11-6361-17155-CV
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
|
Will Rossbach, Complainant, vs. Erik Hjelle and Erik Hjelle and Associates, Inc., Respondents. |
FINDINGS
OF FACT, CONCLUSIONS,
AND ORDER |
The above-entitled matter came on for an evidentiary hearing on May 1, 2006, before a panel of three Administrative Law Judges: Barbara L. Neilson (Presiding Judge), Steve Mihalchick, and Beverly Jones Heydinger. The hearing record closed on May 23, 2006, with the filing of the parties’ post-hearing briefs.
Jay
Benanav and Luke Kuhl, Attorneys at Law, Weinblatt and Gaylord, PLC,
Jill
Clark, Attorney at Law,
This is the final decision in this case, as provided in Minn. Stat. § 211B.36, subd. 5. A party aggrieved by this decision may seek judicial review as provided in Minn. Stat. §§ 14.63 to 14.69.
1. Did Respondent Erik Hjelle violate Minn. Stat. § 211A.12 by accepting contributions from Hjelle & Associates, Inc. in excess of $300?
The panel concludes that Respondent Erik Hjelle violated Minn. Stat. § 211A.12 by accepting contributions from Hjelle & Associates, Inc. in excess of $300.
2. Did Respondent Erik Hjelle violate Minn. Stat. § 211B.13 by accepting prohibited corporate contributions from Hjelle & Associates, Inc.?
The panel concludes that Respondent Erik Hjelle violated Minn. Stat. § 211B.13, subd. 2, by accepting contributions from Hjelle & Associates, Inc.
3. Did Respondent Hjelle & Associates, Inc. violate Minn. Stat. § 211B.15, subd. 2, by making prohibited corporate contributions?
The panel concludes that Respondent Hjelle & Associates, Inc., violated Minn. Stat. § 211B.15, subd. 2, by making contributions to promote Erik Hjelle’s candidacy.
4. Did the Complainant file this Complaint in bad faith?
The panel concludes that the Respondents failed to establish that the Complainant filed the Complaint in bad faith.
Based upon the entire record in this matter and the stipulation of the parties concerning certain exhibits and testimony from the prior campaign complaint case of Koppen v. Maplewood Firefighters Association, Inc. and Erik Hjelle[1], the panel makes the following:
1.
The Complainant is currently a member of the
Maplewood City Council. In the November
2005 election he ran unsuccessfully for Mayor of Maplewood. Respondent Erik Hjelle was a first-time
candidate for Maplewood City Council and was elected to the City Council on
November 8, 2005. He is also a
2.
Hjelle & Associates is a for-profit subchapter
S corporation. Respondent Erik Hjelle owns
Hjelle & Associates along with his father and brother. However, Respondent Hjelle’s father and
brother do not work for and are not involved in the running of the business.[2]
3.
On March 6, 2006, the Complainant filed a
Complaint with the Office of Administrative Hearings alleging that Erik Hjelle,
Hjelle & Associates, and the Maplewood Firefighters Association (MFA) violated
various provisions of Minnesota Statutes Chapters 211A and 211B.
4.
By Order dated March 7, 2006, Presiding
Administrative Law Judge Barbara Neilson determined that the Complaint set
forth prima facie violations of Minn. Stat. §§ 211A.12 and 211B.13 on the part
of Respondent Erik Hjelle for allegedly accepting corporate contributions from
Hjelle & Associates, and a prima facie violation of Minn. Stat. § 211B.15
on the part of Respondent Hjelle & Associates for allegedly making a
corporate contribution to Hjelle’s campaign.
Judge Neilson dismissed all of the other allegations in the Complaint
and also dismissed the Maplewood Firefighters Association as a party.
5.
