Benson's office backs Unlock Michigan on not disclosing donor sources

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Apr. 14—LANSING — Secretary of State Jocelyn Benson's office has decided a nonprofit organization that's funded by secret donors and helped bankroll the Unlock Michigan campaign doesn't have to report where its contributions came from.

The ruling is a boon for nonprofit groups that want to engage in political campaigns in Michigan without having to file disclosures. And Bob LaBrant, the former longtime legal adviser to the Michigan Chamber of Commerce, says "history will remember" the decision.

LaBrant filed the initial complaint and had argued that because the nonprofit Michigan Citizens for Fiscal Responsibility made a series of contributions to Unlock Michigan, the group qualified as a ballot committee itself. Under that interpretation, the group, which is tied to Senate Republicans, would have to file its own disclosures about where $1.8 million came from.

But Adam Fracassi of the state Bureau of Elections found that for a violation to have occurred, the evidence had to show that Michigan Citizens for Fiscal Responsibility solicited contributions for "the sole purpose" of giving money to Unlock Michigan.

"(T)he department finds that the evidence is insufficient to conclude that a potential violation of the act has occurred and dismisses your complaint," Fracassi wrote.

A day later, LaBrant penned a letter to the Democratic secretary of state, questioning why her staff hadn't dug into the matter further to investigate the finances of Michigan Citizens for Fiscal Responsibility.

The decision signals that nonprofit organizations "have impunity to hide the true identities of contributors to current and future ballot question campaigns and petition drives," LaBrant said.

"History will remember this complaint's dismissal," he wrote, "not something expected from someone who has championed ending dark money."

LaBrant once wrote a book entitled, "PAC Man: A Memoir," referring to his lengthy involvement with Michigan's campaign finance laws and political action committees (PACs). Benson campaigned on improving Michigan's transparency policies.

The Bureau of Elections has a limited ability to collect additional evidence to support a filed campaign finance complaint, Secretary of State office spokesman Jake Rollow, spokesman.

"In this case, the bureau obtained the information available and necessary to evaluate the complaint but, as the correspondence indicates, Mr. LaBrant did not submit sufficient evidence to prove a violation of the law occurred," Rollow said.

The bureau would need additional evidence from LaBrant to find a violation or take additional investigatory steps, he added.

Unlock Michigan is the petition effort to repeal the 1945 law that previously allowed Gov. Gretchen Whitmer to declare a state of emergency and keep the declaration in place without input from lawmakers. The Michigan Supreme Court ruled the law unconstitutional on Oct. 2, but the campaign to put the repeal proposal before the GOP-controlled Legislature has continued.

Unlock Michigan had raised $2.8 million by the end of 2020. About $1.8 million of the money came from a Lansing-based nonprofit called Michigan Citizens for Fiscal Responsibility, which doesn't disclose the sources of its funding.

According to corporate filings, the group's board features Republican political consultants who also work for the firm Lambert & Co., which has a downtown Lansing office. The same firm does consulting work for the Senate Republican Campaign Committee.

Ellen Kletzka of Lambert & Co. is listed as the record keeper for the Senate Republican Campaign Committee and the treasurer for Michigan Citizens for Fiscal Responsibility, which spent more than $1 million on TV ads in state Senate races in 2018.

In an affidavit that was filed with the Secretary of State's office and obtained by The Detroit News, Heather Lombardini, president of Michigan Citizens for Fiscal Responsibility, said to the best of her knowledge, the nonprofit "has not solicited or received contributions" to redirect to Unlock Michigan.

"There is no evidence that respondent solicited or received contributions for the purpose of making an expenditure to Unlock Michigan," wrote Brian Shekell and Andrew Richner, attorneys for Michigan Citizens for Fiscal Responsibility, in a filing. "The allegations in the complaint are without factual support and should result in its dismissal."

Fred Wszolek, spokesman for Unlock Michigan, said LaBrant's complaint never had any merit.

"He dreamed up an entirely new interpretation of the law to say that an organization can only contribute to a cause once, but more than once is illegal," Wszolek said. "It just doesn't work that way."

Unlock Michigan turned in more than 500,000 petition signatures on Oct. 2. If 340,047 of the collected signatures are deemed valid by the Michigan Bureau of Elections, the repeal proposal could go before the Legislature for approval without Whitmer having a chance to veto it.

On March 26, the Bureau of Elections released a 500-signature sample that it will use to determine the validity of the signatures submitted.

LaBrant contended that state officials should have done more to determine whether Michigan Citizens for Fiscal Responsibility received "contributions for the purpose of making an expenditure" to Unlock Michigan, the standard that would have triggered disclosure.

The Bureau of Elections could have tried to obtain bank records, LaBrant said in a letter to Benson on Saturday.

"Did no one in the Elections Bureau have the intellectual curiosity to re-read and question the Lombardini affidavit?" LaBrant continued. "Did the Elections Bureau before dismissing my complaint look at Unlock Michigan's annual report or did time stand still at the Bureau, still locked in on July 20, 2020, the date of my original complaint?"

LaBrant said he plans to file a motion for reconsideration of the initial decision. He could take the matter to court once the administrative process is over, he said.