For Michigan Republicans, A Reckoning With The Consequences Of Hidden Money

A secretive account, unavailable contracts, and an open investigation.

 

By SIMON D. SCHUSTER

Michigan Campaign Finance Network

 

LANSING (Feb. 11, 2020) — A week ago, rumbling fissures within the Michigan Republican Party (MRP) leadership were blown open. Then-chair Laura Cox sent an email to party insiders, alleging the former chair Ron Weiser, who was running for a third term in the role, had in 2018 used $200,000 in party funds to pay a candidate for secretary of state, Stan Grot, to leave the race.

One senior MRP official, speaking on the condition of anonymity due to the party’s turmoil, told MCFN, “I think that many times you enter these conventions and the delegates are concerned that the establishment is playing games with the votes. And typically they're not. This time they were.”

The payments had come from the party’s administrative account, a secretive source of funds that can accept corporate contributions and has no requirements for public disclosure. Now it's been alleged the account provided party leaders the leverage to unilaterally influence major Republican party decisions while hiding the move from nearly all its members.

Weiser called the allegations “baseless'' in a statement, though he didn’t directly deny the assertion Grot had dropped out as a condition of the payments. Grot told The Detroit News he left the race in 2018 because he “didn’t have a chance to win,” and noted the work he did for the party afterward. Days later, Weiser was reelected as chair with two-thirds of party delegates supporting him. 

Though the true impetus behind the payments remains an open question, the allegations have highlighted an unsavory reality: multiple experts told the Michigan Campaign Finance Network that in Michigan it’s likely legal to pay a candidate to abandon their bid for office.

 

A Pattern Of Payments

Grot left the contest days before the party’s nominating convention in summer 2018, where delegates select the candidates who will appear under the party’s name on the November ballot. Three days after dropping out, payments to Grot from the account reportedly began.

The Michigan Campaign Finance Network has previously reported on administrative accounts and the ways they enable political parties to spend millions to anonymously support their candidates.

Several Michigan GOP officials interviewed by MCFN said they viewed the transactions as violations of state campaign finance law, and in a virtual town hall last Friday, Cox said, “I believe this agreement should have been reported to the Michigan secretary of state as it was money paid to affect an election.”

The alleged circumstances surrounding the payments to Grot were provided in an internal investigation conducted by attorney Jon Lauderbach on behalf of the party, which Cox included in her email to delegates. It also contained allegations that Scott Hagerstrom, another Republican operative, had been paid $81,000 in administrative account funds without a specified reason in early 2017.

In the report, former general counsel Stu Sandler alleged the payment was made at Weiser’s direction so Hagerstrom would withdraw from running against then-chair Ronna McDaniel. While three current and former GOP officials corroborated the nature of the arrangement with MCFN, the narrative leaves lingering questions.

Hagerstrom did not publicly leave the race for more than a month after McDaniel was put in line for a national role and Weiser had announced his intention to seek the party’s chair again. Despite a slew of endorsements from Trump-adjacent officials, Weiser was in a competitive contest against Hagerstrom, who remained a grassroots favorite. At the time Weiser held no role in the party and Hagerstrom only resigned about two weeks before the convention and. Sandler and Hagerstrom did not respond to interview requests.

Regardless, the allegations have shaken the morale of some party activists.

Allegan County Republican Jason Watts worked on the campaign of Mary Treder Lang, the secretary of state candidate who won the nomination after Grot’s resignation. The news left him despondent, as MRP committed only about $150,000 to support Treder Lang — less than what Grot had allegedly been paid to not run in the first place.

“What Weiser did completely negated all of my hard work. I don't want any candidate, I don't want anyone to feel that their work was for naught,” he told MCFN. “That's what disturbs me is that we weren't given the tools to fight fairly.”

Weiser’s alleged rationale for getting Treder Lang on the 2018 ticket was to ensure Republicans would not only put forward male statewide candidates against Democrats’ all-female slate, who ultimately swept the election that November.

The report acknowledged payments had been arranged for party officials in the past, but never on the scale of what Grot was paid, which was corroborated by reporting from The Detroit News. Watts asserted this was part of a pattern of MRP providing compensation to party leaders.

“This isn't just a one-off thing, this has happened on numerous occasions, vice chairs and such have been supported when they said they needed a salary or something,” he told MCFN.

These payments only came to light because Cox publicly revealed them. The MRP’s administrative account remains a tightly controlled source of funds, with few outside party leaders and senior staff aware of how the money is used. That’s partly because it’s also a means for corporations and wealthy individuals who would rather their support remain unknown to funnel unrestricted amounts of cash into the party.

In an interview, Cox told MCFN that while she doesn’t believe the party’s administrative account should be subject to external review, there should be some oversight of its use within the party.

