Dead man giving: political donations from late lawyer

Sunday, January 18, 2004

By SHANNON D. HARRINGTON and CLINT RILEY

As an attorney with the politically juiced Teaneck law firm that bears his name, Edward N. FitzPatrick often joined his partners in doling out contributions to New Jersey's politicians.

The lifelong Republican gave to governors and senators, county executives, and town councilmen. He gave long after his political career ended as mayor of Allendale.

And, if state campaign finance records are to be believed, FitzPatrick continued to give more than a year after he died.

FitzPatrick died in January 2000. Still, in the months following his death - from April 2000 through June 2001 - three different Democratic campaign funds in Hudson County cited FitzPatrick as having contributed money eight times, for a total of $8,250.

The law firm's partners and the committees who reported the contributions called the reports honest mistakes, which went unnoticed until recently, when reporters pointed them out. No one would be foolish enough to believe that the firm actually tried to pass off contributions by a dead partner, said M. Robert DeCotiis, managing partner at DeCotiis, FitzPatrick, Cole & Wisler, in a written statement.

But experts say the FitzPatrick contributions reflect poorly on New Jersey's campaign finance system, particularly the rules that regulate contributions from business partnerships.

The problems go well beyond just a few contributions attributed to a dead man. And they go well beyond the DeCotiis law firm.

As listed in state campaign finance records - specifically, the online database that's most often viewed by the public - more than 3,000 contributions since 1999 totaling millions of dollars from law firms and other partnerships do not conform to state rules.

The rules, established by the Election Law Enforcement Commission, the state agency charged with enforcing New Jersey's campaign-finance laws, are designed to prohibit those involved in partnerships from multiplying their contributions and influence and sidestepping contribution limits that bind individuals and corporations.

Without increased disclosure, tighter rules, and better enforcement, experts say, the public has no way of knowing whether New Jersey politicians and their biggest financial backers are playing fast and loose with rules designed to limit the influence of any one individual or group over the democratic process.

"If [regulators] turn their back on this, they are turning their back on the entire campaign-finance system in New Jersey," said Craig Holman of the government watchdog group Public Citizen.

ELEC's executive director acknowledged there are problems. He said his staff of two field investigators and three compliance officers is simply overwhelmed by the more than 25,000 campaign-finance reports filed each year.

"This agency needs to be better funded, better staffed, and better equipped," said Frederick M. Herrmann, whose agency has a $2.9 million annual budget that has remained stagnant the past several years. "It's crucial to properly support the agency that supports the law."

Further, Herrmann said ELEC lacks expertise in how various business partnerships and limited-liability companies work.

"I'm not an expert in this field and no one at ELEC is," he said.

Being able to measure contributors' influence will become even more key if state lawmakers enact proposals designed to prohibit government officials from awarding no-bid government contracts to large campaign contributors.

Last month, The Record reported the DeCotiis firm was averaging more than $10 million a year in fees from governments in New Jersey while it was contributing an average of $500,000 to the politicians who had hired them.

Under the proposed reforms, no government official could award a contract to any firm that gives more than $5,000 in campaign money through the company, its executives, and principal partners.

As its rules are followed today, experts point out, it's nearly impossible for ELEC to determine whether campaign-contribution limits are being violated or whether contributions from partners are being made voluntarily by the contributor recorded in ELEC records. Those are two of the main functions of campaign-finance regulation, they say.

Furthermore, sanctions are limited, and rarely applied.

The posthumous contributions from FitzPatrick are glaring examples of this problem, experts said.

"One of the basic principles of any campaign finance system is whether the contributions are made voluntarily," said Larry Noble, a former general counsel to the Federal Elections Commission who now heads the Center for Responsive Politics in Washington, D.C. "There is a very serious question of who is making these contributions. It's a question of how voluntary a contribution from a dead man can be."

Representatives of the DeCotiis firm blamed the FitzPatrick contributions on the campaign committees, saying officials mistakenly attributed money to FitzPatrick that should have been allocated among the surviving partners.

ELEC records continue to show FitzPatrick as the contributor, a month after reporters first raised the issue.

Among the 3,000 contributions that ELEC records attribute to partnerships are donations from some of the state's top law firms, developers, lobbyists, and liquor distributors. Nearly 200 of those contributions are attributed to DeCotiis, FitzPatrick, Cole & Wisler, the largest single component of the problematic entries.

Attempts to control big money's influence

Partnership attribution has long bedeviled attempts to control the influence of big money in politics.

New Jersey real-estate developer Charles A. Kushner, for example, used a web of dozens of business partners and more than 90 limited-liability companies to direct $3.1 million to federal and state candidates during a recent five-year period. That money included more than $1.5 million directed to political funds benefiting Governor McGreevey. Court papers allege that Kushner made contributions in the names of partners without their knowledge or pre-approval. Kushner, through a spokesman, has repeatedly denied the allegations, which federal prosecutors are now probing.

In an attempt to limit abuse and to increase disclosure by individuals involved in partnerships and limited-liability companies, ELEC established a set of regulatory safeguards in the late 1990s.

Those business entities were prohibited from making contributions directly. If they wanted to send a campaign a check from the partnership bank account, the money must be allocated to individual partners - none of whom could give more than the limit on contributions by individuals.

To ensure that the contributions were made voluntarily, the checks also must be accompanied by statements signed by each contributor acknowledging they were voluntarily giving that money.

