Common Cause/NY Complaint
On February 22, 2016, the Board received the Complaint
. The Complaint alleged that “the conduct of Mayor Bill de Blasio, in establishing, and soliciting funds for [C41NY] and, most recently, directing the transfer of funds from [C41NY] to [UFANYC] has violated . . . the spirit, and we believe, the letter of Sec. 3-703 of the New York Campaign Finance Law.”27
The Complaint questioned whether C41NY was a campaign committee subject to the Act and Board Rules; whether contributions to C41NY violated the contributions limits imposed by Admin. Code §§ 3-703(1)(f) and (1-a); and whether, if C41NY could not be considered a committee subject to the Act and Board Rules previously, if it might at some date closer to the election become subject to the Act and Board Rules.28
In accordance with Board Rule 7-01, Board staff sent the Complaint to the 2017 Campaign.29
The Board received a response from the 2017 Campaign on March 14, 2016.30
The response asserted that the Complaint did not “allege or present any facts that suggest [C41NY] is an ‘authorized committee’” within the meaning of the Act. The response stated that since C41NY is not a political committee under the Act, it does not receive contributions as defined by the Act. It further argued that the limitations of Admin. Code §3-703(1)(f) and (1-a) did not apply to C41NY, since those provisions only apply to contributions accepted by a candidate or authorized committee.
The Board simultaneously issues Advisory Opinion 2016-1 to provide further guidance to candidates who participate in the efforts of outside organizations.
If an organization’s expenditures are coordinated with a campaign, and are made in connection with a covered election, those expenditures will be subject to the Act and Board Rules governing candidates. Advisory Opinion 2016-1 enumerates factors the Board will consider in determining when coordinated expenditures are considered to be in connection with an election. While C41NY’s communications as listed above focused on and promoted Mr. de Blasio, they occurred more than three years before his next covered election and focused on issues being discussed by a governmental body. The promotional benefits of those communications likely dissipated during that time, and the Board has determined that they are not connected to the 2017 election for the purpose of applying the limits in the Act.
The Act defines “independent” activity as that in which a candidate or a candidate’s committee “did not authorize, request, suggest, foster or cooperate.” Admin. Code § 3-702(8); Board Rules 1-08(f)(2), (3).
Pursuant to Board Rule 1-08(f)(1):
Factors for determining whether an expenditure is independent include, but are not limited to:
- whether the . . . entity making the expenditure is also an agent of a candidate;
- whether the treasurer of, or other person authorized to accept receipts or make expenditures for the . . . entity making the expenditure is also an agent of a candidate;
- whether a candidate has authorized, requested, suggested, fostered, or otherwise cooperated in any way in the formation or operation of the . . . entity making the expenditure;
- whether the . . . entity making the expenditure has been established, financed, maintained, or controlled by any of the same persons, political committees, or other entities as those which have established, financed, maintained, or controlled a political committee authorized by the candidate;
- whether the . . . entity making the expenditure and the candidates have each retained, consulted, or otherwise been in communication with the same third party or parties, if the candidate knew or should have known that the candidate’s communication or relationship to the third party or parties would inform or result in expenditures to benefit the candidate . . . .
Whether expenditures are non-independent “is necessarily fact specific.”31
Mr. de Blasio’s involvement in C41NY’s operations and activities demonstrates that C41NY is not independent of Mr. de Blasio and the 2017 Campaign. Mr. de Blasio has authorized, requested, suggested, fostered, and/or cooperated with C41NY’s formation and operations. C41NY was established by Mr. de Blasio and other individuals connected to Mr. de Blasio, including those who worked on the 2013 Campaign and the Mayoralty. Mr. de Blasio occasionally “seeks assistance” from C41NY to advocate for particular issues related to the mayor’s office, and may “make suggestions” over hiring and firing questions at C41NY.
Additionally, C41NY was established and is maintained and controlled by the same individuals who established and controlled the 2013 Campaign, and who occupy similar roles in the 2017 Campaign. Individuals with long-standing relationships to Mr. de Blasio appear to control, direct, and speak on behalf of C41NY.32
Examples of these ties are included in the analysis below.