“I would encourage the new chairman to do that. But because he had put up so many obstacles in me trying to get to the bottom of these expenditures, I don't know that that is likely to happen,” she said. “I hope that others in the party will put pressure on him to absolutely do that. Whether it's set up some sort of review committee, an ethics committee, something like that, I think would be very appropriate.”

In one of her final acts as party chair, Cox voluntarily submitted the results of the investigation to the bureau as a complaint. The thrust is that because the payments allegedly had political repercussions, MRP broke campaign finance rules governing administrative accounts. MRP did not respond to requests for comment this week once under new leadership.

The office is now investigating, despite attempts by the party to withdraw its complaint after Weiser re-assumed leadership of MRP. If there are potential violations of the law the case may be referred to Attorney General Dana Nessel’s department.

 

Paid To Leave

Yet even if a quid pro quo did occur as Cox and others allege in the report, three experts interviewed by MCFN said — outside of regulated political money — one individual paying another to stop running for office doesn’t appear to constitute bribery under Michigan law.

The state’s bribery law is relatively narrow, as it largely applies to receiving, giving or promising something of value in exchange for an action taken once a person is holding public office. 

“It just seems that simply saying ‘if you drop out, we'll give you this benefit,’ does not meet the definition of bribery, particularly the definition contained in a criminal law,” said Robert Sedler, a distinguished professor of constitutional law at Wayne State University. Sedler is also an adviser to Nessel. 

He said intraparty affairs, like nominating candidates and elected leaders, don’t fall under the statute.

“The whole idea is to get something from a public official that the public official is in a position to give you. There are no public officials involved here. That is to say, a party chair is not a public official,” Sedler said. “It's certainly not an ethical thing to do, but unless something is prohibited by law, it's not sanctionable.”

Michigan’s current law aligns with a view held by Rutgers Law School professor Stuart Green. He has established a concept of bribery where an office holder must be “offered something of a value in return for breaching a positional duty that he holds — with respect to, say, voting for legislation, issuing a ruling in a case, taking an executive action of some sort.”

With regard to the circumstances here, Green said in an email “I have a hard time seeing any official positional duty being violated. Does the former candidate's role … obligate him to run for party chair or secretary (of) state? That seems unlikely.”

Nessel’s press secretary, Ryan Jarvi, said the department could not comment on the matter as it’s against policy to provide legal opinions to the public. It’s certainly possible the department could find the payments illegal based on a different aspect of the law.

In other states such as Utah, their bribery law covers party officials and does not allow a quid pro quo for dropping out of an election. An incumbent city councilman in South Carolina was charged for soliciting bribes to not seek reelection in 2016. In Congress in 1873, Alexander Caldwell, the newly-elected senator from Kansas, faced removal from office in part because he paid his opponent $15,000 to drop out — along with paying state legislators to vote him into office. Caldwell resigned before a full vote could be held. Still, it was the disdain of Caldwell’s peers that threatened his seat, not the law.

And in 2019, a strategist for former U.S. Rep. Bob Brady of Pennsylvania was sentenced to 18 months in federal prison after indirectly paying off a challenger’s campaign debt with Brady’s campaign coffers in exchange for opponent leaving the race. But MRP’s administrative account is beyond the reach of Michigan’s campaign finance law and the payments were allegedly made directly to Grot and to Hagerstrom’s business, not to campaign accounts.

Still, there are ways to think of bribery beyond the letter of the law. Deborah Hellman is a professor of law at the University of Virginia and has published scholarship which advocates for an expanded vision of bribery.

She differs with Green, and ventured that even if Michigan law may not apply to these circumstances, it doesn’t mean there’s not room for a statute that would.

“Let's assume (Grot) intended to run for office and made the decision not to on the basis of being paid … Let's say he's not technically covered by that statute, but as a private citizen, does he have a responsibility not to make the decision to enter politics on the basis of being paid off?”  Hellman said in an interview.

“I think the spirit of what that statute is getting at is that we want these political decisions to be not made on the basis of payment,” She said. “So to me that's an instance that we should think of as bribery, even though that doesn't mean that he ought to be prosecutable under that statute.”

This is a point where the former chair of the Michigan Republican Party agrees — in part. Cox declined to characterize the payments as bribes. But regardless of the conclusion the state reaches, Cox said it should be illegal to pay someone to drop their candidacy.

“I believe that that is not an appropriate way to handle our democratic process,” she said. “I do not believe that money should be involved in deciding to stay in a race.”

 

(Photo of Weiser is credited to the Gerald R. Ford School at the University of Michigan and is used under the terms of a Creative Commons license.)

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Press Press Release Michigan Republican Party Ron Weiser Laura Cox Dark Money Campaign Finance Bribery Mrp Stan Grot Scott Hagerstrom

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