Before the
commencement of the hearing in this matter, the parties stipulated that certain
exhibits and testimony from a prior campaign complaint case, Koppen v. Maplewood Firefighters
Association, Inc. and Erik Hjelle,[3]
could be admitted into this record.[4] The Koppen
complaint was filed on November 2, 2005, by Marvin Koppen, an incumbent
candidate for the Maplewood City Council who ultimately was not
re-elected. Mr. Koppen alleged in his
complaint that Mr. Hjelle and the Maplewood Firefighters Association violated
various provisions of Minnesota Statutes Chapters 211A and 211B. In particular, the complaint alleged that Mr.
Hjelle violated Minn. Stat. § 211A.12 by accepting contributions of over $300
from the MFA. After a probable cause
hearing, a panel of Administrative Law Judges heard the matter on January 27
and January 30, 2006. By Order dated
March 1, 2006, the panel found that Erik Hjelle violated Minn. Stat. § 211A.12
by accepting contributions in excess of $300 from the Maplewood Firefighters
Association. The panel assessed a $400
civil penalty against Mr. Hjelle for
this violation.
Corporate Contributions
6.
The
period for filing as a candidate for the 2005 primary and general elections began
July 5, 2005 and ended July 19, 2005. In
7.
Karen
Guilfoile is the Maplewood City Clerk and the Director of Records, Elections,
and Licenses for the City of
8.
A couple
of weeks before the July 5, 2005 filing date, Ms. Guilfoile and Ms. Hansen
assembled packets of information for candidates that contained the following documents:
(1) Minnesota Affidavit of Candidacy form; (2) Candidate schedule; (3)
Candidate Information form; (4) the Minnesota Campaign Manual; (5) the Campaign
Financial Report form; (6) City of Maplewood Ordinance regarding political
signs; (7) Minnesota Department of Transportation letter regarding political
signs; and (8) City of Maplewood map order form.[6] Ms. Guilfoile and Ms. Hansen double-checked
each packet to assure that each document was included. Every person who filed as a candidate for
office in
9.
The
Minnesota Campaign Manual is a 41-page booklet published by the Minnesota
Secretary of State’s Office that contains an annotated digest of Minnesota
Statutes Chapters 211A and 211B.[8]
10.
Respondent
Hjelle filed as a candidate for Maplewood City Council on July 19, 2005.[9] Ms. Guilfoile gave him a folder with the
packet of information. Ms. Guilfoile
took the documents out of the folder and identified each one for Respondent
Hjelle. While he was there, Respondent
Hjelle filled out and filed his affidavit of candidacy form.[10]
11.
The
Minnesota Campaign Manual was included in the packet of information that
Respondent Hjelle received from Ms. Guilfoile on July 19, 2005.[11]
12.
In late July of 2005, Bill Kordis, a
VOTE
Erik
Hjelle
Change
& Common Sense
Endorsed by Maplewood Firefighters Association, Inc.
Paid for by Maplewood Firefighters Association, Inc.
The word “VOTE” was written at an angle in the upper left hand corner of the sign.[12]
13. Respondent Hjelle picked up the signs on or about August 3, 2005. The total cost of the signs and stands was $1,423.91.[13] Respondent Hjelle paid for the signs and stands with a check written to Honsa Printing on his insurance business checking account, “Erik Hjelle and Associates, Inc.”[14]
14. Sometime prior to September 2, 2005, Ms. Guilfoile called Respondent Hjelle and told him that he needed to have a disclaimer on his lawn signs.[15]
15. On or about September 2, 2005, Mr. Kordis ordered adhesive labels from Honsa Printing to apply to the lawn signs that contained the following disclaimer: “Prepared and paid for by the Maplewood Firefighters Association, Inc., 7200 Hudson Blvd. N., Suite 107, Oakdale, MN 55128, in support of Erik Hjelle.”[16]
16. The total cost of the labels was $89.13.[17] Respondent Hjelle paid for the labels with a check to Honsa Printing drawn on his business checking account, “Erik Hjelle & Associates, Inc.”[18]
17. On or about October 11, 2005, Respondent Hjelle wrote a check to Honsa Printing in the amount of $636.65 from his business checking account, “Erik Hjelle & Associates, Inc.” The check was payment for pamphlets Respondent Hjelle had ordered for his campaign.[19]
18.
