Scottsdale NoDDC campaign violation filing meant to ‘protect the election process’

NoDDC supporters lined the walls of council chambers during the 2018 election season. (File photo)

David Smith — a resident, former city treasurer and elected leader — has filed a second campaign finance complaint against NoDDC entities and three individuals behind the groups.

The campaign finance complaint filed May 17, on behalf of Mr. Smith, was delivered to the Scottsdale City Clerk by the law firm: Timothy A. La Sota.

The complaint alleges NoDDC Political Action Committee, NoDDC Inc., Chairman Jason Alexander; Director Mike Norton; and Treasurer Rebecca Holmes, violated various provisions of Arizona law.

“They appear to have violated various campaign finance laws; ignored Arizona Statutes governing disclosure of donor information; and possibly converted NoDDC PAC2 contributions to personal use,” the 24-page complaint states.

“The public has been deprived of compliance with Arizona campaign finance laws, laws that are meant to foster transparency and integrity in elections. The donors have also been victimized, as the funds contributed, at a minimum have gone for lawyers, fines, and other payments of questionable legitimacy. And, this is to say nothing about whether the funds were ever commingled with personal funds.”

Mr. Alexander and Mr. Norton have both issued statements proclaiming their innocence in the matter.

“This is what happens when grassroots activists threaten the establishment,” Mr. Alexander said in a prepared statement.

“We voted out Smith, stopped Virginia Korte. Now they are attacking me with lawyers, twisting campaign finance laws to silence us. We beat them at the polls, and they are trying to destroy us with lawsuits.”

The issue

NoDDC — officially referred to as NoDDC Inc. — started as an anonymous digital entity in late 2016, aspired to reshape Scottsdale politics and matured into a nonprofit entity. Today, it is registered as a political action committee.

For clarification: the Protect Our Preserve PAC — and now NoDDC PAC — can collect campaign contributions, while the nonprofit Protect Our Preserve entity cannot.

The NoDDC PAC formed Sept. 20, 2016, and dissolved Dec. 13, 2016. The period from Dec. 13, 2016 to Oct. 5, 2018, when Mr. Alexander created a PAC with the City of Scottsdale is essentially a period of dormancy for the group, the complaint states.

On Sept. 17, 2018, a campaign complaint was filed alleging that a group of individuals operating under the moniker NoDDC, were engaging in political activities without proper registration as a PAC, and disclosure of campaign donations and expenses.

The city clerk investigated the matter, and found probably cause of a violation, sending the matter to City Attorney Bruce Washburn.

Mr. Washburn, in his Oct. 15, 2018 letter to NoDDC legal representation — Daniel Arellano of Philadelphia-based Ballard Spahr — agreed with the findings of the city clerk resulting from the Sept. 17 campaign finance violation filing.

A $5,000 fine was levied, and paid by personal check drawn on the Bank of America account of Jason Alexander and Rebecca Holmes.

According to Mr. Smith’s new complaint, investigation into the initial campaign finance complaint, and a review of NoDDC PAC financial disclosure reports, “lead to the conclusion that the violations of Arizona campaign finance laws by the named entities and the named individuals have been (and continue to be) more pervasive, systemic and serious than identified in the September 17, 2018 complaint.”

Specifically, the complaint asks the city clerk to investigate whether the named entities and individuals have misrepresented contributions made; ignored state statutes governing disclosure of donor information; and converted NoDDC PAC contributions to personal use.

The complaint outlines:

  • Contributions made to NoDDC, NoDDC Inc. and NoDDC PAC have been misrepresented and/or not disclosed;
  • Donor information has not been disclosed in accordance with Arizona Statutes governing disclosure of donor information; and
  • It must be determined if funds purportedly donated to and held by NoDDC PAC have been knowingly and willfully converted to personal use.

The complaint alleges PayPal contributions were not made to NoDDC Inc., and presumptively, the contributions were instead made to the personal bank account of a NoDDC Inc. director.

The PayPal account summaries that were provided to the city covered only a portion of the dormancy period, from March 7, 2018 through Oct. 18, 2018, but disclosed more than 100 individual donations, the complaint states.

The same PayPal report shows four account withdraws, totaling $8,156.24, without giving indication of whether such withdraws were deposited to the account of NoDDC Inc., or the personal bank account of a NoDDC Inc. director.

