Article by Erik Smith. Published on Friday, October 29, 2010 EST.
Commissioners Call Tactic Reprehensible and Disturbing – Labor and Trial Attorneys Backed Cynical Squeeze Play That Cost Senator Her Seat
Public Disclosure Commission considers staff report Thursday.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Oct. 29.—The state’s campaign watchdog agency went to the max Thursday against Moxie Media, the Democratic consulting firm that launched a phony Republican political campaign and tipped a Senate race in Everett last summer.
The state Public Disclosure Commission handed off the case to state Attorney General Rob McKenna for prosecution. Commission members called the affair “reprehensible” and “disturbing.”
The case embroils some of the biggest players in Washington Democratic politics – the Washington State Labor Council, the Washington Federation of State Employees, and the Washington State Association for Justice, a trial lawyers’ association.
Last summer they pledged money for one of the most cynical campaign tactics in state history – a successful effort to knock out moderate state Sen. Jean Berkey, D-Everett, in the primary, by attacking her from the right and the left. Republican and independent voters in the 38th Legislative District never knew who was behind the independent effort to build up a weak right-wing candidate, because campaign pledges from the three groups were never reported.
“This behavior is mind-boggling,” said commission member Jane Noland. “It is reprehensible and it makes a true mockery of the disclosure laws and the concept that people understand how these elections work and who’s funding them. It’s not about limits on campaigns or amounts spent. It’s about disclosure. And this has made it a joke.”
Commission members rejected a recommendation from their staff to treat the matter as a routine reporting violation. Moxie Media had negotiated a modest $30,000 fine with the agency staff. But commission members said the case was so egregious it deserved the full treatment.
By kicking the matter to the Republican attorney general, the commission raises the possibility of further investigation into other aspects of the case. Should McKenna decide to prosecute, the courts might not only take action against the consulting firm. The election itself might be thrown out, and a new one called.
Left Builds Up Right-Winger
The case is significant because Moxie Media is the clearinghouse for the independent-expenditure campaigns that the left has mounted statewide. This year the powerhouse consulting firm has routed millions of dollars for a loose-knit coalition of groups that include the state Labor Council, public-employee unions, trial lawyers and “progressive” activist organizations.
What got Moxie in hot water was a small part of its independent expenditure campaign to dump Berkey. The 10-year incumbent had raised the ire of labor and its allies, and the progressive coalition dumped an enormous $288,000 into the race, backing Democrat Nick Harper, who was far to the left.
There was a problem that should have been obvious from the start. Berkey would probably survive the primary, because Washington’s top-two primary system advances the top two vote-getters, regardless of party.
To make sure Berkey went down, Moxie partner Lisa MacLean obtained $9,000 in pledges from the three organizations.
The plan was to build up a third candidate in the race, a right-wing candidate who hadn’t bothered campaigning, and who filed as a ” conservative” because the Republican party was too liberal for his taste. Two hit pieces and an automated “robo-call” did the trick. Harper and conservative Rod Rieger carried the day. Berkey lost by 122 votes.
What made the tactic particularly cynical was that the mailings attacked Berkey for voting to raise taxes – at the same time the progressive coalition was hammering her from the left for not raising taxes enough. The mailers and telephone messages identified the sponsor as the “Cut Taxes PAC.” Washington law requires campaign messages to identify the top five contributors, but the only one named was something called the “Conservative PAC.” Voters never had a clue.
Paperwork Was Only Slip
What gave state authorities the ability to act was the fact that Moxie Media never reported the pledges – meaning that on paper, Conservative PAC never had any money. The money never came through – the state Labor Council got cold feet after the press began picking up on the affair after the election. The curious reports raised red flags at the PDC, but Moxie denied involvement by its clients, and said the whole project had been on the house.
PDC investigators got curiouser after Berkey filed a complaint. They dug up a raft of emails that proved otherwise, documented a convoluted financing scheme and indicated that Moxie was trying to conceal the truth from voters. One email from MacLean said: “I am trying to provide as much cover to funders as possible. And don’t want any funder names on pieces as top five contributors.”
Yet at Thursday’s meeting, the staff recommended that the commission treat the matter as an ordinary reporting violation. It negotiated a settlement with Moxie Media’s law firm, Perkins Coie, and presented it to the commission. Under the deal, Moxie would have paid $30,000 – a fine equal to three times the amount of money involved, plus investigation costs.
The commissioners shot that down fast.
