$81,872 unreported, a $1,500 penalty

Washington requires any organization that employs a registered lobbyist to report the political contributions it makes: once a year in an annual report, and in a special report for any month in which those contributions pass a small threshold — more than $100 in 2012, according to the report of investigation. The point is to put an interest group’s campaign money and its lobbying in the same place on the public record.

The Washington State Association for Justice — founded in 1953, known until 2008 as the Washington State Trial Lawyers Association, and made up of about 2,500 plaintiffs’ attorneys and staff, according to the Public Disclosure Commission’s report of investigation — employed registered lobbyists throughout 2012. That year it made two contributions from its general treasury that it did not report, according to the Commission staff’s executive summary and analysis: $11,872.20 to its own Justice in Action PAC on or around January 10, 2012, and $70,000 to Our Washington PAC on or around October 12, 2012.

The second went into the governor’s race. “At the time WSAJ made this contribution to Our Washington PAC, the latter was sponsoring Independent Expenditure political advertising and Electioneering Communications in opposition to the 2012 Rob McKenna Campaign for Governor,” the staff analysis says. The $70,000 arrived three and a half weeks before the general election, and when the association filed its annual lobbyist-employer report for 2012 on February 28, 2013, the contribution was not on it, according to the report of investigation.

Where the money went

Our Washington raised $9,190,710 for the 2012 campaign, according to its contribution reports to the Public Disclosure Commission. Most of it came from national party and labor committees; the Democratic Governors Association alone gave $4.75 million.

Largest contributors to Our Washington (PDC committee 14572), 2012 election. Source: PDC contribution reports. Computed by Washington Independents.

The association’s own political committee, Justice for All PAC, gave Our Washington $303,500 over 12 payments that year. Those came from a registered political committee that files its own reports, and they were not part of the case. The association’s $70,000 from its general treasury took its combined contribution to $373,500, about 4% of the committee’s money. McKenna, then attorney general, lost the race to Jay Inslee.

How it came to light

1. January 25, 2016Lawyers for the Freedom Foundation, an Olympia-based policy group, file a 45-day citizen action notice with the Attorney General and the Thurston County prosecutor, alleging the association had failed to report its contributions.
2. February 10, 2016The Attorney General’s Office refers the complaint to the Public Disclosure Commission.
3. February 25, 2016The association’s lawyer, Dmitri Iglitzin, responds. He disputes that the association made unreported in-kind contributions and concedes it may have failed to report monetary ones.
4. March 11, 2016The Commission finds apparent violations and returns the matter to the Attorney General with a recommendation to act.
5. July 15, 2016The Attorney General’s Office announces that the association will pay $9,240 to resolve its lawsuit.

The notice alleged far more than the Commission found. It counted $1,467,387 in contributions and in-kind support since 2010, according to the report of investigation, and argued that the association’s PAC had reimbursed it at least $636,310 for in-kind contributions the association never reported. Iglitzin answered that the PAC had paid the association for services — administration and professional fees — and that nothing had been given away:

“Because there is no evidence that WSAJ conveyed anything of value to WSAJ PAC or any other political committee during the last five years other than as a result of a transaction whereby the item of value was purchased from it by the PAC, there is no evidence to support this allegation.”

Commission staff agreed. They found no evidence of unreported in-kind contributions and concluded that the committees’ payments to the association were payments for services rendered, according to the staff analysis. On the monetary contributions, Iglitzin’s letter conceded the point: “WSAJ may have violated RCW 42.17A.630(2)(a) by failing to report monetary contributions to political committees.”

What the clock had already taken

Washington’s campaign-finance law gives the state five years to bring an action. The review covered March 2011 through February 2016, and anything whose report fell due before that window was out of reach.

That included the largest sum in the complaint. On or around October 8, 2010, the association lent $500,000 to Stop the Insurance Industry Takeover, the committee opposing Initiative 1082, which would have let private insurers sell workers’ compensation coverage in Washington. Voters rejected it that November. A special report disclosing the loan would have been due in November 2010, according to the report of investigation. The staff analysis records it among the association’s “other unreported monetary contributions” that were “required to be disclosed on L-3 and L-3c reports due outside the five-year limitation on state actions in RCW 42.17A.770.”

The settlement

The association agreed to pay $9,240, according to the Attorney General’s announcement of July 15, 2016: a $1,500 civil penalty and $7,740 in the state’s costs and fees. The penalty was 1.8% of the $81,872 that went unreported, and it came four years after the contributions, and after the election they were made in.

The Commission did not set a penalty itself. It sent the case to the Attorney General because it “determined additional legal or penalty authority needed to address violations,” according to the PDC’s record of the case.

Who was named

The respondents were the association, its executive director Gerhard Letzing and its deputy director Suone Cotner, according to the staff analysis. The report of investigation also lists the five people registered to lobby for the association during the review period, and notes that none of their monthly lobbyist reports disclosed contributions on the association’s behalf — which is why the association itself had to report them.

The first name on that list is Elizabeth Berry. She is now State Rep. Liz Berry, D-Seattle, chair of the House Labor & Workplace Standards Committee. She registered to lobby for the association in February 2013, after the 2012 reports were due, according to her filing with the PDC. The investigation made no finding about her or any other lobbyist. She became the association’s executive director in 2016, according to her legislative biography.