Finally, C41NY and Mr. de Blasio have each retained, consulted, or otherwise been in communication with the same third party or parties. Review of C41NY’s financial disclosure through August 2015 shows an overlap between the 2013 and 2017 Campaigns’ and C41NY’s use of legal representation, public relations consulting, media consulting, and personnel. Given the nature of the third parties employed by C41NY and the 2013 and 2017 Campaigns, Mr. de Blasio knows or should have known that the overlapping relationship to third parties would inform or result in expenditures that benefited him.
Therefore, the Board considers C41NY and expenditures made by the organization to be coordinated with Mr. de Blasio.
In Connection with a Covered Campaign
Issue groups and other entities regularly conduct public advocacy on issues that have no connection to an election or a candidate, and are not subject to the Act. However, candidate-coordinated communications that refer to or otherwise promote candidates may be considered to be made in connection with a covered election. See Advisory Opinion No. 2016-1 (July 7, 2016). The Board will consider a number of factors to determine whether a coordinated expenditure is made in connection with a covered election, including, but not limited to:
- whether the content focuses on the candidate, his/her opponent, or otherwise promotes the candidate and/or denigrates his/her opponent;
- whether, in cases where the communication refers to more than one individual, the content references the candidate in a manner that overshadows references to the other individuals, or otherwise promotes the candidate and/or denigrates his/her opponent;
- whether the distribution of a communication appears designed to reach the candidate’s electorate;
- whether the communications are focused on the candidate’s past accomplishments or positions, rather than focusing on issues being discussed by a governmental body;
- whether there is consistent and repeated overlap between campaign staff, the organization’s staff, and/or their consultants’ staff, or the candidate or his/her agent has raised funds for the organization;
- whether the organization lacks a history of advocacy on issues or other work that is separate from a candidate or campaign; or
- whether the timing coincides with the candidate’s campaign.
See Advisory Opinion No. 2016-1. See also Advisory Opinion Nos. 2003-2 (July 14, 2003), 2000-1 (March 7, 2000), 1997-6 (June 24, 1997), 1993-10 (September 23, 1993), 1993-9 (September 9, 1993). The Board will generally find that expenditures made prior to January 1 of the election year are not in connection with a covered election. When, however, numerous or substantial factors are present, such that those expenditures closely overlap with election activity, including by focusing on the candidate’s past accomplishments or otherwise promoting the candidate and/or denigrating his/her opponent, the Board may consider activity prior to January 1 of the election year to be in connection with a covered election, particularly if it occurs closer to the election year. Expenditures in connection with a covered election that are made with the cooperation of a campaign are in-kind contributions, which must be accounted for and reported by campaigns.33
Many of the factors noted in Advisory Opinion 2016-1 are present in this case. As in the examples cited above, C41NY’s communications have focused on Mr. de Blasio by name, specifically promoted Mr. de Blasio’s policy initiatives, and have publicized Mr. de Blasio’s past accomplishments. The content of many communications have made exclusive reference to Mr. de Blasio, his role as mayor, and his initiatives, beyond merely advocating for the underlying issues. Mr. de Blasio’s name and image are sometimes featured in these communications, as are Ms. McCray’s voice and image.
Further, there has been extensive and repeated overlap between the staffs of the 2013 and 2017 Campaigns, Mr. de Blasio’s mayoral staff, C41NY, Hilltop, BerlinRosen, and Mr. de Blasio himself.34
Examples of these ties include:
- Bill Hyers, adviser to the Mayor, an initial director of C41NY, manager of the 2013 Campaign, and currently a partner at Hilltop, which consulted on the 2013 Campaign and is consulting on the 2017 Campaign;
- Ross Offinger, who served as C41NY treasurer after raising money for the 2013 Campaign, and who the 2017 Campaign reported as a consultant;
- Jonathan Rosen, adviser to the Mayor and principal at BerlinRosen, which worked extensively with the 2013 Campaign and C41NY, and is a consultant for the 2017 Campaign;
- Dan Levitan, a spokesperson for the 2013 and 2017 Campaigns, who served as an officer of C41NY and works as a vice president for BerlinRosen;
- Sam Nagourney, finance director for the 2013 Campaign, consultant for the 2017 Campaign, and a principal at Hilltop, who helped C41NY raise funds.35
Recently, de Blasio Administration officials announced that Mr. Hyers and Mr. Rosen were “agents of the City” based on their close connection to Mr. de Blasio.36
Additionally, C41NY does not have a history of engaging in issue advocacy or other work unrelated to a candidate or campaign; it was created by associates of Mr. de Blasio solely to advocate for Mr. de Blasio’s policy initiatives.
