Jeremy Durham

Bill restricting campaign money investment goes to governor

The House gave unanimous approval Monday evening to a bill to put new restrictions on investments of money held in state political campaign accounts. It was inspired by a number of questionable investments found in an audit of former state Rep. Jeremy Durham’s  funds.

The measure (SB377) had passed the Senate earlier (previous post HERE, including a press release) and it now goes to the governor for his signature.

Sponsors are Sen. Doug Overbey, R-Maryville, and Rep. Gerald McCormick, R-Chattanooga. The bill declares campaign funds must be deposited in a financial institution insured by the FDIC or the national credit union administration that is authorized to do business in the state.

The Durham audit found the Franklin Republican, expelled from his seat last year, had invested more than $100,000 of campaign money in a company operated by a major political donor and also used the funds to make substantial loans to a professional gambler and his wife. That’s not illegal under current law, though Durham is under investigation for multiple other allegations of activity that would be illegal.

More details on Durham’s alleged campaign money misdeeds

In a formal, 30-page letter to former state Rep. Jeremy Durham, the Registry of Election Finance staff lists around 690 alleged violations of state campaign finance laws that were found in an audit. Since each could lead to a maximum civil penalty of $10,000, the total theoretically could be $6.9 million – more than the total collected from all fines in the Registry’s history.

The letter is a step toward deciding what, if any, penalty will be imposed. Durham has until May 1 to respond to the letter, offering any explanation or defense he wishes to the allegations – most involving use of campaign money for personal expenses and investments, but multiple cases of failure to disclose contributions and other infractions.

A Registry hearing is scheduled for June 14. The FBI is also reportedly investigating Durham, apparently with an eye toward tax evasion or fraud charges.

A copy of the letter is available by clicking on this link: durhamletter

The Tennessean has an overview story on the letter’s allegations. An excerpt:

The information… also provides for the first time the names of prominent campaign donors and business owners who gave Durham thousands of dollars that the former Franklin lawmaker never reported on his campaign disclosures… Additionally, the report details nearly $76,000 in improperly disclosed campaign expenditures — on everything from Florida restaurants and airplane tickets to flowers and a Yankee Candle purchase.

The donors and reportedly undisclosed contributions listed in the show cause notice include:

Lee Beaman, a well-known Republican fundraiser and prominent Nashville car dealer, gave Durham $3,000. Durham reported receiving only $1,500;

Cathy and John Simmonds gave Durham $6,000, but he reported receiving only $1,000. John Simmonds, the former CEO of Southeast Financial Credit Union, wrote a letter to a federal judge seeking leniency for a former youth pastor who admitted to statutory rape and child pornography charges. Durham also wrote a letter on the man’s behalf, although there is no discernible personal connection between Durham and the man;

Tracy and Cynthia Miller, who are the brother and sister-in-law of prominent Republican donor and businessman Andy Miller, donated $6,000 to Durham. He reported only $4,500.

Senate votes to restrict investment of campaign funds

The Senate approved 32-1 Monday evening a bill by Sen. Doug Overbey, R-Maryville, that puts new restrictions on legislators making investments with campaign funds.

The bill (SB377) comes after an audit found former Rep. Jeremy Durham, R-Franklin, had invested more than $100,000 of campaign money in a company operated by a major political donor and also used the funds to make substantial loans to a professional gambler and his wife. That’s not illegal under current law, though Durham is under investigation for multiple other allegations of activity that would be illegal.

Overbey’s bill declares that campaign funds can be invested only in federally-insured accounts at a bank or credit union. The sole no vote came from Sen. Todd Gardenhire, R-Chattanooga, who in a committee hearing last week declared “you can’t legislate against stupidity” and observed that the bill would prohibit some relatively safe and non-controversial investments such as municipal bonds.

Overbey said that “reasonable minds might differ” on where to draw a line on permitted investments, but that his bill simply restricts campaign money investing to what most legislators already use after “some things that never would have occurred to most of us to do.. did occur.”

Note: Press release below.

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Democrats call for repeal of ‘Jeremy’s law’

From the Associated Press

Democrats at the state Capitol on Tuesday blasted their Republican colleagues for not doing enough to prevent sexual harassment on the hill, after a freshman Republican lawmaker resigned surrounding allegations of sexual misconduct.

