Protest Decisions

              June 12, 1998

VIA UPS OVERNIGHT

Gene Moriarty

June 12, 1998

Page 1

Gene Moriarty

41 Pine Street

Watertown, CT  06795

Hoffa Slate

c/o Patrick J. Szymanski, Esq.

Baptiste & Wilder

1150 Connecticut Avenue, NW

Suite 500

Washington, DC  20036

Richard Leebove

R.L. Communications

18600 West 10 Mile Road

Suite 101

Southfield, MI  48075

George H. Faulkner, Esq.

Faulkner & Sacket

820 West Superior, No. 300

Cleveland, OH  44113

Henry F. Murray, Esq.

Livingston, Adler, Pulda & Meiklejohn

557 Prospect Avenue

Hartford, CT  06105

Bradley T. Raymond, Esq.

Finkel, Whitefield, Selik,

  Raymond, Ferrara & Feldman

32300 Northwestern Highway

Suite 200

Farmington Hills, MI  48334

Gene Moriarty

June 12, 1998

Page 1

Re:  Election Office Case No. PR-095-JHS-EOH

Gentlemen:

Gene Moriarty, a member of IBT Local Union 677, filed a pre-election protest pursuant to Article XIV, Section 2(b) of the Rules for the IBT International Union Delegate and Officer Election (“Rules”) against the James P. Hoffa Slate.  Mr. Moriarty alleged multiple violations of the Rules based on filings of the Campaign Contribution and Expenditure Reports (“CCERs”).  Each allegation will be addressed separately below.

This protest was investigated by Director of Campaign Finance Leslie Deak.

Gene Moriarty

June 12, 1998

Page 1

I.  ALLEGATIONS REGARDING THE REPORTING OF HOFFA’S TRAVEL EXPENSES

The protester alleged that the Hoffa Slate CCERs did not accurately and completely report the travel expenses of James P. Hoffa, a candidate for general president, during the rerun election.  The protester first reviewed the expenditures for travel which were reported on Mr. Hoffa’s CCERs.  The protester then compiled a list of fundraising events attended by Mr. Hoffa as reported on Mr. Hoffa’s and the Hoffa Slate members’ CCERs.  The protester contended that the comparison of the reported amount for travel expenditures to the fundraising events Mr. Hoffa likely attended demonstrates that Mr. Hoffa’s reported expenditures are below what it would cost for the amount of travel Mr. Hoffa engaged in.

Mr. Hoffa reported travel expenditures in gross amounts on the CCERs, and did not itemize travel expenditures by destination.  Accordingly, the reported amounts generally reflected more than one trip.  Mr. Hoffa submitted documents supporting the reported expenditures, specifically credit card billing statements that included his travel expenditures.  The billing statements were compared with the protester’s list of events.  Contrary to the protester’s claim, Mr. Hoffa reported expenses for all of the campaign events he attended.

The protester also alleged that the Hoffa Slate did not report the travel expenses of campaign consultants and staff.  The review of the credit card statements and explanations from Hoffa Slate representatives found that the expenses of consultants and staff were properly reported.  The Hoffa Slate consultants and staff charged their travel expenses on the Slate credit card, which amounts were then reported in full on the Hoffa Slate CCERs.

The protester also alleged that Mr. Hoffa made several mistakes reporting his credit card expenses on his CCERs.  A comparison of the credit card statements with the CCERs revealed that there were discrepancies in the amounts reported for a number of the credit card expenditures.  These errors appear to be clerical because the amounts reported on the CCERs were greater than the actual credit card bills for the reporting period, and, as previously stated, the CCERs reported all the travel events.  On June 8, 1998, the Hoffa Campaign amended its CCERs to correct the amounted reported.

Accordingly, this portion of the protest is RESOLVED in part; and DENIED in part.