Sometime
in October of 2005, Respondent Hjelle saw a copy of the Campaign Manual at the
home of
19.
Before
Respondent Hjelle looked through the Campaign Manual, he did not realize that
corporate contributions to a campaign were prohibited or “that much of a
concern.”[22] But once Respondent Hjelle read through the
manual, he realized that writing checks for campaign expenses from his corporate
account was not appropriate.[23]
20.
Respondent
Hjelle called his accountant and explained that he had paid for campaign
expenses from his corporate business account.
The accountant told him that he should not have done that and advised Respondent
Hjelle to ask Honsa Printing to refund the payments in exchange for personal
checks in order to correct the transactions.[24]
21. On or about November 3, 2005, Respondent Hjelle contacted Kay Owens, one of the owners of Honsa Printing, and asked if she would be willing to refund to him the $1,423.91 he paid from his business account for the lawn signs in exchange for a check in the same amount from the Maplewood Firefighters Association. Respondent Hjelle explained that he had just recently learned that he should not have paid for the signs from his business account. Ms. Owens agreed to refund Hjelle the $1,423.91 and accept a check in the same amount from the MFA.[25] On or about November 3, 2005, MFA’s Treasurer, Dale Solheid, wrote a check to Honsa Printing on MFA’s account. He left the amount and date blank and either Respondent Hjelle or someone at Honsa Printing later filled in the amount as $1,423.91.[26]
22.
On or
about November 17, 2005, Respondent Hjelle again contacted Ms. Owens at Honsa
Printing and asked if she would refund a check in the amount of $636.65 that he
wrote to Honsa Printing on his business checking account on or about October
11, 2005,[27]
in exchange for a check in the same amount from his personal checking
account. Ms. Owens agreed to do so, and
wrote a check out to Respondent Hjelle in the amount of $636.65.[28] Respondent Hjelle wrote a check from his
personal checking account to Honsa Printing in the amount of $636.65. The check was deposited on or about November
18, 2005. However, the check was dated
September 14, 2005.[29]
23.
Respondent
never asked Honsa Printing to refund the $89.13 amount he paid for the labels
from his business checking account in exchange for a personal check. In attempting to correct the corporate
contributions, Respondent overlooked this transaction.[30]
Bad Faith Allegation
24.
Sometime
in February of 2006, the Complainant called Respondent Hjelle and asked to meet
with him to discuss some City Council related issues. Respondent Hjelle agreed to the meeting, and the
two met for coffee on a Friday afternoon.
During the meeting, the Complainant asked Respondent Hjelle to consider making
a public statement addressing the allegations in Marv Koppen’s complaint that
he violated campaign laws. The hearing
on Mr. Koppen’s campaign complaint against Respondent Hjelle and the Maplewood
Firefighters had just concluded on January 30, 2006. The Complainant told Respondent Hjelle that
he did not expect him to admit wrongdoing but the Complainant felt that some
sort of public contrition on the part of Respondent Hjelle was necessary for
the good of the City Council. The
Complainant also told Respondent Hjelle that if he did not issue a public
statement, the Complainant would file another campaign complaint against him.[31]
25.
At the Maplewood
City Council meeting held on or about February 13, 2006, City Council members
engaged in a heated discussion about the allegations contained in the campaign
complaint filed by former councilmember Marv Koppen and the concerns expressed
by residents regarding the complaint.
After the council meeting, the Complainant approached Respondent Hjelle
in a room outside of Council chambers and asked him if he had “made a decision”
regarding his request that Respondent Hjelle issue some sort of public statement. The Complainant stated that it was not going
to be easy for the City Council to get through the controversy without some
sort of public statement from Respondent Hjelle. In response, Respondent Hjelle told the
Complainant that he was not going to make a public statement and that if the
Complainant wanted to file another complaint against him, to go ahead and file. Respondent Hjelle told the Complainant, “you
have to do what you think is right.”[32]
26.
