STATE OF MINNESOTA

ETHICAL PRACTICES BOARD

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Friday, June 21, 1996

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Riverwood Conference Center

Monticello, MN

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MINUTES

Meeting was called to order by Chair Rodriguez.

Members present: Anderson, Owens Hayes, Pauly, Rodriguez, Slocum, Wilson.

Others present: Olson, Goldsmith, Swanson, staff; Eller, counsel.

MINUTES (May 31, 1996)

Ms. Owens Hayes' MOTION: To approve the May 31, 1996, minutes as drafted.

Vote on MOTION: Unanimously passed.

CHAIR'S REPORT

Board Appointment - Chair Rodriguez welcomed newly appointed member, Charles Slocum to the Board.

Board Meeting Schedule - Next Board meeting: Friday, July 27, 1996.

EXECUTIVE DIRECTOR'S REPORT

Board Office Space (see May 31,1996, Board minutes) - Real Estate Management has informed Ms. Olson that removal of asbestos from the proposed office expansion area will cost approximately $3,000. The question of who will pay for the removal has not been answered and the proposal for finishing the space and related costs has not been received from Real Estate Management to date. Rent for the space available on the third floor of the Centennial Building for Board meetings and client training would cost the Board approximately $500 a month, plus initial construction costs. That proposal does not appear to fit in the Board's budget at this time.

Letter to leadership - At its meeting of May 31, 1996, the Board directed staff to draft a letter to be sent to the legislative leadership about reporting the receipt and use of benefits for campaign activities that are not paid for from campaign committee funds. Board members reviewed a draft letter and discussed and agreed to certain changes.

Ms. Wilson's MOTION: To approve the letter as amended in Board discussion.

Vote on MOTION: Unanimously passed. (See copy attached).

Enforcement Report

Mr. Goldsmith presented the following enforcement matters for Board action:

. Waiver Requests

Lobbyist Disbursement Report due 1/16/96, Second waiver request

Philip W. Schrader, (Citizen's Alliance for Legal Moderation (CALM), $60; first waiver request of $200 was granted on January 5, 1993, for the late filing of the lobbyist disbursement reports due April 15, 1992, and July 15, 1992. No motion was made.

. Nonpayment of late filing fee for the late filing of the Lobbyist Disbursement Report

due 4/15/96

This matter is before the Board for the authorization of a third certified letter to be sent for the nonpayment of the late filing fee for the late filing of the lobbyist disbursement report and for the subsequent referral of the matter to the attorney general's office for further enforcement if the payment of the late filing fee is not made. The lobbyist listed below has been sent two late filing fee notices, including notice that this matter would be referred to the Board at its meeting of June 21, 1996. Staff's most recent telephone contract with this lobbyist was on June 18, 1996. He said he would send the payment.

Thomas Paradice, (Fight for Minnesota Incorporated), $35.

Ms. Owens Hayes' MOTION: To send Third Official Notice of Delinquency to Mr. Paradice and authorize the subsequent referral of the matter to the attorney general's office for further enforcement if the payment of the late filing fee is not made.

Vote on MOTION: Unanimously passed by five members (Anderson absent).

. Nonpayment of late filing fee for the late filing of the Supplementary Statement of Economic Interest due 4/15/96

This matter is before the Board for the authorization of a third certified letter to be sent for the nonpayment of the late filing fee for the late filing of the supplementary statement of economic interest and for the subsequent referral of the matter to the attorney general's office for further enforcement if the payment of the late filing fee is not made. The public officials listed below have been sent two late filing fee notices, including notice that this matter would be referred to the Board at its meeting of June 21, 1996.

Michael D. Finch, (Minnesota Housing Finance Agency), $15, staff 's most recent telephone contact with this public official was on June 10, 1996. He said he would send the payment; Thomas M. Forsythe, (Minnesota State University Board), $5, staff's most recent telephone contact with this public official was on June 11, 1996. The public official was unsure whether he would pay the late filing or whether he would appear before the Board at the July meeting; and Jane Hess, (Medical Services Review Board), $45. Staff's most recent telephone contact with this public official was on June 17, 1996. She said she would send the payment.

