Mayor Responds to Red Flags Report

HomeElectionsCampaign FinanceMayor Responds to Red Flags Report

Leffingwell’s amended reports address his unaccounted for campaign funding

The Austin Bulldog’s investigative report exposed the fact that more than $72,000 in campaign funds were not properly accounted for in Leffingwell’s two mayoral campaigns and the true source of a $30,000 loan the mayor reported making to his 2012 campaign may have been concealed.

Lee Leffingwell
Lee Leffingwell

In response to that investigative report Mayor Lee Leffingwell filed two Correction/Amendment Affidavits March 6.

More than $40,000 in campaign funds were unaccounted for by offsetting reported expenditures at the end of Leffingwell’s 2009 mayoral campaign. The Lee Leffingwell 2010 Correction/Amendment Affidavit addresses that defect by reporting that he reimbursed part of the $100,000 he had loaned his 2009 campaign with $39,039.07 in unspent funds. Schedule F included with the Affidavit shows that payment was made July 29, 2009.

More than $32,000 was unaccounted for after the mayor’s 2012 reelection campaign. The Lee Leffingwell 2012 Correction/Amendment Affidavit addresses that defect by reporting $32,675.83 in expenditures that were not properly included in the mayor’s final 2012 Campaign Finance Report due to a bookkeeping error. Five expenditures that total that amount are included in the revised Schedule F (see details at the end of this article.).

The Lee Leffingwell 2012 Correction/Amendment Affidavit also included a change in the lender’s address in Schedule E for the $30,000 loan to his campaign. The revised Schedule E reflects the mayor’s own home address, in lieu of the address of Thomas Coopwood, M.D., who Leffingwell personally nominated for reappointment to the Central Health Board of Managers.

The filing of these Affidavits do not alter the fact that Leffingwell’s mayoral opponents who ran against him in 2009 and 2012 can still sue him for damages. (More about that later.)

Mayor’s consultant responds

The Austin Bulldog requested a copy of Leffingwell’s canceled check for that $30,000 loan to his campaign. His campaign consultant, Susan Harry, said in an e-mail this afternoon that the mayor will request a copy of the canceled check from his bank.

The mayor neither granted an interview to discuss these issues before our investigative report was published nor responded to e-mailed questions for this follow-up story.

Instead, Susan Harry e-mailed The Austin Bulldog Monday afternoon.

Harry’s e-mail stated, “Since your questions involve campaign business rather than official city business, please do not correspond with the Mayor or members of his staff about campaign matters using their City e-mail addresses. You may direct questions about campaign finance reports to me.”

Harry’s e-mail included a copy of the Lee Leffingwell 2010 Correction/Amendment Affidavit for the 2009 campaign that was filed as an amendment to his January 15, 2010 report.

The affidavit provides an explanation of the correction as follows:

“An expenditure by the campaign during this reporting period to re-pay (sic) a portion of a loan that the candidate, Lee Leffingwell, made to the campaign was inadvertently omitted from Schedule F of the original report. The prior July 15, 2009 report, which has also been corrected, reflected on Page 2, ‘political contributions maintained,’ that the loan repayment had been made during that reporting period. However, after receiving a copy of the loan repayment check from the bank, the campaign has determined that the date of the expenditure fell within the reporting period for the second half of 2009, which is covered by this report. This corrected report reflects the amount of the outstanding loan balance and includes the associated Schedule F expenditure.”

The Austin Bulldog requested that Harry provide a copy of the check that repaid Leffingwell.

The 2010 Affidavit was filed March 6 as a change to the mayor’s report covering the period from July 1, 2009 through December 31, 2009. That report is published on the City Clerk’s website with reports due January 15, 2010.

‘Austin American-Statesman’ story incomplete

The local daily newspaper glossed over the issue of whether the mayor has honestly accounted for his campaign funds by publishing a March 8 report on page B5 headlined “Leffingwell fixes $72,000 in campaign bookkeeping goofs: Discrepancies came from clerical flubs such as incorrect home address.” (The print edition headline replaced the online headline’s “errors” with “goofs.”)

“The errors were reported this week by a nonprofit journalism website,” the local daily newspaper’s story stated, without naming The Austin Bulldog.

These are not merely “clerical flubs,” as the daily newspaper characterized the errors, but gross inattention to the requirement for accountability required by the state Election Code.

Nor do these “flubs” relieve the mayor of his legal responsibility or damages payable to his opponents, which potentially could cost him hundreds of thousands of dollars in damages if those candidates file lawsuits authorized by the Election Code.