During
the hearing, the Complainant moved to dismiss Respondents’ claim that the
Complaint was filed in bad faith. The
panel granted the Complainant’s motion to dismiss after the close of Respondent
Hjelle’s testimony on direct examination.
Based upon the foregoing Findings of Fact, the panel makes the following:
1. Minn. Stat. § 211B.35 authorizes the panel of Administrative Law Judges to consider this matter.
2. The burden of proving the allegations in the complaint is on the Complainant and the standard of proof is preponderance of the evidence.[33]
3. Minn. Stat. § 211B.15, subd. 2, prohibits corporations from making a contribution of money or thing of monetary value to a committee or individual to promote or defeat the candidacy of an individual for nomination, election, or appointment to a political office.
4. The Complainant has established that Respondent Hjelle & Associates violated Minn. Stat. § 211B.15, subd. 2, by making contributions of money or things of monetary value to Respondent Hjelle to promote his candidacy.
5. Minn. Stat. § 211B.13, subd. 2, provides as follows:
A person may not knowingly solicit, receive, or accept any money, property, or other thing of monetary value, or a promise or pledge of these that is a disbursement prohibited by this section or section 211B.15.
6.
7. The Complainant has established that Respondent Hjelle violated Minn. Stat. § 211B.13, subd. 2, by accepting money or things of monetary value from Hjelle & Associates.
8. Minn. Stat. § 211A.12 provides in relevant part as follows:
A candidate … may not accept aggregate contributions made or delivered by an individual or committee in excess of $300 in an election year for the office sought and $100 in other years …
9.
10. Minn. Stat. § 211A.01, subd. 4, defines “committee” to mean “a corporation or association or persons acting together to influence the nomination, election, or defeat of a candidate or to promote or defeat a ballot question.”
11.
The Complainant has established by a
preponderance of the evidence that Respondent Hjelle violated Minn. Stat. §
211A.12 by accepting contributions in excess of $300 from a committee in an
election year. The Complainant has established
that Respondent Hjelle accepted contributions from Respondent Hjelle & Associates
in the amount of $2,149.69.[34]
12. Under Minn. Stat. § 211B.36, subd. 3, the Panel may order a complainant to pay the respondent’s reasonable attorney’s fees and the costs incurred by the Office of Administrative Hearings if it determines that a complaint is frivolous. Frivolous claims may include those lacking a good faith investigation of the facts or those filed in bad faith.
13. The Respondents failed to establish that the Complainant filed this Complaint in bad faith and the panel concludes that the Complaint is not frivolous.
Based upon the record herein, and for the reasons stated in the following Memorandum, the panel makes the following:
IT
IS ORDERED:
1. That Respondent Erik Hjelle pay a civil penalty of $500 by July 14, 2006, for violating Minn. Stat. §§ 211A.12 and 211B.13, subd. 2.[35]
2. That Respondent Hjelle & Associates, Inc. not be assessed a civil penalty for violating Minn. Stat. § 211B.15.
Dated: June 6, 2006
|
/s/ Barbara L. Neilson |
|
BARBARA L. NEILSON |
|
Presiding Administrative Law Judge |
|
/s/ Steve M. Mihalchick |
|
STEVE M. MIHALCHICK |
|
Administrative Law Judge |
|
/s/ Beverly Jones Heydinger |
|
BEVERLY JONES HEYDINGER |
|
Administrative Law Judge |
Minn. Stat. § 211B.15 prohibits corporations from contributing money or any thing of monetary value to candidates or major political parties. The Complainant has established that Respondent Hjelle wrote three checks from the corporate checking account of Hjelle & Associates, Inc., in amounts totaling $2,149.69 to purchase lawn signs, stickers, and pamphlets for his campaign. By doing this, Respondent Hjelle & Associates made contributions to Hjelle’s candidacy in violation of Minn. Stat. § 211B.15, subd. 2. Likewise, by accepting the three contributions, Respondent Erik Hjelle violated Minn. Stat. § 211B.13, subd. 2, which makes it illegal for persons to accept disbursements prohibited under Minn. Stat. § 211B.15. Finally, Respondent Hjelle violated Minn. Stat. § 211A.12, by accepting contributions in excess of $300 from Hjelle & Associates.
