NC may loosen sanctions for political campaigns and PACs after first-time violations

Harry Lynch/File photo

The State Board of Elections is considering a policy that would allow some campaigns and political action committees to keep smaller donations that violate campaign finance rules — only for first-time infractions.

And the board, which monitors campaign finance rules compliance, is soliciting public comments on the plan.

Under the policy, the board would settle cases involving prohibited donations or spending of less than $1,000 per election cycle. First-time rule-breakers would receive warning letters recommending that they forfeit prohibited donations, but not requiring it.

First-timers breaking rules with sums from $1,000 up to $10,000 would also receive settlements. But they would be required to forfeit the money. If they do, they would not face penalties that could reach as much as three times a donation’s value.

“What we are trying to address here is first-time candidates, first-time treasurers, folks who are still learning the landscape and learning the law and as a result there may be unintentional violations,” said Lindsey Wakely, the board’s deputy general counsel.

This would formalize what the board often already does with contributions totaling $1,000 to $10,000 in an election cycle, Wakely said.

The proposal worries Bob Hall, the retired executive director of Democracy NC, a nonpartisan campaign watchdog. The changes would make it more tempting for campaign committees, political action committees and contributors to violate the law, he said, and less likely that the board would investigate smaller contributions that when added up point to a larger problem.

“It’s just a bad streamlining, and I’m afraid it just encourages the board not to have to do much digging and investigating, which may either be because they don’t have the funds to do the investigating or the whole process has been stretched out so far,” Hall said.

He gave the example of a powerful interest group giving $1,000 contributions to nine members of a legislative committee that could swing a vote in the group’s favor. Since that only totals $9,000, the proposed policy might only lead to a settlement that calls for the forfeiture of the money.

Wakely said such activity would be flagged and investigated.

The heart of the matter

Elections board audits routinely flag contributions given to campaign and political action committees that exceed legal limits or come from businesses or nonprofits prohibited from making them.

That’s happened in recent years to the campaign committees of state Sen. Bill Rabon, a Southport Republican and powerful Rules Committee chairman since 2017, and state Senate Minority Leader Dan Blue, a Raleigh Democrat, and the NC Realtors Political Action Committee. In each case, the committees gave the money to a state fund that benefits public schools.

These cases are now often handled informally, with staff flagging a problem expenditure and the committees sending a forfeiture check covering that amount, Wakely said. The proposed settlement system creates a formal process that requires campaigns and PACs to acknowledge their responsibilities under the law, which will make it harder for them to claim ignorance if violations reoccur, she said.

“Having a signed settlement I think is an inducement to get folks to agree with us and get into compliance,” Wakely said, adding that the settlements and warning letters would be public record.

The elections board would still have the option under the proposed change to investigate and apply penalties if Board of Elections staff see an intent to break the law. Any campaign that signs a settlement would have to stay clear of improper expenditures for the next eight years to avoid stiffer penalties.

Campaign committees and PACs that do not agree to a settlement could face board hearings and financial penalties.

The proposed policy would not apply to individual donors or other entities that are not a part of political committees, Wakely said. The proposed policy also does not pertain to cases involving those who gave anonymously or in the name of another, violations the board always investigates.

Previous changes expanded secrecy

In 2018, state lawmakers changed the law to make the board’s campaign finance investigations secret. Even if the board finds that a violation occurred, the board must give the State Ethics Commission an opportunity to review the case before the board can refer a case to a district attorney.

Lawmakers included the secrecy in reform legislation after a scandal in the 9th Congressional District election that year that mostly had to do with improper absentee ballot collection.

The law put an end to public hearings the board used to hold on campaign finance allegations, which in previous years exposed illegal conduct that benefited former House Speaker Jim Black, former Agriculture Secretary Meg Scott Phipps and former state Sen. Fletcher Hartsell.

That makes murky how much effort the board is making to rout out campaign finance violations, Hall said.

The board, for example, stayed silent for three years as it investigated a complaint involving Chad Price, the CEO and co-founder of Mako Medical, who had made several campaign donations in the name of a severely disabled sister. South Carolina officials last year fined him for donations he gave to candidates in the names of several businesses.

The board referred the case to Wake County District Attorney Lorrin Freeman last May, Axios and WBTV reported. She confirmed she asked the SBI to investigate.

Members of the public can weigh into this latest proposed change by Feb. 13 by emailing the board at