Vol. 5,  No. 8          February 15, 2008

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State Democrats Hold

Election Laws In Contempt

Democratic Party Refuses To Comply With Election Law


By Johnny Gunn

Charges of election finance fraud have been filed with the Nevada Secretary of State regarding election finance reports required to be filed by the Nevada State Democratic Party (NSDP).  According to information made available to The Nevada Observer, In addition to filing discrepancies by the parent party, the North Las Vegas Democratic Club among others has received and spent money that has not been reported on contributions and expenses reports for at least two years.  Money, the leaked documents indicate, has been spent on campaigns, parties, and possibly individual needs.

The complaint was filed with the elections division of the Secretary of State on December 31, 2007 alleging “that the Nevada State Democratic Party violated section 294A.140 of the Nevada Revised Statutes.”  A copy of the complaint was forwarded to Jill Derby, party state chairwoman on January 4, 2008.  In part, the Democratic Party response to the complaint reads like this: “Several years ago, the party Treasurer was advised by the Secretary of State’s office that for filing of C and E Reports, it was necessary only to report non-federal (state) contributions and expenses. The treasurer was also advised that it was unnecessary to disclose internal transfers from non-federal to federal party accounts, as such transfers are disclosed in monthly reports filed with the Federal Election Commission.”  The response was signed by Party Chair Jill Derby.

Besides questioning discrepancies in the C&E filings, Michael Zahara, a Clark County member at large of the party’s executive board, claims C&E reports haven’t been filed.  Derby responded this way to those charges.  “With regard to allegations of failure to file reports in periods 1 and 2 of 2006, those reports were filed in an accurate and timely fashion, although for reasons unknown, they are not posted on the Nevada Secretary of State Website.

“In order to avoid any similar misinterpretations in future, the Nevada State Democratic Party, beginning with the 2007 filing, will report internal transfers from the non-federal to federal accounts.”  Are we to assume the dog ate the homework before it could be posted?  That kind of answer shows a complete disregard for state law.  Discrepancies in some reports, other reports missing, allegations of malfeasance by party clubs and associations, and the only answer is, “for reasons unknown they aren’t posted …” isn’t what should be the response from a state party chair.

The Clark County Democratic Party along with the North Las Vegas Democratic Club, the Women’s Democratic Club of Clark County, the Red Rock Democratic Club, the Henderson Democratic Club, and the Paradise Democratic Club are all alleged to have received money or in-kind services at various functions and not reported them on state mandated election reports, and have spent money that is not reported.  The Clark County Democratic Party has not been audited for years according to more than one source.

According to at least one source, the amount of money involved totals well over $150,000.  In addition to unreported contributions and expenses, it has been alleged that at least $15,000 has not been accounted for in the North Las Vegas Democratic Club.  Some have indicated they believe the money may have ended up in a political campaign and not been reported.  No audit has been called for by the state party or the Clark County party.

The Secretary of State’s elections officials were unable to offer a comment on the matter as we went to press, but said, “we promise a response in the near future.”  It is rare for one of the major political parties to find themselves in a situation where their finances are called into question and even more rare for contributions and expenses reports to be questioned.

Contributions and expenses reports are required for all candidates running for an office in the state and political parties, clubs associated with those parties, political action committees, and other groups associated with parties, candidates, or ballot questions are required to file these reports with the Secretary of State, a city clerk, or country clerk.  The reports are looked on by many candidates and officials as a pain in the neck.  They are rarely if ever looked at in depth by any but reporters.

The reason for that is the complete lack of responsibility by the parties, elected officials, and the general public.  Nevada’s election law is the least transparent of any of the states and politicians and the parties take advantage of that.  The reports are almost impossible to decipher since there are no rules involved in filling them out.  Contributions and expenses are rarely filed in alphabetical order, are most often written by hand, sometimes even in pencil, and those that actually file them with the idea of following the law are held in contempt.  Some candidates have found themselves being ridiculed for doing the job properly.

According to Michael Zahara, an elected member of the Executive Board of the state party, representing Clark County at large, “In 2006 and 2007, the Nevada State Democratic Party (NDSP) sanctioned clubs and caucuses raised and spent monies on Democratic efforts in each year,” and did not report these on their NRS mandated forms.  Zahara says those within the state party have dismissed his allegations out of hand.  Zahara says state chair Derby “refuses to assert her authority as party CEO to adhere and follow the mandates of the NRS.”

Among Zahara’s charges, thousands of dollars of in-kind services and products were never listed on the C&E reports.  Money was donated to party sanctioned clubs and given to candidates with no paperwork involved, no reports on the C&Es.  Money raised and spent on the recent caucus is not reflected in the current accounting, and what the state is saying it has in its accounts may be off by as much as $500,000.  What’s worse, Zahara says, no one at the county or state level is taking responsibility to correct the problems.  Zahara insists that the party refuses to see a problem.

