STATE OF MINNESOTA
ETHICAL PRACTICES BOARD

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Friday, March 21, 1997

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Blazing Star Conference Room
Ground Floor, Centennial Office Building

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MINUTES

Meeting was called to order by Chair Rodriguez.

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

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

Ms. Pauly informed Board staff that she would be unable to attend the meeting.

MINUTES (February 28, 1997)

The Board agreed to certain changes in the draft minutes.

Mr. Anderson's MOTION: To approve the February 28, 1997, minutes as amended in discussion.

Vote on MOTION: Unanimously passed.

CHAIR'S REPORT

Board Meeting Schedule - Next Board meeting: Friday, April 25th.

EXECUTIVE DIRECTOR'S REPORT

Ms. Olson reported the following:

Staff activities - Gary Goldsmith is taking a series of classes to enable staff to move forward on the campaign finance management system. This training will save on expenditures for consulting services.

March 12 - Board members and Ms. Olson met with Senator Price to discuss the Board's fiscal years 1998/99 budget and legislative recommendations.

March 19 - Staff presented information to the Senate Government Operations Budget Division Committee about the budget and the Board's technology initiative.

Staff continues to work on a draft document to establish guidelines regarding campaign expenditure/noncampaign disbursements for Board discussion. The draft will be placed on the April agenda for Board discussion.

Personnel issues - Mr. Goldsmith reviewed Billie Errico's performance from March, 1996, to February, 1997. Ms. Errico received a satisfactory review and will receive a step level increase in accordance with the MAPE contract.

Jim Maloney is no longer in the Board's employ.

Board office matters (see May 31st, June 21st, September 20th and October 25th minutes) - The Department of Administration continues to work on the office remodeling to increase the Board's public area.

Informational materials for Board members - Bonnie Williams, Executive Director of the Florida Commission on Ethics, has placed Ms. Olson's name in nomination for membership on the COGEL Steering Committee.

Correspondence - A letter from the National Federation of Independent Business was available for Board review (see copy attached). Ms. Olson reported that she informed Mr. Hickey that the Board does not generally support specific legislation and that while the Board recommends parity between labor unions and corporations they do not suggest how to achieve the parity.

Enforcement Report

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

Consent Items

Board Action: Authorization of a third certified letter for nonfiling of the Report of Receipts and Expenditures and subsequent legal enforcement action, in the event the report is not filed. Two notices have previously been sent to each client. To date, the following 36 committees have not filed the Report of Receipts and Expenditures due 1/31/97:

Friends of (Karl) Anderson

(Sharon) Anderson Volunteer Committee

(Sharon) Anderson Volunteer Committee

Elect (Matt) Begeske Committee

(Steven) Boynton Volunteer Committee

(Kevin) Chandler for Senate

(Donald) Cheatham for State Representative

(Kevin) Correy for Senate

People for (Michael) des Parois

Elect (John) Ellenbecker Committee

(Thomas) Gromacki for State Representative

(Patrick) Harris for the House

(Connie) Heisenfelt for House

(Marc) Heisenfelt for House

United Brotherhood of Fathers, Candidate (Harold) High for Attorney

General

(Connie) Janssen Volunteer Committee

Neighbors for (Carlos) Mariani Committee

Volunteers for (Joe) McCabe

Friends of (Darrell) McKigney

(David) Meier Volunteer Committee

(Patrick) Rosenstiel for Legislative Committee

(Mike) Schultz Volunteer Committee

(Paul) Sobocinski for Senate Volunteer Committee

(Mike) Spillane Volunteer Committee

(Marianne) Stebbins for State Senate

(Marianne) Stebbins for State Representative

(William) Teetzel for the 90's

Volunteers for (Mitchell) Unruh

Committee to Elect (Bonnie) Walters

19th Senate District DFL

61st Senate District DFL

Minnesota Citizens for Limited Legislative Terms

Minnesota NOW PAC

Olmsted County DFL Women's Club

People FPBP of the USA

Volunteer Fire Fighter Political Committee

Ms. Wilson's MOTION: To authorize the actions specified in the consent matters.