Ms. Owens Hayes' MOTION: To accept any payment of late filing fees from Mr. Finch and Mr. Forsythe; if payment is not sent, place the matter in the file as de minimus; if the statute of limitations has not run, the previous matter may be added to any subsequent case involving these individuals that may arise.

Ms. Owens Hayes' withdrew her MOTION.

Ms. Pauly's MOTION: To send Third Official Notice of Delinquency to Mr. Finch, Mr. Forsythe, and Ms. Hess and authorize the subsequent referral of the matter to the attorney general's office for further enforcement if the payment of the late filing fees is not made.

Vote on MOTION: Unanimously passed by five members (Wilson absent).

. Nonfiling of Required Amendment

Jerry Beedle, treasurer, Labor Solidarity Committee, 4-0303, this matter is before the Board for the authorization of a third certified letter to be sent for the nonfiling of an amended report of receipts and expenditures and for the subsequent referral of the matter to the attorney general's office for further enforcement if the amendment is not filed. The committee has a cash balance discrepancy between the January 31, 1995, report (ending cash balance $-9,111.17) and the January 31, 1996, report (beginning cash balance $3,448.10). Also, on the January 31, 1996, report, the committee reported accepting five contributions from five unregistered associations for a total of $1,260. Mr. Beedle has been sent two notices, including notice that the matter would be referred to the Board at its meeting of June 21, 1996. Staff's most recent contact with this treasurer was on June 10, 1996. He said he would amend his report for the January 31, 1996, reporting period and he would notify the treasurers of the unregistered committees and request they register with the Board office and to complete a report of receipts and expenditures.

Mr. Anderson's MOTION: To send Third Official Notice of Delinquency to Mr. Beedle and authorize the subsequent referral of the matter to the attorney general's office for further enforcement if the report is not filed.

Vote on MOTION: Unanimously passed by five members (Wilson absent).

Edmond Hanson, treasurer, Political Education Fund of Local 21, 3-0154 - This matter is before the Board for the authorization of a third certified letter to be sent for the nonfiling of an amended report of receipts and expenditures and for the subsequent referral of the matter to the attorney general's office for further enforcement if the amendment is not filed. The committee has a cash balance discrepancy between the January 31, 1995, report (ending cash balance $4,892.10) and the January 31, 1996, report (beginning cash balance $4,769.10). Mr. Hanson has been sent two notices, including notice that the matter would be referred to the Board at its meeting of June 21, 1996. Staff's most recent telephone contact with the treasurer was on June 10, 1996. Staff left a message on the treasurer's answering machine, informing him a written response to the Board's request for additional information was still outstanding and the matter would be going to the Board.

Ms. Owens Hayes' MOTION: To send Third Official Notice of Delinquency to Mr. Hanson and authorize the subsequent referral of the matter to the attorney general's office for further enforcement if the report is not filed.

Vote on MOTION: Unanimously passed by five members (Wilson absent).

. Nonfiling of the amended Registration and Statement of Organization

Harold T. High, candidate, United Brotherhood of Fathers, 1-3347 AG - This matter is before the Board for the authorization of a third certified letter to be sent for the nonfiling of an amended registration and statement of organization and for the subsequent referral of the matter to the attorney general's office for further enforcement if the amendment is not filed. The former treasurer has resigned. Correspondence was sent to the candidate. The correspondence requested the candidate to have the new treasurer complete an amended registration and statement of organization to inform the Board office of the current status of the officers of this committee. Mr. High has been sent two notices, including notice that the matter would be referred to the Board at its meeting of June 21, 1996. Staff's most recent telephone contact with this candidate was on June 7, 1996. He said he would send a letter to terminate this committee and state, in the letter, that no funds were ever raised or spent by this committee.

Ms. Pauly's MOTION: To send Third Official Notice of Delinquency to Mr. High and authorize the subsequent referral of the matter to the attorney general's office for further enforcement if the statement is not filed.

