12-6326-17493-CV

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

Eva Young and Laura Lehmann, M.D.,

Complainants,

vs.

Mark Stenglein, Hennepin County Commissioner, and Mark Stenglein Volunteer Committee

Respondents.

NOTICE OF DETERMINATION OF

PRIMA FACIE VIOLATION

AND

NOTICE OF AND ORDER FOR PROBABLE CAUSE HEARING

TO: Eva Young, 1308 Boardwalk Avenue, Minneapolis, MN 55411; Laura J. Lehmann, M.D., 6828 Wooddale Avenue South, Edina, MN 55435-1635; and Brian Rice, Attorney at Law, Rice, Michels & Walther, LLP, 206 East Bridge – Riverplace, 10 Second Street NE, Minneapolis, MN 55413.

On September 6, 2006, the Complainants filed a Complaint with the Office of Administrative Hearings alleging that Respondents violated Minn. Stat. §§ 211A.02, 211A.06 and 211B.12. After reviewing the Complaint and attached exhibits, the undersigned Administrative Law Judge has determined that the Complaint sets forth a prima facie violation of Minn. Stat. § 211B.12(6). All of the other allegations are dismissed.

THEREFORE, IT IS HEREBY ORDERED AND NOTICE IS HEREBY GIVEN that this matter is scheduled for a probable cause hearing to be held by telephone before the undersigned Administrative Law Judge at 9:30 a.m. on Monday, September 11, 2006. The hearing will be held by call-in telephone conference. You must call: 1-888-455-9001 at that time. Follow the directions and enter the numeric pass code “17493” when asked for the meeting number. The probable cause hearing will be conducted pursuant to Minn. Stat. § 211B.34. Information about the probable cause proceedings and copies of state statutes may be found online at www.oah.state.mn.us and www.revisor.leg.state.mn.us.

At the probable cause hearing all parties have the right to be represented by legal counsel, by themselves, or by a person of their choice if not otherwise prohibited as the unauthorized practice of law. In addition, the parties have the right to submit evidence, affidavits, documentation and argument for consideration by the Administrative Law Judge. Parties should provide to the Administrative Law Judge all evidence bearing on the case, with copies to the opposing party, before the telephone conference takes place. Documents may be faxed to Judge Mihalchick at 612-349-2665.

At the conclusion of the probable cause hearing, the Administrative Law Judge will either: (1) dismiss the complaint based on a determination that the complaint is frivolous, or that there is no probable cause to believe that the violation of law alleged in the complaint has occurred; or (2) determine that there is probable cause to believe that the violation of law alleged in the complaint has occurred and refer the case to the Chief Administrative Law Judge for the scheduling of an evidentiary hearing. Evidentiary hearings are conducted pursuant to Minn. Stat. § 211B.35. If the Administrative Law Judge dismisses the complaint, the complainant has the right to seek reconsideration of the decision on the record by the Chief Administrative Law Judge pursuant to Minn. Stat. § 211B.34, subd. 3.

Any party who needs an accommodation for a disability in order to participate in this hearing process may request one. Examples of reasonable accommodations include wheelchair accessibility, an interpreter, or Braille or large-print materials. If any party requires an interpreter, the Administrative Law Judge must be promptly notified. To arrange an accommodation, contact the Office of Administrative Hearings at 100 Washington Avenue South, Suite 1700, Minneapolis, MN 55401, or call 612/341-7610 (voice) or 612/341-7346 (TTY).

Dated: September 7, 2006

/s/ Steve M.Mihalchick__

STEVE M. MIHALCHICK

Administrative Law Judge

MEMORANDUM

On January 31, 2006, Respondent Mark Stenglein Volunteer Committee (Committee) filed its 2005 Annual Campaign Finance Report. The report listed the Committee’s total non-itemized contributions as $16,980.00 and its total non-itemized expenditures as $8,989.65.[1] On June 23, 2006, the Committee filed an Amended 2005 Annual Report. This report reduced the Committee’s total non-itemized contributions and expenditures by $5,620.00.[2] In the Amended Report, the Committee’s total non-itemized contributions is reported as $11,360.00 and its total non-itemized expenditures is listed as $3,369.65.[3]

The Complaint alleges that Respondents violated Minn. Stat. § 211A.02, subd. 2, and Minn. Stat. § 211A.06, by filing a 2005 annual campaign finance report that incorrectly overstated the Committee’s non-itemized contributions and expenses by $5,620.00. According to the Complaint, the Committee was notified by Wells Fargo Bank on September 8, 2005, that it had subtracted $5,620.00 from the Committee’s account to correct an error made while processing a deposit.[4] Despite this notification, the Complaint alleges that the Committee incorrectly overstated its contributions and expenditures in its 2005 Annual Report.[5] On June 23, 2006, Respondents filed an Amended Annual Report, which reduced both its total non-itemized operating contributions and expenditures by $5,620.00.[6] The Complainants allege that the Respondents filed an inaccurate financial report and failed to keep accurate records in violation of Minn. Stat. §§ 211A.02 and 211A.06. The Complainants contend that the Respondents simply subtracted the $5,620.00 amount from both its contribution and expenditure amounts once they realized a deposit accounting error had been made.

