August 27, 2017/Press

ICYMI: NC Senate leader pays fine over campaign money

NC Senate leader pays fine over campaign money
By Colin Campbell
August 15, 2017

Senate leader Phil Berger’s campaign recently paid a $5,500 forfeiture after an audit found multiple improper contributions above the legal limit.

Auditors also raised questions about Berger’s practice of paying office rent to his own law firm because he sometimes conducts legislative and campaign business there.

The findings were part of a routine State Board of Elections and Ethics Enforcement audit, which reviewed Berger’s campaign finance reports from 2009 to 2015. Between 2012 and 2014, auditors found three donors who exceeded the maximum contribution level, which is currently $5,200 per two-year election cycle but was a lower amount at the time of the improper donations.

One of the donors, the political action committee for the North Carolina State Farm Agents Association PAC, donated $9,000 over a two-year period.

The $5,500 forfeiture payment from the Berger campaign will go to a state fund that helps public schools.

Auditors found six other improper contributions but did not require a forfeiture because they were received “outside of the records retention period,” the report says. Those included excessive contributions, improper business contributions and a donation from a federal campaign committee that had failed to register with the state.

Auditors also scrutinized the Berger campaign’s monthly $1,500 payments to the senator’s law firm for office rent. After receiving questions about the practice from the elections board, campaign treasurer Amy Ellis responded with a memo explaining the practice. Ellis said the space is rented because “it is the most convenient location for Senator Berger to conduct campaign and legislative business when not working on legal matters.”

The monthly rent payment, which Ellis calls “a reasonable approximation of fair market rent” includes phone service, a cell phone payment and the use of a law firm secretary for about 70 hours per month. According to Rockingham County tax records, Berger’s 1,400-square-foot law office has a tax value of $109,000.

Because the law firm is set up as a professional corporation, Ellis says it would be “illegal” for the campaign to use the office for free – that would be “an impermissible corporate contribution.” She noted that other campaigns have similar arrangements with law firms owned by the elected official, so the “campaign’s lease therefore represents a common practice.”

The elections board did not identify any problems with the practice in the final report but had requested the information to determine how the lease payments were calculated.

Auditors also found eight PAC contributions that were not included on the PAC’s financial disclosure reports or were listed with incorrect contribution amounts. “Due to the age of the transactions, the committee is not able to secure copies of checks,” the audit report said. “Reports will not be changed.” In addition, the audit found a number of minor clerical errors, including PAC contributions that listed a date when the legislature was in session and PAC donations were not allowed. Berger’s campaign provided documents showing those donations were actually made during a fundraiser held the day before the session began.

Asked about the audit, Berger campaign finance director Peter Barnes said the process “identified $5,500 in discrepancies (out of about $4.5 million raised in that time period)” and the campaign “complied with all of the board’s requests.” Asked if the election board’s findings had been resolved, agency spokesman Patrick Gannon pointed to a line in the report that says “the review of this committee’s reports is complete through the 2015 Mid Year Semi Annual Report.”