Contributions and Expenses reports are manipulated regularly in Nevada as parties and candidates attempt to shield those that make large contributions.  The election law itself aids in these efforts.  In Nevada, corporations and LLCs, that is Limited Liability Corporations, are treated as individuals and on the contributions reports, only the name of the corporation appears.  None of the people involved in the corporation are named so that a person or group that might control many corporations can contribute hundreds of thousands of dollars to a campaign and anyone looking at the C&E reports would never know it.

Along with complaints filed with the State of Nevada, the Federal Elections Commission has been notified of the alleged discrepancies.  According to one source, the Women’s Democratic Club (WDC) raised money for various candidates by way of a fundraising dinner but did not list the names of candidates that were given funds nor did they list the amounts.  Reportedly, the funds were not listed on the WDC contributions and expenses reports.

The Red Rock Democratic Club has never filed a C&E report with the Secretary of State.  According to the Nevada Revised Statutes, political clubs are required to do so.  According to Zahara, the North Las Vegas Democratic Club cannot account for any funds for the last two years and may not have any paperwork on fundraising.  Zahara has been attempting to straighten out the finances and get the proper papers filed since September 2007.  So far, he says, party officials have ignored him, even threatened him.

John A. Hunt is the Clark County Democratic Committee Chairman, and according to Zahara has no intention of amending any of the contributions and expenses reports that have been filed with the state.  He recently said to Mike Zahara, in an e-mail that was acquired by The Nevada Observer, “Your tactics are clearly no different than a telemarketer against people who become a point of your obsessions.”  Hunt went on to say, “I find your emails threatening and will seek a restraining order and report you to the Attorney General for prosecution if I receive any more emails.”

Zahara pointed out that, “This is the business of the County Chair.  You are the County Chair.  How else am I to communicate with you?”  Zahara feels that as an elected member of the state democratic party hierarchy he has a responsibility to see to it that the party does not break the election laws of the state.  At this time, Hunt has not responded to e-mail questions nor returned telephone calls.  It appears that the state party, Clark County committee, and various party clubs have some serious financial explaining to do to the State of Nevada and to democrats that have contributed to the party’s coffers.

There is no indication in the Derby response to Zahara’s complaint to the Secretary of State that an amended C&E would be filed.  Zahara has opened a dialog that needs to be followed up by the Democratic State Party of Nevada.  Questions that immediately come to mind include:

• Is there missing money?

• If so, how much?

• Where has that money gone?

• Why is the party acting in an illegal manner?

• By not including in-kind donations, is someone being protected?

• Why haven’t audits been done as required by party rules?

At several Clark County Democratic dinners, in-kind offerings of food and refreshment, printing, and advertising were never listed on the C&E reports despite the fact that they are asked for in particular.  According to the party’s own bylaws, an outside auditor is required to go over the books every two years, but according to Zahara there have not been any audits for years.  There have been no attempts to file corrected reports with the Secretary of State.  “They (the party officials) treat party finances as one giant slush fund and no one seems to care,” Zahara told this reporter.

The state democratic party hired a new executive director in the spring of 2007.  Travis Brock came to Nevada politics by way of Iowa, possibly to coordinate Nevada’s first democratic caucus, which was held January 19 amid a flurry of lawsuits and acrimony.  His poli8tical work included working on campaigns in Iowa, and on the campaigns of John Kerry and Al Gore.  Brock has not responded to e-mail questions nor returned telephone calls.

Democratic Party Chair Jill Derby ran for Congressional District Two in 2006 and announced recently that she is giving consideration to another run again this year.  Former Secretary of State Dean Heller is in his first term in Washington.  Questions about the state party finances and Clark County party finances will certainly not help Derby’s campaign.

Political parties write their own rules as to how their finances are handled, but they must still follow the laws of the State of Nevada and the federal government.  There is a movement within the Democratic State Party to revise how the party’s finances are to be handled.  The movement would return financial control to the party’s executive board from the executive director and paid staff.  At this time, what the party is saying is on the books and what the books reflect are two different stories.

It is rare for the state to follow through on complaints about C&E reports.  Often the complaints are handed off to the ethics commission, a toothless group of people who rarely find ethical problems.  The entire Independent American Party (IAP) has relentlessly refused to fill out C&E reports, often getting around the law by filing blank sheets of paper.  The law says the forms must be filed.

The law also says that finances must be disclosed and that often isn’t done.  At the federal level, financial records are filed in a data base form, typed or by way of a computer, in alphabetical order, with information on who the contributor is.  When corporations donate, corporate officers and holders of large amounts of interest in the business are listed.  The federal laws are lacking in many respects but are far superior to what is available in Nevada law.