Vote on MOTION: Unanimously passed .

Discussion Items

Board Review and Consideration of Possible Administrative Termination

These matters are presented for the Board to review for possible administrative termination. Collection efforts will continue on these accounts, as they relate to past violations and judgments already obtained. The administrative termination applies only to future correspondence and any enforcement that would take place as a result of noncompliance.

Roger Anderson, treasurer, (Roger) Anderson for State Representative, 1-2600 67A A judgment has been obtained for the nonfiling of the Report of Receipts and Expenditures, due October 29, 1990, covering the period August 29 through October 22, 1990, the subsequent late filing fee, and for the return of public subsidy since the committee failed to account for use of the funds.

At its May 31, 1996, meeting the Board reviewed this matter and decided to pursue enforcement to obtain the Report of Receipts and Expenditures and to collect the monetary portion of the judgment. Late filing fees, unaccounted for public subsidy, and judgment interest total $5,472.16. This account is currently at revenue recapture for collection, should Mr. Anderson apply for and be entitled to any tax refund from Minnesota. However, Mr. Anderson is no longer living in Minnesota and the Attorney General's office referred this matter to PAYCO collection agency on September 27, 1996.

The committee registered with the Board office on September 28, 1990, and never filed a report with the Board office.

Mr. Anderson's MOTION: To administratively terminate the (Roger) Anderson for State Representative committee so as to: 1) suspend enforcement activities not already in progress; 2) report the committee's status as terminated in reports and records maintained by the Board; and 3) continue to maintain the committee file in the active files section of the Board's records.

Vote on MOTION: Unanimously passed.

Douglas Hofman, treasurer, (Douglas) Hofman Volunteer Committee, 1-3046 49B - Judgments have been obtained for the nonfiling of the Report of Receipts and Expenditures due January 31, 1995, covering the period January 1 through December 31, 1994, the subsequent late filing fee, and for the return of public subsidy since the committee failed to account for use of all of the funds.

The committee registered with the Board office on April 13, 1994, and has filed two Reports of Receipts and Expenditures. The most recent reports filed with the Board, covering the period January 1 through October 24, 1994, shows an ending cash balance of $2,768.09.

At its May 31, 1996, meeting the Board reviewed this matter and decided to pursue enforcement to obtain the Report of Receipts and Expenditures and to collect the monetary portions of the judgments. This matter was referred to revenue recapture and the Minnesota Collection Enterprise for collection of the monetary portions totaling $1,749.19. This matter is set for hearing on March 25, 1997.

Ms. Wilson's MOTION: To administratively terminate the (Douglas) Hofman Volunteer Committee so as to: 1) suspend enforcement activities not already in progress; 2) report the committee's status as terminated in reports and records maintained by the Board; and 3) continue to maintain the committee file in the active files section of the Board's records.

Vote on MOTION: Unanimously passed.

Phil Ratté, treasurer, (Phil) Ratté for State Representative, 1-3328 52A - Judgments have been obtained for the nonpayment of the late filing fees for the late filing of the Reports of Receipts and Expenditures due July 5, 1995, for the Special Election in House District 52A, covering the period June 12 through June 28, 1995, and for the nonfiling of the Report of Receipts and Expenditures, due September 19, 1995, covering the period June 12 through September 9, 1995.

Late filing fees and judgment interest, total $389.50. The judgments were referred to the Minnesota Collection Enterprise and revenue recapture for enforcement.

The committee registered with the Board office on June 23, 1995, and has filed one report. The committee shows an ending cash balance of $1,200.

The Attorney General's office is in the process of obtaining a bench warrant in this matter.

