Injustice redefined

The Oregon Secretary of State colludes with the Democratic Party of Oregon to dismiss a criminal probe and slash a civil fine arising from the party's $500k donation from a crypto currency fraudster.

They’re laughing at us. (Photo by Brian Burk)

Last Thursday, the Elections Division of the Oregon Secretary of State agreed to do publicly what it has been doing privately since last fall, when the Democratic Party of Oregon violated Oregon law by misreporting then failing to correct timely a $500,000 donation it used, at least in part, to help elect Tina Kotek governor. As first reported by The Oregonian’s Hillary Borrud, the Elections Division agreed to reduce its proposed civil fine against the DPO from $35,000 to $15,000 and to drop its investigation into a potential criminal referral against the DPO arising from the donation.

In exchange for this near-exoneration, the DPO gave up next to nothing: it agreed to explain periodically to the Elections Division how it is going about trying, really really hard this time, not to break the law again. The resulting settlement agreement is the administrative law version of a STAY OUT OF JAIL FREE card, “negotiated” by two parties who wanted the same result: to avoid bankrupting and shaming the DPO and further tarnishing the image of Oregon elected officials who are buddies with the DPO, which is to say almost all of them who matter.

The settlement agreement is the punchline of a long-unraveling joke by Oregonians’ state government at Oregonians’ expense, delivered, as such punchlines often are, the Friday before Mother’s Day weekend. Before the essential sorting of sordid details, though, perhaps you will excuse a brief personal story.

I knew something was up as soon as the nice woman from the state Office of Administrative Hearings picked up the phone a few minutes before 9 am Friday. The hearing on the DPO’s appeal of the Elections Division’s proposed fine was set to begin at 9. I’d left a breakfast event early to listen to the hearing, and accidentally called the OAH office instead of the toll-free number for the hearing.

Surprised that a human answered the phone, I explained to the nice woman that I think I had the wrong number, and was trying to call into the DPO hearing. I said sorry for bothering her, and I’d just call the toll-free number. She paused, then told me “I’m not able to give any information about the hearing to anyone other than the parties. Are you a party?” No, I was a member of the public and anyway I was not calling for information about the hearing, but rather to listen to the hearing. We said good bye and hung up.

I then called the hearing toll-free number and sat on hold for about eight minutes. The recording suggested that you call another number if left on hold for more than five minutes. I finally hung up and called the other number; the nice woman answered the phone. This time, she let me know the hearing was cancelled. Postponed? No, cancelled. Why? She couldn’t say.

Mind racing, your intrepid “reporter” took to Twitter at 9:16 am:

A bit later in the day, The Oregonian confirmed the parties had indeed settled. The aforementioned Borrud was kind enough to post the settlement agreement, which interim Secretary of State Cheryl Myers had provided, along with a statement, to some media but not to the dude who has written more about the DPO case than anyone on planet Earth and who had already asked more than once for a copy of the settlement agreement. Not to that dude.

The settlement agreement is a farce of administrative law.

The settlement agreement is a confessionary and self-condemning pact between the DPO and its co-conspirators in the Secretary of State’s office barely, half-heartedly, obscured with the trappings that attend legitimate legal proceedings — the faintest bit of lipstick on an oinkingly porcine partisan ploy.

One gets a good sense of what’s to come by reading the very top of the letterhead on which the settlement agreement appears:

Cheryl Myers is Acting Secretary of State, of course, because Shemia Fagan resigned the week prior because she took money from a cannabis business while her office audited the state’s regulation of such businesses. Some have observed that Fagan was also massively conflicted with regard to the DPO investigation.

Myers continues the tradition. As a friend of the Roundup pointed out to me, Myers, it goes without saying a Democrat, ran for State Representative in 2010. During her campaign, she paid the DPO $924 to perform web services. It’s not the $70,000 the DPO had given Fagan over the years, but Myers, like most every high-ranking Oregon government official, is an ally of the DPO.

