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In re Application of Friends of Vanel

Supreme Court, New York County

August 26, 2013

In the Matter of the Application of Friends of Clyde Vanel, CLYDE VANEL 2009 CAMPAIGN, CLYDE VANEL, Petitioners, For Judgment Under Article 78 of the CPLR
v.
New York City Campaign Finance Board, Respondent.

Unpublished Opinion

Eileen Rakower, J.

Friends of Clyde Vanel, Clyde Vanel 2009 Campaign, and Clyde Vanel (collectively, "Petitioners"), bring this Article 78 proceeding to challenge the New York City Campaign Finance Board's (the "Board") decision to impose penalties against Petitioners for violations of the Campaign Finance Act and Board Rules. The Board opposes.

Clyde Vanel ("Vanel") was a candidate in the 2009 primary for City Council District 27. Friends of Clyde Vanel ("the Committee") was Vanel's designated campaign committee for the 2009 election. Petitioners participated in the NYC Campaign Finance Program ("the Program") and received a total of $70, 050 in public funds.

Following a post election review of Petitioners' reporting and documentation for the 2009 election, the Board staff sent Petitioners a Public Funds Notice and a Penalty Notice on June 8, 2012. The Public Funds Notice recommended that Petitioners repay $32, 214 in public funds. The Penalty Notice recommended that Petitioners be assessed total penalties of $9, 753 for a variety of violations of the Act and Board Rules.

On October 5, 2012, Petitioners submitted a written response contesting the allegations in the Public Funds and Penalty Notices. On November 29, 2012, Vanel appeared before the Board to contest the allegations in the Public Funds and Penalty Notices ("the Hearing"). After review of the documents and oral statements from Petitioners and Board staff, the Board issued a final determination on December 13, 2012, which: a) reduced the scope of the undocumented transactions, impermissible post-election expenditures, and over-the-limit contributions findings; b) eliminated findings for failing to provide bank statements and report an in-kind contribution; and c) reduced Petitioners' public funds repayment by $32, 674. [1]

The Board ultimately determined that the amount due from Petitioners was $7, 871 based on the following assessed penalties: 1) $250 for accepting two corporate contributions; 2) $300 for filing a disclosure statement six days late; 3) $2, 000 for failing to accurately report cash receipts; 4) $500 for failing to accurately report monetary receipts; 5) $1, 452 for failing to document 31 transactions; 6) $117 for making impermissible post-election expenditures; and 7) $2, 712 for accepting over-the-limit contributions. Petitioners do not contest the Board's assessment of a $117 penalty for making impermissible post-election expenditures, but challenge the remaining penalties in the action. To date, Petitioners have not paid any of the portion of the Board's penalty assessment, including the $117 penalty they do not contest.

The Board administers the NYC Campaign Finance Program ("the Program"), which provides public matching funds to candidates for NYC public office. To qualify for these public funds, a candidate agrees to abide by the Program's requirements, which include but are not limited to: a) limitations on the source or amount of contributions the campaign may receive; b) the filing of periodic disclosure statements that report contributions and expenditures; and c)the reporting and documenting of campaign-related transactions. (Admin Code §3-701).

After the election, Board staff conducts a thorough audit of each campaign's records and disclosure statements, and notifies each campaign of any potential public funds repayment obligation or violation of the Act and Board Rules. (See, Admin Code 3-710). Alleged repayment obligations are communicated in the Post-Election Public Funds Calculation Repayment Notice ("Public Funds Notice"), and alleged violations and recommended penalties are communicated in the Alleged Violations and Recommended Penalties Notice ("Penalty Notice"). (Admin Code 3-710[4], 3-710.5[ii]). Campaigns may contest the allegations contained in the Notices in writing and/or by appearing before the Board. (Admin. Code 3-710[4], 3-710.5[ii]; Board Rule 7-02[c]).

The Board may assess penalties of up to $10, 000 each for most violations of the Act or Board Rules. (Admin Code §3-711). The candidate and committee are jointly and severally liable for assessed penalties. Although penalties are ultimately subject to its discretion, the Board promulgated a schedule of recommended civil penalties ("baseline penalties") for common infractions and violations in effect for the 2009 election cycle in the Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations of the 2009 Elections ("Penalty Guidelines") (See, Admin Code §3-711[1]).

The New York City Campaign Finance Act, Administrative Code 3-710, states in pertinent part:

1. The Campaign Finance Board is hereby empowered to audit and examine all matters relating to the performance of its functions and any other matter relating to the proper administration of this chapter...
2. (a) If the board determines that any portion of the payment made to the principle committee of a participating candidate from the fund was in excess of the aggregate amount of payments which such candidate was eligible to receive pursuant to this chapter, it shall notify such committee and such committee shall pay to the board an amount equal to the amount of excess payments.
(b) If the board determines that any portion of the payment made to aprinciple committee of a participating candidate from the fund was used for purposes other than qualified campaign expenditures, it shall notify such committee of the amount so disqualified and such ...

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