II.  ALLEGATIONS REGARDING PROHIBITED IN-KIND CONTRIBUTIONS RECEIVED

      BY THE HOFFA SLATE

The protester alleged that the Hoffa Slate’s practice of paying its consultants flat monthly fees makes it likely that the consultants are being paid less than commercially-reasonable rates.

Gene Moriarty

June 12, 1998

Page 1

The protester argued, based on In re Carey Slate, PR-035-EOH (April 27, 1998), that if consultants are not receiving commercially reasonable payments for their work, they are in violation of the Rules.  The only evidence provided by the protester was the decision concerning Richard Leebove and R.L. Communications in In re Carey Slate, where the Election Officer found that the Hoffa Slate received large, unreported in-kind contributions from Mr. Leebove.  The protester contends that because the Hoffa Slate is paying certain consultants a flat monthly fee in the rerun election, it is “likely” receiving in-kind contributions from its consultants as it did in the initial election.

According to its CCERs, the Hoffa Slate has retained five consultants for the rerun election.  Thomas Pazzi works full time as the Hoffa Campaign Manager.  The Hoffa Slate reports paying him a total of $6,000 per month since October 1997 for his work on the campaign.  David Lyle, also a full-time consultant with the Hoffa Slate Campaign who works as the deputy to Mr. Pazzi, has been paid an average of $4,400 per month by the Hoffa Slate Campaign.  Mr. Leebove and R.L. Communications have been paid  approximately $3,000 each month since October, 1997, by the Hoffa Slate Campaign.[1]  The Hoffa Campaign retains two other consultants, Barbara Jo Crancer and Al Huntoon, who assist in clerical and field tasks.  The Slate pays each of them approximately $1,000 per month.

The Hoffa Slate also reported expenses charged by the full-time consultants, Mr. Pazzi and Mr. Lyle.  Mr. Pazzi and Mr. Lyle use the Hoffa Slate credit card to charge their travel and other office expenses, so their expenditures have been reported along with the rest of the credit card expenditures.

Mr. Pazzi, Mr. Lyle and Mr. Huntoon worked for Mr. Hoffa in the initial election and were paid amounts similar to what they are now receiveing for the rerun election.  No evidence has been presented that these consultants are being compensated at a rate inconsistent with the work now being performed or that is otherwise unreasonable.  Mr. Leebove’s monthly compensation exceeds that he had been paid during the initial election.  The protester has not presented evidence concerning the amount of services rendered by Mr. Leebove for this amount and, therfore, there is no basis on which to find these sums unreasonable. 

Gene Moriarty

June 12, 1998

Page 1

The protester bears the burden of proof to present evidence that a violation has occurred.  Rules, Article XIV, Section 1.  The Election Officer has consistently denied protests when the protester offers no evidence to corroborate and support his allegations.  Hoffa, PR-043-LU385-SCE (January 9, 1998); Pike, P-278-LU952-CLA (January 30, 1998).  In the instant case, the protester has not presented any evidence to support the allegation that the amounts that the Hoffa Slate has reported paying its consultants is not commercially reasonable.

Accordingly, this portion of the protest is DENIED.

III.  ALLEGATIONS REGARDING THE LATE REPORTING OF FUNDRAISING

       ACTIVITY

The protester alleged that on its CCER No. 5, the Hoffa Slate reported three fundraisers that were held in previous reporting periods.  The protester complained that, while CCER No. 5 covered the month of March, it included the initial reports of fundraisers held in January and February.  The protester contended that the fundraiser in January should have been reported in CCER No. 3, the report that covered the period of January 1 through January 31, 1998, and that the fundraisers held in February should have been reported in CCER No. 4, the report that covered the period of February 1 through February 28, 1998.

The Hoffa Slate responded that the time required to verify the membership status of contributors accounts for delay between the occurrence of the event and the reporting.  It stated that the proceeds from fundraisers are not deposited in the Slate’s account until the contributors are verified, at which time the Slate considers the money received, and reports the contribution.  Therefore, according to the Hoffa Slate, it reports the contributions when they are received.

