Louisiana league's PAC fined by state board of ethics for violations

HARAHAN, La. – The advent and successful efforts of CUNA’s Credit Union Legislative Action Council (CULAC) to raise money to support credit unions’ national legislative lobbying efforts has spurred many leagues to make similar efforts on the state level through their respective state political action committees (PAC). Like CULAC, state credit union league PACs are subject to reporting requirements mandated by their state law. The Louisiana Credit Union Legislative Action Committee-”Credit Union PAC”- affiliated with the Louisiana Credit Union League, has been found by the state Board of Ethics to have violated reporting and contribution collection requirements of the Campaign Finance Disclosure Act (CFDA) and has been fined $5,000 for the violations. In documents obtained by Credit Union Times by public record, the Board of Ethics wrote in its opinion published May 17 that, “Credit Union PAC failed to accurately report its activities for the years 1997 and 1998. It’s use of affidavit reports, rather than itemized reports, resulted in the lack of required disclosure. The sole use of annual reports also resulted in the lack of timely disclosure during election cycles. “It is further the opinion of the Board that Credit Union PAC failed to timely report for the year 1999. Again this was an election year in which reports should have been filed on the same schedule as the candidates supported by the PAC. “Credit union PAC also violated the CFDA by collecting contributions without keeping records of the source of those contributions. It is necessary for PACs to properly document all contributions received. Passing the hat as a method of fundraising is not acceptable pursuant to the CFDA.” No individuals either at the league or Credit Union PAC were cited by name in the CFDA’s report. Connie Major, assistant vice president of government affairs for the Louisiana league said the fine did not surprise the league, and it had already been paid by direct payment. She was not sure how the payment was funded. She emphasized that the violations concerned “reporting deficiencies and general internal auditing procedures” that Credit Union PAC had brought to the attention of the state Board of Ethics, and it was not the other way around. “We realized we missed several reporting deadlines. Our retained lobbying firm of Adams & Reese in New Orleans worked closely with the Board of Ethics to correct the problems and straighten things out. They kept us apprised of the situation as it progressed,” Major said. Indeed, as the Board of Ethics stated in its opinion, the board, “acting as the Supervisory Committee on Campaign Finance Disclosure…conducted a confidential inquiry after the La. Credit Union Legislative Action Committee (“Credit Union PAC”) advised the Board that it had failed to accurately and timely file disclosure reports.” More specifically, in July 2000, the executive director of the league with the permission of the Credit Union’s PAC President and Secretary/Treasurer retained counsel to monitor ongoing campaign finance practices for Credit Union PAC and undertook an internal audit. When the audit was completed, Credit Union PAC hired an outside auditor to reconcile various charges, contributions and expenses related to PAC activities and attempted to compile the required documentation to corroborate the items. As the Ethics Board opinion further states, during the course of the reviews, it was discovered that Credit Union PAC had submitted Affidavits in Lieu of Disclosure Reports for the years 1997 and 1998. Further review suggested that the CFDA required itemized reports, rather than affidavits, because of the level of Credit Union PAC activity. It was further found that Credit Union PAC had failed to file reports on the same schedule as the candidates it supported. According to the board’s opinion, the total of 1997 receipts by Credit Union PAC was $18,372.83, with an additional $181.50 paid to the State Treasurer as anonymous contributions. Contributions to candidates were made in the amount of $8,225. For 1998, Credit Union PAC receipts totaled $21,104.70 with an additional $85.00 remitted to the State Treasurer. Contributions to candidates in 1998 totaled $10,000. During 1997 and 1999, Credit Union PAC served as a collecting agent for contributions raised at the district or chapter level for CULAC – for 1997, $5,810 was collected, and in 1999, $17,000 was collected and transferred to CUNA. During the review of Credit Union PAC’s activities, it was found that no report had been filed for 1999. Credit Union PAC subsequently prepared and filed an Annual Report containing the cumulative contributions and expenditures for the year’s activities. On Jan. 23, 2001, Credit Union PAC filed its Annual Report for 2000 activities. In its opinion, the Ethics Board wrote that, “Political committees are required to file annual reports and reports on the same schedule as the candidates they support or oppose.” Furthermore, “political committees are required to maintain adequate records to support the contents of their report. And, political committees are prohibited from expending funds from an anonymous source.” Louisiana Credit Union League President Ann Cochran too stressed that the situation had been remedied and that Credit Union PAC was actively working on revamping its general accounting and reporting procedures. But that was little solace to some credit unions in the state. Carol Irby, president/CEO, Riverland CU in New Orleans said the news came as no surprise to her. RiverLand disaffiliated from the league in 1996 because of her dissatisfaction with league management. “In the first quarter of 1998, CUNA’s Campaign for Consumer Choice was soliciting credit union contributions through the state leagues. Our board was eager to contribute but had serious concerns about the Louisiana Credit Union League’s oversight of the fund – and we communicated such to our designated Louisiana CCC Team Captains. When we were affiliated, the League’s apparent lack of accountability and questionable practices contributed to our loss of confidence. As a result, we mailed our $1,600 contribution directly to Larry Blanchard, CUNA’s CCC coordinator.” “The Louisiana’s Board of Ethics report appears to prove our concerns were well founded. I have more confidence that CUNA properly accounted for our Credit Union’s contribution. I only hope that none of our funds were returned to Louisiana’s campaign fund.” Audrey Cerise, president/CEO of ASI FCU in Harahan also was not surprised to learn of the Ethics Board’s opinion and the fine it levied against Credit Union PAC. Like RiverLand, ASI disaffiliated from the league about five years ago because, “We had no confidence in the league leadership. We were involved with the league for many years, and we had no confidence in the way they handled things,” said Cerise. Also like RiverLand, ASI made its political action committee contributions directly to CULAC. Frustrated at the situation, Cerise said, “If CUNA is going to require credit unions to go through leagues to be a part of CUNA, then CUNA should police the leagues and make sure they live up to certain standards.” Unlike CULAC, leagues’ respective PACs are governed by each state’s unique laws. From a federal standpoint, Richard Gose, vice president of political action and grassroots for CUNA said he emphasizes that “it’s not just important to raise money but to do it the right way.” At CUNA, said Gose, “We emphasize compliance and training with federal election law. We hope the states do the same thing on the state level. It’s important that league’s run their PACs the correct way and not simply raise money.” -