Minn. Stat. § 211A.02 requires candidates or committees to file periodic financial reports listing certain information including total amounts of receipts and expenditures for each reporting period. Unlike the filing requirements with the Campaign Finance Board under Minn. Stat. § 10A.025, there is nothing in Section 211A.02 that provides for the assessment of penalties for inaccurate information, false statements, or poor record-keeping. Instead, the only penalty permitted with respect to violations of Section 211A.02 is limited to those instances where a candidate or committee fails to file a required report at all. In those cases, the filing officer[7] may file a complaint with the Office of Administrative Hearings alleging a violation of 211A.02; but then only ten days after the filing officer has provided written notice to the candidate or committee of their failure to file.[8]

In this case, because the Respondents did file the required annual report, they have complied with the requirements of Minn. Stat. § 211A.02. The Administrative Law Judge finds that the Complainants have failed to allege a prima facie violation of Minn. Stat. § 211A.02 and that allegation is dismissed. Complainants’ allegations go to the accuracy of the data filed in the report and the records maintained. Those issues are more appropriately raised with the Campaign Finance Board and not this office.[9]

The Complainants also allege that the filing of the inaccurate information in the Committee’s 2005 Annual Report violated Minn. Stat. § 211A.06, subd. 4. Pursuant to this statute, a treasurer who fails to keep a correct account of money received for a committee “with the intent to conceal receipts or disbursements, [or] the purpose of receipts or disbursements” is guilty of a misdemeanor. The Complainants maintain that the fact that the bank notified the Committee of the incorrect deposit amount in September of 2005, suggests that the Committee “knowingly filed an inaccurate report.”

The Complainants have alleged no facts that would suggest that the treasurer of Respondent Committee filed its 2005 Annual Report with the intent of concealing receipts or disbursements. Instead, the treasurer filed an Amended Report on June 23, 2006, correcting the inaccurate amounts at issue. The Administrative Law Judge concludes that the Complainants have failed to allege a prima facie violation with respect to this allegation. It is not enough for the Complainants to point to the inaccurate financial information in order to allege a prima facie violation of Minn. Stat. § 211A.06. Rather, there must be some allegation that the Respondents intended to conceal the receipts or disbursements. Complainants have not alleged any facts that would support finding that the treasurer intended to conceal the Committee’s receipts or disbursements. This allegation is dismissed.

The Complainants have also alleged that Respondents violated Minn. Stat. § 211B.12 by making contributions of over $50 to charitable organizations. According to the Committee’s Annual Report, the Committee made a donation of $100 to Eastside Neighborhood Services on September 9, 2005, and a donation of $100 to the St. Paul Foundation on January 6, 2005.

Minn. Stat. § 211B.12 governs permitted expenditures of money collected for political purposes. Under this statute, expenditures by a campaign committee on salaries, wages, communications, mailing, campaign advertising, printing, office space and “charitable contributions of not more than $50 to any charity annually” are permitted.

Complaints brought under the Fair Campaign Practices Act must be filed with the Office of Administrative Hearings within one year after the occurrence of the act that is the subject of the complaint. Because the Committee’s $100 donation to the St. Paul Foundation was made more than a year ago, the allegation that this donation violated Minn. Stat. § 211B.12 is dismissed. The Administrative Law Judge finds, however, that the Complainants have alleged a prima facie violation of Minn. Stat. § 211B.12 with respect to the Respondent Committee’s donation of $100 to Eastside Neighborhood Services on September 9, 2005.

Finally the Complainants allege that some of the expenses reported in the Committee’s 2005 Annual Report do not qualify as legal expenditures under Minn. Stat. § 211B.12.

Minn. Stat. § 211B.12 provides as follows:

Use of money collected for political purposes is prohibited unless the use is reasonably related to the conduct of election campaigns, or is a noncampaign disbursement as defined in section 10A.01, subdivision 26. The following are permitted expenditures when made for political purposes:

(1) salaries, wages, and fees;

(2) communications, mailing, transportation, and travel;

(3) campaign advertising;

(4) printing;

(5) office and other space and necessary equipment, furnishings, and incidental supplies;

(6) charitable contributions of not more than $50 to any charity annually; and

(7) other expenses, not included in clauses (1) to (6), that are reasonably related to the conduct of election campaigns. In addition, expenditures made for the purpose of providing information to constituents, whether or not related to the conduct of an election, are permitted expenses. Money collected for political purposes and assets of a political committee or political fund may not be converted to personal use.

The Complainants contend that expenditures for “meals” and “food” at three restaurants in October and December of 2005, do not “meet the standard” articulated at section 211B.12.[10]

Minn. Stat. § 211B.12(7) permits other expenses that are “reasonably related to the conduct of election campaigns” or “made for the purpose of providing information to constituents.” Complainants have failed to allege any facts to support their claim that Respondents’ expenditures on food and meals were not reasonably related to Stenglein’s election campaign or made for the purpose of providing information to constituents. The Administrative Law Judge finds that the Complainants have failed to allege a prima facie violation of Minn. Stat. § 211B.12 and this allegation is also dismissed.

S.M.M.

[4] The bank processed a deposit of $8,455.00 to the Committee’s account when the actual amount of the deposit was $2,835.00. See Attachment 2.

[7] Minn. Stat. § 211A.01, subd. 7 defines “filing officer” to mean the officer authorized by law to accept affidavits of candidacy or nominating petitions for an office or the officer authorized by law to place a ballot question on the ballot.

[10] The Complainants have also questioned other expenditures made in 2004. These are beyond the one year statute of limitations (211B.32, subd.2) and have not been considered.