Odd address entry on one report also raises possibility of a criminal violation
A total of more than $72,000 in campaign funds were not properly accounted for in Lee 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.
These defects were discovered in The Austin Bulldog’s analysis of more than a thousand pages of Campaign Finance Reports filed by Leffingwell during his first run for mayor in 2009 and in his 2012 reelection bid, along with related public records.
The Austin Bulldog’s written request for an interview with the mayor outlined the general nature of our findings and the possible legal implications. The mayor, through his chief of staff, Andy Mormon, declined to be interviewed.
The defects in Leffingwell’s reports may make him legally responsible for hundreds of thousands of dollars in civil damages and attorney’s fees if his 2009 and 2012 mayoral campaign opponents choose to file lawsuits authorized by state law.
These defects could also result in a substantial damages payable to the Texas Ethics Commission.
Further, if the source of the $30,000 loan to his 2012 reelection campaign is not Leffingwell—as he attested in a sworn statement—then he and the actual lender could be vulnerable to criminal charges as well.
In each Campaign Finance Report submitted, a candidate or officeholder must personally sign an affidavit and swear or affirm under penalty of perjury that the reports are true and correct and include all information required to be reported under the Election Code.
The Texas Ethics Commission Commission’s Instruction Guide for completing Campaign Finance Reports warns: “As a candidate or officeholder, you alone, not the campaign treasurer, are responsible for filing this form. Failing to file a report on time or filing an incomplete report may subject you to criminal or civil penalties.”
Because the mayor declined to address these problems in an interview it’s not clear whether these reporting defects are merely the result of sloppy reporting or whether something nefarious is going on.
Regarding funds not accounted for, someone in his campaign could conceivably be stealing money, which—given the amounts of money unaccounted for—would be a felony offense.
Lieutenant Governor David Dewhurst and U.S. Representative Lloyd Doggett both lost large sums of money from their campaign accounts due to the theft by people they trusted.
A former campaign staffer for Doggett was sentenced to 30 days in jail and four years probation after she pleaded guilty to stealing $168,000 from his campaign treasury, The Austin Chronicle reported September 1, 2006.
More recently, a campaign manager for Dewhurst is being investigated for allegedly stealing more than $1 million from his U.S. Senate campaign, the Dallas Morning News reported February 7.
Overview of reporting defects
Here is a brief summary of the alleged reporting defects identified in The Austin Bulldog’s investigation:
Questionable loan source—The $30,000 loan that Leffingwell reported making to his 2012 mayoral campaign from personal funds listed not his own address as the lender’s—but that of Thomas Coopwood, MD, who Leffingwell personally nominated for reappointment to the Central Health Board of Managers. This raises the possibility the loan was illegally made by someone who lived at the Coopwood residential address. If so, that could subject both the true lender and Leffingwell to criminal prosecution. Dr. Coopwood told The Austin Bulldog he did not make that loan.
Campaign money unaccounted—More than $40,000 in campaign funds were unaccounted for by offsetting reported expenditures at the end of Leffingwell’s 2009 mayoral campaign.
In addition, more than $32,000 was unaccounted for after the mayor’s 2012 reelection campaign.
Loan balance misreported—Leffingwell reported loaning his 2009 mayoral campaign a total of $100,000 from personal funds. However, the amount of outstanding loans reported in his final Campaign Finance Report for the 2009 mayoral election was reduced from that amount by more than $39,000, with no reported expenditures accounting for that reduction.
The remaining sections of this article will address each of these reporting defects in greater detail and outline the possible legal and financial ramifications.
Questionable loan source
The Austin Bulldog previously published personal financial statements that Leffingwell filed with the City Clerk covering the years 2005 through 2011. These indicate that Leffingwell possesses substantial personal wealth and he could easily afford to spend significant sums to underwrite his political ambitions.
In 2009 Leffingwell reported loaning his first mayoral campaign $100,000 of his own money. Then, after winning, he reported carrying nearly $61,000 of that debt into his 2012 campaign for reelection. (Letting campaign debt ride from one campaign to the next is not unusual.)