Mr. Anderson's MOTION: To administratively terminate the (Phil) Ratté for State Representative committee so as to: 1) suspend enforcement activities not already in progress; 2) report the committee's status as terminated in reports and records maintained by the Board; and 3) continue to maintain the committee file in the active files section of the Board's records.

Vote on MOTION: Unanimously passed.

Clark Schmidtke, treasurer, Friends for (Clark) Schmidtke, 1-3178 22B - A judgment has been obtained for the nonfiling of the Report of Receipts and Expenditures, due January 31, 1995, covering the period January 1 through December 31, 1994, the subsequent late filing fee, and for a civil fine imposed for accepting a contribution in excess of the 1994 contribution limit.

The committee registered with the Board office on August 1, 1994, and has filed two reports. The most recent Report of Receipts and Expenditures that this committee filed was due October 31, 1994, covering the period January 1 through October 24, 1994. This report shows an ending cash balance of $433.01.

At its August 23, 1996, meeting the Board reviewed this matter and decided to only pursue the collection of the monetary portion of the judgment. Since Mr. Schmidtke is not currently living in Minnesota, the Board voted to defer from pursuing the judgment on the non-filing of the Report of Receipts and Expenditures unless Mr. Schmidtke moves back to Minnesota. The monetary portions of the judgments were referred to the Minnesota Collection Enterprise and revenue recapture for enforcement. This account is currently at revenue recapture for collection, should Mr. Schmidtke apply for and be entitled to any tax refund from Minnesota. Because Mr. Schmidtke is no longer living in Minnesota, the Minnesota Collection Enterprise has returned the account. Late filing fees and judgment interest total $347.80.

Mr. Anderson's MOTION: To administratively terminate the Friends for (Clark) Schmidtke committee so as to: 1) suspend enforcement activities not already in progress; 2) report the committee's status as terminated in reports and records maintained by the Board; and 3) continue to maintain the committee file in the active files section of the Board's records.

Vote on MOTION: Unanimously passed.

Board Recommendation Whether to Proceed With Collection Process

Marvin J. Cole, treasurer, People FPBP of the USA, 4-0760 - This committee registered with the Board office on August 20, 1996. The only Report of Receipts and Expenditures this committee filed covered the period of January 1 through August 27, 1996. The report disclosed receipts and disbursement of $300, respectively, and an ending cash balance of $0.

This matter was referred to the Attorney General's office for the nonfiling of the pre-general Report of Receipts and Expenditures due October 28, 1996. No correspondence has been returned to the Board office, to date.

By memoranda dated March 8, 1997, the Attorney General's office is asking whether the Board wishes to incur the $120 cost of service by publication in order to proceed against Mr. Cole.

Mr. Anderson's MOTION: To administratively terminate the People FPBP of the USA committee so as to: 1) suspend enforcement activities not already in progress; 2) report the committee's status as terminated in reports and records maintained by the Board; and 3) continue to maintain the committee file in the active files section of the Board's records.

Vote on MOTION: Unanimously passed.

Informational Items

Payment of Late Filing Fees

Carol Jean Engel, (Hennepin County Community Corrections), $10

Kim Zikovich Mastro, (Association of Minnesota Counties), $25

Brent W. Primus, (International Express Corporation), $15

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

Return of Public Subsidy - Greater Than Campaign Expenditures

(Lee) Greenfield Volunteer Committee (Rep. - 62A) $838.31

The payment has been deposited in the general fund of the state under Minn. Stat. §10A.324.

Payment of Civil Penalty

(Paula) Hanson for Senate Committee, #1-2821 50 - The Board investigated in executive session, on January 24, 1997, the committee's acceptance of contributions from registered lobbyists and political committees and funds during 1996, which exceeded the applicable contribution limit. On March 14, 1997, the (Paula) Hanson for Senate Committee paid a civil fine of $2,031, one times the excess amount. Senator Hanson entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on February 15, 1997.

The payment of the civil fine has been deposited in the general fund of the state under Minn. Stat. §10A.28.

