WHY LaBRANT FILED COMPLAINT AGAINST ‘UNLOCK MICHIGAN’ FUNDING

Maybe Bob LaBrant feels like Ricky Ricardo in the iconic I Love Lucy TV show — he has “some ‘splainin’ to do.”

LaBrant filed a complaint with the Secretary of State earlier this month against the fundraising activities of an initiative petition campaign to strip Gov. Gretchen Whitmer of her extraordinary powers to lock down the state all by herself through executive orders. In so doing, the retired attorney and campaign finance guru confounded and infuriated all of his erstwhile allies who had applauded his legal triumphs on behalf of Michigan Republicans and the business community over the past four decades.

Today, LaBrant appears to have no friends left among his former comrades-in-arms. He must wish the late U.S. Supreme Court Justice Antonin Scalia was still alive, because that’s whom LaBrant cites in his reasoning for doing what he did, whether it proves successful or not.

Here is what LaBrant says in a statement given exclusively to The Ballenger Report:

“Justice Antonin Scalia  wrote in his concurrence in Doe v Reed,  561 U.S. 186 (2010): “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed. For my part, I do not look forward to a society which campaigns anonymously … hidden from public scrutiny and protected from accountability of criticism. This does not resemble the Home of the Brave.”

Continues LaBrant: “Anonymous contributions are permitted ONLY where the Michigan Campaign Finance Law does not regulate the activity. Issue ads are not regulated under the Michigan Campaign Finance Act (MCFA), because the definition of “expenditure” requires express advocacy. Section 6 (2) (j),  codifying Buckley v Valeo footnote 52, identifies the eight ‘magic words’ of express advocacy.

“Michigan Citizens for Fiscal Responsibility (MCFR) is a 501 (C) 4 social welfare organization under the IRS code. MCFR is also a non-profit corporation formed under Michigan law. MCFR has a history of funding, producing, and placing issue ads in the context of state Senate campaigns.

“When MCFR pays for issue ads (TV, radio, newspaper, billboards, direct mail, etc.), including those ads that use the name or likeness of a clearly identified candidate; as long as the ad does not use words of express advocacy the fund-raising activity that pays for those issue ads  is not regulated under the MCFA.

“A  501(C) 4 organization is required to file annually Form 990 with the IRS.  The organization is required on that IRS Form 990, Schedule B, to disclose each contributor of $5,000 or more. However, the names and addresses of those donors are redacted on the copy of  IRS Form 990,  Schedule B, that is required to be made available for public inspection.

“A 501 (c) 4 organization that does only issue ads can inform its donors  that, although the IRS will be informed of their contribution, if it is over $5,000 the general public will not. As a result, some commentators call these donations “dark money.”

“With no state Senate seats up for election in 2020, MCFR in June 2020 decided to venture outside of issue advocacy and into a new arena, making multiple contributions to Unlock Michigan, a ballot question committee established to sponsor an initiative petition drive to repeal the 1945 Emergency Powers of Governor Act. As of this writing, MCFR has been disclosed by Unlock Michigan as having made six contributions totaling $695,200, which represents more than 74% of the funds received by Unlock Michigan as of August 3, 2020.

“Issue advocacy advertising  falls outside the regulation of the MCFA. In sharp contrast, ballot question committee activity is regulated by the MCFA.  Pledges of anonymity, perhaps promised to contributors for issue advocacy,  do NOT apply to contributors solicited to support a ballot question committee.

“Had MCFR written only one check for $695,200 on June 9, 2020, that would be a legal contribution to a ballot question committee. Section 3(4) would be crystal clear — MCFR would not have to register and report itself as a ballot question committee, because it did not go on to solicit and receive contributions.  I would not have filed a campaign finance complaint.

“Perhaps MCFR did not understand the implications of the key phrase in the definition of “committee” found in Sec. 3(4) of the MCFA. That phrase reads: “unless the person solicits or receives contributions for the purpose of making an expenditure to that ballot question committee…”

“In my complaint, I stated that the second contribution by MCFR to Unlock Michigan raises the presumption that during the nine days between their first contribution ($10,000) on June 9, and the second contribution ($150,000) to Unlock Michigan on June 18, MCFR was doing precisely what that phrase — “unless the person solicits or receives contributions for the purpose of making an expenditure to that ballot question committee”  — says disqualifies MCFR from being exempt from definition of  “committee.” That presumption, of course, can be rebutted. It is conceivable that MCRF had $160,000 in its bank account on June 9, 2020 and that MCFR was not out soliciting and receiving contributions to make that second contribution of $150,000 to Unlock Michigan on June 18.

“The third contribution from MCFR to Unlock Michigan on June 24 (6 days after the $150,000 contribution) for $400,000 is more problematic and strengthens the presumption and makes it even harder to rebut that MCFR was not soliciting and receiving contributions.

“On June 30,  MCFR made a fourth contribution to Unlock Michigan for just $200 to attend an Unlock Michigan fund-raiser. That presumption is perhaps the only one that could be successfully rebutted.

“On July 20, MCFR made a fifth contribution to Unlock Michigan for $100,000, again strengthening  the presumption and making it harder to rebut that MCFR was not out soliciting and receiving contributions.

“Finally,  on July 31,  MCFR made a sixth contribution to Unlock Michigan for $35,000. Given the frequent number of contributions totaling $695,200 from June 9 to July 31, 2020,  all MCFR may be left with is a feeble, but likely false, defense that says it had $695,200 in its bank account all along and was just slow in doling it out.

“The Elections Bureau can resolve this complaint simply by asking MCFR to submit affidavits from its principal officer and record-keeper that MCFR made no bank deposits between June 10, 2020 and July 31, 2020. If no such affidavits are submitted and no bank statements are offered to the Elections Bureau as proof supporting  those affidavits, then the inference is clear and the Elections Bureau should proceed finding that MCFR has been soliciting and receiving contributions to make additional contributions to Unlock Michigan.

“The Bureau of Elections can proceed to make a finding that there may be reason to believe MCFR has violated the MCFA by failing to register (Sec. 24) and report (Sec. 34) itself as a ballot question committee. The Bureau of Elections can then commence, using informal methods, to enter into a conciliation agreement with MCFR.

“The Bureau of Elections, in the process of reaching a conciliation agreement, should demand that  MCFR  file a Statement of Organization registering itself as a ballot question committee. MCFR should also be required to file the July, 2020, quarterly report and the August, 2020, qualification report.

“In preparing those reports,  MCFR should be instructed, and agree, that on each date it made a contribution to Unlock Michigan after June 9, 2020, it had used a LIFO accounting disclosure system working backward from each date that MCFR made a contribution to Unlock Michigan. These reports should disclose by name, address, amount, and date of the contribution received by MCFR from its donors until the amount of each MCFR contribution to Unlock Michigan is reached.

“Also, the conciliation agreement should require MCFR to pay all late filing fees and penalties.”

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