March 4, 1998
Hugh Thompson
March 4, 1998
Page 1
Hugh Thompson
4921 Loughborough
St. Louis, MO 63109
James P. Hoffa
2593 Hounds Chase
Troy, MI 48098
Bradley T. Raymond, Esq.
Finkel, Whitefield, Selik,
Raymond, Ferrara & Feldman
32300 Northwestern Highway
Suite 200
Farmington Hills, MI 48334
James P. Hoffa Slate
c/o Patrick Szymanski, Esq.
Baptiste & Wilder
1150 Connecticut Avenue, NW, Suite 500
Washington, DC 20001
William T. Hogan, Jr.
Campaign Fund
2443 North Evergreen
Arlington Heights, IL XXX-XX-XXXX
Marvin Sacks, Esq.
100 West Monroe St., Suite 804
Chicago, IL XXX-XX-XXXX
Richard Brook, Esq.
Cohen, Weiss & Simon
330 West 42nd Street
New York, NY 10036
Richard Leebove
RL Communications, Inc.
18600 West Ten Mile Road, Suite 101
Southfield, MI 48075
John Murphy
20 Piedmont Street
Arlington, MA 02174
Hugh Thompson
March 4, 1998
Page 1
Re: Election Office Case No. PR-041-JHS-EOH
Gentlemen:
A pre-election protest has been filed pursuant to Article XIV, Section 2(a) of the Rules for the 1995-1996 IBT International Union Delegate and Officer Election (“Rules”) by Hugh Thompson, a member of Local Union 600. Mr. Thompson alleges multiple violations of the Rules based on the Campaign Contribution and Expenditure Reports (“CCERs”) filed by various candidates for International office on the Jim Hoffa-No Dues Increase-25 & Out slate (“Hoffa slate”) in the initial International officer election.
Hugh Thompson
March 4, 1998
Page 1
On September 5, 1997, the Election Officer declined to docket the protest, as a post-election protest on the ground that, regardless of its merits, it could not have affected the outcome of the election. The protester appealed to the Election Appeals Master, who, on November 25, 1997, remanded the protest to the Election Officer for investigation and decision. In re: Thompson, 97 - Elec. App. - 329 (KC) (Nov. 25, 1997).
The protest was investigated by Director of Campaign Finance Leslie Deak. The allegations will be addressed separately below.
I. ALLEGED VIOLATIONS OF WILLIAM HOGAN, JR.
A. Improper Contribution from Local 20 Business Agents Fund
The protester alleges that Mr. Hogan’s June 1997 CCER reflects a contribution from the Local 20 Business Agents Fund, a contribution that would be improper under Article XII, Section 1(b) of the Rules. The protester argues that, based on the Election Officer’s decision in Rockstroh, P-764-IBT-EOH (July 11, 1996), contributions from the Local 20 Business Agents Fund (“Fund”) are impermissible because the Fund is facilitated through the local union by the participation of the local union’s bookkeeper/employee.
On August 6, 1997, Mr. Hogan was directed by the Election Officer to return the contribution he received from the Fund. On August 12, 1997, the Election Officer received Mr. Hogan’s affidavit swearing that he returned the money and a copy of the check to the Local 20 Business Agents Fund.
Accordingly, this portion of the protest is RESOLVED.
B. Improper Arrangement for Payment of Rent
The protester alleges that Mr. Hogan’s June 1997 CCER indicates payment of rent for a campaign office on other than commercially-reasonable terms, violating the Rules. Mr. Hogan’s CCER lists a lump-sum payment of rent at the end of nine months of occupying the rental space, rather than monthly rent payments. The protester complains that Mr. Hogan should have listed the outstanding rent as a debt on prior CCERs.
Hugh Thompson
March 4, 1998
Page 1
Article XII, Section 1(b)(1) of the Rules prohibits employers from contributing anything of value where the purpose, object or foreseeable effect of the contribution is to influence the election of any candidate. Under the Rules, the use of building or office space is a campaign contribution. See Lopez, P-456-LU743-CHI (April 10, 1996). However, the use of building or office space does not constitute a contribution if that space is purchased or leased from a vendor at commercially-reasonable terms. See In re: Gilmartin, 95 - Elec. App. - 45 (KC) (December 18, 1995); Carter, P-457-LU550-NYC (March 7, 1996).
The lease agreement between Mr. Hogan and the lessor, Tom Ferguson, established a month-to-month lease, which is terminable on January 15, 1997, or by either party upon written notice to the other party at least 20 days prior to the contemplated termination date. The lease set the rent at $300 per month. The lease contains no provision for deferral of rent and payment by a lump-sum at the end of the term. Further, Mr. Hogan provided no evidence that he had renegotiated the terms of the lease in order to gain forbearance on the monthly collection of rent or change the monthly nature of the lease. Mr. Hogan stated that the monthly lease payments simply “fell through the cracks.”
