The Washington State Democratic Party today filed an FEC complaint against Us Senate candidate Mike MCGavick.

The essence of the complaint is that when Mike announced his candidacy to run against incumbent Maria Cantwell, his employer gave him a retirement package that amounts to an illegal campaign contribution.  The core of this is that Safeco Insurance modified an agreement to allow him faster access to several hundred thousand stock options via accelerated vesting.  This effectively gave him a war chest for what will be a hard battle against Cantwell.

The irony here is on two levels.  First, Maria Cantwell played a similar game when she successfully ran for Senate in 2000.  At the heart of the complaint filed against her were:

• Cantwell pledged as collateral a $375,000 home to set up a $600,000 line of credit despite FEC rules requiring collateral for a campaign loan to be at least as much as the loan.

• On a second loan, a $4,000,000 line of credit on which Cantwell ended up borrowing $3.2 million, Cantwell pledged as collateral RealNetworks stock which was then worth $5.6 million.  Both loans were from U.S. Bank and on both Cantwell received the lender's prime rate, "potentially saving her tens of thousands of dollars" according to the Associated Press article.  The article went on to state, "FEC rules prohibit candidates from receiving a more favorable rate than another bank customer for the same type of loan."

• While Cantwell had a legal obligation to disclose both loans by mid-October in her committee's report to the FEC, she failed to make any disclosure until January 31, 2001, and then only after receiving two letters from the Federal Election Commission.  After illegally failing to disclose the large loans during the campaign, Cantwell was elected by a mere 2,229 votes.

Cantwell's complaint was essentially dismissed except for an admonishment letter sent due to a failure to disclose.

I will leave the legal arguing to the lawyers.  But a couple things strike me.

While the facts are slightly different it does seem somewhat reminiscent of the accusation against McGavick.  In both cases it involved money.  In both cases the complaint allege that the candidate was given money they were not entitled to. 

In reality I would imagine that this is fairly common practice in the business.  No one will argue that campaigns are money pits.  If you want to get into office, it takes cash, and the higher the office the more it takes.  When you dabble into the US Senate, think in the terms of millions.

Whether these two candidates are truly guilty of anything is irrelevant.  I find enough similarities between the two methods to make me consider this a pot meet kettle issue.

But one side issue makes it a bit more fun.  You see for McGavick to have been given that modified retirement package the board of directors had to vote to allow it.  If it is ruled that the modification was done to circumvent campaign finance laws then the Board of Directors is complicit in that violation.

And at least two of the people oif the board, which voted unanimously to approve the package are lawyers, and subject to ethics violations accusations.

The real irony is who those two people are.  They are Judith Runstad and Gary Locke.

Runstad is a well known supporter of the State Democratic Party, who has also given money to Maria Cantwell.  It is reported that Runstad gave $1,000.00 to Cantwell’s 2000 campaign on November 8, 2000, and $2,750.00 to Cantwell’s 2006 campaign: $1,000.00 on March 23, 2001, $250.00 on January 12, 2002, $500.00 on July 21, 2003, and $1,000.00 on July 26, 2005.

Gary Locke of course is the former Governor of Washington, and also a Democrat.

So appreciate the irony that the candidate to oppose Maria Cantwell was given money by two prominent democrats, one of whom is a donor of hers, and the other the Former Governor of the State, and any ethics complaint against Safeco and McGavick would have to implicate them in ethics violations that could lead to their disbarment.

Sound Politics has more on the story here. 

It will likely spin down to nothing, but it does make an interesting read, just to watch both sides taunt each other with "no I'm not, YOU are...." 

Richard Pope has sent this letter to Locke and Runstad asking them to comment, before he files a Bar Association complaint. If anyone gets a response I will cross post it here.

I don't expect it, nor do I expect this to be picked up by the MSM.

Dear Gary Locke and Judith Runstad:

In today's (Wed 04/26/2006) Seattle Post-Intelligencer, Dwight Pelz and the Washington State Democrat Party have accused Safeco Corporation of making an illegal $17 million contribution to the campaign of Mike McGavick, a candidate for the United States Senate. Prior to his U.S. Senate campaign, Mr. McGavick served for several years as President and Chief Executive Officer of Safeco Corporation.

http://seattlepi.nwsource.com/local/268034_mcgavick26.html

I have reviewed the Safeco Corporation website, and it appears that both of you were on its Board of Directors when they approved what the Washington State Democrats are alleging was an illegal $17 million campaign contribution. In fact, you two appear to be the only members of the Safeco Board of Directors who are licensed attorneys.

http://phx.corporate-ir.net/phoenix.zhtml?c=66188&p=irol-govBoard

I have not yet read the FEC complaint filed by the Washington State Democrat Party. It is not posted on their website, but I have requested them to e-mail a copy of it to me. Hopefully, the Washington State Democrats will publicly release their complaint, so that it is not necessary to make a public records request to the FEC to obtain a copy of it.

If the article in the Seattle P-I is correct, the Washington State Democrats are accusing Safeco Corporation and its Board of Directors of violating federal law. 2 USC 441b(a) prohibits all corporations from making any contributions whatsoever to candidates for federal elected office. Even if Safeco Corporation were a natural person, instead of a corporation, 2 USC 441a(a)(1)(A) would limit its contribution to Mr. McGavick to no more than $2,100 for the primary election, and another $2,100 for the general election.

Moreover, if Safeco Corporation and its Board of Directors acted knowingly and willfully in committing the violation that the Washington State Democrat Party has apparently alleged, this would constitute a federal felony under 2 USC 437g(d)(1)(A)(i), punishable by up to five years in a federal prison and substantial fines, since more than $25,000 was involved.

I am considering whether or not to file a grievance with the Washington State Bar Association against both of you, requesting them to investigate the allegations made by the Washington State Democrat Party, determine whether any of them constitute violations of the Rules of Professional Conduct, and take appropriate action in the event that they do.

I would appreciate any comments you may have on this matter, and in particular your views on the following subjects:

(1) Were you a member of the Safeco Corporation Board of Directors when it approved the compensation packages that the Washington State Democrat Party claims constituted an illegal $17 million campaign contribution?

(2) If so, did you vote to approve the compensation packages? If you did not personally vote to approve, did you take any formal action in the corporate records indicating your dissent or abstention from the Board of Directors decision?

(3) Do the compensation packages approved by the Safeco Corporation Board of Directors constitute an illegal campaign contribution to Mike McGavick, whether for $17 million or any other amount?

(4) Do all items of the compensation packages approved by the Safeco Corporation Board of Directors constitute legitimate compensation for Mike McGavick for the services that he has performed for Safeco Corporation?

(5) If anything in the compensation packages was an illegal campaign contribution to Mike McGavick, did Safeco Corporation act knowingly and willfully in violating the federal campaign finance statutes referenced above?

(6) If anything in the compensation packages was an illegal campaign contribution, did you and the other individual members of the Safeco Corporation Board of Directors act knowingly and willfully in violating the federal campaign finance statutes referenced above?

Thank you for your careful attention in this matter.

Sincerely yours,
Richard Pope

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