On Thursday at 9 a.m., the Alaska Public Offices Commission will consider approving a consent decree regarding a high profile campaign finance complaint that begs some questions and demands some answers.
After a scathing report issued by the APOC staff on June 4, 2009 that alledged a coordinated effort to evade Alaska's campaign finance laws, the full commission is preparing to consider a watered-down settlement that in no way reflects the severity of the offenses as presented by the initial APOC investigation.
On March 20, 2009, an APOC complaint was filed by the Pebble Partnership and the Resource Development Council, an Anchorage business group. The complaint filed against local millionaire Bob Gillam, local advertising executive Art Hackney, and two others, accused them of violating state law by illegally laundering donations through various groups in order to fund an aggressive campaign to pass Ballot Measure 4: the anti-mining initiative that was on the August 2008 primary ballot.
The complaint
The complaint arose after emails surfaced raising questions about the group-coordinating pooling of donations and directing checks that Gillam would write to the various groups.
Interestingly, the numerous emails submitted to raise legal questions probably never would have come into the public domain if not for arrogance.
In Spring 2008, the group hired a political fundraising consultant named Robert Kaplan. Then, after spending four months of helping the anti-mining groups -- they ended up stiffing him.
In September 2008, a month after the anti-mining initiative failed, Kaplan was sent an email saying that his contract was cancelled and his commissions on fundraising would not be paid. Angry, Kaplan decided to collect his balance by forwarding damaging emails from key players to the proper authorities.
On June 4, 2009 the APOC staff issued a damaging 42 page report that among other things found the group had accumulated 18 various violations of campaign finance laws while spreading the cash amongst their various organizations.
The following is an excerpt from the APOC internal investigation report released June 4, 2009.
Despite the fact there were several formal organizations created, these four individuals, acting in concert with one another pulled all the strings, collected and pooled all the money, and determined how that money should be spent on the campaign for ballot measure 4. Under 15.13.400 and 2 AAC 50.290 they were a "group."
There is also a preponderance of evidence to show that Gillam, the Gillam Group, AJS, RRC and AFCW all violated the laws prohibiting the making and receiving of anonymous contributions or contributions in the name of another.
Staff recommends that the four members of the Gillam Group be assessed the maximum penalty for failing to register and report as a group.
Staff recommends that AFCW, AJS, RRC and Gillam be assessed the maximum penalty for making and accepting anonymous contributions, and making and accepting contributions in the name of another.
Staff recommends that RRC be assessed the maximum civil penalty for failing to report campaign expenditures for Ballot Measure 4 and expenses incurred on behalf of AFCW.
According to the APOC staff's report, they even recommended turning the issue over to the Attorney General.
Staff suggests that the Commission consider referring this case to the Attorney General under 2 AAC 50.476(b)(2) to investigate whether violations of AS 15.56 have occurred.
Several emails included in the APOC report highlighted the alledged coordination between the groups.
In response, both Gillam and Hackney said they had no idea how the various groups were going to spend the millions that Gillam donated and that the donations were completely without coordination including one group call Americans for Job Security.
The APOC staff investigator found this impossible to believe.
Even more disturbing than the contributions going through RRC is the enormous amount of money that passed through a group called Americans for Job Security (AJS).
More than half of the $2.9 million dollars that Alaskans For Clean Water received came from Gillam by way of AJS. AJS is nothing more than a sham entity created for the sole purpose of allowing people like Gillam to evade campaign disclosure laws. AJS has no purpose other than to cover various money trails all over the country.
AJS claims that it is a legitimate 501(c)(6) trade organization that represents the interests of its members, and that it is "one of the largest job preservationist grass roots lobbying organizations in the United States." AJS also claims that once a member makes a donation, that member has no control over how the money is spent.
Unbelievable claims
Again, the APOC staff found these claims simply not believable for a variety of reasons.
First, is the timing of the Gillam contributions to AJS and the AJS contributions to AFCW. As described above, Gillam gave $1 million dollars to AJS, and the very next day AJS made its first contribution to AFCW, in the amount of $750,000.
Three weeks later Gillam gives $500,000 to AJS, and two business days later AJS makes its second contribution to AFCW, in the amount of $450,000. Less than two weeks after that Gillam gives another $500,000 to AJS, and a few days later AJS makes its third contribution to AFCW, in the amount of $400,000.
The only time AJS made a contribution to AFCW, or otherwise engaged in the Pebble Mine or Ballot Measure 4 campaign was immediately after receiving an even larger contribution from Gillam.
Finally, wrote the APOC staff, there is evidence that Gillam knew his contributions to AJS would be transferred to AFCW, and there is evidence that he considered his contributions to AJS to be contributions to AFCW. Gillam testified at his deposition that he joined AJS at a time when he had serious medical issues and feared that he might die. It was his dying wish to protect Bristol Bay, and therefore he gave $2 million dollars to AJS.
Gillam, who owns a luxury lodge in Bristol bay, stated in his deposition that "I thought there was a chance I was not going to make it, and I wanted to - I wanted to see to it that the effort, the anti-Pebble effort, continued if at all possible. And, I had - I hoped that AJS would continue that effort, even if I didn't." [Gillam Depo. 65:3-14.]
The APOC found that it simply does not make sense that he would make such a contribution without some assurance that his money would end up back in Alaska, with a group supporting Ballot Measure 4.
Moreover, when confronted with the claim that their fundraiser, Robert Kaplan, was entitled to a commission on the contributions from AJS to AFCW, Gillam responded, "We specifically excluded funds that I contributed which includes monies to Americans for Job Security...and other monies I contributed otherwise." [Doc 129]
However, with all of this evidence contained in the APOC June 4, 2009 report showing a concerted effort to hide the true sources of the money used to advocate for passage of the anti-mining initiative, the APOC is on the verge of giving these folks a tap on the wrist.
In one of the most confusing decrees included in the proposed settlement is where the APOC argues for the velvet glove approach because,"Whereas the full details and nature of the conduct and activities of their conduct have been fully disclosed to the staff."
Excuse me?
The full details and nature of their conduct would never have been disclosed if not for Robert Kaplan getting angry that he got stiffed and then proceeded to turn over damaging emails.
While the APOC staff investigation proposed the maximum penalties and recommended the Attorney General investigate criminal charges, the APOC has now proposed a fine of merely $35,000 and a recognition that these folks need to do a better job next time.
In addition, the APOC has refused to release the maximum fine amount so the public can see just how much of a break these folks are receiving. This is a departure from other APOC rulings where they have had no problem stating the maximum penalty by law.
So what happened?
Was the initial APOC staff report full of unsubstantiated allegations?
Did the Attorney General back off due to a lack of proof?
The public deserves to know why after APOC's own staff found this group had committed 18 different violations of Alaska campaign finance laws, the APOC is now saying that the legal issues are "complex" thus the need for a watered-down settlement.
Over the last few years after Alaska's campaign finance and ethics laws had been flaunted, the legislature supposedly closed the loopholes. The APOC was reportedly finally given some teeth to investigate and hold violators responsible.
With regards to this complaint, there is a clear conflict of opinions and recommended actions coming out of the APOC
So what happened?
To see a PDF of the timeline of events from the June 4 APOC report, click here.
Andrew Halcro is running against incumbent U.S. Rep. Don Young in the 2010 Republican primary. Halcro is the publisher of AndrewHalcro.com, a blog devoted to Alaska issues and politics. He is president of Avis/Alaska, his family business. Halcro served in the Alaska House of Representatives from 1999 to 2003, and he ran for governor in 2006 as an independent. He and Democrat Tony Knowles lost to a woman named Sarah Palin.