Rep. Mark Lovell, a fair and carnival operator from suburban Shelby County submitted his resignation letter on Tuesday. Lovell said in the letter that the elected position ended up being more demanding than he expected and that he needed more time to devote to his business interests and family.

Democrats though quickly sensed blood in the water and took the opportunity to strike.

“This is unacceptable behavior from people who are elected to the general assembly,” said Sherry Jones, a Democrat from Nashville.

Jones and two other top Democratic lawmakers addressed reporters Tuesday afternoon and called on lawmakers to repeal what’s known as Jeremy’s Law.

The bill, which passed last year, was unofficially named after former Rep. Jeremy Durham, who was expelled from his seat surrounding allegations he sexually harassed more than two dozen women at the Capitol.

That bill mandates any victim of sexual harassment who sues the state and loses must then pay for the legal fees of the defense.

“I would say nobody up here is safe anymore. If we can go through all of the sexual harassment issues that happened last year, and you still have somebody…who would do something like that again, what does that say about this place?” Jones added.

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Audit helps keep Durham ‘in the crosshairs’ of fed prosecutors?

Following up on the Registry of Election Finance audit of Jeremy Durham’s campaign finances, The Tennessean quotes a former federal prosecutor as sayiing the report is “packed with problematic stuff” for the former legislator that will keep him “in the crosshairs” of an ongoing federal investigation. The article goes on to give a couple of comparisons between federal prosecutions in other states and matters raised in the Durham audit.

Before federal investigators indicted North Carolina state Sen. Fletcher Hartsell Jr. on more than a dozen counts of money laundering, mail fraud, wire fraud and tax evasion, they asked him why he spent campaign money on haircuts.

Hartsell said he is a “hippie” and only trims his locks because he’s a lawmaker, according to federal court documents. Investigators called this rationalization an attempt to “perpetuate his scheme to defraud.”

In comparison, when a state auditor asked ex-Tennessee lawmaker Jeremy Durham why he spent more than $1,400 of campaign funds on lawn care, he reportedly told the investigators he needed the lawn mowed at his house in case he hosted fundraisers there.

In pleading guilty to a federal wire fraud charge this month, a former mayor in New York admitted to using campaign contributions for his own purposes. The wire fraud charge stemmed from the former mayor moving fraudulent funds between bank accounts, court documents state.

In the Durham audit, Tennessee campaign finance officials found Durham spent more than $10,000 of donor money on personal items, including alcohol and a plane ticket for his wife. He also routinely moved funds between his campaign, political action committee and personal and professional bank accounts.

Both the North Carolina and New York cases demonstrate strategies the FBI and U.S. attorney for Middle Tennessee could use if they indict Durham.

Durham’s lawyer threatened to sue Registry over audit release

In releasing an audit indicating hundreds of campaign finance law violations by former state Rep. Jeremy Durham, the Registry of Election Finance board ignored a threatened lawsuit by Durham’s lawyer, Peter Strianse, according to The Tennessean. Now Strianse says he and Durham have not decided whether to follow through on the threat.

In a Feb. 6 letter sent to a staff attorney for the registry… Strianse said releasing the audit to the public would be “premature and unfairly prejudicial” to the Franklin Republican, reflecting an argument he used prior to the audit’s release on Wednesday.

“Obviously this matter is of great public importance and personal importance to Mr. Durham. Respectfully, it is our belief that many of the findings contained in the Draft Report are clearly erroneous, contrary to law, and require significant correction and amplification,” Strianse wrote in his three-page letter, obtained by The Tennessean through an open records request.

Registry Treasurer Tom Lawless, who is also an attorney and served as chairman when the audit began, waved off the threat.

“It’s a knee-jerk reaction, almost as if the registry would be intimidated by that. Which couldn’t be further from the truth. There’s a complete immunity,” Lawless said in a phone interview Friday.

“The truth, generally, is an absolute defense in law.”

…“Libel and slander remain actionable torts when the individual in question is a public figure,” Strianse said (in the letter). “The release of the Draft Report over Mr. Durham’s timely objection may demonstrate that the challenged material was published with actual malice if it is prematurely released on 2/8/17 before Mr. Durham has had an opportunity to respond and proper findings have been made by the Board.”

More random audits needed to catch ‘double-dipping’ legislators?