Based on the language of the lease, the Election Officer finds that the lump-sum payment of rent at the end of the period for campaign office space is neither commercially reasonable nor in accordance with the terms of the lease. The failure of Mr. Hogan to comply with the lease terms turns the rent into a debt owed to the lessor, Mr. Ferguson. That debt should have been reported on the CCER. Furthermore, the debt to a vendor should follow commercially-reasonable terms, including interest payments on the debt.
Accordingly, this portion of the protest is GRANTED. The Election Officer orders Mr. Hogan to pay, within three (3) days of this decision, $100 from his general campaign fund. This amount is calculated to reflect interest that would have been reasonably due over the nine months of deferred monthly rent payments. This amount shall be paid to Mr. Ferguson. Within one (1) day of making this payment, Mr. Hogan shall file an affidavit of compliance, along with a copy of the check and transmittal letter to Mr. Ferguson.
C. Payment for Radio Advertisements to Station WSCR
The protester raises issues concerning the payment for campaign advertisements supporting Mr. Hoffa that aired on radio station WSCR prior to the initial election and the manner in which the payment was reported. First, the protester alleges that Mr. Hogan violated Article XII, Section 1(b)(7) of the Rules by failing to properly identify the debtor who incurred the $5,000 obligation. Second, the protester alleges that the loan from James M. Hogan was an improper contribution from an employer.
In the CCER for the period of December 21, 1996, through March 31, 1997, Mr. Hogan reported indebtedness through an extension of credit from WSCR for advertisements in the amount of $5000.00. He reported that this debt was incurred in November 1996. Subsequently, in the CCER for the period April 1, 1997, through June 30, 1997, Hogan reported that the indebtedness had been transferred in November 1996 from WSCR to James M. Hogan.
Hugh Thompson
March 4, 1998
Page 1
Article XII, Section 2 of the Rules mandates that candidates must report the details of debts on their CCERs. In an interview with Mr. Hogan, he stated that listing WSCR as the debtor was an error. James Hogan, Mr. Hogan’s brother, submitted records that he had paid the radio station for the advertising on October 26, 1996. A representative from WSCR stated that James Hogan conducted the entire transaction purchasing the advertisements and radio time, including payment for the advertisements. Accordingly, Mr. Hogan should have reported either a debt owed to James Hogan or a contribution by James Hogan of $5,000. Mr. Hogan’s campaign transferred $5,000 to James Hogan on July 8, 1997. The stated purpose of that transfer was to reimburse James Hogan for the cost of the radio advertisements.
Article XII, Section 1(b)(1) of the Rules prohibits contributions from employers. Article XII, Section 1(b)(5) of the Rules allows contributions from members who may be employers as long as the contribution comes from funds other than those acquired by members in their capacity as employer. James Hogan purchased the advertisements in October 1996. Contemporaneous membership records from Local Union 714 indicate that James Hogan was an active member of that local union through February 1997.
James Hogan’s eligibility to contribute to Mr. Hogan’s campaign depends on his status at the time the debt is incurred, not his status as of the date of repayment. Because James Hogan was a member at the time of the origination of the debt, he could properly contribute to Mr. Hogan’s campaign. Thus, James Hogan could also lend money to Mr. Hogan. Mr. Hogan, therefore, did not violate the Rules by accepting the loan of $5,000 from James Hogan.
Accordingly, this portion of the protest is hereby GRANTED as to the reporting violation and DENIED in all other aspects. Within five (5) days of this decision, William Hogan shall file an amended CCER listing the loan from James Hogan to his campaign.
II. ALLEGED VIOLATIONS OF JOHN MURPHY
The protester alleges that John Murphy failed to list certain expenses on his CCER despite having engaged in campaign activity during the reporting period that should have resulted in reportable expenses. Additionally, the protester asserts that during the period in question, Mr. Murphy was “harassing” individual contributors to the Carey campaign and should have incurred and reported expenses connected with this activity.
The protester submitted a September 3, 1997 article from the Boston Globe as proof of Mr. Murphy’s having engaged in expense-generating campaign activity in January, 1997. The investigation found that Mr. Murphy engaged in campaign-related activity through investigative efforts related to a protest in January 1997.