Payment of Late Filing Fees

George W. Bateman, treasurer, (George) Bateman for Representative, #1-2493 37B A $202.36 partial repayment of the $5,965.24 owed for the return of public subsidy based on the 9/19/90, Affidavit of Contributions and the 1/31/91, Report of Receipts and Expenditures was paid through Chapter 13 bankruptcy. A total of $2,425.95 remains to be paid.

The payment has been deposited in the general fund of the state under Minn. Stat. §10A.34.

Return of Contribution More Than 60 Days After Receipt

Dean Francis, treasurer, (Dick) Day Volunteer Committee, 1-2495 28 - accepted total contributions of $400 from the Hy Vee Food Stores Employees PAC on October 30, 1996. Upon notification that this association is not registered with the Board, the Committee returned $300 to the contributor on March 17, 1997. Notification was received in the Board office on March 19, 1997. The unregistered association was notified by certified mail as directed under Board policy amended August 27, 1992.

Financial report and agency deposits - Mr. Goldsmith submitted a report covering July, 1996, through February, 1997.

ADVISORY OPINION REQUESTS

Requests for the following advisory opinions are nonpublic data.

Advisory Opinion #261 - Candidate involvement in other political committee; use of principal campaign committee funds to promote a constitutional amendment.

The Board reviewed a draft response to an advisory opinion request by a legislator who asks what role a candidate may play in the formation and operation of a political committee established to promote a constitutional amendment and to what extent a candidate may use principal campaign committee funds for activities related to promotion of a constitutional amendment?

The Board discussed certain language changes to the draft response.

Mr. Anderson's MOTION: To approve Advisory Opinion #261 as amended in discussion.

Vote on MOTION: Yes: Anderson, Rodriguez, Wilson

Abstain: Owens Hayes

Motion failed: 3 to 1.

The Board agreed to certain language changes to the draft response.

Mr. Anderson's MOTION: To approve Advisory Opinion #261 as amended in discussion.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #261 signed by Chair Carolyn Rodriguez, March 21, 1997: A candidate may not form, or exert direct or indirect control over, a political committee separate from the candidate's principal campaign committee. A candidate's use of principal campaign committee funds to promote a constitutional amendment must be reported as campaign expenditures.

Advisory Opinion #262 - Conflict of interest for public officials

The request for an advisory opinion was withdrawn by the requester.

Advisory Opinion #263 - Use of funds by legislative caucus committee

The Board reviewed a draft response to an advisory opinion request from a representative of a political committee who asks if: 1) contributions received by a Caucus Committee may be used to promote the committee's legislative agenda; 2) expenditures by a Caucus Committee promoting the party's legislative agenda generally, without identifying any particular candidate, are allocable to any of the party's candidates as a donation in-kind, assuming that it is generally permitted by statute; and 3) how to categorize, allocate, and report contributions if the name of the current incumbent legislator in the district, who is a member of another party, is specifically mentioned?

The Board agreed to certain language changes to the draft response.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #263 as amended in discussion.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #263 signed by Chair Carolyn Rodriguez, March 21, 1997: A caucus committee expenditure for mailings, advertising, or similar costs to promote the party's legislative agenda, if generally permitted by statute, may be an approved expenditure on behalf of a candidate, a general committee disbursement, or an independent expenditure. Classification of the cost depends on the specific content and timing of the promotional piece and on the party's candidates' participation, if any, in approving the expenditure.

LEGAL COUNSEL'S REPORT

Board members reviewed a memo from Counsel Gretz outlining the status of cases which have been turned over to the Attorney General's office (see memo attached).

LEGISLATIVE RECOMMENDATIONS AND RULES COMMITTEE

Mr. Goldsmith reported that the deadline for comments or a request for a hearing on the proposed rules is next week. To date no comments or requests have been submitted to the Board.

ADJOURNMENT

Meeting adjourned.

Respectfully submitted,

Nancy Wilson, Secretary

(Minutes by staff)

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