"What we should see on the reports [filed by campaign committees] is not the name of the partnership, but the name of the partners," Herrmann said. "The name that shows up on the report has to be that person's money."

But those rules often are not being followed.

In addition to the more than 3,000 contributions attributed to partnerships on the ELEC Web site, The Record found dozens more examples in non-electronic records filed by smaller campaign funds in towns and school districts around the state.

The ELEC Web site cautions that the database is subject to clerical error. But a spot-check of dozens of paper records submitted by the campaigns showed that the database was accurate in most cases. The contributions were still attributed to partnerships and limited-liability companies, not the partners themselves.

For example, on Oct. 25, 2002, the state Democratic committee reported receiving a combined $45,000 from two companies that had contracted with Bergen County in 1998 to run the county's public hospital. The companies, Bergen Regional Medical Center, LP, and Solomon Healthcare Group, LLC, are principally owned by a group of Colorado investors who gave the state Democrats a total of nearly $100,000 that same day through various entities they control.

What the state committee didn't disclose in its reports, however, is which partners made the contributions.

A spokesman for the state committee said the attribution for Solomon Healthcare was inadvertently left off the ELEC report - and that partner Solomon J. Melamed made the $20,000 contribution. But the spokesman acknowledged that the committee has no partner information for the $25,000 given by the Bergen Regional partnership, even though it was given a year ago.

"It's still in the process of the follow-up stage," said the spokesman, Adam Green. Melamed did not return a phone call left at his Denver-area office.

Yet, another example occurred during a three-month period last year when the New Democratic Assembly Leadership PAC - controlled by Assembly Speaker Albio Sires - reported receiving two contributions from "DeCotiis, FitzPatrick, Cole and Wisler LLP" totaling $25,000 and a separate $25,000 contribution from "DeCotiis, FitzPatrick, Cole and Wisler PC Esqs."

As reported, the contributions would violate rules prohibiting direct contributions from a partnership and the $25,000 contribution limit that any single individual or entity can make to a legislative leadership committee.

Through a spokesman, the DeCotiis firm said it had paperwork on the correct attribution among the partners. But neither the committee nor the firm would share that paperwork with The Record, and the state ELEC Web site continues to show the contributions as having come from the partnership, a violation of its rules.

A review by The Record of the firm's $2.5 million in contributions since 1999 showed that more than half was attributed in campaign-finance records to the partnership, not to individual partners.

Dead man's donations an 'innocent mistake'

A handful of campaign officials contacted by The Record said the DeCotiis firm provided allocation letters identifying the source of the contributions. Officials said the committees simply didn't disclose that information.

In the case of the FitzPatrick contributions, The Record contacted officials from all three Hudson County committees - the Hudson County Democratic Organization, the North Bergen Democratic Municipal Committee, and the 2001 campaign committee of now-Jersey City Mayor Glenn Cunningham.

While officials called the FitzPatrick allocations mistakes by the campaigns, none of the committees provided supporting allocation letters.

"It strikes me as most likely an innocent mistake made at the campaign," said Alex Booth, former treasurer for the Cunningham committee. "It was probably made because the campaign staff was overworked at the time."

Further raising questions about contributions made by the DeCotiis firm, experts say, is a copy of the firm's partnership agreement, which was obtained by The Record from court papers.

The agreement states that "without limitation all decisions concerning contribution(s) to candidates, political parties, and/or similar organizations" are to be made by a five-member management committee - an arrangement that campaign finance experts say raises questions about the voluntary nature of contributions made in the names of partners outside the management committee.

"That's absolutely outrageous," said Holman, of Public Citizen. "I am quite astounded to hear something like this is going on in New Jersey."

DeCotiis said in his written statement that all campaign contributions from the firm were made with the full knowledge and approval of the partners to whom the money was attributed.

After the newspaper's inquiries, the firm retained a top New Jersey campaign finance attorney to offer an opinion on the discrepancies.

"It's not uncommon for there to be the kind of errors you are finding," said Angelo J. Genova, a partner in the Livingston law firm of Genova, Burns & Vernoia. "There are deficiencies in the law, there are deficiencies at ELEC and there is inadequate sophistication by many of the people using the [state campaign finance] system."

Genova, who serves as special counsel to the state Democratic committee, said he does not believe anyone at the DeCotiis firm intentionally violated any state law or regulation. Any improperly reported contributions, including those in FitzPatrick's name, are at worst "technical non-compliance."

"The fact is there is disclosure that the dollars came from this law firm," Genova said. "Not everyone dots their I's and crosses their T's."

But even if a contributor were at fault for violating disclosure rules, state law places accountability for those omissions entirely on the politicians and their campaigns.

Currently, there is no law or regulation that allows ELEC to directly penalize campaign contributors who fail to provide required contributor information or choose to ignore disclosure rules and contribution limits. New Jersey's law in this area is weaker than those covering federal campaigns and contributions made to campaigns in numerous other states.

Last year, ELEC officials sanctioned and levied just more than $100,000 in fines on more than 70 campaign and political action committees throughout the state, in most cases for filing campaign finance reports late or not at all. No contributors were sanctioned.

Watchdogs say the burden should not be placed solely on campaign officials.

"That is a bit unusual," said Noble, of the Center for Responsive Politics. "It puts all the burden on the committees and none of the burden on the contributors. It seems like the type of law you would write if you wanted to encourage people to give contributions."

E-mail: harrington@northjersey.com and riley@northjersey.com

http://www.elec.state.nj.us/

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.