Campaign Violations by McCaffery’s Firm’s PAC??

Member Group : Freindly Fire

Law Partners Reimbursed For Political Contributions; Recipients Still Unknown

By CHRIS FREIND, The Bulletin
Friday, April 24, 2009

The contentious race for Philadelphia district attorney took another twist this week, with questions being raised regarding possible campaign finance violations involving Dan McCaffery, considered a front-runner in the five-candidate Democratic field.

Mr. McCaffery is a shareholder in the Jenkintown law firm Friedman, Schuman, Applebaum, Nemeroff & McCaffery, and also serves as treasurer of the firm’s political action committee (PAC), the Pennsylvania Good Government Fund.

On numerous occasions in 2007 and 2008, partners in the firm, including Mr. McCaffery, were reimbursed by the PAC for personal political contributions, which, according to legal statutes, may be a violation of state and federal law.

The Pennsylvania statute regarding election contributions explicitly states that political donations cannot be made on behalf of any other person or entity: "It shall be unlawful for any person to make any contribution with funds designated or given to him for the purpose by any other person, firm or corporation. Each person making a contribution shall do so only in his own name."

Under the law of the commonwealth, the treasurer of a political committee is responsible for "all money received and disbursed."

Federal law also prohibits contributions made in the name of another person or entity. The statute reads, "No person shall make a contribution in the name of another person or knowingly permit his name to be used to effect such a contribution, and no person shall knowingly accept a contribution made by one person in the name of another person."

Despite these prohibitions, six Friedman Schuman partners have continuously engaged in PAC reimbursements for campaign donations. According to the PAC’s campaign finance documents, the reason for PAC expenditures to each partner is for "Reimbursement for Various Contributions on behalf of the PA Good Gov’t Fund." All of the PAC’s reports are publicly available from the Pennsylvania Department of State.

For the years 2007 and 2008, the partners were reimbursed $45,771.

No public record exists listing the recipients of these campaign contributions.

Mr. McCaffery was reimbursed $8,939; Sean Kilkenny, $20,789; Peter Friedman, $11,250; Robert Nemeroff, $1768; Kerry Schuman, $2,925; and David Applebaum, $100.

This practice raises a number of questions.

While the PAC is complying with state law, which requires listing expenditures on campaign finance reports, it is concealing to whom it is actually contributing. When the partners write a personal check with full knowledge they will get reimbursed by the PAC, the committee, in effect, becomes the ultimate contributor, yet the list of donation recipients is nonexistent on the reports.

Since it is the partners’ personal funds that are being spent at campaign events, it might appear that they are not using "funds designated or given to him for the purpose by any other by any other person, firm or corporation." However, the partners, armed with the knowledge that they will get reimbursed at a later date, are making contributions with funds that are, in fact, originating from another organization – the PAC.

Is Favor Being Curried?

Because the reimbursements have occurred over a two-year period, and not a one-time event, the partners’ arrival at a campaign event having "forgotten the PAC checkbook" does not seem plausible.

Some political veterans have expressed bewilderment, especially since the practice is being routinely carried out by politically knowledgeable attorneys. They have speculated that one possibility for engaging in the reimbursements would be to wield more clout and influence with the recipient. An individual’s check puts a "face to a name" and imparts a personal connection to the contribution.

"In the era of pay to play politics, these reimbursements raise the specter of conflicts of interest, at the least, and beg the question if pay-to-play is occurring," one 25-year political operative said.

The Department of State’s campaign finance Web site allows users to search for an individual’s contributions on a statewide basis. This does not, however, shed light on determining the recipients for whom PAC reimbursements were made.

Partner Sean Kilkenny donated over $40,000 in 2007 and 2008 to various candidates, and he was reimbursed roughly half that figure by the PAC. Public records do not differentiate between personal and reimbursed donations.

In addition to serving as Jenkintown Borough Council president, Mr. Kilkenny is the Solicitor for the Borough of Norristown, Hatfield Township, Lansdale Borough, Whitemarsh Township, and the Montgomery County Controller’s Office.

Since contributions to municipal candidates do not appear in Department of State records, it is even more difficult to track the reimbursed donations. The only manner to tabulate a partner’s contributions to municipal candidates and committees is to search the records at each of the state’s 67 county seats. Mr. Kilkenny’s $40,000 in contributions do not reflect his donations to municipal candidates.

Depending on which of the partners’ donations were reimbursed, the consequences could be significant.

In Mr. Kilkenny’s case, he donated $2000 to Mr. McCaffery’s D.A. campaign on Nov. 13, 2008. He was then reimbursed $2,560 on Dec. 3. Based on available pubic records, neither the public nor the Department of State has any way of knowing if Mr. Kilkenny was reimbursed for the McCaffery donation. If he was, then the McCaffery campaign would be in violation of campaign finance limits.

Five other partners in the firm donated an additional $4500 to the McCaffery campaign in 2008.

Philadelphia imposes contribution limits for city candidates – $2,600 for individuals, and $10,500 for PACs. Since the Pennsylvania Good Government Fund contributed the maximum amount to Mr. McCaffery’s campaign, any additional money from the PAC would result in a violation.

In this regard, political observers have asked if the reimbursement practice could be a way to evade campaign contribution limits.

Asked for an explanation of the reimbursements, Mr. McCaffery stated that the firm’s PAC was organized for the primary purpose of supporting the candidacy of persons who are supported by members of the law firm.

"During this time, it (the PAC) has never committed, been fined or even accused of any violation of the Pennsylvania Election Code. However, as with any voluntary organization, accounting errors occur and actions to correct technical mistake are taken. We are in the process of amending the report," he said.

"On several occasions, attorneys associated with our firm made direct contributions to various candidates for public office," McCaffery continued. "Ordinarily, consistent with the customary practice of the Committee, those attorneys would have made contributions to the Committee, and then the Committee would have made direct contributions to the candidate for office. In this case, the attorneys made the contribution to the candidate and then Committee reimbursed each of the attorneys for the contribution."

Characterizing the firm’s attorneys getting reimbursed by the PAC a "minor error," Mr. McCaffery stated that in each case, the PAC’s contributors’ identity and place of employment were disclosed on appropriate state campaign finance reports. "The Committee’s membership is composed of attorneys associated with the law firm, and in each instance, the direct contributions were made in the name of the attorneys associated with the law firm. There was no attempt to misrepresent any contribution. In fact, there has been no suggestion that the identity of any contributor was either misrepresented or hidden from the public."

Mr. McCaffery concluded by stating, "Ironically, the provisions of the Election Code were intended to ensure full disclosure of the identity of the contributor – as was done in this case. The purpose of this provision of the Election Code was to prevent individual donors attempting to hide their identity behind third parties."

The McCaffery statement refers only to the identity of contributors. It completely fails to address the fact that the recipients of the reimbursed campaign contributions are still unknown.

The Department of State declined to say whether it believed the reimbursements violated state law, adding that it needed to gather more information, such as the recipients of the donations, before rendering its decision.

Chris Freind can be reached at [email protected]