Reduce expense funds for office holders? At least they were transparent

The expenses were as varied as annual dues to a classic car club, a tuxedo, and paying your own son to shovel snow.

The year was 1990, and Michigan lawmakers were billing their officeholders’ expense accounts for personal expenses, a portion of campaign donations destined for seemingly every use.

A then-state senator, Fred Dillingham, R-Fowlerville, tapped his Officeholder Expense Fund, or OEF, for more than $9,000 in specialized care for his disabled daughter.

Joe Mack, a former senator from Ironwood, paid his wife $9,250 — about $22,700 in today’s dollars — for unspecified “secretarial services” in 1990, The Detroit News reported on its front page Sunday, April 28, 1991, detailing the expenses. by all 148 members of the legislature.

Democratic state Rep. James O’Neill of Saginaw “paid himself $1,500 to rent a bedroom in his own home to use as an office,” The News reported.

O’Neill said at the time that it was “perfectly legal” to be his own landlord and use OEF money in this way.

“I checked with the secretary of state,” O’Neill told then-Detroit News reporter Eric Freedman.

Freedman’s sensational April 1991 report provides an abundance of necessary context for the current debate in Lansing over the stench of secret money flowing in and out of nonprofits controlled by state legislatures with virtually no oversight or sunshine.

The investigation into dark money in Michigan politics intensified last week after Attorney General Dana Nessel filed 13 criminal charges against former House Speaker Lee Chatfield for allegedly destroying his fundraising account, the Peninsula Fund. had used to fund a lavish jet-setting lifestyle during his four years. in the field of leadership.

Chatfield tapped the Peninsula Fund to pay off $132,000 in credit card debt for expenses that could only have been personal, Nessel said, including a family vacation to Universal Studios in Orlando, Florida, complete with luxury purchases at Ugg and Coach and a meal at a Harry Potter-themed restaurant.

“It is no exaggeration to say that his employees, friends and family all benefited from the extravagant misspending of these funds,” Nessel said of Chatfield’s alleged abuse of a so-called social welfare organization.

More: Nessel: Secret donors influence policy decisions in Lansing

Chatfield’s attorney has previously said her client did nothing illegal in managing these funds, which are set up under Section 501(c)4 of the Internal Revenue Service code and known in Lansing simply as the c4 of the legislator.

They are, in fact, a personal basis for a legislator. Some of the money finds its way to campaign activities. Some of the money found its way to lawmakers’ plates. Nessel claims that Chatfield and his aides found ways to pocket money through embezzlement schemes to get a cut of the $1.3 million he raised for the Peninsula Fund from donors whose identities remain secret.

In laying out her case against Chatfield, Nessel curiously praised the former system of expense funds for officeholders, which, unlike 501(c)4 groups, had to be disclosed at least twice a year.

Established in 1970, officeholders’ expense funds were intended to pay for the costs lawmakers incur while doing their jobs: tickets to an NAACP dinner, a donation to a local Boy Scout troop, mileage reimbursement for driving through rural multi-county districts. for sub-issues or running a district office.

But there were a whole host of questionable expenses. Then-House Speaker Lewis Dodak, D-Birch Run, charged his OEF $18 for the Antique Auto Club of America’s annual dues. Rep. Ralph Ostling, R-Roscommon, bought football tickets to the University of Michigan and Michigan State University for friends and voters, which state election officials declared legal as long as he didn’t get a free ticket to the Big House or Spartan Stadium.

Jackie Vaughn, a longtime state senator from Detroit, had OEF receipts that included $2,000 in donations to the church where he taught Sunday school, $800 in Christmas purchases at the Hudson’s store in the Oakland Mall and 15 receipts for groceries purchased at a Kroger’s in Lansing “many started the day before or on the same day as a weekly legislative session at the Capitol,” Freedman wrote.

Within three years of The News’ April 1991 report on officeholders’ spending, lawmakers abolished the funds in what was heralded as good government reform in the wake of a Capitol embezzlement scandal at the House Fiscal Agency.

