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Moxie Media Case Finally Settled – and It’s a Whopper!

Consulting Firm's Partners Will Pay $150,000 - Created a Phony Campaign to Defeat a Democrat Who Didn't Toe the Line



Everett Republicans never knew this mailer was planned and backed by labor unions and trial lawyers in one of the most blatant fakeouts in Washington political history.


OLYMPIA, Dec. 16.—A year after a Seattle political consulting firm pulled off a coup in Everett with one of the most sordid campaign tactics in state history, it is paying the price – and it’s a big one.

            Moxie Media’s partners, Lisa MacLean and Henry Underhill, have settled with the state attorney general’s office, agreeing to pay a $110,000 fine and an additional $40,000 in legal fees. Another $140,000 will be suspended, as long as they comply with state campaign rules for the next four years.

            What it means, though, is that there won’t be a trial, and there won’t be any more disclosures of the type that last year embarrassed the big-spending organizations that traditionally support Democratic campaigns. It also means the state attorney general’s office won’t be going after the biggest penalty of all – a reversal of the election results in Everett’s 38th Legislative District, and a new election.

It was a case that shocked the state, a massive fakeout of Everett voters that made a weak tea-party candidate a contender, and defeated an incumbent Democratic senator who didn’t toe the “progressive” line.

What Moxie Media’s campaign literature and finance reports never disclosed was that the scheme was planned and backed by some of the most powerful Democratic interest groups in this state – the Washington State Labor Council, the Washington Federation of State Employees and the Washington State Association for Justice, the organization that oversees political activities for the state’s trial lawyers.

            They were among the groups had vowed revenge in last year’s election cycle on moderate Democrats who failed to support their agenda of tax hikes and a crackdown on corporate “tax loopholes.” Their primary targets were state Sen. Steve Hobbs, D-Lake Stevens, who squeaked through the election, and state Sen. Jean Berkey, D-Everett, the victim of the Everett scheme.

            In a statement issued Friday, attorney general Rob McKenna declared, “This settlement holds Moxie Media, Lisa MacLean, Henry Underhill and their two political action committees accountable for their campaign finance disclosure violations and preserves the integrity of state law while avoiding the expense to taxpayers of taking this case to trial.”


            A Complicated Plan


            You might say Moxie Media pulled off a feat in Everett that would make any political consultant proud. The firm turned a nowheresville officeseeker into a candidate to be reckoned with, with a bit of political junk mail and a few recorded messages delivered by phone. What made the Rod Rieger miracle even more impressive was the fact that his biggest supporters never actually met the guy and really didn’t want him to win.
Moxie Media was the prime agent for the independent campaigns run by some 15 labor and progressive organizations last year – really every major left-of-center group in the state, with the exception of the Washington Education Association, which went its own way. The coalition was active in 17 Washington-state races, spending some $1.5 million. In most cases the campaign efforts were somewhat more straightforward. They backed Democrats, the candidates the coalition actually wanted to win. But even in those races there was a bit of subterfuge. Money was funneled through a complex web of 40 political action committees that often made it impossible to tell which organization’s dollars were financing a particular campaign.

            The 38th District in Everett was a special case. As the primary election approached last Aug. 17, the coalition was dumping in vast amounts of money to elect Democrat Nick Harper and defeat incumbent Democrat Berkey – an astounding total of $275,000. Seemingly every day Everett voters could open their mailboxes and find a new attack on “big business Berkey,” the Democrat who voted for corporations and oppressed the working class – there were 15 such hit pieces in all. The thing is, in Washington state, that strategy makes no sense whatever unless there is a third candidate in the primary who runs an effective campaign. Washington’s top-two primary allows the top-two vote-getters to advance to the general election, regardless of party.
But Rod Rieger, the candidate on the right? He just wasn’t doing his job. Rieger hadn’t bothered raising money. He hadn’t made a single public appearance. He even disdained an affiliation with the Republican Party, which he considered too liberal. On the ballot he listed himself merely as “conservative.”
To squeeze out Berkey in the primary, Moxie Media’s MacLean decided to give the poor man some help.


            Aimed to Conceal


Everett Republicans might have been suspicious of pro-Rieger mailers if they had mentioned that they were paid for by the state’s biggest labor organizations. But the beauty of the scheme, MacLean explained in emails to coalition members, was that the mailers could get around state rules that require them to list their sponsors. The funds could be routed through a pair of shell political action committees Moxie Media had formed. And so the mailers simply said the literature was paid for by the “Cut Taxes PAC,” and that its funding came from the “Conservative PAC.”

Even better, paperwork creating the PACs could be filed just before the Aug. 17 primary, and so contributions for the campaign would not have to be disclosed until after the election, MacLean explained. “This will not show up at the PDC until Aug. 11 as a C6 [report] and would likely take much longer for any reporter or blogger to connect it to any of you before [after] election day.”