Nevertheless, it is difficult for the Board to conclude that the timing of these communications, completed more than three years before any ballots will be cast, can be said to coincide with the candidate’s campaign in the 2017 elections. Additionally, many of the communications were directly related to issues that were at the time being considered by a governmental body and were a matter of general public debate. Therefore, the Board determines that the expenditures related to these communications were not made in connection with a covered election. However, if they had occurred closer to the election, the number and significance of the factors is such that the Board would likely have found that they were made in connection to the 2017 election.
C41NY has represented that it has ceased operations, and will not make additional expenditures for public communications between now and the 2017 elections. Still, some of the work conducted by C41NY may have enduring value, including research, polling, organizing, or list-building. Given the significant presence of the factors described above, and in particular the extensive use of common consultants by C41NY and the 2017 Campaign, the Board will closely review the activities of the 2017 Campaign during the pre-election period to ensure that any work product prepared by C41NY and made available to the 2017 Campaign is appropriately valued and accounted for under the applicable limits on contributions and expenditures.
The Board currently does not have enough information to determine whether UFANYC was non-independent of Mr. de Blasio or his 2017 Campaign, and without such determination, Advisory Opinion 2016-1 does not apply. However, UFANYC’s communications appear to implicate the factors discussed in Advisory Opinion 2016-1 as being in connection with a covered election. UFANYC has exclusively promoted Mr. de Blasio’s affordable housing plan. The organization has not advocated for affordable housing generally, but specifically for “de Blasio’s affordable housing plan.” As such, UFANYC’s communications have not just focused on the underlying issue, but also promoted Mr. de Blasio. Additionally, UFANYC was created with the express purpose of promoting Mr. de Blasio’s housing plan; it has not engaged in issue advocacy independent of this initiative. For the reasons stated above, however, the Board cannot conclude that these expenditures are in connection with the 2017 election.
In response to the questions posed in the Complaint, the Board finds that contributions to C41NY are not subject to the Act and Board Rules. The Board does find that C41NY coordinated with the 2017 Campaign. However, as discussed in Advisory Opinion 2016-1, when determining whether a coordinated expenditure is made in connection with a covered election, the Board will consider the timing of the expenditure of particular importance.
C41NY created and distributed communications promoting the candidate, implicating many of the factors discussed in Advisory Opinion 2016-1. In particular, there was consistent and repeated overlap between key staff and consultants to the 2013 and 2017 Campaigns and C41NY. However, because C41NY’s communications as described above occurred more than three years before the 2017 elections, any consequent benefit to the candidate is attenuated. As a result, those activities are not considered in connection with a covered election, and as such are not considered to be in-kind contributions to the 2017 Campaign.
If C41NY had engaged in similar activity closer in time to the upcoming 2017 election, it is likely the Board would have considered those expenditures subject to the Act and Board Rules. Given the extensive use of common consultants by C41NY and the 2017 Campaign, the Board will closely review the activities of the 2017 Campaign during the pre-election period to ensure that any C41NY work product transferred to the 2017 Campaign is subject to the limits on contributions and expenditures.
These findings concerning C41NY’s expenditures do not fully address the perceptions generated by C41NY’s fundraising activities. The Program was created to reduce the influence of campaign fundraising on government decision-making. The drafters and supporters of the Act recognized that any time a candidate or elected official solicits large contributions, the resulting transaction creates the potential for perceived or actual corruption. As such, the Act places reasonable, common-sense limits on contributions to candidates. Mayoral candidates, for example, may accept contributions no larger than $4,950 from any single contributor, and no more than $400 from individuals doing business with the city. The Act recognizes that fundraising by elected officials can present a heightened possibility of improper influence-seeking or coercion. As such, winning candidates are prohibited from accepting contributions from individuals doing business with the city for their transition or inaugural expenses.