Vote on MOTION: Unanimously passed by five members (Wilson absent).

Mr. Goldsmith presented a report regarding payment of the following late filings fees:

. Return of contribution more than 60 days after receipt

John McCarty, treasurer, St. Paul DFL, 2-0518, accepted total contributions of $500 from the St. Paul Ward 4 DFL on December 3, 1995. Upon notification that this association is not registered with the Board the Committee returned the contribution in full to the contributor on June 13, 1996. A copy of the returned contribution check was received in the Board office on June 13, 1996. These actions were taken under the Board's May 7, 1982, policy regarding acceptance of more than $100 from a committee not registered with the Board.

. Payment of late filing fees

Terrence Knutson, treasurer, (Terrence) Knutson Volunteer Committee, #1-2429 41, $311.74, ($100 late filing fee plus $211.74 court costs paid through Revenue Recapture. claim); for the late filing of the Report of Receipts and Expenditures due 1/31/91. (The report has not filed as of today. The Board voted at its meeting of 8/11/95, to administratively terminate this committee).

Dee Listerud, (Paul Revere PAC), $160, ($100 late filing fee plus $60 for court costs - paid through Revenue Recapture Claim), for the late filing of the Lobbyist Disbursement Report due 1/17/95. (The lobbyist disbursement report has not been filed as of today).

Mark Nygaard, (R-Kids--Remember Kids in Divorce Settlements), $35 for the late filing of the Lobbyist Disbursement Report due 1/16/96.

Jual Carlson, treasurer, The Committee to Elect (Jual) Carlson Minnesota State Auditor, #1-3164 Aud, $100; and Jerry Beedle, treasurer, Labor Solidarity Committee, #4-0303, $55, for the late filing of the Report of Receipts and Expenditures due 1/31/96.

John Pratt, (Minnesota Council of Nonprofits), $30; and Robert R. Reinhart, (Minnesota Employment Law Council), $40, for the late filing of the Lobbyist Disbursement Report due 4/15/96.

Patrick L. Nelson, (Commerce Department), $25 -Terence Stone, (Rural Development Board), $5, for the late filing of the Supplementary Statement of Economic Interest due 4/15/96.

All payments have been deposited in the general fund of the state under Minn. Stat. 10A.34.

. Payment of Civil Penalty

Neighbors for (Richard) Jefferson Committee, #1-1868 58B - The Board investigated in executive session, on May 31, 1996, the committee's nonelection year campaign expenditures which exceeded the limit of $4,316 by $223.50. On June 11, 1996, the Neighbors for (Richard) Jefferson Committee paid a civil fine of $447, two times the amount by which the committee exceeded the applicable expenditure limit. Representative Jefferson entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on June 15, 1996.

Committee for (Jacob) Koppendrayer, #1-2415 17A - The Board investigated in executive session, on May 31, 1996, the committee's acceptance of a contribution during 1995, which exceeded the applicable contribution limit. On June 6, 1996, the Committee for (Jacob) Koppendrayer paid a civil fine of $222, two times the excess amount. Representative Koppendrayer entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on June 8, 1996.

(Gene) Pelowski Volunteer Committee, 1-1763 32A - The Board investigated in executive session, on May 31, 1996, the committee's acceptance of contributions during 1995, which exceeded the applicable contribution limit and the committee's nonelection year campaign expenditures which exceeded the limit of $4,316 by $69.35. On June 7, 1996, the (Gene) Pelowski Volunteer Committee paid a civil fine of $760.70, two times the excess amount, which represents a total of three civil fines. Representative Pelowski entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on June 15, 1996.

All payments of civil fines have been deposited in the general fund of the state under Minn. Stat. 10A.28.

. Conciliation Agreements

Senator (Ember) Reichgott Junge Volunteer Committee, #1-1344 46 - The Board investigated in executive session on May 31, 1996, the committee's acceptance of a cumulatively-excessive contribution. The contribution exceeded the statutory limit of $1,726 by $14. Senator Reichgott Junge entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on June 8, 1996. A civil fine of $28 must be paid within 30 days of the date that the agreement was signed by the Board Chair.

