Any discussion of political campaign financing and the laws governing it in Michigan must start with retired attorney Bob LaBrant, for years the Senior Vice President for Political Affairs and General Counsel for the Michigan Chamber of Commerce.
LaBrant spent most of his working career defunding political opponents, almost always to the advantage of the Republican Party.
He recapped his defunding efforts in his highly-regarded 2014 memoir, PAC MAN: A PERSONAL POLITICAL HISTORY OF THE CAMPAIGN FINANCE, REDISTRICTING, BALLOT QUESTION, RECALL, AND JUDICIAL ELECTION BATTLES IN MICHIGAN 1977-2014.
But LaBrant has more to tell. Here is the first part of it in his own words:
“In 1994, I successfully lobbied the legislature to prohibit labor unions from using compulsory union dues to make political contributions to state and local candidates and committees in Michigan. This forced labor unions such as the AFL-CIO and UAW to form, for the first time in Michigan, political action committees (PACs) funded like their corporate PAC counterparts, from VOLUNTARY personal contributions from their members. If political action committees raised funds using payroll deduction, annual written affirmative consent would be required by labor and corporate PACs across the board.
“Also, that year I pursued enactment of legislation making state and local candidates and political party committees ineligible to receive charitable gaming licenses to raise funds from political bingo and millionaire parties. That legislation prevailed but was subject to referendum and lengthy court battles.
“In 1998, I was involved in a campaign finance complaint brought against the State Bar of Michigan and its purported “separate” segregated fund, LAWPAC. The Department of State ruled that the State Bar of Michigan, as a public body, was ineligible to operate LAWPAC as a separate segregated fund that was permitted to pay all its administrative and solicitation costs. The Michigan Supreme Court in 2000 issued an administrative order prohibiting the solicitation of LAWPAC contributions on the State Bar’s mandatory dues invoice.
“Beginning in 2005, I sought from the Department of State a series of rulings that administration of a PAC payroll deduction plan was an “expenditure” as defined in the MCFA. Building on that ruling, I next asked whether a public body, like a school district, could administer a PAC payroll deduction program for a teacher’s union PAC. The Department said a public body could not. This led to years of litigation reaching the Michigan Supreme Court twice. In 2011, the Supreme Court upheld the Department of State’s declaratory ruling that reimbursement did not cure the underlying violation of the MCFA. That Supreme Court decision was codified in the MCFA.
“Universities, as public bodies that operated a PAC housed on campus for their school’s lobbyists to use in attending legislative fund-raisers, had to restructure their operations.
“In 2013, the legislature amended the MCFA to allow corporations to conduct PAC payroll deduction only for a corporation’s own PAC or an association PAC if that corporation was a member. A corporation cannot now administer a PAC payroll deduction program for a union PAC, since, because of an earlier ruling on a LaBrant complaint, the Department held that that would be an illegal in-kind corporate contribution.
“The legislation provided that a violation could not be cured by reimbursement. The Michigan AFL-CIO challenged the new law. The U.S. 6th Circuit Court of Appeals reversed a federal district court ruling by holding that there is no First Amendment right to PAC payroll deductions.
“Now in retirement (I will be 76 years old next month), I took on “dark money” which can be defined as funds raised by a nonprofit organization that are not required to disclose the identities of their donors to the public unless they engaged in express advocacy activity on behalf of candidates or ballot questions.
“I was alarmed that “dark money” was dominating the funding of petition drives. When the Michigan Campaign Finance Act (MCFA) took effect on June 1, 1977, it was based on the tenet of public disclosure and the belief that sunshine makes for the best civic disinfectant. That tenet was on life support.
“A statutory initiative petition drive called ‘Unlock Michigan’ was successful in repealing the 1945 gubernatorial ‘Emergency Powers Act’ — and that was just the beginning. Unlock Michigan pledged to launch a second initiative petition drive (Unlock Michigan 2.0), this one restricting state and local public health orders.
“The Michigan Republican Party promised to lead a statutory initiative petition drive on election law changes using the same strategy as Unlock Michigan, where the legislature by-passes a promised gubernatorial veto by having the legislature enact the initiative following the certification of signature sufficiency by the Board of State Canvassers, thereby avoiding having the initiative placed on the statewide ballot for voter approval.
“This is permitted by Article II, Section 9, of Michigan’s Constitution. The MCFA, however, should be there to disclose to the public, media, and the Bureau of Elections who are the true funders of these petition drives.
“If Michigan Citizens for Fiscal Responsibility (MCFR) and Michigan! My Michigan! (MMM), which between them accounted for over 84% of the $2.8 million raised by Unlock Michigan, becomes the model used to finance future ballot question committee activity, then the life support plug will have been pulled, leaving the MCFA ‘s disclosure requirements a “dead letter.”
“On September 22, 2021, an Interpretive Statement issued to me inserted the life support plug back into its socket. Disclosure and transparency are not yet dead.
“The LaBrant Interpretive Statement from the Department of State holds that a political party administrative fund cannot be used to make a contribution or expenditure to a ballot question committee or “Super” PAC (Independent Expenditure Committee). “Allowing administrative account funds to make contributions or expenditures using money from restricted sources in an account not subject to MCFA regulation would contravene the very purpose for which the Act was created, “ the Department ruled.
