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1/13/2014
WATCHDOG CAMPAIGN FINANCE Mistrust validated by report ; 'Pay to play' a real fear for residents; Veasey: Greenville suspicions backed up

By Maureen Milford  The News Journal 1/13/14

For Greenville residents who for six years have fought a massive real estate development at the intersection of Lancaster Pike and Del. 141, some decisions made by the Markell administration just didn’t add up – not requiring a traffic impact study to determine if the project would change the character of the wealthy neighborhood and snarl traffic.

Now, with the release of the 101-page report on state campaign finance practices by special prosecutor E. Norman Veasey, Greenville residents believe they have the answer. Veasey in his report details significant contributions to Markell’s 2007 and 2008 gubernatorial campaign by real estate entities affiliat-ed with the Stoltz organization, which is proposing the multiuse complex at Barley Mill Plaza. Numerous business entities affiliated with developer Keith Stoltz, such as the company that owns the Greenville Center shopping center on Kennett Pike, contributed the maximum amount to the campaign. In total, the Stoltz organization was among Markell’s top political contributors. Many say the conclusion from Veasey’s report is obvious: Money buys access and influence. “This just further erodes our faith in the democratic process,” said Tom Dewson, one of the leaders of the citizens group Save Our County, which continues to fight the Stoltz project in court. “Every step in the Barley Mill process has an odor about it.” Stoltz entities gave more than $20,000 to Markell’s campaign committee between 2007 and 2008, according to public records and people close to the investigation. During this time, a Stoltz entity bought the nearly 100-acre Barley Mill Plaza property and proposed a redevelopment that would rival the King of Prussia, Pa. retail complex.

Neighbors were outraged by the size of proposal, which they believed was not in keeping with the character of the community. Veasey determined some contributions were improper under Delaware law, which required campaigns to ensure all funds received conformed to code. The former Supreme Court chief justice noted that Keith Stoltz tried to follow the law, relying in good faith on legal advice from the Markell campaign.

Another entity associated with Stoltz gave an additional $10,000 to Markell’s political action committee in October 2008; the Veasey investigation did not focus on that contribution, which was properly handled under the law.

Stoltz could not be reached for comment.

A spokeswoman for Markell said last week that Stoltz entity contributions did not cloud the government’s judgment on Barley Mill Plaza – including the most controversial decision by the transportation department, which determined a traffic impact study would not be done.

“The suggestion that the governor did not reverse the professional judgment of the DelDOT engineers to require a particular kind of study because of campaign concerns is baseless and incorrect,” said Cathy Rossi.

Trust eroded

For some in Delaware, the Veasey report’s depiction of Delaware’s “pay-to-play” culture – where public officials get free cases of beer, tickets to seats in the Club Suites level of a Philadelphia Eagles football games and turn a blind eye to improper contributions – has only further diminished their trust in government. While Veasey outlined many cases of the corrupt culture, no public official will be prosecuted, either because the statute of limitations had expired on the offense or the investigators could not find credible evidence to prove the violation beyond a reasonable doubt.

Veasey did recommend a number of reforms, including the elimination of contributions from limited liability companies, limited partnerships and other artificial business entities. He said campaign dona-tions made through those entities, which are hardly transparent, “raise serious concerns about circumvention of the spirit of the laws, as well as concerns about the ‘Delaware way,’ the ‘pay to play’ culture in Delaware, and the potential creation of methods of ‘gaming the system.’” And average citizens watching these developments say they reinforce the perception that “there is a definite double standard of justice here,” said John Flaherty, president of the Delaware Coalition for Open Government.

Adds Clarence White, owner of a body shop in the Southbridge neighborhood in Wilmington: “They get disenchanted. People just say, ‘What’s the use?’ Long as there’s hope there’s a chance for a change, but once you lose the hope, everything is lost.” Sam Hoff, a professor of history and political science at Delaware State University, said the Markell administration and General Assembly need to take measures to regain the public trust. “The whole thing just stinks to a lot of people,” Hoff said. “When stuff like this happens it sort of chips at the shine of government – the idea that government is trustworthy. The perpetual question people will always have is: Does money buy influence? The most destructive thing to democracy is when trust is diminished and the legitimacy of the entire government is questioned.”

Markell said he will discuss Veasey's recommendations with members of the General Assembly. He called Veasey's proposals “thoughtful and provocative and very much worthy of consideration.”

“Before I come forward with some specific proposal, I really want to think about how all of them fit together,” he said.

But White said more needs to be done.

“The politicians just can’t tell people what they’re going to do, they have to show people what they’re going to do,” he said.

Countered Markell spokeswoman Rossi: “Anyone losing faith in government should know that these issues have been investigated exhaustively and professionally, the few contributors who knowingly broke the law were held accountable, and that his [Veasey’s] recommendations for further improvements in our laws will be the subject of many discussions in the coming months.”

Not tough enough?

Since the Veasey report was released on Dec. 29 following a two-year investigation, Republicans have criticized Veasey for not prosecuting public officials.

But defense attorneys who went up against him, representing people under investigation, said the charge is unfair and uninformed.

“I was facing a person who was not ‘taking a dive,’ or throwing ‘softballs,’ but who was as ‘hard-nosed’ as any prosecutor would be under the circumstances,” said Wilmington attorney Joe Hurley, who represented a lawyer who was under scrutiny.

Hurley made his comments in a letter to State Republican Party Chairman Charles Copeland, who had publicly criticized the report as “underwhelming.”

