Ethics Commission looks into omission of PAC donation

How does one forget to report $10,000? That was the question of the evening for the Ethics Review Commission at its March 13 convocation.

In a complaint filed by Fred Lewis last November, he accused the No on J political action committee of failing to report its largest and most controversial contribution from the Real Estate Council of Austin in time for early voting. He insinuated that the group had purposefully hid the donation.

Proposition J was an initiative on the 2018 ballot that would have required any comprehensive change to Austin’s land use rules (i.e., CodeNEXT round two) go to voters for approval. Lewis argued that a donation from RECA to the PAC that campaigned against the proposition carries weight.

“This is the oldest trick in the book,” said Lewis. “It’s pretty clear that the people did know the law.”

According to city campaign finance laws adopted in 2016, disclosure of contributions must be made within two business days of a campaign expenditure of $500.

Cary Ferchill, an attorney and the chair of the Electric Utility Commission, acknowledged that the filing was late but said it was an unintentional lapse in reporting.

With an admission of wrongdoing at the table, the commissioners unanimously found that a violation of ethics had occurred. However, they were unable to level sanctions – the most punitive of which is a class C misdemeanor violation and a $500 fine – without knowing whether the omission was intentional. Accordingly, the commission moved to a final hearing.

Ferchill offered to “concede the issue without admitting (intentionality behind) anything.” However, Commissioner Debra Danburg found this could be detrimental to the ethics process down the line.

“I appreciate what you’re saying as far as the backed-up legal fees, etc., but what I don’t want to have is a situation where a PAC would say that the worst we could get is a $500 fine, let’s go ahead and not be transparent,” she said.

In the original complaint, Lewis argued that an inadvertent oversight had serious consequences. “Since Prop J calls for a voter approval requirement on a comprehensive land development code revision such as CodeNEXT, RECA’s special interest donation is information Austin’s many early voters would have liked to know about but were illegally kept in the dark on,” he said.

Lewis pointed to the makeup of the PAC, which included four political consultants (John-Michael Cortez, Mark Littlefield, Mark Yznaga and Y Strategy), as evidence that even with a junior campaign treasurer, this oversight was surprising.

Commissioner Donna Beth McCormick similarly expressed her surprise at the lack of oversight. “Nobody looked? Nobody paid any attention?” she asked.

Ferchill explained that while he was not a fact witness on the matter and didn’t have firsthand knowledge of what transpired, he was confident in saying, “Nobody proofed her work.”

The result was that the PAC reported all but one of its donations in a timely manner.

On Oct. 26, the PAC appropriately filed its third direct campaign expenditures report after spending $2,500 on Oct. 24. It disclosed a $5,000 donation from the Austin Chamber of Commerce but there was no disclosure of the $10,000 RECA PAC contribution that was made on Oct. 22.

The $10,000 contribution was disclosed five days later on Oct. 30 with the PAC’s eight-day report to the Texas Ethics Commission. By that time, early voting was nearly completed. Lewis argued that had this donation been disclosed, it could have swayed votes.

“What is the explanation for filing the report but leaving out that very large contribution?” asked Commissioner Mary Kahle.

Ferchill clarified that the directions for campaign finance reporting were convoluted and that it takes a deep knowledge of the processes to ensure that they are followed correctly.

“If it was confusing, why didn’t you make a phone call and get it cleared up?” Commissioner McCormick wondered rhetorically.

While no definitive answers were discovered during their preliminary hearing, ethics commissioners will work to uncover the reason for the breach of ethics when they take up a final hearing of the case at their next meeting. Commissioners Peter Einhorn and Brian Thompson were absent.

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