Jefferson Smith paper trail leads into dense thicket
Our doubts about Portland mayoral candidate Jefferson Smith continue to nag us -- his cheerleaders at WW notwithstanding. We've been wondering how this guy has been paying his mortgage, since he doesn't appear to have had a job in the world of commerce since he jumped or fell from the Stoel Rives law firm in 2003.
Smith's occupation since then has been... wait for it... community organizer. He's the founder, and has served as an officer, of a much ballyhooed organization known as the Bus Project, whose mission in life is to get young people involved in politics. It seems benign enough, but we thought we'd get out the public records of the Bus Project's finances, and see if we could figure out where the money comes from and where it goes.
What we discovered is quite a tangled mess that makes it awfully difficult to figure out how big of a tap Smith has been inserting into the organization's money keg. And we're seeing several other issues that leave us scratching our head.
First of all, from what we can tell from the Oregon secretary of state's website, there is no organization that is actually named the Bus Project. There are in fact three entities who operate under the "Bus" banner, but the real names of two of them are something else. First, there's a nonprofit organization that classifies itself as a section 501(c)(3) entity -- a tax-exempt charity for federal income tax purposes. Its real name is Oregon Progress Forum, and it operates under the assumed business name Bus Project Foundation. Second, there's a public benefit corporation that classifies itself as a tax-exempt section 501(c)(4) organization. Its real name is New Progressive Network, and it operates under the assumed business names Bus Project and Oregon Bus Project. The third entity is a political action committee known as Bus PAC.
The three entities are obviously related. Caitlin Baggott, the president of the 501(c)(4) (succeeding Smith there in April of this year), is also a director of the PAC, as well as the executive director of the 501(c)(3). Mariana Lindsay, the secretary of the 501(c)(4), is listed with the state as an "alternate transaction filer" for the PAC.
Sloppiness with money and bookkeeping is immediately apparent in the financial disclosures of the PAC. It's been paying thousands of dollars in fines to the secretary of state's office for violations of the state's campaign finance laws. The state has brought 10 penalty cases against Bus PAC since 2004, and an SOS staff member in Salem characterizes the PAC as a well known "repeat offender." Not only is it chronically late in reporting its campaign finance activities, but in May 2010 the PAC also had to "adjust its books" by $13,558 that it couldn't account for. The fines in the 10 cases total $4,956, most of which was assessed in just the last 13 months; the largest penalty, $1,356, was assessed in February of this year.
Another fact that jumps out of the PAC's financial disclosures is that there's money flowing back and forth between the PAC and New Progressive Network, the 501(c)(4) organization. By our amateur calculations, in the time since the secretary of state's Orestar campaign finance reporting network has gotten up and running in late 2006, the PAC has reported paying the 501(c)(4) organization about $93,500, and reported as receiving back from the 501(c)(4) contributions totaling about $50,000.
There's doubtlessly a story behind the circular cash flow, but some of the Orestar entries are baffling. Lately there have been several instances in which the PAC has reported paying thousands of dollars to the 501(c)(4), and receiving the same amount as a contribution back from the 501(c)(4) on the same day. If this were a mature political organization, we'd just assume that this was some sort of standard industry practice. Certainly we're not expert in campaign finance maneuvering. But given that these are organizations founded and run for a long time by Smith -- who will drive a car on a suspended license if it suits him -- one wonders whether something untoward is going on in made-up paper transactions like those.
We'll take a look at the section 501(c)(3) "charity" tomorrow. There are some really touchy tax issues there, because 501(c)(3)'s, unlike 501(c)(4)'s and PACs, aren't allowed to get too involved in supporting political campaigns. And at least for some period of time, there's been only one big old joint Bus website for the 501(c)(3) and the 501(c)(4), on which contributions are also solicited for the PAC. That's some seemingly dangerous turf there.
In any event, to cut through the chase to the ending, after slogging through various mounds of documents, it's still not possible for us to figure out exactly how much Smith was actually paid by the Bus entities. Maybe it was substantial, maybe it was modest. It may not be all that much. But from what's been filed with secretary of state and the IRS, we can't tell what it was. And so the questions remain: Who is this guy, really? And how does he pay his living expenses?
UPDATE, 9:00 p.m.: We just noticed that in addition to the $13,558 "balance adjustment" for which it was penalized in 2010, the PAC had a $21,913 "balance adjustment" in January 2007, for which no penalty was imposed by the state. That's a lot of money to lose track of.