Campaign donors could get free rein
Case pits free-speech laws against money laundering prohibitions
By NICK BUDNICK     Issue date: Tue, Jan 3, 2006
The Tribune

   A Portland court case that could set a precedent that would make it impossible to track the source of campaign contributions is quietly heating up just as the 2006 political fundraising season is going into high gear.
   Briefs are due this month in the case of State vs. Moyer, in which the state of Oregon has charged one of the city’s longtime business leaders, 87-year-old Tom Moyer, with a felony violation of Oregon’s election laws.
   It’s a case with high stakes: If Moyer is convicted, one of the city’s most prominent community members, builder of the Fox Tower and other downtown high-rises, conceivably could land in jail.
   If his defense is successful, however, observers say it would effectively obliterate the state’s entire campaign reporting system — which already, in a 2004 study conducted by the University of California at Los Angeles, was rated being one of the least transparent and most permissive in the nation. As Janice Thompson of the Money in Politics Research Action Project puts it, if Moyer wins on appeal, “the underpinnings of the state’s disclosure system would disappear.”
   The story starts in May 2003. That’s when Moyer gave then-mayoral front-runner Jim Francesconi $500 — on the same day that his executive assistant, Sonja Tune, gave Francesconi $2,000 and his then-26-year-old granddaughter, Vanessa Kassab, gave him another $2,500. All three contributions arrived one week after Moyer met with Francesconi to lobby for one of the developer’s projects.
   In April 2004, as the mayoral primary approached, a complaint was filed alleging that the contributions all originated with Moyer, thus violating the state’s ban on giving or accepting contributions made in a false name. Francesconi denied any knowledge that the contributions had all stemmed from Moyer, and no charges were filed against him.
   But after investigating, the state did file charges against Moyer, his assistant and granddaughter, alleging that Moyer reimbursed Tune as well as Kassab, who also goes by the last name Sturgeon. All three hired lawyers who filed a demurrer, the legal equivalent of saying, “So what?”
   They argued that even if the money was laundered, the free-speech protections in Oregon’s constitution — which are stronger than in most states — trumps the state’s political money-laundering ban, since the U.S. Supreme Court has held that contributions are equivalent to political speech.
   In March, Multnomah County Circuit Judge John Wittmayer agreed with Moyer’s defense. “I feel that this statute is overly broad. It encompasses conduct that is clearly protected and is therefore unconstitutional,” he said in court. “We all know that political contributions are clearly speech.”
   The state promptly filed notice of its plans to appeal. Fred Neal, who oversees campaign reporting for the secretary of state’s office, calls Wittmayer’s ruling “alarming,” saying it essentially legalizes political money laundering. Neal says, “If you can contribute anonymously, you can lie about it as well.”
   Moyer’s attorney, David Axelrod, did not return calls, and a representative from his real estate office, said, “We have no comment.” Asked for her name, she hung up.
   But Kassab’s attorney, Ron Hoevet, downplays the significance of Wittmayer’s ruling. He says that because Oregon is one of a handful of states that does not place limits on the size of contribution a candidate can accept, there is little motive for people to disguise their contributions.
   “I don’t think there’s going to be much impact at all,” he says, adding that he questions the state’s chances on appeal. “I just didn’t think it was that close,” he says of Wittmayer’s ruling. “I think the state is wasting its time.”
   
   Not the first time
   
   It’s true that the Moyer case is the first time the state has ever filed charges over a case of alleged political money laundering. But judging by numerous allegations over the years, the practice appears to be more common than it might otherwise appear. In 1990, the state Democratic Party was accused of laundering money, and in 2004 it was accused of laundering a contribution from AMR, the ambulance company, to Milwaukie Mayor Jim Bernard.
   In 2002, a jury found that ballot-measure operative Bill Sizemore had laundered $1 million through a D.C.-based nonprofit because donors did not want their identities to be public. And in 2003 a state investigation found that tens of thousands of dollars appeared to have been laundered through nonprofits operated by former gubernatorial candidate Kevin Mannix.
   There have been other campaign finance irregularities as well. State Rep. Derrick Kitts, R-Hillsboro, has taken heat for using campaign funds to pay for rent, meals, gas, golf and other seemingly personal expenses. And last fall, state Rep. Dan Doyle, R-Salem, pleaded guilty to falsifying his campaign reports to conceal payments of more than $145,000 to him and his wife. The scandals fueled the Legislature’s approval of bills last year to improve campaign reporting.
   
   Financing on front burner
   
   In this context, the Moyer case hangs a symbolic question mark over a year in which campaign finance seems destined to remain a hot topic.
   First, a measure to block Portland’s brand-new public financing system is considered a slam-dunk to land on the May ballot. Under the system approved by the City Council last year, a council candidate can receive city money for a campaign if he or she shows grass-roots support by collecting $5 donations from 1,000 people.
   But opponents of the measure, including the Portland Business Alliance and a group calling itself the First Things First committee, have been pushing to overturn the system. No announcement has been made, but insiders say opponents have already gathered enough signatures to place a measure to block public financing on the May ballot.
   Second, efforts also are under way to impose contribution limits, which already exist in 45 other states. One, called Petition 8, would alter the state constitution so that free-speech rights would no longer block limits. Another, called Petition 37, would impose actual limits. And state Rep. Peter Buckley, D-Ashland, has said he hopes to get another measure on the ballot as well.
   Activist lawyer Dan Meek is spearheading the two petitions, which have been approved for signature gathering. He says contribution limits would actually help the state’s case against Moyer, by giving the courts another compelling reason why political money laundering should not be allowed.
   Briefs in the Moyer case are due Jan. 23, after which the case will be assigned to a three-judge panel of the Oregon Court of Appeals.