Hugh Thompson
March 4, 1998
Page 1
Mr. Murphy objects to the allegations based on timeliness. He argues that the activity in January 1997, reported by the Boston Globe was common knowledge to all interested parties at the time and, therefore, any allegations regarding that activity should have been filed at the time. He also argues that at the time of the activity, he was no longer a candidate. The election for the position for which Mr. Murphy ran was concluded on December 14, 1996, prior to the reported activity. At the time of the activity, Mr. Murphy asserts that he was acting only as an election observer, not as a candidate, so that his was under no obligation to report his activity.[1]
Article XIV, Section 2(b) of the Rules requires protesters to file “within two (2) working days of the day when the protestor becomes aware or reasonably should have become aware of the action protested.” The Election Officer agrees that the protest regarding Mr. Murphy’s activities during January 1997 is untimely. Mr. Murphy’s activities in January 1997 had been public knowledge prior to the news article in September 1997. He was in Washington, DC, observing the conclusion of the election count and numerous participants witnessed his presence. As such, any complaints should have been filed after Mr. Murphy filed his CCER for the period ending March 31, 1997.
Although the Election Officer has treated the time limits as prudential restrictions and has waived them when protests were not excessively untimely, this is not one of those cases. Any complaints about Mr. Murphy’s activities in January 1997 should have been filed in April 1997 after the submission of the CCER for that period. This protest is at least four months late and the protester has not provided any reason to excuse the delinquency. Accordingly, this issue of Mr. Murphy’s conduct in January 1997 will not be considered.
Although not presented by the protester, Mr. Murphy stated to the investigator that he made a trip to Washington, DC, on or about May 9, 1997, in order to review CCERs filed by other candidates. He drove to Washington in his personal automobile and stayed in a Ramada Inn for one night. He paid for the lodging with personal funds. Mr. Murphy’s CCER No. 6 for the period March 29 through June 30, 1997, did not reflect the lodging expenditure. The expense of hotel lodging is an expenditure that should have been reported because until the initial election was certified, review of the CCERs was covered by the Rules. Mr. Murphy, therefore, incurred one expenditure that was not reported on his CCER.
Accordingly, this portion of the protest is therefore GRANTED as to the expenditure for Mr. Murphy’s lodging in May 1997; and DENIED in all other respects.
Hugh Thompson
March 4, 1998
Page 1
III. ALLEGATIONS AGAINST JAMES P. HOFFA, THE HOFFA SLATE AND
RL COMMUNICATIONS, INC.
The protester alleges that an improper payment was made to RL Communications, Inc. by the Hoffa ‘96 Legal and Accounting Fund because RL Communications, Inc. is neither a law firm nor an accounting firm. This issue has already been addressed by the Election Office. The Election Office already had found the payment made to RL Communications, Inc. by the Hoffa Legal and Accounting Fund to be improper and the improper payment has been refunded. See In re: Richard Leebove, 97 - Elec. App. - 328 (KC) (Nov. 24, 1997); Moriarity, PR-049-IBT-EOH (Jan. 15, 1998).
Accordingly, this portion of the protest is RESOLVED.
IV. ALLEGATIONS AGAINST HOFFA SUPPORT TEAM
The protester raises the issue of a discrepancy in the cash balance of the Hoffa Support Team as reported in the CCER. The Hoffa Support Team CCER indicated a beginning balance of $3,428.00. From that balance, a single expenditure of $1,273.00 should have resulted in a balance of $2,150.00; instead the CCER showed a zero balance.
The Hoffa Support Team was unable to provide a specific explanation for the discrepancy, attributing it to a reporting error. The failure of the accounts to balance in accordance with the CCERs is serious. Candidates are cautioned that they are responsible for insuring that their accounts do balance.
In the instant case, however, an audit performed by the Election Office revealed that the discrepancy was caused by a mathematical error in the early CCER reports. The auditors did not find that any fraud or improper use of funds caused the discrepancy. Despite the fact that the auditors could not fully account for the discrepancy, the Election Officer is convinced that the Rules have not been violated in this instance.
This part of the protest is DENIED.
Any interested party not satisfied with this determination may request a hearing before the Election Appeals Master within one (1) day of receipt of this letter. The parties are reminded that, absent extraordinary circumstances, no party may rely upon evidence that was not presented to the Office of the Election Officer in any such appeal. Requests for a hearing shall be made in writing and shall be served on:
Hugh Thompson
March 4, 1998
Page 1
Kenneth Conboy, Esq.
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
Fax: (212) 751-4864
Copies of the request for hearing must be served on the parties listed above as well as upon the Election Officer, 444 North Capitol Street, NW, Suite 445, Washington, DC 20001, Facsimile (202) 624-3525. A copy of the protest must accompany the request for a hearing.
Sincerely,
Michael G. Cherkasky
Election Officer
MGC:chh
cc: Kenneth Conboy, Election Appeals Master
[1] During this period, post-election protests were pending and the election had not been certified.