Politics & Government

N.C. officials investigate Democratic campaign group

WASHINGTON — North Carolina elections officials are investigating whether a national Democratic campaign organization violated the state's ban on corporate donations.

Investigators are looking at donations by individuals and North Carolina corporations to the Democratic Legislative Campaign Committee, a national group that works to get Democrats elected to statehouses around the nation. The committee has given more than $750,000 to the North Carolina Democratic Party since 2004.

At issue: Did the money that the group routed to North Carolina come only from individuals or did it include corporate money, in violation of North Carolina law?

Michael Sargeant, the campaign committee's executive director, said the organization "segregates the funds it raises into different accounts." By doing so, it makes sure that corporate and individual contributions aren't mixed and that state laws such as North Carolina's — and similar laws in some two dozen states — are followed.

He said contributions that ended up in North Carolina were put in a separate Democratic committee fund that was registered with the state as a political action committee that didn't accept corporate or union money.

But that might not pass muster with the state Board of Elections.

Kim Strach, the deputy director of the board, said it wasn't enough for a group to "segregate" donations. The checks must be made out to the state committee, Strach said. Otherwise, the money is considered to have been raised by the DLCC, which accepts prohibited corporate money.

Sargeant said the national committee had complied with "both the letter and spirit" of state law. He said the contributions were similar to previous ones by Republican groups.

The board began examining the national committee more than a year ago, prompted by a complaint filed by Republicans.

The organization is of renewed interest to investigators because of its ties to Jim Black, the former North Carolina Democratic House speaker who's serving a prison term for accepting unrelated illegal donations. Black was a director of the Democratic Legislative Campaign Committee from about 2000 to 2004, a period when it took in more than $100,000 from North Carolina corporations and had annual fundraisers at the Pinehurst Resort and Country Club. Money came from industries with business before lawmakers in Raleigh.

Strach said investigators hoped to reach a conclusion in the next few weeks. She said the board could go as far as prohibiting contributions to North Carolina from the national committee. A penalty, if warranted, would be decided by the elections board. North Carolina law says the penalty won't exceed three times the amount of the illegal contribution.

By determining whether there were enough individual donations intended for North Carolina state races, investigators will get insight into another question: Were the corporate dollars raised from North Carolina businesses meant to be funneled back to North Carolina to influence state officials? The North Carolina Democratic Party uses much of the money on its most competitive state legislative races.

Sargeant said the committee didn't take donations with the promise that they'd go back to the states of origin or to particular candidates or committees.

The Democratic Legislative Campaign Committee and its North Carolina fund share Washington addresses and staff. Caroline Valand, who's now the executive director of the North Carolina Democratic Party, was the national caucus director and political director for the national committee and the assistant treasurer of the group's North Carolina committee. Valand declined a request for an interview.

"It's so easy to commingle funds that most states don't even bother investigating," said Craig Holman, the campaign finance lobbyist with Public Citizen, a government watchdog group in Washington. "Even though the money may not be easily traceable, the beneficiaries know where the money came from."

ABOUT THE DLCCAbout the DLCC

Founded in 1993, the Democratic Legislative Campaign Committee is a national organization that's responsible for helping to elect Democratic state legislators across the country.

The group says it helped Democrats gain seats at the local level in 2003, 2004, 2005 and 2006, including flipping 14 legislative chambers to Democratic control.

Because it doesn't give to national candidates, like members of Congress, it doesn't have to file with the Federal Election Commission. Known as a 527 group because of its tax-exempt status, it does have to report to the Internal Revenue Service.

The DLCC can accept corporate contributions of unlimited amounts.

To do business in a state such as North Carolina, which bans corporate money, it has to set up a separate political action committee registered with the state that accepts only contributions of less than $4,000 from individuals.

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