On Our Watch -

News and Highlights from Ethics Watch

October 2008

State Elections Director Resigns Amid Ethics Watch Investigation Ethics Watch initiated an investigation of State Elections Director Holly Lowder that resulted in her abrupt resignation. Ethics Watch had submitted a Colorado Open Records Act (CORA) request on the Secretary of State's office seeking documents regarding state contracts with voter database consultant John Paulsen, who purportedly leased a condominium to Lowder. Ethics Watch's probe revealed pervasive conflicts between Lowder and Paulsen that calls into question hundreds of thousands of taxpayer dollars doled out to Paulsen through state contracts. This is not the first time Secretary of State Mike Coffman has tolerated conflicts of interest by Elections Division employees. Ethics Watch is pursuing further legal action to hold Lowder, Paulsen and Coffman accountable for violating state conflicts laws. Read Chantell Taylor's statement and details of the investigation here. Read the Rocky Mountain News stories here and here and here. Read the Denver Post story here. Ethics Watch Calls for IRS Investigation into Campaign Activities of Four Non-profit Organizations On September 29, Ethics Watch requested that the Internal Revenue Service launch an immediate investigation of four non-profit organizations: American Future Fund (AFF), Coloradans for Economic Growth (CEG), Freedom's Watch, and Western Skies Coalition (WSC). The request presented evidence that these four organizations might have spent more of their total resources on actions that influence elections in Colorado rather than on social welfare activities, in violation of their federal tax-exempt status. AFF, CEG, Freedom's Watch and WSC are each registered as 501(c)(4) tax exempt organizations. According to federal tax law, a 501(c)(4) is exempt from federal income taxation if it operates primarily to promote social welfare. 501(c)(4) organizations must devote at least half of their resources and efforts to activities that promote the common good, general welfare, civic betterment or social improvement of a particular community. The law clarifies that promotion of social welfare does not include direct or indirect participation in political campaigns on behalf of a candidate. According to Ethics Watch's research, it appears that more than half of the activities engaged in by AFF, CEG, Freedom's Watch and WSC have been partisan, non-educational activities that provide benefit to various conservative candidates for state and federal public office in violation of statutory requirements for 501(c)(4) organizations. Read the complaint and related exhibits here. Read the Colorado Independent story here. Ethics Watch Sues Senate Majority Fund LLC and Colorado Leadership Fund LLC On September 10, Ethics Watch filed a complaint with the Colorado Secretary of State against the Senate Majority Fund LLC (SMF) and the Colorado Leadership Fund LLC (CLF) asserting that SMF and CLF sponsored political ads that expressly advocate in favor of particular candidates in violation of state laws. Both SMF and CLF are registered with the Internal Revenue Service (IRS) and the Colorado Secretary of State as 527 political organizations. As 527s, under Colorado law SMF and CLF are not subject to any contribution or spending limits. Ethics Watch's complaint alleges that by purchasing ads that expressly advocate in favor of state candidates, SMF and CLF became political committees under Colorado law and must comply with all applicable contribution limits and reporting requirements, including adhering to the political committee contribution limit of $500. SMF and CLF's disclosure reports show that each organization has accepted contributions far in excess of $500, including several single contributions up to $30,000. SMF and CLF could be liable for civil penalties up to five times the amount of each contribution received in excess of $500, resulting in millions in fines for skirting campaign finance laws. Read the complaint and related exhibits here. Read the Associated Press story here. Read the Rocky Mountain News story here. Ethics Watch Files Suit against Three Lawmakers to Force Release of Public Records On September 9, Ethics Watch asked the Denver District Court to force State Senator Josh Penry, R-Grand Junction, State Rep. Cory Gardner, R-Yuma, and State Rep. Frank McNulty, R-Highlands Ranch, to comply with an open-records request seeking documents and communications regarding two proposed oil and gas severance tax initiatives, including Amendment 52. Penry, Gardner and McNulty, who sponsored and support Amendment 52, objected to the open records request through the Office of Legislative Legal Services (OLLS). While OLLS provided Ethics Watch with a handful of documents, OLLS advised Ethics Watch that Penry, Gardner and McNulty are withholding additional relevant documents based on OLLS' argument that when legislators discuss a ballot initiative they are not acting as legislators, and therefore, documents regarding their communications regarding a ballot initiative are not "public records" under the Colorado Open Records Act (CORA). Read the complaint and related exhibits here. Read the Grand Juntion Daily Sentinel story here. How You Can Help Ethics Watch raises public awareness about government accountability, and exposes those who are misusing taxpayer resources. Tips from Coloradoans are integral to our work, as are individual donations from those who support our mission. Please consider supporting Ethics Watch with information or a donation or both, so that we can continue to research, identify and expose unethical behavior by our public officials. Submit a tip here. Make a donation here.		When the new rules of the Colorado Independent Ethics Commission took effect September 1, Ethics Watch called on the Independent Ethics Commission (IEC) to promptly investigate its languishing complaint against Secretary of State Mike Coffman. At the same time, Ethics Watch bolstered its pending complaint by submitting additional evidence including newly obtained e-mails between Secretary Coffman and staff members in his office. In February, Ethics Watch filed a complaint with the Independent Ethics Commission asking it to penalize Secretary of State Mike Coffman for his violations of legal standards of conduct. This was the first complaint filed with the Independent Ethics Commission since it was approved by voters in November 2006. With the commission's newly adopted rules taking effect in September, everything is in place for the commission to begin reviewing complaints and fulfilling its role as Colorado's only independent body designated to enforce ethics rules across all branches of state government. At the end of September, the IEC still had not taken action on Ethics Watch's complaint. Read Chantell Taylor's statement here. Listen to Luis Toro on the Mario Solis-Marich Show here. Ethics Watch Forces Return of Unlawful Campaign Contribution by HD 56 Candidate Ali Hasan According to campaign finance disclosures researched by Ethics Watch, Ali Hasan, candidate for Colorado House District 56, accepted an illegal $1,000 contribution to his candidate committee from a private corporation registered in Nevada. Not only did the contribution exceed Colorado's voter-approved contribution limit of $200 for primary races and $200 for general elections, it appeared to be from an unlawful source. Under Colorado law it is unlawful for a corporation to make a contribution to a candidate committee. According to the secretary of state's rules, Hasan has 30 days from the date of receipt to return the unlawful contribution. Hasan received the contribution on September 5, 2008. Within hours of Ethics Watch's call, the campaign indicated it would return the contribution to the corporation. Read Chantell Taylor's statement here. Read the Vail Daily article here. Read the Colorado Independent article here.


� 2008 Colorado Ethics Watch, all rights reserved.
If you wish not to receive this newsletter in the future, click here