The Election Officer addressed this issue in Moriarty, PR-058-JHS-EOH (April 8, 1998).  In Moriarty, the protester complained that the Hoffa Slate reported contributions from a fundraiser that was held on November 29, 1997, in their CCER No. 3, which covered the period from January 1 through January 31, 1998.  That fundraiser should have been reported in the Hoffa Slate’s CCER No. 2, which covered the period from November 20 through December 31, 1997.

The Election Officer held that slates should report contributions received at fundraising events in the reporting period in which the event occurred.  Moriarty, PR-058-JHS-EOH (April 8, 1998).  The date the contribution is made not on the date of deposit to the slate’s bank accounts but on the date that the contribution was given to the campaign.  If the slates and candidates are unable to verify the membership of all of the contributors prior to the reporting period deadline, the contribution must nevertheless be reported, and marked with an asterisk on the reporting form.  Pending verification, the contributions must be kept in a segregated separate escrow account.  See Letter from Michael G. Cherkasky Advising on Membership Verification of Contributors (January 9, 1998).  The Hoffa Slate was cautioned to revise its practices of delinquent reporting.  Moriarity, at 3.

Gene Moriarty

June 12, 1998

Page 1

The instant protest concerns  CCER No. 5  filed on April 29, 1998.  In this CCER, the Hoffa Slate delinquently reported three fundraisers that had occurred in earlier reporting periods.  It reported one fundraiser that occurred on January 17, 1998, that should have been reported in its CCER No. 3, one fundraiser that occurred on February 6, 1998, that should have been reported in CCER No. 4, and one fundraiser that occurred on February 7, 1998, that also should have been reported on CCER No. 4.

Accordingly, this portion of the protest is GRANTED.

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

CCER No. 5 was the first report due, and filed, after the Election Officer’s April 8, 1998, decision in Moriarty. The failure to report the fundraiser on the earlier CCERs could not be cured retroactively.  Now that the filing rule has been stated clearly, all fundraisers should be reported on the CCER covering the time period in which they occur.

The Election Officer directs that the Hoffa Slate cease and desist from the practice of delinquently reporting fundraisers.  No additional sanctions will be imposed for this violation.  Future violations, however, will be subject to remedial action, including fines.

IV.  ALLEGATIONS REGARDING PROHIBITED EMPLOYER CONTRIBUTIONS

The protester alleged that the Hoffa Slate accepted a prohibited employer contribution from George Faulkner, an attorney.  Mr. Faulkner made an in-kind contribution of $714.44 to the Hoffa Slate for a fundraiser for the Hoffa Slate Legal and Accounting Fund and was identified as a sponsor of the event.

Employers are prohibited from making campaign contributions.  Rules, Article XII, Section 1(b)(1).  Although disinterested employers are allowed to contribute to candidates’ legal and accounting funds, solicitations for contributions to legal and accounting funds must be financed by money from the general campaign funds, not money from the legal and accounting funds.  Advisory on Campaign Contributions and Disclosure (“Advisory”), revised November 1997, at 18.  Therefore, contributions from employers cannot be used to solicit donations for candidates’ legal and accounting funds.  See Moriarty, PR-066-JHS-EOH (April 10, 1998) (finding a similar contribution from Robert E. Whitton an improper employer contribution).

Gene Moriarty

June 12, 1998

Page 1

The contribution from and sponsorship by Mr. Faulkner is an improper employer contribution.  The Hoffa Slate refunded Mr. Faulkner’s contribution on May 5, 1998, and reported the refund in its CCER No. 6.

Accordingly, this portion of the protest is hereby RESOLVED.

An order of the Election Officer, unless otherwise stayed, takes immediate effect against a party found to be in violation of the Rules.  In Re: Lopez, 96 - Elec. App. - 73 (KC) (February 13, 1996).

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:

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, 400 North Capitol Street, NW, Suite 855, 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