(Jim) Rostberg Volunteer Committee, #1-2712 18A - The Board investigated in executive session on May 31, 1996, the committee's acceptance of a facially-excessive contribution from a registered principal campaign committee. The contribution exceeded the statutory limit of $100 by $78, and was accepted during the regular session of the legislature. Representative Rostberg entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on June 8, 1996. A civil fine of $370 must be paid within 30 days of the date that the agreement was signed by the Board Chair.

Financial Report and Agency Deposits - Mr. Goldsmith reported that he has audited the Boards budget for fiscal year 1996 up through May and that it appears that approximately $10,000 will be forwarded to the fiscal year 1997 budget.

ADVISORY OPINION REQUESTS

Requests for the following advisory opinions are nonpublic data.

Advisory Opinion #239 - Replacement of destroyed campaign materials

The Board reviewed a draft response to an advisory opinion request from a candidate who asks the Board for direction in reporting the replacement of political signs, used in the 1990 and 1992 elections that were destroyed in a fire while they were being stored in a machine shed for use in the 1996 election, on the principal campaign committee's Report of Receipts and Expenditures. Insurance on the property covered the signs and under the insurance policy, a deductible is applicable to the entire claim.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #239 as drafted.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #239 as signed by Chair Carolyn Rodriguez, June 21, 1996: The receipt of insurance proceeds by a principal campaign committee is reported as miscellaneous income. Use of insurance proceeds to replace destroyed campaign signs is reported as a noncampaign disbursement.

Advisory Opinion #240 - Political Activity as bona fide occupational qualification

The Board reviewed a draft response to an advisory opinion request from the authorized representative of an association who asks the Board if it is required that an employee, who is a legislative lobbyist, refrain from being an endorsed candidate for the legislature be established as a "bona fide occupational qualification" as that phrase is used in Minn. Stat. 10A.20, subd. 11.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #240 as drafted.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #240 as signed by Chair Carolyn Rodriguez, June 21, 1996: A "bona fide occupational qualification", as that phrase is used in Minn. Stat. 10A.20, subd. 11, may include a requirement that an employee who is a legislative lobbyist not be an endorsed candidate for legislative office.

LEGAL COUNSEL'S REPORT - No change since last report

STANDING COMMITTEE REPORTS

Legislative Recommendations and Rules Subcommittee Report - No report.

OTHER BUSINESS

Board Resolution

Mr. Slocum's. MOTION: To adopt the following resolution:

RESOLVED, that the Ethical Practices Board recognizes Elsa Carpenter for her years of service from 1991 to 1996 as a member of the Board and offers this resolution in appreciation for her investment of time and energy in support of the mission and objectives of the Minnesota Ethical Practices Board.

Vote on MOTION: Unanimously passed.

Board budget - Board members reviewed a draft budget for fiscal year 1997.

Ms. Owens Hayes' MOTION: To approve fiscal year 1997 budget as drafted.

Vote on MOTION: Unanimously passed by five members (Anderson absent).

REPORT FROM EXECUTIVE SESSION

FINDINGS IN THE MATTER OF THE HOUSE REPUBLICAN COMMITTEE

Mr. Goldsmith reported that during executive session the Board found that there was sufficient evidence to support a finding that probable cause existed to believe that the House Republican Campaign Committee violated Minn. Sat. 10A.27, subd. 9(a) and directed the House Republican Campaign Committee to return the contributions accepted during the regular session of the 1995 Legislature to the contributors, and if a contribution can not be returned because a committee is no longer in existence, then the amount of that contribution will be imposed as a civil fine. (See findings attached).

ADJOURNMENT

Meeting adjourned.

Respectfully submitted,

Nancy Wilson, Secretary

(Minutes by staff)

If you would like to receive any attachment referred to in these minutes please contact the board office