LITTLE ROCK — In 2009, state Treasurer Martha Shoffner accepted a New York law firm’s $10,000 check to her campaign but facing recent questions about it, has decided to give the $10,000 back.
The single check was meant to be contributions of $2,000 each from five law partners at the firm, Shoffner’s chief deputy said.
It’s unclear whether Arkansas ethics rules allow multiple contributors who are not married and not sharing bank accounts to make their donations in a single check.
The firm — Kaplan, Fox & Kilsheimer LLP — has a securities monitoring contract with the Arkansas Teacher Retirement System. Shoffner is a member of the board of trustees for the system.
Shoffner also reimbursed $9,874 to her campaign carry-over account because campaign and carry-over funds were used to pay for a $900-a-month lease for a vehicle that was used for campaigning, for her office and for her personal use, said the chief deputy, Debbie Rogers.
During the past few weeks, the Arkansas Democrat-Gazette has questioned Shoffner and some of her employees about the $10,000 check and the $900-a-month lease.
In a campaign-finance report for Oct. 1-Dec. 31, 2009, Shoffner reported $2,000 contributions on Dec. 2, 2009, from Robert Kaplan, Fred Fox, Richard Kilsheimer, Donald Hall and Joel Strauss of the law firm. Fox could not be reached for comment at the firm Wednesday after a firm representative referred this newspaper’s questions to him.
THE CHECK
The Democrat-Gazette last week asked how Shoffner knew that the check was intended to be five contributions, whether the check or any other document stated that, and, if so, would she show a copy of the check or document. She declined to do so.
Rogers said the contributions were put on one check at the instruction of Cord Rapert, who worked for Shoffner and went with her to New York.
However, Rapert, 24, of Jonesboro, now a student at Arkansas State University, said he advised an assistant at the firm that the maximum individual contribution to a state office candidate in Arkansas is $2,000 per election. It’s “incorrect” to indicate that he suggested that the five contributions be made in one check, he said.
“I would have never instructed them to put it on one check, because we know it’s not proper with the Ethics Commission,” said Rapert.
Shoffner said she’s not blaming Rapert. “I am not trying to get Cord in trouble at all,” she said.
Rogers, who is a sister of former state Treasurer Jimmie Lou Fisher, said when asked whether it was proper to have five contributions in one check that “inquiries were made by the treasurer, and being unable to determine satisfactorily that such practice is allowable without question, the decision was made to return the contributions to the donors.”
Shoffner said she decided to return the $10,000 after consulting Graham Sloan, executive director of the Arkansas Ethics Commission. She said it is a gray area in the law.
“I just wanted to rectify the situation,” she said.
In recounting his conversation with Shoffner, Sloan said, “My advice, if you had called before you deposited a check is I would have said, ‘Send it back and get a separate check from each of those individuals.’”
“You can’t really unring the bell,” Sloan said, but “the only remedial action that I could think of would be to return [the check].”
Rogers said the $10,000 was returned Friday.
Sloan said the state Ethics Commission has never considered whether accepting a $10,000 contribution from a firm intended to be five $2,000 contributions violates the ethics laws. The commission determines whether a violation has occurred, he said.
Under Arkansas Code Annotated 7-6-205 (b), “No contribution shall be made to or knowingly accepted by a candidate or his or her campaign committee ... unless the contribution is made in the name by which the person providing the funds for the contribution is identified for legal purposes.”
Sloan said he doesn’t see a problem with a husband and wife who have a joint account and are both listed on the account giving a $4,000 check to represent two $2,000 contributions.
RETIREMENT SYSTEMS
George Hopkins, executive director of the Arkansas Teacher Retirement System, said the system is the lead plaintiff in one suit filed in 2010 by the law firm and lead plaintiff with two other institutional investors in another suit filed by the firm in 2009.
The firm has been working for the system since December 2008. The system has four securities monitoring firms. It doesn’t pay them anything, Hopkins said. “The presiding judge decides what amount, if anything, that these firms are paid,” he said.
Hopkins said he didn’t know until recently that the firms contribute to state officials and he’s never asked any of the firms to contribute to any trustees who are state officials and never had a trustee ask him to make such a request. State Auditor Charlie Daniels also serves on the system’s board of trustees.