Lawyers defending clients under investigation said Veasey and his team asked the right questions, and “really squeezed it.” They said they have no doubt Veasey would have pressed charges if he could have proven a case beyond a reasonable doubt. Veasey, who was tapped by Attorney General Beau Biden in 2011 to lead an investigation into election finance violations following the federal prosecution of liquor executive Christopher Tigani for donor reimbursements schemes, found instances of an “unfortunate ‘pay to play’ culture” in Delaware. Not only did Veasey uncover evidence of improper giving, Tigani and Dover real estate developer Michael Zimmerman alleged candidates or their campaign staff knew about donor reimbursement schemes. In three cases, Veasey found instances where lawmakers received gifts of more than $250 – beer and liquor, sports tickets and free campaign labor – that they failed to report as required by law.

But Veasey decided against pursuing criminal cases based on a variety of factors, including the lack of corroborating evidence and the expiration of the statute of limitation periods covering the violations.

The problem Veasey faced is that the state’s election law is a “Mickey Mouse statute,” Hurley said. “It’s poorly drafted and full of holes.”

If Veasey brought a case under such a statute, Hurley said, he would face serious problems winning a conviction.

Still, some Republicans, lawmakers and good government activists in Delaware have raised question about Veasey’s investigative methods and conclusions.

Not black and white

Independent investigators looking into misconduct by public officials are often in a “nowin” situation tailored made for second guessing and political sniping, experts said.

“If you do prosecute public officials, special prosecutors are open to charges of overzealousness. If don’t you prosecute them, you’ll be accused of having botched the job,” said Daniel Richman, a professor at Columbia Law School who is involved in the new Center for the Advancement of Public Integrity.

Unlike a state or federal prosecutor, a special prosecutor has to release his findings of either wrongdoing or a lack of misconduct, Richman said. This leaves the investigator open to Monday morning quarterbacking, they say.

Yet bringing a criminal case is not a black and white exercise, they say. All prosecutors must rely on their prosecutorial discretion, weighing lots of factors, including the quality of the evidence, the credibility of witness, the cost to the state versus the seriousness of the offense and whether the cases can be proved beyond a reasonable doubt.

“It’s a subject matter written about more than any other subject in criminal procedure,” said Bennett Gershman, a professor at Pace Law School and author of “Prosecutorial Misconduct.” “It’s so amorphous.”

To Gershman, a prosecutor must be morally convinced the defendant committed a crime before bringing a case.

“Prosecutors have incredible power. They have weapons like no other. It can be abused. It’s the most dangerous power of any public official,” he said.

Too hard to prove

Melanie Sloan, a former prosecutor and executive director of Citizens for Responsibility and Ethics in Washington, a nonprofit dedicated to promoting ethics and accountability in government and public life, said she tended to be aggressive in bringing cases, willing to “risk a loss.”

But Sloan, who is from Delaware, said she recognizes the difficulty Veasey would have in prosecuting cases based on her knowledge of the report – including the lack of credible witnesses and the statute of limitations.

“I see a lot of problems,” she said.

Veasey said his decision not to file charges was an exercise of his prosecutorial discretion. He insisted it was totally nonpartisan and based on fact. He also said he is bound by the need to prove a crime beyond a reasonable doubt, as well as his ethical duty to refrain from prosecuting a charge he knows is not supported by probable cause.

The judge found evidence of improper contributions, but in some cases the statute of limitations had expired. And while Veasey found evidence of election law violations, the judge said, “the failure of some elected officials or donors to follow the law carefully does not mean they should be indicted when there is no credible evidence of all the elements of a crime that we could bring to a judge and jury in a court of law and prove beyond a reasonable doubt, and at a considerable expense of taxpayer money.”

Some accomplishment

Former prosecutors and some defense lawyers say critics fail to acknowledge what Veasey did accomplish.

He indicted both Tigani and Zimmerman for reimbursing contributors who made political donations under their own names, and got guilty pleas. Veasey also reached a non-prosecution agreement with Tigani’s family-owned liquor company, N.K.S. Distributors Inc. in New Castle, and Kemal Erkan, chief executive of United Medical LLC on Continental Drive in Stanton, and his business.

These brought in approximately $650,000 in recoveries and fines, which partially offset the cost of the investigation, the report said.

According to Veasey, the net cost to the state was approximately $400,000.

And Veasey did name individuals – politicians and contributors – in the report, which is a form of shaming, former prosecutors said. That can be harmful to the careers of politicians because their opponents will use it against them, Sloan said. It also highlights to the public what happened, she said.

“You’re putting people in the spotlight,” Gershman said.

Defenders also point out that policy recommendations made by Veasey are more than just window dressing.

“It’s not just icing,” said Columbia’s Richman. “They’re really thought of as important an part of the message.”

It’s a mistake to think of criminal prosecutions as the leading edge of campaign finance reform, he said. But, Richman said, “ Americans like quick fixes to problems they help create.” The difference, he added, is that prosecutions tend to punish a small number of people disproportionately while real reform measures bring lasting change.

Contact Maureen Milford at (302) 324-2881 or mmilford@delaware online.com. Contact Jonathan Starkey at (302) 983-6756, on Twitter @jwstarkey or at jstarkey@delawareonline.com.

“The whole thing just stinks to a lot of people. When stuff like this happens it sort of chips at the shine of government – the idea that government is trustworthy,”

SAM HOFF, Professor of history and political science at Delaware State University

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