Protest Decisions

Hoffa-Hall 2011 filed a pre-election protest pursuant to Article XIII, Section 2 of the Rules for the 2010-2011 IBT International Union Delegate and Officer Election (“Rules”).  The protest alleged that the campaign contribution and expense report (“CCER”) the Gegare slate filed for the fourth reporting period failed to account properly for a February 26 fundraiser.

            Election Supervisor representative Deborah Schaaf and forensic accountant Frank Maguire investigated this protest.

Findings of Fact and Analysis

            Under Article XI the Rules, each candidate for International office must file two financial reports for each reporting period in which he/she is a candidate.  The filings include a Campaign Contribution and Expenditure Report (CCER) that documents all contributions received, all expenditures made, cash on hand, loans incurred, and related financial information, as well as a Supplemental Report No. 1 that documents the contributions received and expenditures incurred for legal and accounting work on behalf of the campaign efforts of the organization.  Any candidate for International office has the right, upon request to OES, to inspect and obtain copies of the reports filed by any other candidate, in accordance with reasonable terms and conditions set by the Election Supervisor. 

            The fourth CCER reporting period commenced February 1, 2011 and concluded May 31, 2011.  Reports for this period were due June 15, 2011.   The Gegare slate timely filed the required reports for Period 4.  Hoffa-Hall 2011 obtained the Gegare slate reports and timely filed this protest.

            The Gegare slate CCER reported an event the slate called “Leppins CA Fundraiser,” which took place in El Monte, California on February 26, 2011.[1]  The CCER indicated that 133 people attended the event.  Despite this attendance, the report showed a single contribution in the amount of $2,500.00 from Charles Lepins, the event’s host.  The contribution was listed on Schedule A, Part 3 of the report, under “Unverified Monetary Contributions.”  Hoffa-Hall 2011’s protest sought an investigation of this event, asserting it was unlikely only one of the 133 attendees made a contribution at the event, as the report implied.  The protest further asserted that a contribution of $2,500 from the lone contributor exceeded the maximum amount permitted by the Rules from a non-candidate and that the Gegare slate did not record any expenses relating to the event. 

            Investigation showed that 133 persons attended the event and contributed $7,415.22.  Investigation further showed that the event incurred $4,915.22 in expenses, leaving a net gain from the event of $2,500.00.[2]  Lepins collected sufficient data on each contributor (name, signature, local union number, last 4 digits of Social Security number, and contribution amount) to record their contributions.[3]  Similarly, Lepins maintained records and collected receipts to document the expenses incurred for the event.  Lepins furnished these records to the Gegare slate when he forwarded a certified check for the net proceeds of the event.

Although the Gegare slate had the records necessary to meet its reporting obligation for this fundraiser, it did not do so.  Thus, none of the contributions from the event were entered into CCERS, nor were the event’s expenses recorded on the Gegare slate CCER report.  Instead, the slate attributed the entire amount to Lepins as a single contribution, and the slate’s report showed the net gain from the event as an unverified contribution.  Further, although the contribution was deemed unverified, the Gegare slate deposited the check for $2,500 in its general account rather than an escrow account.[4] 

The slate’s reporting of this fundraiser was improper for several reasons.  First, the Rules require that contributions from individual members be attributed to those members and not aggregated and attributed to another member.  Accordingly, attributing the contributions made by 133 members to Lepins improperly concealed from scrutiny the identities of those contributors.  Second, the contribution attributed to Lepins was greater than the maximum contribution a non-candidate member may make to a candidate or slate under the Rules.  Third, all expenses incurred in generating contributions must be reported on the CCERS, and the Gegare slate failed to do so despite having the expense records at hand.  Finally, while the CCERS highlighted the slate’s failure in these respects by automatically designating the contribution attributed to Lepins as unverified because it exceeded the maximum contribution he was permitted to make, the slate improperly did not segregate the gain into an escrow account and instead commingled the funds with verified funds.

The slate has designated Beth Kirchman to prepare and file its CCER reports.  Kirchman told our investigator that she failed to report the fundraiser properly because of a “lack of a working understanding” of the CCER filing process.  She stated further that she knew that attributing the net proceeds to Lepins “was probably not the correct way to report” the event but assumed that if she had reported the information incorrectly “someone from OES would contact [her] about it.”  Kirchman did not contact OES for assistance in how to report the fundraiser.  In addition, Kirchman stated she was unaware that the Lepins contribution was reported as an “unverified contribution,” which the CCERS does automatically when a contribution attributed to a member exceeds the maximum amount that member may contribute. 

OES records demonstrate that Kirchman has assisted with the preparation of Gegare slate CCER reports for the duration of this election.  In addition, OES has invited Kirchman on four occasions to participate in training for CCERS and filing obligations. 

On these facts, we GRANT the protest.

Remedy

When the Election Supervisor determines that the Rules have been violated, he “may take whatever remedial action is deemed appropriate.” Article XIII, Section 4. In fashioning the appropriate remedy, the Election Supervisor views the nature and seriousness of the violation as well as its potential for interfering with the election process.

            We direct the Gegare slate to file an amended CCER for reporting period 4 that properly details the contributors from the Lepins fundraiser and the expenses incurred in that event.  Such amended report shall be submitted by August 12, 2011.

            Pending receipt of that report, we direct the Gegare slate to place in an escrow account the $2,500 contribution it improperly attributed to Lepins.  Once the contributor data has been properly entered into CCERS, the slate may transfer to its general account the contributions that the CCERS verifies as proper.  Any unverified funds must be maintained in the escrow account until proper disposition under the Rules.

            Finally, we assess a fine against the Gegare campaign in the amount of $750, which represents 30% of the improperly reported contribution.  We treat the failure to enter the contribution and expense data from this February 26 fundraiser as a failure to file concerning it.  Competing candidates serve an important function in policing the campaign finance process, and omitting the essential data on this event left Hoffa-Hall 2011 with inadequate information from which to examine it.  Elements of this violation, such as the individual contribution limit and the requirement to itemize and identify each contribution are clear on the face of the Rules.  Article XI, Section 1(b)(12(A) ($2,000 limit on individual contributions to International officer election) and Section 2(b)(2) (recordkeeping requirements).  These matters are not obscure and do not involve gray areas of interpretation. 

The Gegare campaign shall pay the fine within two working days of issuance of this decision.

            Any interested party not satisfied with this determination may request a hearing before the Election Appeals Master within two (2) working days of receipt of this decision.  The parties are reminded that, absent extraordinary circumstances, no party may rely upon evidence that was not presented to the Office of the Election Supervisor in any such appeal.  Requests for a hearing shall be made in writing, shall specify the basis for the appeal, and shall be served upon:

Kenneth Conboy

Election Appeals Master

Latham & Watkins

885 Third Avenue, Suite 1000

New York, NY  10022

Fax: (212) 751-4864

Copies of the request for hearing must be served upon the parties, as well as upon the Election Supervisor for the International Brotherhood of Teamsters, 1801 K Street, N.W., Suite 421 L, Washington, D.C.  20006, all within the time prescribed above.  A copy of the protest must accompany the request for hearing.