from Fallon's campaign on April 2, the information services department of the Federal Election Commission "confirmed that Ed Fallon has done nothing illegal or unethical." The full text of that release is after the jump, but here is a relevant excerpt:

Fallon campaign manager, Lynn Heuss, provided the rules the campaign reviewed with the FEC Information Officer: From the FEC Candidate Guide, Chapter 4, Section 10, "Partnerships are permitted to make contributions according to special rules. 110.1(e) and (k)(1). For further details, see Appendix B."

In addition, Chapter 4, Section 12 of the FEC Candidate's Guide says, "When candidates use their personal funds for campaign purposes, they are making contributions to their campaigns. Unlike other contributions, these candidate contributions are not subject to any limits. 110.10; AOs 1991-9, 1990-9, 1985-33 and 1985-60. They must, however, be reported (as discussed below)." And a little further down under "Definition of a Candidate's "Personal Funds" it says, "The personal funds of a candidate include: Assets which the candidate has a legal right of access to or control over, and which he or she has legal title to or an equitable interest in, at the time of candidacy; income from employment; ...."

Heuss clarified the only contribution the business has made is sending out two email messages, which constitute an in-kind donation, and is not in violation of FEC regulation.

(UPDATE: Chase Martyn reported on April 3 that the FEC denied making "any determination relative to the specific circumstances of any campaign". Martyn added that Iowa Independent had merely questioned the ethics of how I'M for Iowa was used and not alleged that any laws were broken.)

If no laws were broken, what is the problem? The Boswell campaign has tried to suggest that there is something underhanded about I'M for Iowa. From the Register's March 29 article:

"If he's going to run on clean elections, then he should come clean about what he's doing," Boswell campaign spokesman Mark Daley said.
[...]

The ethics questions are the latest jab by Boswell ahead of the June 3 primary.

"On the surface, this looks like a fund to give him a job," Daley said.

Although I've donated to Fallon's gubernatorial and Congressional campaigns, I have never contributed money to I'M for Iowa. As a result, I haven't followed the organization's work very closely.

But if individuals want to give money to help Fallon advocate for clean elections, or organize opposition to coal-fired power plants and CAFOs, what is the problem?  

Non-profit organizations are unable or unwilling to take a position on some kinds of political disputes, so there is a niche for a business like I'M for Iowa.

Does the Boswell campaign mean to suggest that advocacy work is not a real job? That seems strange. Barack Obama's supporters and television commercials have praised that candidate for working as a community organizer after finishing law school.

Frankly, I'm a little surprised the Boswell campaign wants to go down this road, since Boswell's campaign accepted hundreds of thousands of dollars from corporate PACs in 2007 alone. I'm supposed to be concerned about the hidden agenda of individuals who have contributed to I'M for Iowa?

Asked to comment in the Register article of March 29, Fallon characterized the allegations as typical establishment politics:

"The political establishment attacks a candidate on his strength," Fallon said. "My strength is my commitment to issues. They are looking for ways to discredit me."

Fallon's campaign addressed the controversy in more detail in statements released on March 31 and April 2. The full text of those press releases are after the jump.

Contact: Stacy Brenton
Fallon for Congress
(515) 822-3029
stacy@fallonforcongress.com
FOR IMMEDIATE RELEASE

Monday, March 31, 2008 (10:30 CDT) - Ed Fallon today released the following statement in response to Leonard Boswell's most recent negative attacks against him, and in response to a mistaken impression circulated the past few days that Fallon considered running for Governor in 2006 as an independent.

"We need to set the record straight."

"First, in 2006, I absolutely never, ever considered running for Governor as an independent. In fact, I firmly pledged to support the winner of the Democratic primary. After losing that primary, I volunteered extensively with the Culver campaign. You might recall that I even wrote a song asking my supporters not to write me in."

"And, for the record, if I do not win this primary for Congress, I will not run as an independent. I will support Congressman Boswell."

"Second, I have never 'attacked' Congressman Boswell. Pointing out how we differ on issues and challenging the Congressman to explain and discuss those differences hardly constitute an attack. I will continue to point out such differences and will cite bill numbers and the date of votes taken on those bills. I will continue to base my critique on facts, avoiding innuendo and disparagement. And I will continue to praise the Congressman for his military and political service to our country, as I do at nearly every campaign event."

"Regrettably, Congressman Boswell is not willing to stick to the same high standard of positive, issues-based campaigning. Among a wide range of attacks, he has said that I am 'no Democrat,' that I voted to support sex offenders, and that I am unethical."

"That brings me to my third and final point. This weekend, news circulated widely about Congressman Boswell's allegation that I have acted unethically in my work with I'M for Iowa. Yet if you read the coverage of this allegation it's emphatically clear that the charge is without substance. As with most negative attacks in politics, the allegations are intended to create doubt, sow suspicion, and discredit an opponent on his strengths."

"It's really very similar to what Republicans did to John Kerry in 2004. George Bush's avoidance of military service was an embarrassment, a political weakness. John Kerry had an exemplary record of military service. So what does Karl Rove do? He has Bush attack Kerry on the latter's strength, which of course, was also Bush's weakness."