In his defense, Respondent Hjelle testified
that the Campaign Manual, which annotates the state laws regulating campaign
reporting and campaign practices, was not included in the packet of information
he received from Ms. Guilfoile when he filed for office. However, Ms. Guilfoile gave credible
testimony about her standard practice of compiling and distributing to each
candidate a packet of information, which included the 41-page Campaign
Manual. Respondent Hjelle’s testimony, on
the other hand, demonstrated that he had little knowledge of the election
process or of the specific campaign laws and applicable requirements. Based on their testimony, the panel concludes
that it is more likely than not that Respondent Hjelle received the manual from
Ms. Guilfoile but simply did not appreciate its significance at the time. In any case, even if Respondent Hjelle did
not receive the Campaign Manual, it would not excuse the violations. Respondent Hjelle had an obligation as a
candidate for public office to familiarize himself with the laws governing his
campaign and there is no evidence that he made any effort to do this. For example, Respondent Hjelle was unaware
that his lawn signs required a disclaimer until Ms. Guilfoile called him to
notify him of the requirement on September 2, 2005. In addition, Respondent Hjelle’s attempt to
correct his insurance company’s prohibited corporate contribution of $1,423.91
for the lawn signs by exchanging its check for a check from the Maplewood
Firefighters Association resulted in him being found to have violated Minn.
Stat. § 211A.12 for accepting a contribution from MFA in excess of $300.[36] Overall, Respondent Hjelle’s actions throughout
his campaign reflect a lack of effort on his part to learn and abide by the governing
campaign laws.
Respondent Hjelle also argues that the claims against him were already litigated in the Koppen matter and that he should not be assessed any further penalties for the same violations. However, as the panel explained in its prior Order addressing Respondents’ res judicata and collateral estoppel arguments,[37] the issues in this matter are not the same as those litigated in the Koppen case. Respondent Hjelle & Associates was not a named party in the Koppen case and its contributions were not at issue. The civil penalty assessed against Mr. Hjelle in Koppen, although based on some of the same transactions with Honsa Printing, was for conduct relating to the Maplewood Firefighters Association, not Hjelle & Associates.
Respondents also contend that since Erik Hjelle attempted to correct two of the transactions by exchanging his corporate checks for a personal check and a check from MFA, these transactions should be viewed as loans from Hjelle & Associates rather than as prohibited contributions. Respondents maintain that the checks written on Hjelle & Associates’ account for $1,423.91 (lawn signs) and $636.65 (pamphlets) were only “temporarily provided and then repaid.” However, Minnesota Statutes chapters 211A and 211B define the terms “contribution” and “disbursement” to include loans.[38] Accordingly, even if Respondent Hjelle & Associates’ contributions are viewed as loans, they still form the basis for a finding that prohibited acts occurred under Minn. Stat. §§ 211A.12, 211B.13 and 211B.15.
The panel concludes that Respondents’ violations
of the applicable laws warrant penalties.
However, the panel has taken into account that the fine assessed against
Respondent Hjelle in the Koppen
matter, although based on a separate violation of the law, stemmed from the
same series of transactions at issue in this matter.[39] The panel also notes that Respondent Hjelle took
steps to rectify one of the prohibited corporate contributions by substituting
a personal check for the amount his business paid for the pamphlets ($636.65) in
exchange for Honsa Printing refunding the amount written on his business
account.[40] Although the violations of campaign laws occurred when the corporate checks were
written and the contributions received, Respondent Hjelle’s attempts to correct
the prohibited transactions have been considered by the panel with respect to what
if any penalty should be assessed.