Leffingwell didn’t invest anything in his 2012 reelection bid—until just four days before the May 12 election, when he reported loaning his campaign $30,000. He was fending off a challenge by former Council Member Brigid Shea, who was investing heavily in her effort to be Austin’s mayor, and political newcomer Clay Dafoe, who was campaigning on a shoestring budget.
Shea filed notification of a $25,000 loan from personal funds to her campaign April 11. Then on May 4, 2012, she filed notification of an additional $40,000 loan to her campaign from personal funds. (See Brigid Shea 2012 Campaign Finance Reports Analysis)
Leffingwell’s $30,000 loan—which was spent on advertising and a last-minute mailer—was crucial, because the election turned out to be a squeaker. Although the mayor ended up with 52 percent of the total votes cast and a win, he actually got less than 50 percent of the votes cast on election day: 13,841 to Shea and Dafoe’s combined 14,005. He avoided a runoff only because of the thin margin he netted in early voting.
Leffingwell filed a sworn disclosure stating that on May 8 he had made a $30,000 loan to his 2012 campaign using personal funds. That form does not require listing the lender’s address. (See Lee Leffingwell Report of $30,000 Loan to his 2012 Mayoral Reelection Campaign.)
Then, two months later, on July 16, 2012, Leffingwell filed his final Campaign Finance Report for the 2012 election cycle. That Report covered the period from May 3 through June 30. (See pages 276-308 of Lee Leffingwell 2012 Campaign Finance Reports.)
The July 16 Report contains a significant entry that indicates that someone else may have loaned the $30,000 to his campaign—not Leffingwell.
Reported another’s address—Schedule E in Lee Leffingwell’s July 16, 2012 Campaign Finance Report (with annotations added) indicates that Leffingwell made the $30,000 loan to his campaign. (See the unannotated Schedule E on page 298 of Lee Leffingwell 2012 Campaign Finance Reports.)
The “Lender address” is listed in Schedule E as “6717 Valburn Dr. Austin, TX 78722.”
The zip code for the Valburn Drive address is actually 78731. The zip code for Leffingwell’s campaign headquarters at 2406 Manor Road is 78722.The mayor’s residential address is 4516 Balcones Drive, Austin TX 78731, according to Lee Leffingwell Statement of Financial Information filed March 12, 2012.
Criminal offense statute—Knowingly making a contribution or expenditure in another’s name is prohibited by Election Code Section 253.001. An offense under this section is a Class A misdemeanor. Penal Code Section 12.21 states that an individual adjudged guilty of a Class A misdemeanor shall be punished by a fine not to exceed $4,000, confinement in jail for a term not to exceed one year, or both such fine and confinement.
Address is Coopwood’s—The home at 6717 Valburn Drive is owned by Thomas B. and Paula M. Coopwood, according to Thomas Coopwood Travis Central Appraisal District Record.
Deed records maintained by the Travis County Clerk’s Office indicate that the Coopwoods purchased the Valburn Drive property in 2003 and the property has not been resold. These records include:
6717 Valburn Drive Warranty Deed recorded June 19, 2003, for property at Lot 12, Vista Ridge PUD Phase 2, purchased by Thomas B. and Paula M. Coopwood.
6717 Valburn Drive Deed of Trust recorded June 19, 2003, for property at Lot 12, Vista Ridge PUD Phase 2, also identified as 6717 Valburn Drive, Austin, Texas 78731, mortgaged by Thomas B. and Paula M. Coopwood.
6717 Valburn Drive Ownership History search results of the Travis County Clerk’s online database indicate that no sale of the property at 6717 Valburn Drive has been recorded since the Coopwoods bought it in 2003.
The Texas Secretary of State’s SOSDirect online records indicate that five businesses are registered to Thomas and/or Paula Coopwood at 6717 Valburn Drive. (See 6717 Valburn Drive Businesses Registered.) All five business locations were transferred to the Valburn Drive address in 2003.
