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Lansing — An allied group that spent big on primary-season television ads featuring Gov.-elect Gretchen Whitmer went beyond "issue advocacy" by identifying her as a candidate, the state said as part of an ongoing campaign finance probe that could lead to significant penalties and fines.

Michigan Secretary of State Ruth Johnson, in a Nov. 27 letter obtained by The Detroit News, told the Build a Better Michigan group that a pair of ads featuring the East Lansing Democrat and the phrase “Gretchen Whitmer candidate for governor” were a form of express advocacy that directly urged viewers to support her election.

Groups that run issue ads are typically exempt from state campaign finance rules and disclosure laws if they avoid using words like “Smith for governor." Johnson, a term-limited Republican, said it was the “clear intent” of the Legislature to prohibit using substantially similar expressions like those in the pro-Whitmer ads to “circumvent” the Michigan Campaign Finance Act.

In a separate Dec. 7 letter, the Michigan Bureau of Elections asked Build a Better Michigan for additional information as it works to determine whether the committee's spending should have been disclosed as “in-kind” contributions to the Whitmer campaign. If so, the group may have given the campaign excessively large contributions and funding from prohibited corporate sources.

Because the commercials featured Whitmer in a speaking role, “it appears the video and audio used in the ads required cooperation, consultation, or [acting in] concert” between Build a Better Michigan, the campaign or the governor-elect herself, wrote Melissa Malerman, a senior election law specialist in the Michigan Bureau of Elections.

Build a Better Michigan was led by Mark Burton, a longtime Whitmer ally who is now helping run her transition team as she prepares to take office on Jan. 1. Burton said Thursday he'd resigned from Build a Better Michigan "a while back" and referred questions to a spokesman.

"We strongly disagree with the Secretary of State’s interpretation and we are working with their office to bring resolution to this matter," Mark Fisk said in a statement. "This is nothing more than a political complaint filed by political operatives for political gain at a time we should be working together to solve problems for Michigan residents.”

The letters are part of an ongoing investigation by the Secretary of State’s Office triggered by complaints from Michigan Republican Party Chief of Staff Colleen Pero and Tony Daunt, executive director of the conservative Michigan Freedom Fund.  The ads ran during Whitmer’s primary campaign, when she was competing against fellow Democrats Abdul El-Sayed and Shri Thanedar.

The Bureau of Elections asked Build a Better Michigan to respond to its request for additional information by Friday. The group had not yet done so as of Thursday, said Secretary of State spokesman Fred Woodhams.

Pero said the Michigan GOP is “beyond frustrated” the investigation has taken so long. It was prompted by the party's June complaint. Pero said the Bureau of Elections never told her about Johnson’s initial determination, but the GOP secured her Nov. 27 letter through a Freedom of Information Act request.   

“If there is express advocacy, it’s done,” Pero said, arguing Johnson's determination means the Build a Better Michigan ads were a form of illegal contribution to Whitmer. “They’re a corporation and you can’t give a corporate contribution, nor can you accept a corporate contribution.”

In her letter to Build a Better Michigan, Johnson made clear that her determination that the ads were a form of express advocacy is not a final ruling in the larger review sparked by the GOP complaint. Instead, she said her office chose to issue a separate finding “to caution other organizations who may consider using a similar strategy to advocate for or against a particular candidate under the auspices of an issue advertisement.”

“Use of similar language in a similar context will likely be found to constitute express words of advocacy and subject such advertisements to the reporting requirements of the MCFA,” Johnson wrote.

The finding is “very important,” said Craig Mauger, a watchdog with the Michigan Campaign Finance Network. If Johnson had treated the commercials as issue ads, “it could have allowed for an outpouring of anonymous money in a way we haven’t seen before.”

While Build a Better Michigan is a political group that files disclosure reports with the federal government, it received contributions from at least two non-profit groups that do not disclose their own donors. Non-profits are also increasingly running issue ads to influence elections without directly advocating for a candidate.

Johnson, a Republican, in 2013 attempted to require donor disclosure for election-season issue ads but was rebuffed by the GOP-led Legislature, which quickly wrote a permanent exemption into state law. 

“You can run these type of ads without disclosing donors now,” Mauger said. The debate over the Build a Better Michigan ads "is all about what falls under the Michigan Campaign Finance Act."

Daunt’s complaint alleged that the ads should have been treated as an “in-kind” expenditure on behalf of the Whitmer campaign by Build a Better Michigan, which was organized under Section 527 of the Internal Revenue Code and has filed quarterly disclosure reports with the federal government.

If that is the case, it “may result in a determination” that Build a Better Michigan violated several provisions of state law by failing to register as a state-level committee, failed to file campaign finance statements, accepted contributions that would not have been allowed under state law and exceeded contribution limits to Whitmer’s campaign, said Malerman from the Bureau of Elections.

Likewise, if the ads were in-kind contributions, Whitmer’s campaign “may” have filed incomplete or inaccurate statements, accepted at least one contribution that exceeds state limits and accepted a contribution from a non-profit corporation (Build a Better Michigan), which is not allowed under state law, Malerman wrote.

Michigan’s Republican-led Legislature last year weakened rules designed to prohibit coordination between campaigns and independent expenditure groups, including super political action committees.

But the 2017 law also increased penalties for illegal contributions by an independent expenditure committee to a candidate, making it a felony punishable by up to three years in prison and/or a maximum fine of $5,000 for an individual.

If the prohibited contribution or expenditure is made by a group, it could be subject to a fine of up to $20,000 and a fine of up to three times the amount that was spent. As of Sept. 20, Build a Better Michigan launched a $1.8 million ad campaign in July and had spent more than $2.4 million through Sept. 30, according to federal reports.

The Bureau of Elections gave Build a Better Michigan until the end of this week to respond to the request for additional information, including how much it spent on the two television ads, whether it solicited corporate or labor union contributions to fund the ads and how long it worked on the commercials.

“I don’t believe that there is any way to reasonably explain that someone speaking directly to camera, following a script, could be anything other than coordination,” said Michigan GOP deputy chief of staff Sarah Anderson.

Fisk said Build a Better Michigan is proud of the ads, which he said are "part of a long tradition of issue advocacy used by both parties for decades in Michigan" and are consistent with his group's mission of promoting affordable health care, better roads and clean drinking water.

joosting@detroitnews.com

Twitter: @jonathanoosting

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