NorthJersey.com

Donations Run Afoul Of The Law

NorthJersey.com — Tuesday, August 10, 2004

By HERB JACKSON
TRENTON BUREAU

3th of 7 parts (links to all parts of this series in sidebar to right)

UNDER THE INFLUENCE: MONEY IN TRENTON

PART ONE:
Sunday, August 8, 2004

A record $56 million flowed to the winners in last year's legislative elections, much of it from interest groups trying to influence state policy. And the pressure to give keeps growing.

PART TWO:
Monday, August 9, 2004

Can't win in court? Get the law changed. That's a strategy that appears to be working for one millionaire who opened his checkbook to legislative candidates after losing a family dispute.

PART THREE:
Tuesday, August 10, 2004

The Record found that three legislators took more in donations than they were legally allowed to receive from one businessman, but they gave the money back and under the law will likely face no punishment.

PART FOUR:
Wednesday, August 11, 2004

Doctors ramped up their contributions last year as they battled to limit their exposure to big malpractice judgments in court. But lawyers also gave big, and won in the end.

PART FIVE (A) | PART FIVE (B):
Thursday, August 12, 2004

One of the most reliable sources of campaign cash for politicians is other politicians. Money from politicians is used to enforce party discipline or help ambitious candidates make new friends.

PART SIX:
Sunday, August 15, 2004

Who were the top 10 donors to each North Jersey legislator? And who gave the most to the Senate and Assembly Democratic and Republican PACs?

PART SEVEN:
Monday, August 16, 2004

Campaign finance reforms touted by legislative leaders this year will affect only a fraction of contributors, and even they may be able to keep giving money and getting contracts.


THE STAFF

  • Herb Jackson, 42, has covered New Jersey government and politics or directed coverage as an editor for 15 of the past 20 years. A Hudson County native and Rutgers University graduate, he has worked in the Trenton bureau of The Record since 1998. Since February 2002, he has taken readers behind the scenes in Trenton with his column, "Capital Games."
  • Benjamin Lesser, 28, has worked on computer-assisted projects since coming to The Record in November 2000 from The Times Union of Albany, N.Y. While attending the University of Missouri School of Journalism, he worked for the National Institute for Computer-Assisted Reporting. He has also taught classes at Columbia University's Graduate School of Journalism.
  • Editors: Deirdre Sykes, Charles Stile
  • Copy editors: Mike Kozma, Nancy Cherry
  • Graphics editor: Jerry Luciani
  • Designer: Robert Townsend
  • Graphic artist: Bob Rebach
  • Photographer: Chris Pedota
  • You're a powerful state legislator raising hundreds of thousands of dollars for reelection in a district where the opposing party never wins. Are you really supposed to notice if a few of the corporate checks you took have the same address?

    State election law, which is written by the Legislature, says you are. Corporations are not allowed to get around the $2,200-per-election contribution limit by making multiple donations from affiliated companies.

    But one Monmouth County businessman, whose multiple companies are regulated by or do business with the state, did just that with donations to three lawmakers. And after The Record questioned the contributions, Democratic Assemblyman Louis Greenwald and Republican Sens. Joseph Kyrillos and Andrew Ciesla conceded they would have to give the excess donations back.

    The three then questioned how they were supposed to know the companies were owned by the same person – in this case, Charles J. Hesse III of Middletown.

    "It's very difficult, if not impossible, for us to know the ownership of these different companies," said Greenwald, D-Camden.

    "I've raised a fair amount of money and I know we've returned checks. In some ways, I pride myself on not being sure of all the checks that pour in," said Kyrillos, R-Monmouth.

    Against the backdrop of last year's legislative election, when a record-shattering $56 million was raised by the winning candidates, the tale of a combined $4,400 in excess contributions to three legislators may not seem significant. But as the state prepares to implement new laws that will make campaign finance even more complex, the apparent violations show that compliance with the old laws was at best uneven, with enforcement underfunded and far from vigorous.

    Among the many complications is the state law that says corporations are deemed to be affiliated if one person owns more than 30 percent, a fact that no public document discloses for privately held corporations.

    State law also says that for a contribution to be illegal and its recipient to be subject to fines, its receipt must be "willful and intentional," a phrase that is the source of some disagreement. Some lawyers argue that it means a candidate has to know it is illegal, while others who have worked on election law cases say it is sufficient to simply prove the candidate deposited the money.

    Over the limit

    In the case of Hesse – whose interests include trucking, highway paving, operating a landfill, and owning and breeding racehorses – The Record flagged donations from three of his companies that added up to more than the legal amount. All three had used the same post office box.

    Campaign records show that both Ciesla, R-Ocean, and Kyrillos received checks that totaled $3,000, or $800 over the limit, from one of Hesse's companies. They then returned the $800, only to have the same amount come back during the same election cycle from a different company Hesse controlled.