            Officials of the three special-interest groups were eager participants in the scheme and pledged a total $9,000. In the week before the August primary, Everett Republicans got two mailers that touted Rieger’s virtues. MacLean apologized to backers for the quality of the product, explaining that she was doing her best to “simulate crappy GOP mail.” But the union officials said she was being too modest – it looked better than what most Republicans churn out, they said. Some 5,300 Everett Republicans also got “robo-calls” in which MacLean stated that “this is your neighbor, Emma,” a “lifelong Republican” who was furious that Berkey had voted to raise taxes during the 2010 session.

            That was one of the big ironies of the effort. While the aboveboard Moxie Media campaign for Harper attacked Berkey for not raising taxes enough, its underground campaign for Rieger attacked Berkey for raising taxes at all.

Berkey finished in third place in the primary, losing by a mere 122 votes. The strategy worked like a charm. Harper cruised to an easy victory in the general election and is now senator from the 38th District.


            A Reporting Violation


The whole scheme unraveled when news media organizations, including Washington State Wire, began raising questions about the financing for the campaign. Rick Bender, then-president of the state Labor Council, said later that he hit the roof when he learned his organization had been involved, and refused to pay its share of the printing and mailing costs. The other two groups offered to pay, to keep things legal, but Moxie Media told them to keep the money – by that point the jig was up. And so the firm never filed a report indicating where the backing for the campaign had come from. On paper, the Conservative PAC and the Cut Taxes PAC never had a dime.

Berkey complained and the state Public Disclosure Commission investigated. It all came out in the agency’s report. Commissioners said they were stunned. “This behavior is mind-boggling,” commissioner Jane Noland said at the time. “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.”

The PDC referred the case to the attorney general’s office for prosecution.

The funniest thing about the case? There was nothing illegal about hoodwinking the voters of Everett, funneling money through shell PACs, or creating campaign literature that concealed the true sponsorship for the campaign. But filing bad paperwork – that was a crime.

           No Push for New Election


In its news release Friday, the state attorney general’s office said it decided not to go to court to seek a new election. It said it had hired Matt Barreto, a University of Washington political science professor, to review the case, and he concluded that the office could not prove with certainty that the tactic had changed the outcome of the election.

Berkey, contacted Friday by Washington State Wire, said she was disappointed the attorney general’s office didn’t go all the way. “A trial would have allowed voters to see what went on behind the scenes,” she said. “A lot of people were involved in the planning and implementation of this maneuver.”

A trial might have established whether there was illegal collusion between the independent campaign run by Moxie Media and the official Harper campaign, which was run by former MacLean associate Christian Sinderman and who has offices in the same Seattle building, Berkey said.

“I’m just sorry the fine wasn’t more, and that this was the outcome,” she said. “The unions pulled a fast one. For the state Labor Council and the trial lawyers, this is nothing.”

The settlement makes MacLean and Underhill personally liable for the $150,000 penalty. Their first payment of $40,000 is due Dec. 31. MacLean and Underhill also are required to undergo training from the Public Disclosure Commission about the proper filing of campaign finance reports.


            Happy it’s Over


            Reacting for Moxie Media was Will Rava, a partner at Seattle’s Perkins Coie law firm, who represented the consultants in the suit.

            “My clients are pleased to resolve this case,” he said. “As always, they are focused on what they do best – helping their clients advance progressive causes and candidates.

            “In those pursuits, as they have always done, my clients will comply fully with any and all applicable laws and regulations. We note that the settlement does not require any new or amended PDC filings.

            “We agree that the state should not have sought new elections as a result of this matter. Any entitlement to such a remedy could not be proven here, and after the Senate seated Sen. Harper almost a year ago, we do not believe that a court would have had authority to order new elections.”


            Ought to Teach Them a Lesson


            Erin McCallum, president of Enterprise Washington, a business-oriented campaign organization, spent much of last year’s election cycle tracking the bewildering check-passing that went on between Moxie Media’s PACs. That was legal, she said, but the game-playing was on a level never before seen in Washington state. The fine was stiff enough to demonstrate that ultimately it went too far. “They’ll be thinking twice before doing that kind of stuff again,” she said. “This kind of activity should not be tolerated, so I think the public and voters ought to be pleased.”

            Meanwhile, the state Democratic Party has been pushing for a similarly harsh penalty against a conservative organization, Americans for Prosperity, which circulated mailers criticizing the voting records of Democratic candidates but didn’t file a report until after the election. Democrats have been trying to argue that the other effort proves both sides play dirty. After a year-long investigation, Public Disclosure Commission staff decided not a single rule had been broken. Agitation from Democrats nevertheless convinced commissioners last week to keep looking for a violation. State Democratic Party chairman Dwight Pelz said, “We look forward to Rob McKenna taking just as strong a stance against the Koch Brothers and AFP-WA.”