In the past several years, it’s become common for attorneys for firms that were hired to monitor the investments of the Arkansas Public Employees Retirement System and/or the teacher retirement system to contribute to the state treasurer and the state auditor.
NEW YORK
Shoffner’s contact with the law firm in 2009 came when, according to records in her office, she and Rapert were in New York on Nov. 29-Dec. 3 for a conference of the National Association of State Treasurers. The conference was actually Nov. 30-Dec. 2.
Asked why she decided to return to Little Rock on Dec. 3 rather than Dec. 2 since a copy of the conference agenda shows that the last event started at noon Dec. 2, Rogers said that the final luncheon of the conference concluded at 1:30 p.m. “and as the annual lighting ceremony of the Christmas tree in Rockefeller Center was scheduled for that evening, the decision had been made for the treasurer to attend that event on behalf of the state of Arkansas” and return to the state the next day.
Rogers said the cost to the state for Shoffner and Rapert to stay the evening of Dec. 2 in New York rather than return to Arkansas that day was $1,068.29, including $515 for Shoffner’s hotel room and $415 for Rapert’s.
The total cost of the trip was $6,219.26, Rogers said.
Rapert said he attended the tree-lighting ceremony with Shoffner but that they stayed an extra day in New York for a fundraiser at the law firm. That’s when Shoffner received the $10,000 check, he said. He said attorneys at the firm offered to hold a fundraiser for her after she met one of them at a previous conference.
Shoffner said she didn’t stay to attend a fundraiser and that there was no fundraiser. She visited the firm’s office before she flew back to Arkansas on Dec. 3, didn’t solicit funds, but did receive a $10,000 check, she said. “There was absolutely no reason for them to give it to me,” Shoffner said.
THE VEHICLE
The $900-a-month vehicle lease was for a Ford Freestar, a minivan with seating for seven. Shoffner leased it using campaign carry-over funds and campaign funds. She acknowledged using the vehicle for personal use some of the time that she had it. She said she thought she was complying with state law.
The Democrat-Gazette asked whether Shoffner signed a lease agreement that included an option to purchase the vehicle, and whether she could provide a copy of the lease and purchase agreements. She declined to provide copies.
Rogers said the lease for the campaign use of the vehicle was paid for from campaign funds, which is allowed under law.
“Following the election, as the question of state vehicles was still in the courts awaiting resolution, she continued to lease the vehicle for her official duties using carry-over campaign funds, which is allowable under Arkansas state law,” Rogers said.
“However, because the vehicle was subject to minimal personal use during that time that was not documented, Treasurer Shoffner made the decision to reimburse 100 percent of the lease expenditures out of personal funds to resolve any issues that may have arisen over her use of the leased vehicle,” Rogers said.
Sloan of the Ethics Commission said he and commission chief legal counsel Rita Looney talked Tuesday with a Shoffner representative about Shoffner’s vehicle lease.
Under state law, a candidate is allowed to use campaign funds to lease a vehicle for campaign use, but not for personal use, he said, and an officeholder can use carryover funds to lease a vehicle for office-related use, but not for personal use.
“If personal use did occur, you cannot go back and change [that],” Sloan said. “The only remedial action that came to mind was reimbursement to make up for personal usage.”
Whether it would be OK for Shoffner to travel from her home to the Capitol and back home in the vehicle “is just an unanswered question,” Sloan said. “It would depend on the facts of the situation.”
PAST PROBLEMS
Last week, Shoffner admitted that a report filed in January that showed that she had $97,349.67 in carry-over funds on May 19, 2010, from her campaign, and $47,356.29 on Dec. 30 was wrong.
State law limits officeholders’ carry-over funds to an amount equal to the office’s annual salary, which in this case is $54,305.
Shoffner acknowledged the errors by filing five amendments to campaign-finance reports last week, after the Democrat-Gazette questioned her about them.
In one amendment, she changed her reported carryover to show no balance on the May 19 and Dec. 30 dates in 2010 and no expenses during that period.
Shoffner, a Democrat from Newport, has been the treasurer since 2007 and was re-elected to her second four-year term in November 2010.
Her predecessor as treasurer, Delight Democrat Gus Wingfield, was reprimanded and fined $750 by the Arkansas Ethics Commission in 2004. The actions stemmed from his decisions to give promotions and pay increases to members of his family, actions that were disclosed by the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 11/10/2011