EXCLUSIVE: DOJ lawyer said no basis for reducing Sec State fine against Dems

DOJ lawyer representing the Secretary of State argued there was no basis for reducing fine against Democratic Party of Oregon -- Sec State did it anyway. Plus, The Oregonian joins the fray.

There are only so many times I can use photos of Secretaries of State or their Democratic Party of Oregon pals having a good laugh so here’s a shot some random dude took from the top of Pilot Butte in Bend yesterday.

In a hearing memorandum filed April 25 and obtained exclusively by the Oregon Roundup via public records request, the Oregon Department of Justice attorney representing the Secretary of State’s office in the Democratic Party of Oregon’s appeal of the office’s proposed $35,000 fine against the DPO arising from the late filing of an amendment showing the actual source of a mammoth $500,000 donation to be an executive of soon-to-be-bankrupt crypto currency firm FTX summarized the public’s interest in maintaining the fine:

The practical impact of the [DPO’s] failure to amend this transaction is that Oregon voters were under the impression that Prime Trust LLC had funded and contributed $500,000.00 to the [DPO] — rather than an entirely different person: Nishad Singh. Whether intentional or unintentional, the [DPO] did not correct the inaccuracy for several weeks, waiting until the last week before the general election and leaving voters in the dark for a critical period of time that they would find this information pertinent. It is undisputed that this transaction was not amended within the statutorily prescribed timeframe. For this reason alone, the proposed civil penalty should be imposed.

Two weeks later, the Secretary of State’s political bosses pushed aside their own lawyer’s argument and concern for public transparency when they agreed to slash the proposed fine by two-thirds, to $15,000, and to drop its related criminal probe into the DPO’s misreporting of the donation. The hearing memorandum, obtained exclusively via public records request by the Oregon Roundup and drafted by Oregon DOJ’s Kevin Gleim, is what it should be: a forceful argument for why the hearings officer should deny the DPO’s request to reduce the fine. It cannot, in truth, be squared with the nonsensical and political settlement agreement that followed it.

Oregon campaign finance law draws a sharp line when it comes to inaccurate and late disclosure filings. The Secretary of State proposes a fine, and she or a hearings officer can reduce it only upon a finding of one or more mitigating circumstance excusing the late or inaccurate filing. The only mitigating circumstances that can be considered arise if the lateness or insufficiency of the filing is the direct result of the destruction of records by “calamitous event” such as fire, flood, etc.; the failure of a professional delivery service to deliver the records; an error by Secretary of State Elections Division staff; or “clearly-established fraud, embezzlement or other criminal activity[.]”

The sole mitigating circumstance at issue here is the last one, fraud, which is short enough to warrant reproduction in full:

The fraud circumstance is quite narrow. In order to qualify, the fraud must be (1) against the committee (in this case against the DPO); and (2) clearly-established as determined in a civil or criminal court case or by a report of a law enforcement or affidavit of an “accountant or bookkeeper or the person who actually engaged in the criminal activity.” As observed in the Secretary of State’s own hearing memorandum, the DPO failed to establish the fraud circumstance.

The “fraud” relied upon by the DPO, and by both parties in the eventual settlement agreement, does not meet this test. There are two types of fraud by Singh the parties claim justify the penalty reduction: (1) a pattern of fraudulently reporting the source of his political donations, as confirmed in Singh’s guilty plea to the federal crime of campaign finance fraud; and (2) Singh’s political advisor telling the DPO’s fundraising contractor that, with regard to the source of the donation to be disclosed by the DPO, Singh “prefers Prime Trust (though not strongly) so go w[ith] that.”

Singh surely engaged in a pattern of fraud, and admitted to doing so with regard to a host of federal campaign contributions. However, the fraud in those cases was not committed against the DPO. Oregon law is clear that the fraud must be perpetrated against the entity being fined, so the fact that Singh defrauded other campaign committees is irrelevant.

Singh’s agent’s statement of his preference for how the contribution was reported is not even fraudulent. A fraud must be a false statement of fact, and it seems very likely that Singh preferred he not be reported as the source of the donation. As the attorney for the Secretary of State argued, “Under Oregon’s campaign finance law, a person cannot ‘prefer’ to be the contributor of a half-million-dollar campaign contribution - the person either is or isn’t the contributor.”

The attorney representing the Secretary of State knew on April 25 what we now know: that there is no evidence of mitigating circumstances allowing the reduction in the DPO fine. Absent such evidence, the Elections Division staff, each of whom was privy to back-channel communications from the DPO or recently employed by the DPO or both, lacked the legal authority to enter into the settlement agreement. The settlement agreement, at least in so far as it impermissibly reduced the DPO fine, is unlawful.

There is little or perhaps nothing that can be done to overturn the settlement agreement. Such is the challenge when both parties in our putatively adversarial legal system are on the same side.

The harm done by the Secretary of State can and should be mitigated by Attorney General Ellen Rosenblum acting on my complaint asking her to pursue a criminal investigation against the DPO. Rosenblum is conflicted, too, and should ultimately refer the matter to the Marion County District Attorney for a full investigation. Either way, Rosenblum must act.

We now know that the Secretary of State acted contrary to the legal analysis of an attorney on Rosenblum’s staff when she entered the settlement agreement with the DPO. That fact should embolden Rosenblum to take action to ensure further injustice is not done.

Furthermore, the Secretary of State last week referred to Rosenblum a criminal investigation against Singh, arising from the DPO donation. It is senseless to investigate Singh for potential criminality arising from the donation without also investigating the recipient of the donation, given the evidence that’s already publicly available.

While writing this piece today, I noticed The Oregonian editorial board has joined me in attacking the legitimacy of the settlement agreement and noting Rosenblum’s role in averting further injustice, in an editorial headlined “A sweetheart deal for political allies.”

The Democratic Party of Oregon, unsurprisingly, has donated and/or received thousands of dollars to and from Democrats currently in office, including Gov. Tina Kotek and Attorney General Ellen Rosenblum. In fact, Rosenblum, whose office is authorized to take on campaign finance complaints and oversees criminal prosecutions, has given the Democratic Party of Oregon more than $100,000 over the years, including $2,500 just last month – money that may very well be used to help the organization pay its fine. Also unsurprising? Rosenblum has no plans currently to pursue a criminal investigation into the Democratic party, her spokesman said.

I have to admit I feel sort of vindicated, though it would have been nice for The O to mention my work on this topic, of which its editorial staff is very well aware. In the months I’ve been researching and writing about the DPO donation, it’s been mostly a solitary effort. No one in Salem or Portland, regardless of political stripe, seemed to care a bit about what some random dude in Bend thought was a really big deal. It’s good to have company, now.

What matters more is that you, my cherished readers, have been in the know longer than anyone else in the state on this massive and still-unraveling story. Thanks for coming along for the ride. Please make room for the newcomers.

There’s more to come.