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RJ investigation: Weak, vague campaign finance law easily exploited

The sudden downfall of Nevada Senate Majority Leader Kelvin Atkinson has shined a powerful spotlight on weaknesses in the state’s campaign finance law and the growing number of officeholders who have exploited it.

Atkinson, a Democrat from North Las Vegas, resigned from office March 5 and then pleaded guilty Monday to wire fraud for misusing $250,000 in campaign money in a scheme that went on for years. He used contributions to pay off credit cards, pump money into a nightclub and lease a Jaguar.

And it took federal authorities, not state investigators, to take him down.

“Being elected to public office should not be a business opportunity,” said Las Vegas attorney Paul Padda, a former federal prosecutor who handled election cases. “Given the recent prosecutions like this one, I think it should certainly cause greater reflection by state legislators in how the campaign law is written and what additional safeguards need to be implemented to ensure the integrity of the system.”

Former Nevada U.S. Attorney Richard Pocker said the state needs to write more clarity into the law to show how candidates and officeholders can spend campaign money and how they can’t.

“Having your decisions about prosecutions and investigative direction made 2,000 miles away is not always in the best interest of protecting the community,” Pocker said.

Just last year, federal authorities brought down another prominent elected official for misusing campaign money. Las Vegas City Councilman Ricki Barlow resigned and pleaded guilty to diverting more than $66,000 in campaign money toward his personal use. He spent less than a year in federal custody and home detention.

Gov. Steve Sisolak supports strengthening Nevada’s campaign finance law.

“Our state government must operate with the high standards of transparency and integrity that Nevadans deserve,” Sisolak said in a statement. “I support common-sense reforms to Nevada’s campaign finance disclosure laws that would shed light on how campaign dollars are being spent and increase trust and accountability in our elections. I look forward to reviewing any proposals from the Legislature this session to address this.”

Law limitations

Wayne Thorley, deputy secretary of state for elections, acknowledged the law has limitations and his office doesn’t have the resources to effectively police candidate spending.

The secretary of state’s office referred the Atkinson investigation to the FBI “a couple of years ago,” according to Nevada U.S. Attorney Nicholas Trutanich.

In the past three years, the secretary of state’s office has received only five complaints alleging the personal use of campaign dollars. It found all five without merit.

In 2016, Las Vegas Assemblyman John Moore, a Libertarian, complained that fellow Assemblyman Paul Anderson, R-Las Vegas, gave him $1,800 in gift cards and cash and told him not to report them on his disclosures. The secretary of state found Anderson used personal funds and gave the cash and cards to Moore as a gift because the assemblyman was having “difficult times.”

Last year, a complaint against Assemblyman James Wheeler, R-Gardnerville, which included questions about spending at Costco and paying a credit card, was dismissed when the secretary of state found no violations. Also in 2018, there was a complaint that Lyon County Commissioner Bob Hastings paid himself more than $2,700 out of campaign accounts for advertising, but the secretary of state determined there was no additional documentation required, records show.

Fiore complaint

When Republican Michele Fiore ran for the Las Vegas City Council in 2017, the Clark County Democratic Party filed a complaint alleging she illegally paid $44,000 to her consulting firm, Politically Off The Wall, with her own campaign funds.

But state investigators found no violation of campaign laws, because Fiore provided documents that showed she used the money for voter outreach, records show.

“We were unable to confirm that Ms. Fiore drew or received any form of personal compensation from the company,” the dismissal letter from the secretary of state said.

More recently, records show Fiore spent nearly $500,000 — about half of her combined campaign and political action committee money — after she was elected. She spent lavishly on international travel, restaurant outings, gasoline and furniture, among other items.

The spending pattern is a stark contrast to those of other members of the Las Vegas City Council, Clark County Commission, North Las Vegas City Council and Henderson City Council, records show.

A Las Vegas Review-Journal examination of dozens of campaign reports for elected leaders in Southern Nevada found that only two officials, Las Vegas Councilmen Steve Seroka and Cedric Crear, came close to spending half of their campaign money after being elected. Seroka, who has since resigned, was facing a recall effort. Crear is on the ballot again this year after winning a special election in 2018.

‘Pushed the envelope’

Fiore declined a request for an interview to discuss questions about her campaign spending. In a written statement, she denied misspending campaign money and said she has properly disclosed her expenses.

“I have met and exceeded all legal campaign reporting obligations and have been open, accessible and transparent to my constituents,” Fiore wrote.

Thorley said the state campaign law prohibits spending on personal items, but he acknowledged the wording is not clear.

“There are situations where travel is associated with your campaign and buying a tank of gas is a legitimate campaign expense, but it also may be personal use,” Thorley said. “Without really digging into this, it’s really hard to know if these are legitimate, authorized uses or fall in the prohibited personal use category.”

Democratic consultant Dan Hart said Fiore seems to have “pushed the envelope about as far as it can be pushed” through her spending habits.

“It underlines the need for more specific guidelines on what is an allowable campaign expense,” Hart said. “I think it is fortuitous that the Legislature is in session. Maybe they could provide more transparency about this issue.”

The Nevada attorney general’s office addressed the issue of elected officials spending campaign funds for personal use in a 2002 opinion, but failed to provide absolute clarity. “Elected public officers are generally prohibited from using campaign funds for typically personal and household expenses if the particular use would fulfill a commitment, obligation, or expense that would exist irrespective of the candidate’s campaign or duties as an officeholder. In applying this analysis, each item or expense must be individually analyzed,” the opinion said.

Oversight lacking

Thorley told the Review-Journal his office has not looked at other campaign spending by Fiore because he has only one staff member overseeing campaign filings. The staffer’s primary job is to make sure candidates file reports in a timely manner.

“The Legislature has not given us funding to go in and look proactively,” he said. “We do not have the resources.”

About 9,000 campaign reports and financial disclosure forms were filed with the secretary of state’s office in the 2018 election year, Thorley said.

“The secretary of state is happy to work with the Legislature on any laws or processes they deem appropriate in the areas of campaign finance,” Thorley said.

Republican Secretary of State Barbara Cegavske was not available for comment.

In 2011, former longtime Nevada Assemblyman Morse Arberry, a Democrat from Las Vegas who served from 1984 to 2010, pleaded guilty to failing to report $121,000 in campaign contributions and diverting the money into a personal checking account.

The case was investigated by the secretary of state’s office under Democrat Ross Miller. As part of an agreement with the Nevada attorney general’s office, Arberry pleaded guilty to a misdemeanor charge of fraudulent appropriation of property and received a six-month suspended sentence.

Contact Jeff German at jgerman@reviewjournal.com or 702-380-4564. Contact Arthur Kane at akane@reviewjournal.com or 702-383-0286. Follow @JGermanRJ and @ArthurMKane on Twitter.

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