There is no indication in the Secretary of State’s records that Lee Leffingwell is connected to any of these businesses.
Mayor reappointed Coopwood—On December 8, 2011, Coopwood, a retired medical doctor and general trauma surgeon, was reappointed by the City of Austin to his third term on the Central Health Board of Managers. Coopwood is one of four current Central Health board members nominated by Mayor Leffingwell.
The Austin Bulldog interviewed Coopwood March 1.
Coopwood said Leffingwell was a friend. He said that Coopwood’s wife and Leffingwell’s second wife, both nurses, had worked together at Brackenridge. Coopwood said when Leffingwell’s wife died during his first run for City Council in 2005, Coopwood reached out to him and encouraged him to stay in the campaign. Since then, he said he has attended business meetings that Leffingwell also attended, including a psychiatric stakeholders group, which the mayor attends occasionally.
“That’s how I know him,” said Coopwood.
Coopwood said he not done any financial business with the mayor and they are not related through family.
Shown a copy of the Schedule F entry that listed Coopwood’s address for the $30,000 loan that Leffingwell reported making from personal funds, Coopwood had no explanation.
“I did contribute to his campaign. That’s known. And they had my address,” he said.
But not $30,000—you would have remembered that?
“Yeah, and my wife would have killed me,” Coopwood said.
Coopwood made one contribution of $200 to Leffingwell’s 2012 reelection campaign on December 28, 2011. (See page 16 of Lee Leffingwell 2012 Campaign Finance Reports.)
That contribution was made nearly seven months before Leffingwell filed his end-of-campaign report, in which Coopwood’s residence was listed as the lender’s address for the $30,000 loan.
Coopwood’s ethics were the topic of an article published in the Austin American-Statesman December 19, 2011. The article reported that while serving as chairman of the Central Health board Coopwood “spent three months working with the organization’s newly created HMO as a consultant for $200 an hour.” But neither the other members of the board who were interviewed, nor the Travis County attorney’s office, which acts as Central Health’s legal counsel, saw any ethical problems with the arrangement, the Statesman reported.
Unless Leffingwell were to voluntarily provide proof that he loaned his campaign $30,000 from personal funds, the only way to be certain of who made the loan would be to obtain the applicable records through either a civil lawsuit or criminal investigation. Election Code Section 254.001 requires preservation of campaign finance report records for “at least two years beginning on the filing deadline for the report containing the information in the record.” A person who violates this section commits a Class B misdemeanor.
Campaign money unaccounted for
Election Code Section 253.0351(c) states:
A candidate or officeholder who deposits personal funds in an account in which political contributions are held shall report the amount of personal funds deposited as a loan and may reimburse the amount deposited as a loan from political contributions or unexpended personal funds deposited in the account. The reimbursement may not exceed the amount reported as a loan. Personal funds deposited in an account in which political contributions are held are subject to Section 253.035 and must be included in the reports of the total amount of political contributions maintained required by Sections 254.031(a)(8)…. (Emphasis added.)
The amount of political contributions maintained as of the last day of a reporting period is supposed to equal the total of money in depository institutions plus any investments that can be readily converted into cash, according to the Texas Ethics Commission’s Campaign Finance Report Instruction Guide.
But The Austin Bulldog’s analysis of Leffingwell’s campaign finance reports indicates that the reports filed at the end of his 2009 and 2012 mayoral campaigns are out of balance by tens of thousands of dollars.
2009 off $40,000-plus—Adding the total contributions and loans made to Leffingwell’s 2009 mayoral campaign, and subtracting the total of expenditures and in-kind contributions reported for that election, indicates the campaign should have had $40,524.27 left over and reported in July 2009.
But Leffingwell’s final report filed in July 2009 showed a balance of zero dollars in political contributions maintained.
2012 off $32,000-plus—Making the same calculations for Leffingwell’s 2012 reelection campaign indicates the campaign should have had $32,716.54 left over and reported in July 2012.
