Cash, claims of illegality already flying in Michigan's Senate race

Craig Mauger
The Detroit News

Republicans are accusing Democratic U.S. Sen. Gary Peters of "cheating" in his re-election race by coordinating with political groups that are supposed to work independently.

The criticism in December came after the GOP's preferred Senate challenger, John James, faced similar allegations a year earlier. 

Republican U.S. Senate candidate John James and incumbent Democratic U.S. Sen. Gary Peters are expected to face off in 2020.

All of the claims focus on the Senate candidates' potential collaboration with outside political groups that can raise and spend unlimited amounts of money as long as they do it independently of the candidates' campaigns.

These types of groups have already poured about $3 million into Michigan's 2020 U.S. Senate race, according to a Detroit News analysis. And the election is still more than 10 months away.

The flurry of activity in Michigan points to increased spending on battleground elections, what might be ahead this fall as Democrats try to retake the U.S. Senate from Republicans and the nation's loose enforcement of ethics laws, campaign finance experts said.

Peters, of Bloomfield Township, whose campaign has denied the accusations of illegal coordination, is one of two Democratic incumbents running for reelection in 2020 in states that President Donald Trump won in 2016.

Republicans hold a 53-47 advantage in the Senate, and Democrats are counting on holding Peters' seat in 2020 while finding four Republican seats to flip to regain control of the chamber. Republicans currently control 22 of the 34 seats up for grabs, but many of them are in solid GOP states.

Allegations of illegal coordination between candidates who face strict limits on how much they can raise from donors and outside groups that can accept unlimited contributions have become "disturbingly common," said Michael Beckel, research director at Issue One, a political reform organization.

"Campaign contribution limits exist to guard against corruption and the appearance of corruption," Beckel said. "Yet our country's anti-corruption laws are left in tatters when big money flows into super PACs and dark money groups that creatively find ways to skirt our anti-coordination rules."

Accusations against Peters

Republicans have accused Peters, a first-term Democratic senator, of breaking those rules.

The incumbent senator's campaign posted a page with photographs, footage and positive messages about Peters on its website on Nov. 1, according to a complaint filed by a Washington, D.C., based nonprofit named Foundation for Accountability and Civic Trust. The web page was called "What Michiganders need to know."

U.S. Sen. Gary Peters speaks at the 2019 NAACP convention in Detroit, Monday.

Within days, VoteVets Action Fund began running TV advertisements promoting Peters. The ads used photos, footage and messaging from the candidate campaign's new web page, according to the complaint filed with the Federal Election Commission. The Foundation for Accountability and Civic Trust alleged that Peters was using the page to illegally coordinate with outside groups.

"If the commission does not act and punish such a clear violation, candidates will continue coordinating with outside groups in violation of federal law," the complaint concluded.

The Foundation for Accountability and Civic Trust later filed a similar complaint against Peters and another organization that's supported him, Majority Forward.

But Democrats have noted that the FEC has dismissed similar complaints. Peters campaign spokesman Dan Farough called the new complaints "frivolous."

"The information is publicly available to anyone who wants the facts on Gary’s effective record for Michigan," Farough said in a statement.

Conservative-leaning media outlets and the Michigan Republican Party have highlighted the complaints against Peters. The Democratic incumbent has "reverted to cheating" to try to "save his job," state party chairwoman Laura Cox said.

James' similar allegations

Yet James, a Farmington Hills businessman who also ran for the U.S. Senate in 2018, faced similar allegations that FEC attorneys wanted to investigate further.

During his 2018 primary race against Grosse Pointe businessman Sandy Pensler, the James campaign posted an ad against Pensler on July 10, 2018, according to a complaint from Pensler's campaign. Four days later, a super PAC called the Outsider PAC posted its own ad, featuring similar captions and 10 seconds of the same video, the complaint alleged.

Republican U.S. Senate candidate John James speaks during a rally in Pontiac  on Oct. 17, 2018.

The Federal Election Commission's nonpartisan Office of General Counsel said there was reason to believe Outsider PAC had improperly republished material from the James campaign, according to a March letter.

The office proposed using a "compulsory process," which can include subpoenas, to get more information.

This is a portion of a March 18 letter from Lisa Stevenson, acting general counsel for the Federal Election Commission. The letter offers recommendations in response to a 2018 complaint involving GOP U.S. Senate candidate John James.

Grand River Strategies, a Lansing-based consulting firm that was working with both the James campaign and Outsider PAC, said different employees were working with each client and it had a "firewall" in place to avoid coordination. But the firm didn't provide statements to show employees "complied with the firewall policy," according to the general counsel's letter.

"Although they used a common vendor, Grand River Strategies, the vendor has a firewall in place designed to prevent the flow of information between its employees who work separately for the PAC and the James Campaign," an attorney for Outsider PAC wrote in September 2018,

The James campaign didn't respond to a request for additional information.

The FEC deadlocked 2-2 with Democrats agreeing there was a violation and wanting to gather more information and Republicans rejecting it. The tie effectively meant no wrongdoing was found and ended the examination of the complaint.

The two Republicans on the Federal Election Commission — Caroline Hunter and Matthew Petersen — said the allegations of coordination weren't based on "specific information."

"The commission has repeatedly stated it does not authorize investigations based on speculation," the Republicans said in an Aug. 30 letter.

This is a portion of the 2018 response letter from an attorney for the John James U.S. Senate campaign. The letter responds to a complaint that alleged James had improperly coordinated with a super political action committee.

But Ellen Weintraub, a Democrat and the FEC chair, said in her own letter on Aug. 9 that she agreed Outsider PAC had improperly republished a portion of the ad from the James campaign.

"Political actors will continue to flout the law as long as Republican commissioners continue to refuse to enforce it," Weintraub said.

The case showed James violated the law and Republicans "covered it up," said Alex Japko, a Michigan Democratic Party spokesman.

FEC's lack of enforcement

Groups and campaigns that illegally coordinate can face fines, but federal laws against coordination are rarely enforced. The FEC's six members normally are split, with the commission prohibited by law from having more than three members of one political party on it.

The commission "has frequently deadlocked on complaints against candidates and groups that appear to be violating coordination rules," said Beckel, the research director at Issue One.

The situation worsened this year after the resignation of Petersen left the FEC with only three members, meaning the commission is highly unlikely to act on the allegations against Peters or VetVotes Action Fund before the 2020 election. The FEC only has Weintraub, Hunter and Steven Walther, an independent. 

Since four members are required for the FEC to have a quorum and conduct business, most of its most important duties such as initiating audits and voting on enforcement actions won't happen.

The early exchanges between supporters of James and backers of Peters strike a more aggressive and persistent tone than those between James and his 2018 opponent, Democratic U.S. Sen. Debbie Stabenow, D-Lansing, who beat James by 6.5 percentage points.

Michigan's 2018 Senate race saw about $5.2 million in spending by groups acting outside of the campaigns, according to tracking by the nonprofit watchdog organization Michigan Campaign Finance Network. The 2020 race has already drawn more than half of that total, about $2.9 million, according to a News review of broadcast television ad sales and campaign finance disclosures.

The biggest spenders have been VoteVets Action Fund, which has spent at least $1.2 million promoting Peters on broadcast TV, and Restoration PAC, which has spent about $1 million criticizing Peters.

The early activity in the U.S. Senate race likely indicates what's to come, said Simon Schuster, executive director of the Michigan Campaign Finance Network.

"Campaigns have found many subtle ways to coordinate with super PACs supporting them," Schuster said. "If there is a newfound level of brazenness in those activities, it's merely a reflection of how commonplace this practice has become."

Twitter: @CraigDMauger