Fellow Republican files campaign finance complaint against Steele

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A potential candidate for the Republican nominee for Maryland governor finds himself the subject of a campaign finance complaint before he has decided to formally enter the race.

The complaint, filed by Del. Lauren Arikan, R-Baltimore and Harford counties, alleges that former Lt. Gov. Michael Steele is illegally using an independent expenditure committee to support his candidacy. Steele’s top campaign adviser acknowledged the use of the committee as part of an effort to determine if Steele would enter the 2022 campaign.

“The scope of these acknowledged activities will substantially exceed the $6,000 limitation,” Arikan wrote in a complaint filed with the Maryland State Board of Elections that was obtained by The Daily Record. “In fact, one single statewide poll for a governor’s race would exceed the $6,000 limitation by several multiples. Therefore I am requesting that the State Board of Elections and, if appropriate, the Maryland State Prosecutor immediately investigate and take action to prevent Mr. Steele from misusing this entity in violation of state campaign finance laws.”

Jared DeMarinis, director of candidacy and campaign finance and the Maryland State Board of Elections, confirmed a complaint was filed and is under review.

Such reviews can take months to complete and can ultimately be referred to the Office of the State Prosecutor if a serious violation is uncovered.

In the email complaint, Arikan alleges that Steele is coordinating campaign activities with his 527 committee in violation of state campaign finance law.

Steele announced in July the formation of an exploratory committee for the 2022 campaign. Jim Dornan, a Republican strategist heading up Steele’s potential campaign, said the use of an independent committee is well within state law.

“We can raise unlimited amounts of money through this entity and spend it on travel, polling and other political activities,” Dornan said. “Then when Michael decides to run or not run, it will be closed and the money directed to other candidates and we are allowed to transfer $6,000 to a candidate.”

Dornan said the use of the federal committee was similar to that of Tom Perez, who also had an exploratory committee before formally announcing he would run for the Democratic nomination in Maryland.

Currently there are three declared candidates: Del. Dan Cox, R-Carroll and Frederick; Robin Ficker, a Montgomery County attorney and political gadfly who also served in the House of Delegates; and  Commerce Secretary Kelly Schulz.

Dornan dismissed Arikan’s complaint as “a fantasy from someone who obviously does not know the law and has not done her homework.”

The federal campaign committees can fundraise without reporting the names of donors. Federal candidates have used them in some cases as exploratory committees for early polling and other activities.

Maryland law does not recognize exploratory committees. In general, a candidate who raises or spends money to support a candidate must register a campaign committee and file reports as required.

There is a tightrope that candidates walk related to 527 committees. Candidates can use the independent expenditure committees for some limited activities, such as polling to determine whether to enter a race.

But the closer the 527 coordinates with the candidate, the harder it is to justify the expense as independent. Once that line is crossed, the candidate is subject to a $6,000 limit for direct or in-kind contributions.

Maryland also requires an independent expenditure committee to file a report within 48 hours of spending $6,000 or more in an election cycle. That report requires the naming of those who contribute more than $6,000. Those reports are due within 48 hours of crossing that legal threshold.

Gov. Larry Hogan used a similar committee for his 2014 campaign. The Change Maryland organization produced policy papers on issues that later became issues Hogan campaigned on. However, Hogan ran afoul of the law when his campaign used a poll paid for by Change Maryland.

Polls are considered assets under state election law. The value of a poll that would be assigned to a campaign committee is based on the age. Within three months of the poll, a campaign would have to either buy it from the independent committee at 100% of the cost or declare the value as an in-kind contribution. Polls older than six months are typically valued at about 5% of the cost.