OR: Union leaders face election complaint

Not registering as political committee might be criminal

By STEVE LAW
Statesman Journal

For Original Article

January 26, 2007

Leaders of Oregon's two largest public-employee unions are being investigated for a possible criminal violation for failing to register their ballot-measure campaign arm as a political action committee.

An elections complaint filed by conservative activist Richard Leonetti targets Our Oregon and its officers. The union-financed group, which played an active role in 2006 ballot-measure campaigns, has a five-person board of directors comprising Oregon Education Association and Service Employees International Union leaders.

Our Oregon spent more than $100,000 on ballot measures in 2006 yet never registered as a political action committee or filed reports itemizing its spending and donations, Leonetti said.

"Everybody else has to talk about donors, and they've done none of that," he said.

His complaint, filed with the Oregon Elections Division, is being reviewed by the Attorney General's Office for possible criminal violations, said Brenda Bayes, the Elections Division's deputy director.

Leonetti contends that the unions unlawfully used Our Oregon as a conduit for political contributions, a Class C felony.

Our Oregon spokeswoman Patty Wentz said the group, as a political nonprofit, is allowed to engage in communications and education in ballot-measure campaigns without filing as a political action committee. The group carefully follows the laws, she said, and has a staff attorney who once served as an assistant attorney general with legal expertise in nonprofit regulations.

"I don't think Mr. Leonetti has a clear understanding of Oregon law," Wentz said.

Our Oregon has a staff of eight and an annual budget of about $600,000, Wentz said. The group gets much of its funding from unions, she said, but also has individual donors.

Our Oregon supported a payday-loan initiative that ultimately was adopted by the Legislature in a special session. The group also campaigned against ballot measures that sought to limit state spending, cut taxes, re-institute term limits and reform campaign-finance laws. It produced a ballot-measure guide, conducted research and used its Web site and e-mail to mobilize opposition to the ballot measures.

The group often criticized Howie Rich, a wealthy New York real-estate developer, for bankrolling conservative ballot measures while keeping mum about his own funding. Unions also have criticized conservative initiative activist Bill Sizemore for using a foundation to camouflage his funding.

Now the conservatives are turning the tables, accusing the public-employee unions of the same thing.

"I think there's a problem there," Leonetti said. "I think the system has got to be transparent."

Leonetti admitted that he has some backers he can't divulge. The retired furniture manufacturer, a longtime critic of the state pension system while volunteering for Oregon Tax Research, was persuaded to file the complaint by two people who conducted the research.

One is a Republican and one is a Democrat, Leonetti said, but both feared a backlash if their names were part of the complaint.

Janice Thompson, the executive director of the Money in Politics Research Action Group, said the case illustrates the different rules for state-regulated political committees and nonprofits governed by Internal Revenue Service code.

"It's a dilemma," Thompson said.

The IRS allows more latitude for nonprofits to be involved in ballot-measure campaigns without divulging their spending or donations. It's not a loophole in state law but a question of federal jurisdiction over political nonprofits, she said.

Our Oregon appears to be doing what other political nonprofits are doing, she said.