And then there’s Elections Director Molly Woon. She was the deputy director of the DPO before going to work for Fagan in 2021. Fagan elevated Woon to Elections Director in late 2022 after Fagan fired the prior director for failing to break election rules to benefit a Democrat congressional candidate. Woon supervised the Secretary of State’s DPO investigation despite having been recently and prominently employed by the DPO because, well, she and Fagan didn’t think that was a problem.

That Myers allowed Woon to stay on as Elections Director after Fagan burst into a ball of conflict of interest, to steward the conspiracy with the DPO to its own conflict-ridden completion, is astounding. Myers, the DPO, and whoever else in state government signed off on this monstrosity of mendacity, did not even bother to maintain the illusion of fairness.

And that’s just the letterhead. Before moving on to the substance, such as it is, of the settlement agreement, afford me another brief but important aside, reader. Myers, Woon and the rest of the crew at the Secretary of State’s office had been well-informed by the DPO of its displeasure over the $35,000 proposed fine when it was first made public in January.

At 11:23 pm January 4, P.K. Runkles, legal counsel for the Secretary of State, announced the DPO was upset, according to internal chat records obtained exclusively by the Oregon Roundup:

Redaction was in original production from Secretary of State.

Also on the chat were Alma Whalen, the Elections program Manager actually conducting the DPO investigation and office spokesman Ben Morris. Woon added Myers to the chat midway through the discussion. The entire team responsible for the eventual settlement agreement was privy to the DPO’s back channel scolding about the initial disclosure of the full proposed fine.

The statute under which the Elections Division fined the DPO provides that when a campaign committee files the required disclosure of a campaign contribution after the deadline to do so, the Secretary of State fines the committee in the amount of [Amount of donation] x 1/2% x number of days late. The DPO on October 9, 2023, claimed the $500,000 donation came from a Nevada company called Prime Trust LLC. By the time the DPO amended the filing on October 31 to show Nishad Singh as the actual donor, that filing was late. The original resulting fine, according to the Secretary of State’s penalty matrix, was $35,000.

The statute allows the fined committee to appeal the fine, which the DPO did, and for the Secretary of State to reduce the proposed fine “upon a showing of mitigating circumstances.” In other words, if Myers believed that extenuating circumstances existed that explained or excused the DPO’s law-breaking, she could reduce the fine. The bulk of the settlement agreement is intended to provide those excuses.

Before we get into the excuses, though, a bit of news from the settlement agreement: it appears a fundraising contractor, hired by the DPO, was the bridge between the organization and Nishad Singh.

The settlement agreement does not name the fundraiser. All we know is the fundraiser communicated with Singh’s people before October 4, and the half million dollars appeared in the DPO’s account on October 4. The settlement agreement, focused as it is on excusing the DPO’s lawbreaking, does not elaborate on when the fundraiser made initial contact with Singh’s people, and the scope of the fundraiser’s role with the DPO. Those facts are important to the central question of what the DPO knew about the identity of the donor when it misreported it on October 7.

With that bit of identification out of the way, let’s wade through the excuses. First, in response to questions from the DPO about the identity of the donor, Nishad Singh’s people said he preferred the DPO report Prime Trust LLC as the donor.

The DPO presumably sought confirmation because it knew the fundraiser had approached Singh for a big donation, but the wire transmission of the donation was from Prime Trust.

It is the DPO’s legal responsibility to determine for itself who the donor is for the purpose of filing with the Secretary of State. There was every reason for the DPO to believe Singh, and not Prime Trust, was the donor, if it wished to believe it.

Just six months before the DPO donation, a political action committee used a $14 million donation that it originally reported as coming from Prime Trust LLC, yes that Prime Trust LLC, to help a Democrat congressional candidate in Oregon. It later revised the filing to show the donation was actually from Nishad Singh, yes that Nishad Singh, and his then-boss Sam Bankman-Fried.