But almost overnight, OEFs were replaced in the mid-1990s by nonprofits controlled by the Internal Revenue Service and normally reserved for groups focused on improving social welfare, such as the United Way.

More: In Lansing, Michigan lawmakers are facing a reckoning over their secret fundraising efforts

Then-Lt. Gov. Dick Posthumus was one of the first politicians to create one, the Associated Press reported in August 1995. The Posthumus Civic Fund predated the Kilpatrick Civic Fund, former Detroit Mayor Kwame Kilpatrick’s infamous slush fund, which according to federal prosecutors was used to defraud. donors and enrich Hizzoner’s friends and family.

The federal trial against Kilpatrick shined a bright light on how easily a politician could use one of these funds to induce wealthy donors—usually corporations—to make unlimited donations without detection. In 2013, federal prosecutors said Kilpatrick used his “citizen fund” for $200,000 in personal expenses, $200,000 for friends and family and $150,000 in campaign-related expenses.

Ironically, the April 1991 article in The News reported that then-state Rep. Carolyn Cheeks charged Kilpatrick, mother of Kwame, $350 in landscaping fees for her campaign headquarters, even though there were rules against using those funds for election purposes.

The difference between how Cheeks Kilpatrick and her son used their money is that mom got busted by a news reporter because she had to file a twice-yearly report on what she spent the money on – and who provided the money. But Mayor Kilpatrick was able to run his civic fund without a shred of oversight — until a sex scandal rocked him and authorities started digging, just like the circumstances of 35-year-old Lee Chatfield.

“We used to announce all major expenses and where the money came from. In many ways it had clear advantages over the current system,” said Nick Ciaramitaro, a Democrat who represented Roseville and Eastpointe in the state House from 1979 to 1998.

Previously, reporters and members of the public could search the OEF files at the Secretary of State’s office and review all expenditures and add up the largest expenditures in a given year. Ciaramitaro came in third among House members in 1990, with $26,905 in OEF expenditures, about $66,000 in today’s dollars.

Ciaramitaro attributes his “heavy” expenses to his then operation of a district office on 10 Mile Road in Eastpointe. He used the fund to pay for office rent, utilities, a telephone and a part-time employee to staff it.

According to former lawmakers, the district office — and who staffed it — was always the blurred line that lawmakers seemed to cross when reimbursing officeholders for expenses.

Dominic Jacobetti, the longtime chairman of the House Appropriations Committee whose power and tenure helped inspire term limits, used his OEF money in 1990 to pay his son $2,500 to mow the lawn the day after Christmas, clearing the snow and answering the phone at the Negaunee family home, who claimed the house was being used as his office in the Upper Peninsula.

“I guess Jake would have argued that I can’t be in Negaunee and Lansing at the same time, it’s about a 12-hour drive. That’s the kind of argument you get,” Ciaramitaro said, referring to Jacobetti as “Jake.” as his colleagues called him. “That’s why the OEFs fell out of favor. … The definition of what constituted office expenses was stretched so far in many cases that people thought it was inappropriate.”

Lawmakers did away with a system that could have held them responsible for paying their children to shovel snow in Negaunee, in favor of one that, in Chatfield’s case, reportedly allowed them to take their children on vacation in Florida .

Nessel does not advocate the return of office holders’ expenses.

“There are many ways to address the spending of undisclosed funds and the lack of donor transparency within our government, and it is up to the Legislature to determine what that solution is,” Nessel spokesman Danny Wimmer said in an email Friday. mail. “Transparent expense accounts for officeholders, similar to what existed in the past, could be one that the legislature examines.”

The attorney general has urged lawmakers to pass the BRITE Act, an acronym for Bringing Reforms in Integrity, Transparency and Ethics. The cornerstone of reforming this legislation is that lawmakers would have to register their 501(c)4 organizations with the Secretary of State’s office so that the public can know that they even exist (it’s not easy at this point to to detect the existence of these funds).

But that won’t tell the public what it used to know when officeholders’ spending funds exposed secret spending.

Only full disclosure of donors and spending will bring true transparency and accountability to those who govern us.

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