Yet Leffingwell’s final campaign report indicated he had just $51.59 remaining on hand.
Loan balance misreported
Page 2 of the cover sheet of each Campaign Finance Report (Form C/OH published by the Texas Ethics Commission) requires listing on Line 6 the total principal amount of all outstanding loans as of the last day of the reporting period.
In his Campaign Finance Report of April 9, 2009—the first such report he filed after declaring his first mayoral candidacy—Leffingwell reported total outstanding loans of $100,000. (See page 5 of Lee Leffingwell 2009 Campaign Finance Reports.)
Schedule E (Loans) included in the same Campaign Finance Report shows entries for two loans totaling $100,000 that Leffingwell reported making to his campaign: a $41,163 loan on January 16, 2009, and a $58,837 loan on March 30, 2009. (See page 110 of Lee Leffingwell 2009 Campaign Finance Reports.)
The purpose of reporting loans of personal funds on Schedule E is to evidence the candidate’s intention to reimburse himself at a later date from political contributions. In this way, the candidate would show that he is not violating the personal use prohibition when reimbursing himself from political contributions, according to Ethics Advisory Opinion No. 258 issued by the Texas Ethics Commission in 1995.
The $100,000 balance of outstanding loans was again reported on Leffingwell’s Campaign Finance Report of May 1, 2009. (See page 157 of Lee Leffingwell 2009 Campaign Finance Reports.)
However, Leffingwell’s final Campaign Finance Report for the 2009 mayoral campaign, filed with the City Clerk July 15, 2009, showed the amount of loans outstanding for the 2009 mayoral campaign was $60,910.93—a reduction of $39,087.07. (See page 315 of Lee Leffingwell 2009 Campaign Finance Reports.)
Leffingwell’s July 15, 2009, Campaign Finance Report included no explanation of how the balance of outstanding loans was reduced by more than $39,000.
Expenditure report required—If Leffingwell was reimbursed from campaign contributions to pay down the $100,000 loan, the $39,000-plus by which the loan balance was reduced should have been reported as an expenditure in Schedule F of the July 15, 2009, Campaign Finance Report.
But no expenditures were recorded in Schedule F to show that Leffingwell was reimbursed any amount. (See pages 391-464 Lee Leffingwell 2009 Campaign Finance Reports.)
“If a candidate reported a loan to his campaign on Schedule E (as Leffingwell did) and later paid it back using political contributions, the proper way to report that would be on Schedule F as an expenditure,” said Tim Sorrells, general counsel for the Texas Ethics Commission.
“If you use political contributions to pay back a loan made from personal funds then you show the payments as expenditures on Schedule F,” he said.
“That was true in 2009 and it’s true today,” Sorrells said.
Loan repayment regulations—The requirement to report expenditures for loan repayments is set forth in instructions published by the Texas Ethics Commission and in the Election Code.
The Texas Ethics Commission’s Instruction Guide for Campaign Finance Reports, in laying out the requirements for reporting loans in Schedule E, states:
“If a candidate or officeholder deposits personal funds in an account in which political contributions are held as permitted by Section 253.0351(c) of the Election Code, the deposited amount must be reported as a loan on Schedule E. Political expenditures made from that loan, and any subsequent expenditures to reimburse the candidate or officeholder, must be reported on Schedule F.” (Emphasis added.)
In addition, Election Code 254.031, subparagraphs (3) or (4) also require reporting the reduction in the balance of outstanding loans:
(a): Except as otherwise provided by this chapter, each report filed under this chapter must include:
“(3) the amount of political expenditures (emphasis added) that in the aggregate exceed $100 and that are made during the reporting period, the full name and address of the persons to whom the expenditures are made, and the dates and purposes of the expenditures;
“(4) The amount of each payment made during the reporting period from a political contribution if the payment is not a political expenditure, (emphasis added) the full name of the address of the person to whom the payment is made, and the date and purpose of the payment;”
In other words, a loan repayment from campaign contributions is a reportable expenditure—even if the campaign claims that it is not a political expenditure.