Having found that Respondent Hjelle violated Minn. Stat. §§ 211A.12 and 211B.13, by accepting $2,149.69 in contributions from Hjelle & Associates, and that Hjelle & Associates violated Minn. Stat. § 211B.15 by making corporate contributions to Hjelle’s candidacy, the Panel may make one of several dispositions.[41] The panel may issue a reprimand, may impose a civil penalty of up to $5,000, and may refer the complaint to the appropriate county attorney for criminal prosecution. In this case, the panel has decided to impose on Respondent Hjelle a civil penalty of $500. The panel concludes that Respondent Hjelle’s violations of the contribution limits and the prohibition against accepting corporate contributions was negligent and was the result of his failure to learn the requirements of the governing campaign laws.
The panel has further decided to impose no separate penalty on Respondent Hjelle & Associates. Respondent Hjelle & Associates is essentially a one-person corporation (Erik Hjelle). As an S corporation, any penalty assessed against Hjelle & Associates will be paid by Respondent Hjelle.[42] Moreover, it was Respondent Hjelle’s act of writing the three checks that forms the basis of his corporation’s violation of the law. The panel concludes that Respondent Hjelle should be penalized for his acts, but that assessing a penalty against him and his corporation would penalize Mr. Hjelle twice for the same conduct.
B.L.N., S.M.M., B.J.H.
[1] OAH Docket No. 7-6361-16947-CV (March 1, 2006).
[2]
Testimony of Hjelle in this matter and in Koppen
v.
[3] OAH Docket No. 7-6361-16947-CV (March 1, 2006).
[4] Ex. D.
[5] Testimony of Guilfoile; Ex. C-1.
[6] Testimony of Guilfoile; Ex. A.
[7] Testimony of Guilfoile and Cave; Exs. C-1 through C-8.
[8] Ex. B.
[9] Testimony of Hjelle; Ex. C-1.
[10] Testimony of Guilfoile and Hjelle.
[11] Testimony of Guilfoile.
[12] Testimony of Owens; Ex. 38.
[13] Ex. 90
[14] Testimony of Owens and Hjelle; Ex. 80.
[15] Testimony of Hjelle.
[16] Testimony of Owens and Hjelle; Ex. 37.
[17] Ex. 91.
[18] Testimony of Owens and Hjelle; Ex. 81.
[19] Testimony of Hjelle; Ex. 82.
[20] Ms. Cave lost in the November 2005 election but later won a seat on the Maplewood City Council in a special election held in February 2006.
[21] Testimony of Cave and Hjelle.
[22] Testimony of Hjelle.
[23]
Testimony of Hjelle in Koppen v.
[24] Testimony of Hjelle.
[25] Testimony of Owens; Ex. 84A.
[26] Ex. 83.
[27] Testimony of Hjelle; Ex. 82.
[28] Testimony of Owens; Exs. 86A, 87.
[29] Ex. 87.
[30] Testimony of Hjelle.
[31] Testimony of Hjelle.
[32] Testimony of Hjelle.
[33] Minn. Stat. § 211B.32, subd. 4.
[34] Exs. 80, 81 and 82.
[35]
The check should be made payable to: “Treasurer, State of
[36] See Koppen
v.
[37] Koppen, Order on Motion for Summary Disposition, OAH Docket 11-6361-17155-CV (April 10, 2006).
[38]
Se,
[39] In Koppen, Respondent Hjelle was found to have violated Minn. Stat. § 211A.12 by accepting a contribution in excess of $300 from the Maplewood Firefighters Association (MFA). MFA wrote a check to Honsa Printing for $1,423.91 for Hjelle’s lawn signs in exchange for Honsa Printing refunding Respondent Hjelle & Associates’ check in the same amount.
[40] See Finding 21. However, the panel also notes that even when he became aware that he should not have paid for campaign expenses with corporate checks, Hjelle’s attempts at correcting the transactions were incomplete.
[41] Minn. Stat. § 211B.35, subd. 2.
[42] As an S corporation, all of Hjelle & Associates’ profits and losses are passed through to Respondent Hjelle.