Opposing candidates still have grounds to sue

Leffingwell’s filing of the Correction/Amendment Affidavits will have no bearing on the ability of opposing candidates to sue under Election Code Section 254.231, say attorneys experienced in such lawsuits.

Candidates who opposed Leffingwell in his 2009 and 2012 mayoral campaigns are still entitled to seek damages in court, the attorneys said.

Such lawsuits are based on the defendant’s failure to timely report—by deadlines established in the Election Code—the contributions or expenditures that were required to be reported. The Election Code states that these opposing candidates may collect damages of twice the amount of contributions or expenditures that are required to be reported and were not reported, plus attorney’s fees.

But these attorneys also cautioned that the courts may be reluctant to award damages of twice the amounts not reported that were required to be reported, plus attorney’s fees, if the failure to report was an inadvertent mistake with no intent to hide something or mislead.

David Richards
David Richards

David Richards, senior counsel with Richards Rodriguez & Skeith LLP, said in a March 8 e-mail, “I doubt any lawyer would taken it on (a case based on inadvertent error rather than nefarious intent).

“(The) problem is these mistakes are commonplace, and every sitting judge in Texas has had to file these frustrating reports and trust some aide to do it right.”

Brigid Shea
Brigid Shea

Former Council Member Brigid Shea ran a strong campaign against Leffingwell in 2012. She self-financed a big hunk of that effort with $65,000 in loans that accounted for 35 percent of all funds available to spend on her uphill campaign to unseat an incumbent mayor.

Shea told The Austin Bulldog, “I don’t have any plans at this point to bring any legal action.”

The only other candidate in the 2012 mayoral campaign was Clay Dafoe.

Clay Dafoe
Clay Dafoe

Dafoe told The Austin Bulldog, “I’m still seeking legal advice at this point. I can’t say whether will proceed or not. I would like to proceed and I’m meeting with different attorneys and seeing what I can do.

If Dafoe needed any more motivation to sue Leffingwell he got it at last Thursday evening’s council meeting.

The City Council was began considering Item 40 on the agenda shortly after 9pm. The item was to consider setting a public hearing to consider an ordinance granting a site specific amendment to the Save Our Springs Ordinance and the Critical Water Quality Zone that would allow construction of the Barton Springs General Grounds Improvement Project.

The mayor cautioned person after person who signed up to speak on that agenda item to confine their remarks to whether the public hearing should be set for March 28. Many of the speakers argued for delaying the public hearing on grounds that the staff needed more time to consider all the factors involved.

When Dafoe finally got his turn to speak, he ignored the mayor’s warnings to confine his remarks to the proposed hearing date and continued to argue that he had a right to speak to the topic as he said it was described in the Request for Council Action prepared by city staff.

About two and a half minutes into Dafoe’s remarks the fed-up mayor asked him to step away from the microphone and leave the auditorium. Dafoe stayed at the mic and continued to argue that he had time left and ultimately was escorted out of the auditorium by four men, two of which were in security uniforms, and two which were dressed in civilian suits. At least one of those men in civilian clothes took hold of Dafoe’s arm to physically move him out of the auditorium.

You may see the Channel 6 video coverage of Item 40 at http://austintx.swagit.com/play/03072013-513. (Dafoe’s turn at the mic begins at 19:30 on the video, which is about 37 minutes long.)

Details of Leffingwell’s corrected 2012 report

The 37-page Lee Leffingwell 2012 Correction/Amendment Affidavit addressed the unaccounted for funds at the end of his 2012 mayoral campaign by including previously unreported expenditures totaling $32,675.83.

According to the corrected report, the additional expenditures were for the following purposes:

• $24,359.35 paid to Kelly Graphics May 3, 2012 for printing, postage and mailing services.

• $2,500 to consultant Jonathan Gins May 3, 2012 for contract labor.

• $3,500 to Susan Harry May 3, 2012 for fundraising and compliance consulting.

• $1,500 to Mark Littlefield for general consulting.

• $816.48 to First Bank Merchant Services May 3, 2012 for credit card processing fees.

This report was made possible by contributions to The Austin Bulldog, which operates as a 501(c)(3) nonprofit to provide investigative reporting in the public interest. You can help to sustain The Austin Bulldog’s coverage by making a tax-deductible contribution.

Related Bulldog coverage:

Mayor’s Campaign Reports Raise Red Flags: Problems could subject mayor to double damages in civil lawsuits and triple damages to the state: Odd address entry on one report also raises possibility of criminal violation, March 5, 2013

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