"Since 1992, running campaigns free of PAC and lobbyist money has been one of my strengths. It's one of Boswell's weaknesses, as evidenced by the fact that 74% of his donations last year came from PACs. The public is increasingly aware of the problem of money in politics. So, instead of engaging with me in a fact-based discussion of campaign finance reform, the Congressman says that I am the one acting unethically"

"So, let's set the record straight about I'M for Iowa. It's a business partnership, not a corporation, that Lynn Heuss and I created to allow us to use our skills, experience and resources to work on the issues we care about. Last year it allowed me to draw a small income - $1,250. This year, with any luck, I'll be able to draw a modest income of $3,000 per month, providing enough people value the work we're doing and want to invest in our business."

"And what is our business? I'M for Iowa consults and organizes primarily on state-level issues, including campaign finance reform, eminent domain, corporate hog confinements, and global climate change. We also consult with progressive Democratic candidates wanting to run for office. Since beginning my campaign for Congress, I have kept I'M for Iowa separate from the campaign, though it was important to tell I'M for Iowa supporters before I formally announced that I would be running for Congress and why."

"Congressman Boswell is running a campaign based on the politics of fear and division. It's not too late for him to embrace a positive strategy, one that allows us to have a candid, fact-based discussion of the issues."

"My campaign is about bringing new, positive energy to politics. It's about hope, change, and unity. These are challenging times, but I disagree with the Congressman when he says that they are perilous. We don't need to be afraid. We need to be engaged."

"I'm ready to take my energy and passion to Washington to address the challenges America faces. I'm ready to take on the issue of terrorism and global security. I'm ready to take on the issue of global climate change. I'm ready to take on the need for universal healthcare. I'm ready to take our economic problems and our budget problems. And most important, I'm ready to take on big money and the corporate interests that dominate the political scene in Washington to the determent of the vast majority of Americans."

Contact:
Lynn Heuss, 515-201-9405
lynn@fallonforcongress.com
Stacy Brenton, 515-822-3029
stacy@fallonforcongress.com
FOR IMMEDIATE RELEASE

FEC Confirms Boswell's Allegations Baseless Against Fallon

Des Moines, IA, 34/2/08, 1:30 PM - In an effort to move beyond the politics of deception and get back to an issues-based campaign, the Fallon campaign called the Federal Election Commission (FEC) to confirm their research and put to rest any suspicions aroused by Congressman Boswell's latest round of personal attacks. Campaign manager, Lynn Heuss, spoke with the information services department of the FEC. They confirmed that Ed Fallon has done nothing illegal or unethical.

Fallon says, "Leonard Boswell alleges that I'M for Iowa is some kind of shadowy enterprise that allows me to skirt campaign finance regulations. He tries to make the case that sending 2 email messages to the investors and customers of my business is illegal and unethical."

Fallon says, "This is ridiculous. I'M for Iowa is a business, specifically, a general partnership, I formed which allows me to earn a living and do what I do best - consult, organize and work on issues I care about. Issues like campaign finance reform, hog confinements, eminent domain, climate change, and advising progressive candidates. This is not a non-profit. This is how I earn a modest living.

Fallon notes, "It's like this: Say you're good at fixing cars. You open a garage. Eventually, maybe, you earn a living at it. Let's say that some day you decide to run for office. So, you put a campaign sign in your window. You have brochures by the cash register. You talk with customers about why you're running and what you hope to accomplish. This is perfectly legal and perfectly ethical and no different than me sending 2 emails to my investors and customers."

Fallon summed it up, "Boswell's campaign is trying to sow suspicion and doubt, to discredit me personally and politically. It's what Republicans did to John Kerry in 2004. George Bush's draft dodging was an embarrassment, a political weakness. John Kerry was a war hero. So what does Bush do? He attacks Kerry on Kerry's strength, diverting attention away from his own weakness."

"Running campaigns free of PAC and lobbyist money is one of my strengths. It's one of Boswell's weaknesses. In 2007, 74% of his donations came from PACs, most of them corporate PACs. People are increasingly aware of the problem of money in politics. So, instead of engaging me in a fact-based discussion of campaign finance reform, Boswell impugns that I am acting unethically."

Fallon campaign manager, Lynn Heuss, provided the rules the campaign reviewed with the FEC Information Officer: From the FEC Candidate Guide, Chapter 4, Section 10, "Partnerships are permitted to make contributions according to special rules. 110.1(e) and (k)(1). For further details, see Appendix B."

In addition, Chapter 4, Section 12 of the FEC Candidate's Guide says, "When candidates use their personal funds for campaign purposes, they are making contributions to their campaigns. Unlike other contributions, these candidate contributions are not subject to any limits. 110.10; AOs 1991-9, 1990-9, 1985-33 and 1985-60. They must, however, be reported (as discussed below)." And a little further down under "Definition of a Candidate's "Personal Funds" it says, "The personal funds of a candidate include: Assets which the candidate has a legal right of access to or control over, and which he or she has legal title to or an equitable interest in, at the time of candidacy; income from employment; ...."

Heuss clarified the only contribution the business has made is sending out two email messages, which constitute an in-kind donation, and is not in violation of FEC regulation.

Heuss notes that the FEC says it will not issue a formal statement or ruling unless a complaint has been filed.