Paper trail raises many questions

Governor claims he didn't understand disclosure form

By Patrick Howe

Associated Press

ST. PAUL -- Gov. Tim Pawlenty might have to answer to state campaign finance officials for the way he reported income from a business he owned on economic disclosure reports he filed as a lawmaker and candidate for governor.

Penalties for the offense, if proven before the campaign finance board, range from an official being simply asked to file a new report to a gross misdemeanor with a $3,000 fine.


Pawlenty says he didn't think he was required to report that he earned income from the business, called Bamco. But by not reporting all of his business ties on the disclosure forms, Pawlenty effectively made it far more difficult for anyone to track his links to telecommunications companies that have been accused of cheating some customers.

Pawlenty's spokesman said in a statement Wednesday evening that Pawlenty found the disclosure form confusing and so consulted his tax accountant, who advised against disclosing the payments because the form didn't include a section to report income earned as an independent contractor or consultant.

Pawlenty told reporters in a lengthy discussion on Tuesday that he earned $4,500 per month between August 2001 and September 2002 for legal and business consulting work he did for a pay phone company, Access Anywhere.

No 'Associates'

It was paid to him through a business that state records indicate he started on June 12, 2001, called Bamco &; Associates, LLC. Despite the name, Pawlenty was the only person associated with the company.

In the two pages of instructions given to public officials to explain disclosure requirements, officials are told to list, under the heading "Sources of Compensation," "payment for services as a director, officer, owner, member, partner, employer, employee or payment of an honorarium."

Instead, Pawlenty reported Bamco only under the heading of "Securities," bunching it with stocks and mutual funds he owned.

Jeanne Olson, executive director of the state's campaign finance board, said if a public official receives more than $50 in any given month as an owner of a business, they have to report that as income.


"If an individual is getting monthly wages or compensation, then it would be compensation," she said. Securities, she said, are generally considered stocks and bonds.

She said she couldn't confirm whether a complaint has already been filed, but said the board would be required to rule on the matter if someone questions Pawlenty's filings.

Penalties would vary widely based on whether the board ruled that the violation was done on purpose. If the board decided it was an oversight, an office holder has 10 days to file a new report.

Fine is possible

If board members decide the omission was done knowingly -- a filer must sign the form certifying that the information they provide is correct, complete and true -- it would be a gross misdemeanor punishable by up to a $3,000 fine, Olson said.

"He was wrong to disclose it as investment when it was clearly his business," said Sen. John Marty, a DFLer from Roseville who has sought to toughen the state's disclosure law. "The form is pretty clear that if you are an employee or a board member or an owner or a partner, you have to disclose that."

To Marty, though, Pawlenty's financial ties revealed in newspaper accounts and by Pawlenty himself are proof that the state's laws are riddled with loopholes. He said he hopes to try again to revisit the law next session.

Hamline University professor David Schultz, an expert on campaign finance laws and a self-styled good-government watchdog, said he sees no way Pawlenty wasn't required to disclose under the law.


"Clearly he has a duty to disclose," said Schultz.

A larger question, Schultz said, is whether Pawlenty's pay was offered without the expectation of work, making it in essence an illegal corporate campaign contribution.

Both Pawlenty and Elam Baer, owner of Access Anywhere, say that was not the case.

"He did legal and business work," Baer said in an interview Wednesday. "I don't know exactly the hours."

But he said a lawyer like Pawlenty could easily fetch more than $250 per hour. "It doesn't take many hours to rack up $4,500 per month."

Pawlenty said he didn't believe the law required him to report any information about Bamco, because he was using it to do business as an "independent contractor," a category the law specifically exempts from reporting. Schultz, though, said Pawlenty couldn't have been an independent contractor if he had his own business.

What To Read Next
Get Local