The NoDDC PAC should have shown receipt of donations such monies were received, the complaint states.

In addition, the complaint states there is reasonable cause to believe other donations were made, but not reported on campaign finance reports.

A case of double-jeopardy?

In response to the complaint, Mr. Norton says he has until May 31 to file a response, if he so chooses. He said he is hoping to resolve the issue with Mr. Smith and his attorney prior to the deadline.

Mike Norton

“La Sota, on behalf of Smith, has laid out a complicated series of events, which may or may not have culminated in a violation of some sort,” Mr. Norton said.

“What both cautiously avoid discussing, however, is any nexus between the various allegations and either me or any entity I helped manage or control. The reason they ignore those discussions is that I’m quite certain they realize that I was uninvolved in the various alleged events.”

Mr. Norton says neither Mr. Smith nor Mr. La Sota has offered explanation for how or why he may have participated in any way.

“In short, I find their claims to be without merit, at best, and vexatious, vindictive and an abuse of process at worst,” Mr. Norton said.

Mr. Norton, who is a co-chair for a newly formed PAC to support the city bond election this upcoming November, says these campaign finance complaints will not impact his support for the city bond election.

“I shared the complaint with others involved in the PAC. They remain confident in my ability to help lead the city to a victorious election result in November,” he said, noting that he has faith in the city clerk process.

Mr. Alexander, who has announced his candidacy for Scottsdale City Council in the 2020 election, points to the upcoming bond election as a reason to quiet the group.

“The city has come together recently around development and the bonds, unity that we haven’t seen for years. I’m a big part of that, they are desperate to shut down our fresh voices,” Mr. Alexander said.

Jason Alexander

“This complaint is pure harassment and double-jeopardy. City Attorney Bruce Washburn had all NoDDC Community Group and NoDDC Inc.’s financial records, revenue and receipts. He had subpoena power. He talked extensively to my attorney for weeks about all of this, and we agreed to a settlement on Nov. 28, 2018.”

Mr. Alexander says he has detailed records of all spending since the election, which he will share with the city clerk. The prospectus council candidate says he believes Mr. Smith and Ms. Korte are trying to punish him for his efforts.

“NoDDC continues to work for Scottsdale residents on a shoestring budget, thanks to the generosity of our many small donors,” Mr. Alexander said.

“Smith and Korte are trying to take every dime, and are coming after my personal finances to punish me. This is making me more motivated than ever to run for City Council. I’m going to bring the voice of the residents back to City Hall, and get rid of our corrupt politicians.”

Protecting the election process

Mr. Smith says he filed the campaign finance complaint because it’s important to the people who call Scottsdale home.

David Smith (File photo)

Political opinions aside, Mr. Smith says campaign finance laws are in place for good reason.

“The reason we have these laws, is frankly because we’re trying to protect the citizens, trying to protect the people donating to the cause and trying to make sure their money was spent for whatever the reason was,” Mr. Smith said.

“These aren’t just idiosyncratic laws, they are thoughtfully passed to protect the election process. In this particular case they were ignored or faulted, that’s why I raised all these questions in this filing. This is not a simple matter, like it or not we have laws that protect the election process, they’re well intentioned, purposeful.”

Mr. Smith says he was prompted to look into the NoDDC PAC after seeing some “curious” filings late last year and the first quarter of this year.

Based on the recent reports, Mr. Smith says he issued a public records request with the City of Scottsdale to obtain documents through last year resolving the original complaint filed against the NoDDC group.

“Then some of these other concerns expressed in this complaint began to emerge, at least in mind,” Mr. Smith explained.

“What I think we’re observing is something not uncommon in this world of social media — crowdfunding — where an individual or group finds a cause that resonates with a great group of people.”

While some causes that are often crowdfunded — such as fixing an issue or a homeless puppy, Mr. Smith says — come without strict rules on how to proceed with funds, a political cause or committee is required to report their donations and funds differently.

“There’s a huge difference when you’re doing this to support candidates or deal with a political ballot issue,” he said, pointing out about 10 different Arizona State Statues he believes to have been potentially violated.

Overall, Mr. Smith says he is investigating the campaign finances of the group because he’s concerned.

“We as citizens individually or collectively need to protect our election process, that’s what this is trying to do, is protect the election process,” he said.

Northeast Valley News Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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