The initial misreporting and subsequent amendment by the PAC received plenty of media attention, including in the widely read national publication Politico, on April 19, 2022.

Here’s how Politico summarized the $14 million donation:

Sound familiar? This information was knowable and, presumably, widely known particularly in Oregon and fundraising-focused political circles. I remember coming across the story at the time. It’s possible the DPO and its fundraiser did not know that a federal PAC had misreported a donation from Nishad Singh as coming from Prime Trust because the wire funds bore the name of Prime Trust because it holds funds in, well, trust for Singh. It’s possible the fundraiser, who knew enough about Singh’s giving history to hit him up for a huge contribution to the DPO did not know about Singh’s highly publicized involvement in Oregon politics. It’s possible that neither the DPO nor the fundraiser acting on its behalf knew or had reason to know they were misreporting the donation for exactly the same stated reason as the federal PAC.

It’s possible but far from likely. The $14 million misreporting at the very least raises the inference that the DPO knew or should have known on October 7 that Nishad Singh and not Prime Trust was the true source of the contribution. Such knowledge would be key to a potential criminal prosecution of the DPO. One would expect the DPO and Elections Division to address the inference in the settlement agreement and explain why, in fact, the Elections Division was halting its probe into a potential criminal referral.

But the settlement agreement does not mention the $14 million donation at all, which suggests there was not a viable response to the clear inference the earlier donation raised. Its inclusion would have distracted from the exculpatory mission of the co-conspirators, so it was left out. This fact alone reveals the settlement agreement as fraudulent.

It goes on to recite Singh’s guilty plea in a federal case, in which Singh admits to making donations to federal campaign committees in his name that he knew were actually from Bankman-Fried or their mutual former employer, crypto currency firm FTX. This, the DPO and Elections Division, inform us, is evidence that Singh “engaged in a pattern of concealing the true nature of donations with which he was involved[.]”

That pattern was enough for the Secretary of State to slash the DPO’s fine and drop its criminal probe. The settlement agreement identifies only two mitigating circumstances upon which she relied: (1) Singh’s pattern of concealment; and (2) the DPO’s promise to report to the Elections Division periodically on its efforts to do a better job reporting the source of its donations in the future.

As the sole plausible mitigating circumstance identified (the DPO’s promise to abide by the law next time is laughable), Singh’s pattern deserves a closer look. It is undeniably true that Singh engaged in a pattern of concealing the true source of campaign contributions. He pleaded guilty in federal court to doing exactly that. That Singh, admittedly, and Bankman-Fried, allegedly, defrauded FTX investors to funnel lots of their money to (mostly) Democratic campaigns in 2022 is an enormous international story.

Evidence of that pattern might indeed constitute a mitigating circumstance if we lacked evidence of what actually happened in the DPO case. To put it another way, Singh having misled other campaign committees about the true source of other donations is irrelevant here because there is ample evidence the DPO should have known the true source of the donation.

Based on the settlement agreement, which we can reasonably presume contains the most exculpatory facts available, at most Singh’s representatives told the DPO’s fundraising that he “prefers Prime Trust (though not strongly)[.]” Singh’s statement of his slight preference of how the source of the donation is reported does not constitute deception. It is not a statement of fact that the true source of the donation was Prime Trust. The DPO’s obligation was to report, to the best of its ability, the donation’s true source. Singh’s preference is irrelevant, particularly when, as here, the donor has a well-known history of reporting irregularities.

Recall, too, that some combination of the DPO and its agent/fundraiser likely targeted Singh for the donation. A cursory review of Prime Trust’s website and filings with the State of Nevada would show Prime Trust bears no apparent connection to Singh, other than the federal PAC’s misreporting of Singh’s donation. In other words, the barest due diligence by the DPO - a simple Google search for “Nishad Singh Prime Trust LLC” - would have, or should have, alerted the DPO that the true source of the donation was most certainly not Prime Trust.