Shea’s reports comply—Per City Charter Article III Section 8(F)(4) an unsuccessful candidate who has unreimbursed campaign expenditures from personal funds, made with the intent to seek reimbursement from political contributions, is authorized to solicit and accept political contributions until the expenditures are reimbursed.
After losing the May 12 election, Brigid Shea continued to solicit contributions to reduce the $65,000 balance of outstanding loans she made to her campaign from personal funds.
Shea has consistently reported expenditures on Schedule F for the numerous partial reimbursements made from campaign funds to reduce that debt.
Her Campaign Finance Report filed July 16, 2012, included one expenditure on Schedule F to report a loan reimbursement of $2,500. (See page 258 of Brigid Shea 2012 Campaign Finance Reports.)
Shea’s Campaign Finance report filed January 15, 2013, included expenditures on Schedule F in the amounts of $10,760, $3,000, $200, $200, and $4,000 for a total loan reimbursement of $18,160. (See pages 309-310 of Brigid Shea 2012 Campaign Finance Reports.)
The total expenditures Shea’s campaign made for loan repayments reduced her outstanding loan balance from $65,000 to $44,340—which Shea properly reported in her Campaign Finance Report of January 15, 2013. (See page 265 of Brigid Shea 2012 Campaign Finance Reports.)
Stiff penalties for Election Code violations
Liability to candidates—Election Code Section 254.231: (a) “A candidate … who fails to report in whole or in part a campaign contribution or campaign expenditure as required by this chapter is liable for damages provided by this section.”
Each opposing candidate whose name appears on the ballot is entitled to recover damages of twice the amount not reported that is required to be reported, plus reasonable attorney’s fees incurred in the suit. (Reasonable attorney’s fees incurred in the suit may be awarded to the defendant if judgment is rendered in the defendant’s favor.)
Liabilities for 2009—Leffingwell’s alleged failure to report the $39,089.07 in campaign expenditures to pay down his 2009 balance of outstanding loans could open him to liability for twice that amount, plus attorney’s fees, to each of the other candidates on the mayoral ballot in 2009.
Those candidates were Brewster McCracken, Carole Keeton Strayhorn, David Buttross, and Josiah James Ingalls.
While there appears to be no specific statute of limitations for lawsuits based on violations of Election Code Chapters 253 and 254, several experienced attorneys interviewed for this report agreed that the opposing candidates would have to file lawsuits within four years of the date Leffingwell filed the allegedly defective report: July 15, 2009.
Further, Leffingwell’s alleged failure to report the $39,089.07 in campaign expenditures to pay down his 2009 balance of outstanding loans could have subjected him to additional liability to the state for triple the amount unreported—more than $117,000—per Election Code Section 254.232.
However, the Texas Ethics Commission Rules for Sworn Complaints provides a statute of limitations of two years on such offenses and a fine is no longer possible, said Tim Sorrells, general counsel for the Commission.
“The statute of limitations is two years,” Sorrells said. “Once it’s past the statute of limitations it’s not something we have jurisdiction over.”
Liabilities for 2012—The alleged reporting defects in Leffingwell’s 2012 Campaign Finance Reports could result in judgments for damages of:
(1) If another loaned—If someone at the Coopwood address, and not Leffingwell, made the $30,000 loan to the mayor’s 2012 reelection campaign, then:
(a) Brigid Shea and Clay Dafoe could each be eligible for damages of twice the amount of the $30,000 loan, plus attorney’s fees, per Election Code Section 253.131.
(b) The state could be eligible for triple that amount of the $30,000 loan, per Election Code Section 253.133.
(2) Money unaccounted for—If the $32,716.54 that has not been accounted for after the 2012 reelection campaign was used for unreported campaign expenditures, then Leffingwell could be liable for damages of:
(a) twice that amount, plus attorney’s fees, to mayoral candidates Shea and Dafoe per Election Code Section 254.231.