More than 95 percent of the funds accepted by C41NY could not have been accepted by campaigns under the Act, including a dozen contributions of $100,000 or more. Some came from individuals who were doing business with the city. Many came from corporations, limited liability companies, and other sources prohibited from making contributions to candidates for city office.37
These facts raise serious policy and perception issues and clearly illuminate the ways in which the jurisdiction of the Act is limited. While fundraising activities for election campaigns are closely regulated by the Act, other provisions of city law allow elected officials to solicit funds practically without limits. City laws must be strengthened to provide a more uniform set of protections against the possibility and perception that favor-seeking wealthy interests may influence government decision-makers by contributing to entities associated with an office-holder.
The Board calls upon the City Council to close this solicitation loophole, and amend the law to more closely regulate fundraising solicitations by elected officials and their agents for non-profit organizations, especially § 501(c)(4) entities.
This determination hereby concludes the Board's investigation into the Complaint, which is now closed. However, as with all 2017 campaigns, the Board will continue to closely monitor the activities of the 2017 Campaign as it conducts its pre-election audit reviews to ensure the Campaign complies with the Act’s limits on contributions and expenditures.
NEW YORK CITY CAMPAIGN FINANCE BOARD
A third organization was founded and funded by C41NY, called The Progressive Agenda, which was not mentioned in the Complaint. The Progressive Agenda focused its activities on supporting Mr. de Blasio’s progressive ideals outside of New York State. See infra
Factual Background section.
Laura Nahmias, De Blasio’s Progressive Agenda launches fundraising operation
, POLITICO N.Y, Oct. 20, 2015, http://www.capitalnewyork.com/article/city-hall/2015/10/8580105/de-blasios-progressive-agenda-launches-fundraising-operation
(stating that “[u]ntil recently, [The Progressive Agenda’s] expenses were being paid for with donations made to [C41NY], a 501(c)(4) de Blasio started in December of 2013 to advance his mayoral agenda . . . . But now the committee has formally registered as its own 501(c)(4) nonprofit, and ‘has its own fundraising operation’ which has already begun raising money, committee spokeswoman Rebecca Katz told POLITCO New York.”); Laura Nahmias, National de Blasio group discloses lone donor
, POLITICO N.Y., May 16, 2016, http://www.capitalnewyork.com/article/city-hall/2016/05/8599255/national-de-blasio-group-discloses-lone-donor
(reporting that the entirety of The Progressive Agenda’s funding came from $480,000 in seed funding provided by “the mayor’s other nonprofit,” C41NY).
9 See, e.g.
, Larry Buchanan & Ford Fessenden, Mayor de Blasio’s Private Advisors: Who Gives the Money and Who Gets It
, N.Y. TIMES, Nov. 4, 2015, http://www.nytimes.com/interactive/2015/11/04/nyregion/mayor-de-blasios-shadow-cabinet.html
; Courtney Gross, A Look at How The Mayor’s Nonprofit Groups Have Been Selling His Agenda for the Past Two Years
, TIME WARNER CABLE NEWS, May 20, 2016, http://www.ny1.com/nyc/all-boroughs/fundraising-probe/2016/05/20/a-look-at-how-the-mayor-s-nonprofit-groups-have-been-selling-his-agenda-for-the-past-two-years.html
As reported to the CFB and the New York State Board of Elections through January 11, 2016.