Given their shared interest in disposing with the case, the DPO and the Elections Division chose to ignore the direct facts bearing upon the case in favor of irrelevant evidence of Singh’s behavior in other cases. There is no legitimate mitigating circumstance justifying the Secretary of State’s leniancy.

Why now?

Why did the parties choose to settle now? The investigation began in early November 2022, and appeared as of last week to be going nowhere fast. On April 24, I wrote a piece headlined “Fagan’s stalled, conflicted investigation into record-breaking Democrat donation” based on the lack of activity demonstrated by records the Secretary of State produced to me.

Friday’s hearing surely contributed to the timeline. It’s not at all uncommon for parties to settle their dispute on the courthouse, or in this case administrative office, steps. However, that hearing involved only the DPO’s appeal of the Elections Division’s civil fine. The more explosive issue of the criminal probe was not on the docket. Why did the DPO and the Elections Division choose to go for the kill shot last week?

On May 2, Shemia Fagan announced she would resign as Secretary of State effective May 8. Cheryl Myers, the unelected Deputy Secretary, would take the reigns immediately.

Then, in short order, for the first time in months, there was official word out of the Secretary of State’s office regarding the status of the DPO investigation. On May 5, The Oregonian reported the agency had paused its criminal probe in response to a letter from Damian Williams, U.S. Attorney for the Southern District of New York, in response to a letter the Elections Division had sent to Singh’s attorneys.

The letter, which I obtained via public records request, dated April 10 (The Oregonian incorrectly dates the letter April 4), is addressed to investigator Alma Whalen. It asks her to extend the response deadline provided in her letter to Singh until after the Bankman-Fried trial set for October of this year, in which Singh is likely to be a key prosecution witness. It also asks Whalen to refrain from any “follow-on inquiries” to Singh prior to the trial, to avoid interfering with the federal trial.

The existence of the letter remained secret until nearly a month later, and three days after Fagan announced her resignation. Then, even though the letter did not request Oregon pause its probe, and only asked that Oregon pause its communications with Singh until after October, it was offered out of the blue by the Secretary of State’s office as justification to “pause” the criminal probe.

On May 9, a third (?) shoe dropped. Governor Tina Kotek let everyone know she would not appoint a replacement Secretary of State until after the May 16 primary election. This left the not elected and not-appointed-by-Kotek Myers to run the office, and the DPO investigation.

The confluence of Fagan’s resignation, the Damian Williams letter and last Friday’s civil fine hearing provided a rare opportunity to dispose of the DPO criminal probe without directly tarnishing the image of a single elected or Kotek-appointed Democrat and with a patina of plausible, though on closer examination sorely lacking, justification.

What now?

If Oregonians are going to receive the thorough and fair investigation of the DPO that they deserve and that Oregon law requires, Attorney General Ellen Rosenblum will have to give it to them. The settlement agreement provides only that the Elections Division will drop its criminal probe of the DPO. It explicitly, and probably to Rosenblum’s chagrin, preserves her right to conduct a criminal investigation.

Lucky enough, I filed a complaint with Rosenblum back in February, asking her to take over the DPO investigation in light of Fagan’s myriad conflicts of interest. Her staff declined “at this time,” citing Fagan’s then-ongoing investigation. Rosenblum can, should and in the interest of justice must begin investigating now that the Elections Division has failed.

Rosenblum has her own conflicts of interest, being as all Oregon statewide elected officials are, a close ally of the DPO. She can and should, as I argue in the piece linked above, refer the investigation to the Marion County District Attorney. That would be the best way to ensure a fair investigation.

Regardless of whether she refers the matter to another prosecutor or has her own prosecutors take it on, Rosenblum must act. Justice and what remains of Oregonians’ faith in their state government rely on her.

I edited the description of the penalty applied by the Secretary of State to reflect the correct penalty matrix calculation. Jeff Eager 5-17-23.