    Hesse did not return several calls for this story.

    Kyrillos said the $800 coming back from another company with the same post office box "should have sent up a red flag." But both he and Ciesla denied there was any intention to get around contribution limits.

    "I can tell you most assuredly that when we're doing our reports, we're not going through calculations saying, 'Let's send this back and have them send the money back to us through an alternate contribution,'x" Ciesla said.

    Fred Herrmann, executive director of the Election Law Enforcement Commission, declined to comment specifically on the cases uncovered by The Record, except to say the candidates could be in violation of the law. He said the commission uses "prosecutorial discretion" in determining which candidates to sanction. Contributors can also face fines of up to $100,000 – up to $200,000 in the next election cycle – if the commission believes an illegal donation was intentional.

    Inquiries by The Record also led to Sen. Thomas Kean Jr., R-Union, returning a contribution raised in the 2003 election. It was not a new experience for the senator, who emerged as a leading Republican spokesman over the past two years for ethical reforms.

    Kean had a fund-raiser in April 2003 where 16 donors contributed $4,400 each, or double the legal amount. He said the excess donations were returned the next day when his campaign learned of the "clerical mistake," which he blamed on a treasurer who was more familiar with federal campaign finance laws than state laws.

    Candidates for federal office may accept contributions for their primary and general election campaigns at the same time, but New Jersey law requires them to actually win a primary before raising money for the general election. Candidates may roll over any unspent primary donations into general election campaigns.

    Kean said the error of accepting the double donations was noticed almost immediately, and the refunds were posted a day after the deposits on his campaign finance reports. State law says excess donations returned within 48 hours of their receipt do not violate the law.

    Of the $37,400 in excess contributions that Kean refunded in April 2003, $30,800 was donated back to his general campaign the following August.

    $2,200 returned

    Kean also blamed an accounting error for another donation to the 2003 primary campaign that he returned in June, after The Record questioned it. Kean reported receiving $4,400 on March 28, 2002, from an Anthony Domino, who was described as a pension benefits executive from Connecticut on Kean's reports. Kean told The Record that the donation was legal but misreported because it came from Domino and his wife, each of whom legally could give $2,200.

    But when The Record followed up with a question about another $2,200 check dated March 13, 2003, from an Anthony Domino in West Harrison, N.Y., Kean called back to say that was the same person, and he would be returning the donation. Through a spokeswoman, Kean described Domino as a personal friend.

    Hesse corporations also gave $2,500 to John Bennett, the Republican from Monmouth County who was co-president of the evenly divided Senate last year but lost in November. Bennett said he would give the excess donation back if he had it, but his 2003 campaign still has a $16,000 debt.

    * * *

    ANATOMY OF IMPROPER CONTRIBUTIONS

    In reviewing more than 33,000 contributions to winning candidates and the committees that supported them in the 2003 election, The Record uncovered a series of contributions from affiliated corporations at the same Monmouth County address that totaled more than the legal amount. The recipients, who were all in powerful posts in 2003, returned the excess donations after being questioned by The Record.

    The donor: Charles J. Hesse III controls three corporations with the same post office box: C.J. Hesse Inc., a highway paving contractor; Brick Wall Corp., which runs the Ocean County landfill; and Atlantic Trucking. Hesse is also one of the state's biggest owners and breeders of thoroughbred racehorses.

    Recipient 1: Assemblyman Louis D. Greenwald, D-Camden, chairman of the powerful Assembly Budget Committee. Greenwald received $2,000 from Atlantic Trucking on June 25, 2003, and $2,000 on Oct. 1, 2003. That's $1,800 more than the legal limit of $2,200 per donor. The excess contribution was returned on June 2 of this year.

    Recipient 2: Sen. Joseph M. Kyrillos, R-Monmouth, chairman of the Republican State Committee. Kyrillos received $1,000 from C.J. Hesse Inc. on March 25, 2002; checks for $1,000 each from C.J. Hesse Inc. and Brick Wall Corp. on Aug. 20, 2002; and $1,000 from C.J. Hesse Inc. on April 20, 2003. His campaign apparently noticed that the three C.J. Hesse Inc. checks were over the limit and returned $800 on May 1, 2003, but then Kyrillos received $800 from Brick Wall on May 22. Kyrillos refunded the $1,800 excess contribution from Brick Wall on June 29 of this year.

    Recipient 3: Sen. Andrew R. Ciesla, R-Ocean, former co-chairman of the Senate Transportation Committee. Ciesla received $1,000 from Brick Wall Corp. on June 24, 2002, and $2,000 on May 7, 2003, refunded $800 to Brick Wall on May 20, 2003, then received $800 from Atlantic Trucking on May 31, 2003. He refunded $800 to Atlantic Trucking on June 2 of this year.

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