11 See, e.g.,
Ross Barkan, Bill de Blasio Won’t Say What He’s Doing With His Campaign Nonprofit Today
, OBSERVER, Apr. 21, 2015, http://observer.com/2015/04/bill-de-blasio-wont-say-what-hes-doing-with-his-campaign-nonprofit-today
(reporting that Mr. de Blasio and C41NY refused to discuss what the April 21 event was for or who else would attend in addition to Mr. de Blasio); Liz Benjamin, Here and Now
, TIME WARNER CABLE NEWS, Mar. 26, 2015, http://www.nystateofpolitics.com/2015/03/here-and-now-1238
(noting that “NYC Mayor Bill de Blasio will attend an event hosted by the Campaign for One New York, which is closed to members of the press”); Email from Azi Paybarah & Gloria Pazmino, Capital N.Y. (Apr. 21, 2015)
(reporting that the Mr. de Blasio’s public schedule for that day included “a closed-door event with members of [C41NY]”).
id. See also
note 9 (“Officials at [C41NY] insist the affordable housing group was not their idea. The unions started it to run a six-week campaign to push the mayor's affordable housing agenda to the City Council. But it was also a place for [C41NY] to drop $150,000 in revenue as it began to shut down.”).
Advisory Opinion No. 2009-7 (Aug. 6, 2009); see also
Advisory Opinion Nos. 2013-1 (Jan. 10, 2013) and 2012-1 (Jun. 21, 2012).
32 See, e.g.
, Jill Colvin, Bill de Blasio’s Old Campaign Operations Live On, in One Form or Another
, OBSERVER, Feb. 19, 2014, http://observer.com/2014/02/bill-hyers-keeping-his-distance-from-de-blasio-for-now
; Sally Goldenberg, New director for de Blasio’s political arm
, POLITICO N.Y., May 8, 2015, http://www.capitalnewyork.com/article/city-hall/2015/05/8567658/new-director-de-blasios-political-arm
; Yoav Gonen, Group pushing for Pre-K are de Blasio insiders
, N.Y. POST, Feb. 7, 2014, http://nypost.com/2014/02/07/pre-k-pushers-are-de-blasio-insiders/
; Nikita Stewart, Familiar Consultants Hired by de Blasio’s Pre-K Drive
, N.Y. TIMES, Mar. 19, 2014, http://www.nytimes.com/2014/03/20/nyregion/familiar-consultants-hired-by-the-mayors-pre-k-drive.html?_r=0.
Admin. Code § 3-703(6)(a); Board Rules 1-04(a), (g), 3-03(c), 4-01(c).
Kenneth Lovett, Bill de Blasio fund-raiser asking for $50G to help Democrats capture state Senate made developer feel ‘uncomfortable
N.Y. Daily News, Oct. 30, 2014, http://www.nydailynews.com/news/politics/de-blasio-fundraiser-50g-made-developer-feel-uncomfortable-article-1.1992475
; Laura Nahmias, De Blasio’s 2017 committee makes two hires
, Politico N.Y., Apr. 19, 2016, http://www.capitalnewyork.com/article/city-hall/2016/04/8597097/de-blasios-2017-committee-makes-two-hires
; Laura Nahmias & Dana Rubinstein, De Blasio lists advisers he considers exempt from transparency law
, Politico N.Y., May 19, 2016, http://www.capitalnewyork.com/article/city-hall/2016/05/8599680/de-blasio-lists-advisers-he-considers-exempt-transparency-law
(stating that Mr. de Blasio has called Jonathan Rosen and Bill Hyers, among others, “personal advisers to the Mayor,” and therefore “agents” of the City exempt from the Freedom of Information Law); Azi Paybarah, Ulrich prepares a ‘confidence’ case against de Blasio
, Politico N.Y., May 20, 2016, http://www.capitalnewyork.com/article/city-hall/2016/05/8599249/ulrich-prepares-confidence-case-against-de-blasio
. See also
David W. Chen, Larry Buchanan & Ford Fessenden, Bill de Blasio’s Circle of Power
, N.Y. Times, Nov. 8, 2013, http://www.nytimes.com/interactive/2013/11/08/nyregion/bill-de-blasios-circle-of-power.html
; Jeff Mays, James Fanelli & Katie Honan, De Blasio Advisers Easily Moved From City Hall to Mayor’s Probed Nonprofit
, DNAinfo, May 12, 2016, https://www.dnainfo.com/new-york/20160512/civic-center/de-blasio-advisors-easily-moved-from-city-hall-mayors-probed-nonprofit
; Khurshid, supra
Nahmias & Rubinstein, supra