“I had requested a ruling in June 2021 in response to an announcement made earlier that spring by Michigan Republican Party Chairman Ron Weiser at a meeting of North Oakland County Republicans, where he said the Michigan Republican Party would be launching a petition drive to make numerous changes to Michigan’s Election Law, with the intent of by-passing a promised gubernatorial veto. Weiser said the state party would pay local and county political parties for petition signature collection.
“Was the Republican Party going to use hard dollars to pay for signature collection, thus requiring itself to register and report as a ballot question committee? Or did this petition drive plan to use the ballot question committee, Secure Michigan Vote, to operate just like Unlock Michigan, funded by mystery money hiding the identity of its true contributors by having contributions funneled through a maze of political party administrative accounts or 501 C organizations?
“Have any ballot questions committees been funded from political party administrative accounts? Yes, they had.
“During the public comment period on the Department’s preliminary response to the LaBrant request, Lonnie Scott from Progress Michigan submitted a report prepared by his colleague Erin Lodes on known expenditures on ballot initiatives by the Michigan Republican Party Administrative Account.
“The best example provided in the report was on August 13, 2012, when the Michigan Republican Party Administrative Account made two direct contributions totaling $4,000,000. One contribution was for $2,500,000. The other for $1,500,000. Both were to ballot question committees opposing adding collective bargaining rights to the Michigan Constitution. Bobby Schostak was Michigan Republican Party Chairman in 2012.
“When Jason Roe was still the Executive Director of the Michigan Republican Party last year, he was asked about the LaBrant ruling request. He responded, “We liked the old Bob, not the new Bob.”
“My 2021 interpretive statement closes the political party administrative account loophole.
“I filed a second campaign finance complaint on May 25, 2021, using my attorney, Mark Brewer, a former chairman of the Michigan Democratic Party. We submitted new evidence against Unlock Michigan, and the two Shirkey-controlled 501 C (4)s: Michigan Citizens for Fiscal Responsibility (MCFR) and Michigan! My Michigan! (MMM). A previous complaint had been dismissed.
“Mark and I have been on opposite sides on most issues and political contests since I first met him in 1980s. At that time, he was an associate working with Ted Sachs, one of Michigan’s leading labor law and redistricting lawyers. Brewer, a B.A. graduate of Harvard University and also of Stanford Law School, wrote an amicus brief in 1985 rivaling in length those of former U.S. Supreme Court Justice Louis Brandeis. Mark submitted the brief to the Federal District Court in the Michigan Chamber v Austin case. Mark’s amicus brief detailed nearly every corporate sin in Michigan politics since the 19th century.
“The Chamber, in that lawsuit, was challenging the constitutionality of Michigan’s ban on corporate independent expenditures, 25 years before the Citizens United decision.
“In 2008 I led a successful legal challenge to keep the Reform Michigan Government Now! Proposal (RMIGN) off the ballot. This was Mark’s stealth attempt to rewrite Michigan’s Constitution, not through a Constitutional Convention of elected delegates, but by a petition drive. The size of Mark’s petition when unfolded was larger than an official Michigan road map.
“Despite our past differences, we each reached out to each other. Mark was methodical in drafting a very solid complaint filled with new evidence. The response, rebuttal, and investigation took months.
“This past June 3, a Friday, the Bureau of Elections (BOE) posted to the Secretary of State’s website at 5:00 p.m. its long-awaited determination letter finding that there may be reason to believe that two dark money 501 c (4)s, MCFR and MMM, violated the Michigan Campaign Finance Act (MCFA).
“BOE found that both 501 C (4)s failed to register themselves as ballot question committees and disclose their contributors. Together they had funneled $2.4 million (86%) of the funding for Unlock Michigan (Unlock), the ballot question committee which led the petition drive to repeal the 1945 Emergency Gubernatorial Powers Act.
“My complaint alleged that MCFR and MMM made 15 separate contributions to Unlock and within days Unlock made eleven payments to an outside signature-gathering firm. This activity took place between June 9, 2020, to October 21, 2020.
“In the course of its investigation, BOE requested that both 501 C (4)s provide the bureau with their IRS Form 990 for calendar years 2019 and 2020. BOE also requested that each organization provide the bureau with the date and amount of each donation they received in excess of $500 since January 1, 2020, as well as the total value controlled by each organization after each of these donations and expenditures. Both organizations provided their 2019 IRS Forms 990 but declined to provide BOE with a 2020 IRS Form 990 and all the other requested information about expenditures, contributions, and assets. When both organizations refused to provide that documentation, BOE concluded that neither MCFR nor MMM would have been able to make contributions at their final levels to Unlock Michigan without soliciting/receiving additional funds.
“After making a finding that there may be reason to believe a violation of the MCFA has occurred, BOE is required to use informal methods, such as conference and conciliation, to correct or prevent further violations. Both organizations were given opportunities to furnish BOE with evidence that violations of the MCFA had not occurred. Such information was not provided. Therefore, BOE considered MCFR and MMM to be ballot question committees under the MCFA, with corresponding and unfulfilled disclosure obligations.
“After MCFR and MMM rejected repeated requests for additional information, BOE issued an ultimatum to each, saying that failure to enter into a conciliation agreement by 3:00 p.m. on Friday, June 3, 2022, gave the Department no other choice but to proceed with a referral to the Attorney General for criminal enforcement of the MCFA. The criminal referral was sent that afternoon after the 3:00 p.m. deadline passed.”
Stay tuned for more.