House Speaker Beth Harwell and Lt. Gov. Randy McNally, through spokespersons, tell The Tennessean that it’s not the responsibility of legislative leaders to police “double dipping” by legislators – the practice of billing taxpayers for daily expense payments while also being reimbursed for their expenses from their campaign finance accounts.

That illegal action was highlighted in an audit released Wednesday that found rampant wrongdoing by former lawmaker Jeremy Durham.

Among the possible 500 violations of campaign finance law found by the Tennessee Registry of Election Finance, Durham is accused of receiving $7,700 in payments from the legislature for personal expenses he’d already reimbursed himself for using campaign funds. That would be illegal, but Lt. Gov. Randy McNally and House Speaker Beth Harwell said that’s up to the registry to monitor.

“Violations in a campaign account are governed by the Registry of Election Finance, which is permitted to turn any criminal finding over to the district attorney,” said Kara Owen, a spokeswoman for Harwell.

McNally spokesman Adam Kleinheider also noted the legal process in place if lawmakers receive improper reimbursements.

“If there are further possible remedies, Lt. Governor McNally would certainly be open to discussing them but clearly there are already laws on the books that cover this kind of illegal and unethical behavior,” Kleinheider said.

..No legislative leaders are recommending tougher penalties for campaign violations in the wake of the Durham audit.

House Majority Leader Glen Casada, R-Franklin, said the registry is best equipped to ensure reimbursement issues are addressed. But he and House Ethics Committee Chairman Steve McDaniel, R-Parkers Crossroads, who chaired the special committee that investigated Durham’s sexual impropriety last year, agreed that the Durham findings necessitate a formal review of House practices.

… Despite the tepid response to any legislative action from Harwell and McNally, lawmakers could increase the number of random audits election finance officials perform each year.

Under state law, only 2 percent of candidates — including judges, lawmakers and the governor — are subject to a random audit in an election year. That means during the 2014 election cycle, just 10 candidates, five of whom were legislative candidates, received full audits, according to the registry’s website.

“Other than random audits, I don’t know of anything that we have. I mean, how do you know if somebody’s telling you the truth unless you audit them? And that’s how they found all of these things, was through an audit,” McDaniel said.

Note: The referenced WTVF report (short version in previous post HERE) was based on what reporter Phil Williams called “old fashioned accounting” – simply matching what legislators reported spending in their campaign finance disclosures with the dates they were reimbursed for travel/per diem and noting when the two overlapped. It would seem a fairly simple matter to legislatively mandate that Registry staff do the same – except, of course, that would add to the workload of folks of an already-understaffed agency. But maybe simply enacting such a review requirement would deter – if not eliminate – the intentional practice of double dipping. In the cases cited by WTVF, the legislators reimbursed the state for what they said was an unintentional oversight.

More on Durham audit — up to 500 violations, June hearing set

From The Tennessean’s overview story:

Former state Rep. Jeremy Durham violated state campaign finance law possibly as many as 500 times, including spending more than $10,000 of campaign funds illegally to buy an airplane ticket for his wife, custom suits, spa products and sunglasses, according to a state campaign finance audit released Wednesday.

He also used campaign money for more mundane bills, including lawn care and paint for his home office, the audit shows.

Durham made at least 55 illegal purchases using money given by donors; the state report outlines 39 expenses, but some include multiple purchases. The former Franklin lawmaker also used campaign funds to invest more than $100,000 in the company of a wealthy GOP donor, loan nearly $30,000 to a professional gambler who has a criminal past and loan $25,000 to his wife, auditors found.

Durham paid himself $7,702 from his campaign account for expenses he’d already been reimbursed for by the state, according to the audit. The practice is more commonly known as double-dipping.

…In addition to the illegal use of campaign finances, the audit details how Durham invested more than $100,000 in Life Watch Pharmacy, a company owned by Andrew Miller, a prominent Republican donor who has advocated for anti-Islam policy in the state.

…The report also states David Whitis, a professional gambler who has a criminal record, received three checks totaling $29,800 from Durham’s campaign account…Two of the checks to Whitis indicate the funds are a “loan to friend.” Additional information provided to the auditors by Durham states the money was “capital for a startup venture.”

From WPLN’s report:

Durham’s attorney has a “laundry list” of objections to the findings. Peter Strianse also says he thought the report was a draft that would not yet be distributed widely.

