After losing a court battle over alleged campaign finance improprieties during last year’s mayoral election, the city’s Board of Ethics is moving to tighten its restrictions on spending by the big-money political action committees called super PACs.
The agency is also asking a judge to throw out a lawsuit recently filed against it by Jeff Brown, the supermarket magnate and former mayoral candidate, and a dark-money super PAC that spent heavily to support his run.
The board’s proposed amendments aim to prevent future candidates from using strategies that allowed the super PAC to avoid violating rules on campaign contribution limits while pumping millions of dollars into TV advertising and other election activities supporting Brown.
In particular, the revisions would make it clear that someone who plans to run for office can’t get around the limits by delaying the announcement of their candidacy, as Brown did.
“We see these problems at the federal level, at the state level, and other places where candidates want to play games by delaying their candidacy declaration and then doing all sorts of fundraising for an outside group,” campaign finance lawyer Aaron McKean said during an Ethics Board hearing on Wednesday.
“They declare their candidacy later on, just so that they can have that all set up to spend in their favor later on in the campaign,” said McKean, an attorney with the Campaign Legal Center, a Washington, D.C. nonprofit. “That’s clearly a problem that these regulations address.”
However, a lawyer representing For a Better Philadelphia, the super PAC that supported Brown, cast doubt on the legality of the new rules.
Attorney Matt Haverstick said they may raise free speech issues, and they appear not to indicate how far back in time pre-candidacy activities would be covered. That could lead to a candidate being sanctioned for working with a super PAC years earlier, long before launching a run for office, he said.
“Any regulation of this nature is going to be problematic and probably unconstitutional for, among other reasons, its vagueness,” Haverstick told Billy Penn.
Coordinate or spend big, but not both
The Ethics Board accused For a Better Philadelphia of campaign finance violations last spring, a few weeks before the May primary election. It alleged the PAC improperly coordinated its activities with Brown, for example when he helped organize a PAC fundraiser in 2022.
The board’s executive director, Shane Creamer, described Brown’s involvement in the PAC as one element of a strategy of funneling funding from the candidate’s grocery store empire, Brown’s Super Stores, and other big-pocketed donors into the campaign, while evading contribution limits.
Under the U.S. Supreme Court’s 2010 Citizens United decision, super PACs that independently buy TV ads, commission polls, fund get-out-the-vote activities and do other electioneering can spend as much as they want. But once they start coordinating with a candidate or a campaign, contribution limits kick in.
The Ethics Board said much of the money For a Better Philadelphia spent thus constituted excessive contributions to Brown’s campaign, which could bring substantial fines.
To support that argument, the board’s lawyers pointed to a 2018 advisory opinion it had issued saying the coordination rules retroactively covered a 12-month period before a candidate declared his or her candidacy.
However, in September a Court of Common Pleas judge tossed the charges against the PAC, saying the opinion had no legal force and Brown wasn’t officially a candidate at the time of the coordinated activities.
McKean and other advocates for campaign finance reform argued that by exempting undeclared candidates from the coordination rule, the decision blew a big hole through the city’s efforts to reduce the influence of big-money donors on elections.
That could include donors who remain anonymous by funneling their money through 501(c)(4)s, “dark-money” groups that are not legally required to disclose their funding sources. For a Better Philadelphia PAC has such an affiliated group, the first to play a significant role in a Philadelphia mayoral election.
Looking for loopholes
Representatives of the super PAC argued those concerns were misplaced or overblown. Its attorneys said the U.S. Supreme Court has moved toward allowing future candidates to fundraise for super PACs, and that the ruling only applied to a small set of newbie candidates — like Brown — who didn’t already have a campaign committee covered by the regulations.
“The comments that I have read made it sound like the sky is falling, and I can tell you, the sky is not falling,” attorney Kate Belinski told Billy Penn in September.
The revised rules the Ethics Board is now preparing to codify would put the retroactive coverage of the pre-candidacy period into the board regulations, which have the weight of law.
One section, for example, would define a coordinated expenditure as one made by a PAC or other group in concert with “an individual who is a candidate at the time of the expenditure, regardless of whether they were a candidate at the time the conduct constituting coordination took place.”
During Wednesday’s hearing, Adam Bonin, a longtime Philadelphia election lawyer who has represented former mayoral contender Helen Gym and other candidates, said he admired the board’s efforts to tighten up the city’s campaign finance rules.
But he said he has become “incredibly depressed” about the prospects for meaningfully fixing the system unless Citizens United is overturned.
“I wonder if chasing the last offense does nothing to corral whatever the next one will be,” he told the board. “Wherever the fences are set up, someone will do their best to find the hole in them.”
The legal battle continues
While For a Better Philadelphia eventually prevailed over the Ethics Board, Brown blamed the accusations for tarnishing his campaign and contributing to his fifth place finish in the May primary.
In January, he sued the board and its executive director Shane Creamer, alleging they maliciously attacked him and harmed his reputation during the mayoral race. Also suing were the For a Better Philadelphia super PAC and dark-money nonprofit and the chairperson of both groups, lawyer David Maser.
They allege Creamer and the board knew from the start that their legal theory for why the PAC broke the rules was invalid, but their fierce animosity to constitutionally protected dark-money political groups led them to file a frivolous lawsuit, embarrass Brown, and scheme to ensure his primary loss.
The lawsuit seeks financial damages for the PAC, a declaration that Brown’s rights were violated, and an unusual “name-clearing hearing” that would seek to uncover whether Creamer or someone else leaked information about the board’s investigation to the media.
Creamer has declined to comment on the lawsuit. David Smith, an attorney representing the Ethics Board, last week asked a judge to dismiss the case.
Smith argues, among other points, that state law gives the board and Creamer immunity from damage claims; that the suit doesn’t provide evidence the board’s complaint against the PAC was brought for improper purpose or lacked probable cause; and that there’s no constitutional right to a name-clearing hearing.
“Given the abundance of undisputed evidence that Mr. Brown and his agents coordinated with the PAC both before and after he officially became a candidate, and the path taken by the contributions from Brown’s Super Stores, Inc. and Mr. Brown’s pre-candidacy fundraising…to Mr. Brown’s campaign, plaintiffs cannot plausibly claim…that defendants did not have probable cause as a matter of law to file the underlying lawsuit under Philadelphia’s campaign finance law,” Smith wrote.
Haverstick said Brown and the other plaintiffs will provide a “vigorous” response and look forward to the evidence discovery process in the case.
“A court is going to conclude that these preliminary objections are just a stalling effort to prevent the board’s and Creamer’s day of reckoning,” he said. “We’re certainly going to be looking for Mr. Creamer’s communications with the press and whether he was leaking confidential documents.”