(b) triple that amount to the state per Election Code Section 254.232.
Shea and Dafoe respond
Mayor Leffingwell netted 52 percent of the votes in 2012 to win reelection. Brigid Shea got 37 percent and Clay Dafoe got 11 percent. As Leffingwell’s only opponents, both Shea and Dafoe have standing to file lawsuits for damages over Leffingwell’s reporting errors.
They were unaware of this until informed by The Austin Bulldog, which interviewed Shea and Dafoe on March 2 and March 3, respectively.
Shea’s reaction—Informed of the fact she had standing to sue and the possible damages she might reap, Shea’s initial reaction was, “Oh, Jesus,” and laughing, added, “That would take care of my campaign debt.”
Shea—who previously told The Austin Bulldog that she will run for the Travis County Precinct 2 commissioner’s seat being vacated by Sarah Eckhardt next year—said, “It’s important to have real teeth in a law like this so people observe it, and people don’t try to skirt it,” but added, “I don’t think there’s any malice on the part of Lee (Leffingwell).”
“I don’t think of myself as a vindictive person, so I don’t know what I’ll do in this case,” Shea said. “I do feel very strongly about the importance of campaign finance laws, but my initial reaction to this is it really does seem like just a bookkeeping error.”
Pressed for an answer as to whether she might consider a lawsuit, Shea said, “My honest answer is I don’t know. You’ve presented information that certainly would raise concerns. I also think there might be a fairly innocent explanation for it. … I think there should be some allowance for truly innocent mistakes.”
Dafoe’s reaction—“I think the facts as you present them are very troubling, and something I’ve been concerned about, too,” said Dafoe, who often addresses the City Council during public meetings.
Dafoe has been an ardent defender of what he perceives to be a citizen’s right to address the council without interference from the mayor. He has videotaped instances in which he believes that right has been infringed and has published some of them, along with videos on other topics, on YouTube as The Winter Patriot.
Regarding a possible lawsuit, Dafoe said, “I may have interest. I have to know more. … If it’s true I may be interested in taking legal action.”
“I’d be interested, potentially. I’m curious where these funds went that are unaccounted for—and I think the public deserves an answer.”
Precedent for awards—It was under the same statutes that enable Shea and Dafoe to sue (and Leffingwell’s 2009 opponents as well)—Texas Election Code Sections 253.131 and 254.231—that on August 31, 2010, former Texas gubernatorial candidate Chris Bell won a final judgment against the Republican Governor’s Association and Texans for Rick Perry, et al.
According to Bell’s Wikipedia biography, his lawsuit claimed that in the final days of the 2006 gubernatorial campaign, the defendants illegally hid $1 million in donations from Houston homebuilder Bob Perry. Bell was awarded a $2 million final judgment and his attorneys were awarded fees of $128,832. The Houston Chronicle reported that Governor Perry settled the suit by paying Bell $426,000. (Cause No. D-1-GN-07-003955)
Ethics complaints possible
The Texas Ethics Commission has jurisdiction to investigate these alleged offenses upon receipt of sworn complaints.
The Texas Ethics Commission may also initiate a preliminary review of a matter without a sworn complaint, under Government Code Section 571.124(b).
State ethics complaints—The Texas Ethics Commission Rules for sworn complaints are set forth in Chapter 12. The deadline set forth in Section 12.5 for filing a complaint about alleged offenses is two years and in some cases three years.
Complaints for alleged offenses committed during the 2012 mayoral election campaign are well within the statute of limitations.
For further information on the sworn complaint process, contact the Commission’s Legal Department at 512-463-5800.
Documents used in this investigation
Brigid Shea 2012 Campaign Finance Reports (312 pages)
Central Health Board of Managers (1 page)
Lee Leffingwell 2009 Campaign Finance Reports (464 pages).
Lee Leffingwell 2012 Campaign Finance Reports (312 pages).
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.