“I understand if that’s they’re procedure and those are the steps we have to go through,” says the lawyer. “But why in the world would you make public a report that you know is going to be subject to significant challenge?”

But a Registry official says the office followed standard protocol.  

Durham’s attorney has until May to respond to the findings, before a hearing slated for June.

The Franklin Republican was expelled from the legislature last year following nearly two dozen anonymous claims of sexual harassment.

A federal investigation into potential campaign finance violations is ongoing. 

 

Registry audit finds multiple campaign finance violations by Durham

The Registry of Election Finance staff today released its audit of former state Rep. Jeremy Durham’s campaign disclosures at a meeting of the Registry board. Here are the top-listed findings:

1. Jeremy Durham violated T.C.A. §2-10-105(a) and T.C.A. §2-10-107(a)(2)(A) by failing to report $36,334.95 in campaign contributions.

2. Jeremy Durham violated T.C.A. §2-10-105(a) by reporting $4,600 in contributions where the associated funds cannot be identified as being deposited into a bank account.

3. Jeremy Durham violated T.C.A. §2-10-105(a) by failing to report $10,623.70 in interest earned on campaign funds and T.C.A. §2-10-114(b)(1) by depositing $1,637.50 of that interest into his personal account.

4. Jeremy Durham violated T.C.A. § 2-10-302 by receiving $5,500 in contributions over the campaign limits.

5. Jeremy Durham violated T.C.A. §2-10-105(a) by reporting $6,500 of contributions intended for PACs he controlled as contributions to his campaign account.

6. Jeremy Durham violated T.C.A. § 2-10-107(a)(2)(A) by failing to accurately disclose the names of several contributors. 7. Jeremy Durham violated T.C.A. §2-10-105(a) and T.C.A. § 2-10-107(a)(2)(B) by failing to accurately report campaign expenditures.

8. Jeremy Durham violated T.C.A. §2-10-114 by disbursing $10,176.35 in campaign funds for prohibited activities.

9. Jeremy Durham made cash withdrawals and reimbursements to himself in the amount of $11,927.43 from campaign funds without support which is a violation of T.C.A. §2-10-114(b)(1).

10. Jeremy Durham reimbursed $7,702.07 in expenses to himself from his campaign account that were also reimbursed by the State of Tennessee which is a violation of T.C.A. §2-10-114(b)(1).

11. In violation of T.C.A. §2-10-212(c), Jeremy Durham failed to retain sufficient expense records to determine whether all expenditures were allowable.

12. Jeremy Durham disbursed $64,800 for promissory & convertible note activity which appears to be unallowable per T.C.A. §2-10-114(b)(1).

The full report is available by clicking on this link: durhamaudit

Durham spent campaign funds while not campaigning

Former state Rep. Jeremy Durham spent $1,353.91 in campaign funds after he suspended his campaign for reelection, reports the Nashville Scene. On Sept. 12, the night before he was expelled from the state House of Representatives, he watched Monday Night Football at Buffalo Wild Wings in Nashville and he paid for it with campaign funds.

Fourth quarter campaign filings were due today, so for a lark, Pith looked up Durham’s report. What we found is that he spent $1,353.91 after he dropped out of the race.

Durham suspended his reelection campaign on July 14 after the release of the salacious and damning Attorney General’s report chronicling his extensive sexual misconduct and harassment. He officially lost his primary on Aug. 4. Thus, Durham had no real reason to spend his campaign funds on himself after that. He could have legitimately donated to other people’s campaigns, of course, but that’s not what this report shows.

First of all, the fourth quarter filing period runs from Oct. 1 to Dec. 31. Two of Durham’s claimed expenses are from August and one is from September, which means they should have been listed on his third quarter report. But according to the filing, Durham had $635.97 in unitemized expenses — $64.71 in auto expenses, $15 for a donation, $328.69 on food and beverages, $105 in gas, $21.57 in internet expenses and $101 in parking.

Per itemized expenses, Durham spent $259.94 at Cajun Steamer on Aug. 15, $119.74 at Grays on Main on Aug. 19, $113.57 at Buffalo Wild Wings on Sept. 12, and $104.69 at Kroger on Oct. 1. He also spent $120 for “dues/subscriptions” at Franklin’s Masonic Hiram Lodge on Nov. 17.