Would Have Amounted to Sales Tax
“It was clear from the outset, the intent to conceal, and that to me was the most disturbing element in the case,” said commission member Jennifer Joly.
They passed a resolution 3-0 referring the matter for prosecution.
Berkey attorney Tom Fitzpatrick said the commission made the right decision. A $30,000 fine is a pittance, he said. “If you think about it, a $30,000 fine on $300,000 of election expenses that have gone into this race on behalf of ‘independent groups’ essentially supporting Mr. Harper – it’s the sales tax.”
McKenna Must Decide Today
McKenna faces a deadline today to decide whether to go after Moxie Media himself. The PDC investigation report identifies several technical grounds for action against the consulting firm, most of them having to do with failure to disclose key information about the fake Republican campaign.
But Berkey’s attorneys are after the big enchilada. The courts have the ability to throw out a race and order a new one if they deem violations to be serious enough. Because the margin was so narrow in the 38th District race, they say it is plausible that the phony campaign turned the tide. Berkey is represented by the firm of Talmadge and Fitzsimmons, a firm that includes Phil Talmadge, the widely known former state Supreme Court justice.
Why the deadline? In a separate action, Talmadge filed notice of a citizen lawsuit. The attorney general and the Snohomish County prosecuting attorney have until today to decide whether they will take action. If they don’t, Berkey can file suit on her own.
Berkey Pleased
Berkey attended the hearing. “I’m very pleased with the recommendation,” she said. “We need to get this into court. This was the most unethical action I have seen in 30 years of running elections.”
While the PDC investigation was extensive, she said there are other avenues that might be explored by the attorney general’s office. Berkey said she is suspicious that there may have been coordination between the Harper campaign and the independent expenditure campaign conducted by Moxie Media. Harper campaign manager Christian Sinderman and MacLean are former business partners and have offices in the same building. It is a charge that was sounded and explored in last year’s campaign for King County Executive Dow Constantine, where the two played similar roles.
“This is just the tip of the iceberg, and I think that once they get into it and actually start digging into the records, there’s much more to be found,” Berkey said.
Two Everett Senators Offer Support
Also on hand to support Berkey were two former state senators from Everett, Democrat Larry Vognild, a Berkey campaign supporter, and Republican Gary Strannigan.
Strannigan said he got the Rieger mailings, and he had no idea there was anything suspicious about them. “It was artfully done,” he said. “It was very well done. I looked at this and said, good for Rieger. He found somebody to help him out.”
But when Strannigan found out the truth, he said he was appalled. “When I recognized the tremendous deception that was taking place – I’m just aghast. And I agree, the stipulation agreement was just preposterous. It’s a sales tax on the cost of doing business for them. Even, I think, a seven-figure fine would become, over the course of time, just the cost of doing business for them. Elections are won and lost at the margins. They’re smart people. They wouldn’t have done this, this intentional lying and deception, unless they felt like they needed to.”
Vognild, a former majority leader in the Senate, noted that he was elected with union support. “I had to do a little soul-searching,” he said. “And I said, okay, this time, my friends – and they probably aren’t my friends now, but I consider them my friends – they stepped over the line and they went too far, and I can’t go there. So that’s why I’m here and that’s why I’m helping Jean. And you know, government is in a state right now where every time you do something like this it makes it worse. And it doesn’t matter which party is involved, it makes it worse. That’s why I’m here.”
Moxie’s MacLean Issues Statement
Moxie Media partner Lisa MacLean issued a statement:
“I am disappointed that this matter was not fully and finally resolved today. But I respect the PDC’s decision to reject the agreement reached with PDC staff, and I look forward to working with the attorney general’s office to resolve this matter fairly and without undue delay.
“Moxie Media has taken and will continue to take its compliance obligations seriously. Going forward we will make our good faith, best efforts to comply with all PDC filing requirements.
“I am aware that – outside the formal process – various assertions have been made about what happened in this situation. This complex situation, involving significant legal ambiguities, will not – and should not – be tried in the court of public opinion. There is no place for unsubstantiated allegations and overheated claims in this process.
“I had expected to address this matter in more detail today, but unfortunately, given today’s development, that is not possible. I look forward to putting this matter to rest, and will have more to say at that time.”
State Sen. Jean Berkey, D-Everett, speaks with reporters Thursday, husband Don on right.
Two ex-senators from Everett: Republican Gary Strannigan and Democrat Larry Vognild.
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