IOWA ETHICS AND CAMPAIGN DISCLOSURE BOARD An Independent Agency ofthe Executive Branch MEGAN TOOKER 510 East Suite 1A BOARD MEMBERS: Executive Director Des Moines, Iowa 50319 lames Albert, Chair 8: Legal Counsel Telephone 515~281~4028fFax 515-281-4073 John Walsh, Vice Chair wmv.iowa.gov/ethics Carole Tillotson Ionathan Roos Mary Rueter Elaine Olson To: Ethics Board From: Megan Tooker Date: November 13, 20 18 Request for Board?Initiated Investigation Iowa Code section 688.3213 outlines the Board?s complaint procedures. Subsections one through six explains how the Board shall process and review a formal complaint filed by any person. Subsection of section 688.32B states: [T]he board may, on its own motion and without the ?ling of a complaint by another person, initiate investigations into mattens: that the board believes may be subject to the board?s jurisdictiom, This section does not preclude persons from providing information: to the board for possible board?initiated investigation instead ?ling a complaint. if; Subsection 8 of section 6833213 states: The purpose of an investigation by the board's staff is to determine whether there is probable cause to believe that there has been a violation of this chapter, chapter 68A, section 8.7, or of rules adopted by the board. To facilitate the conduct of investigations, the board may issue and seek enforcement of subpoenas requiring the attendance and testimony of witnesses and subpoenas requiring the production of books, papers, records, and other real evidence relating to the matter under investigation. Upon the request of the board, an appropriate county attorney or the attorney general shall assist the staff of the board in its investigation. Recently, I became aware of a letter that was sent to every mailbox in House District 26. The letter itself indicated it was paid for by Dan Kelley for State Representative, a candidate committee established by a former candidate in House District 29. As explained below, I have received information that leads me to question who actually paid for the letter. Moreover, even if the letter was in fact paid for by the Dan Kelly for State Representative committee, chapter 68A prohibits money from a candidate committee being spent to bene?t another candidate committee. Because the letter was purportedly paid for by a dormant candidate committee rather than the benefiting committee or a poiitical committee, the public has been deprived of contemporaneous reporting of this expenditure and the source of the money used to make the expenditure. I respectfully request the Board initiate an investigation to determine who paid for the letter and what campaign ?nance laws were violated in the process. A formal board?initiated investigation is necessary so the Board?s staff can have subpoena power to compel witness testimony and the production of documents. Background Facts in 2010, Mr. Dan Kelley registered the Dan Kelley for State Representative committee when he ?rst ran to represent Iowa House District 29. Mr. Kelley lives in Newton {Jasper County) and served in the Iowa House from 2011?2016 as the Representative for District 29. His committee remains open and his last disclosure report ?led January 12, 2018 indicates his committee has a negative cash~on?hand balance. Mr. Kelley has informed me since the end of 2016 that his campaign committee does not have any money in it and the negative balance is the result of an accounting error that he needs to fix. Mr. Kelley was last on a public ballot in 2016. He is not currently a candidate for any of?ce. Consequently, Mr. Kelley?s next disclosure report is not due until January 22, 2019. See Iowa Code On or about October 12, 2018, a letter was sent to every mail box in House District 26, which is located in Warren County. See Exhibit A. The letter's return address is the home address of Mr. Dan Kelley. The mailing also indicates it was "paid for by Dan Kelley for State Representative.? The subject of the letter is Representative Scott Ourth, the current Representative for District 26. The letter is very critical of Representative Ourth who is a Democrat, and ends by saying urge you to vote for the Republican in this race.? The letter indicates it is from Dan Kelley, although it is unsigned. I contacted Mr. Kelley on October 16th about his letter. He confirmed he sent it and told me he sent it on his own. On October 19th, through an attorney, he provided me with a written statement where Mr. Kelley stated he received a contribution from a friend to send the letter, which he claims he will disclose on his January 2019 report. See Exhibit B. An anonymous person told me Peyton Parker, a campaign staffer for Mr. Rebel Snodgrass, was seen at two post of?ces in District 26 mailing mass copies of the letter. Mr. Snodgrass is the Republican running against Representative Ourth. I talked to Mr. Parker and he acknowledged his involvement in the letter. He told me Mr. John Thompson, a Snodgrass campaign volunteer, had the idea to do a ?hit piece? on Representative Ourth. Mr. Thompson and Mr. Parker talked about the letter sometime around October 8. Mr. Parker said Mr. Thompson printed the copies of the letter on Thursday, 10/11 at the Spirit of ?7 6 warehouse. Mr. Thompson and Mr. Snodgrass are two of the three owners of Spirit of '76, a printing company. According to Mr. Parker, he picked up the copies of the letter the next morning (10/ 12) from the Spirit of '7 6 warehouse and took them to Mr. Snodgrass?s of?ce to sort and prepare for ?every door direct mail?. Mr. Parker said the letter had to be bundled into sacks of 100 with facing slips related to the particular mail routes. Mr. Parker said he met Mr. Snodgrass at Mr. Snodgrass?s office around 11:30. Mr. Parker said Mr. Snodgrass gave him $2400 in cash to send the letter. Mr. Parker sent most of the letters on Friday, October 12th. He told me he mailed the rest of the letters on October 15th or Mr. Parker said Mr. Snodgrass gave him some additional cash to ?nish the mailing. Mr. Parker estimates the letter cost approximately $2 in postage to mail. Mr. Parker said Mr. Thompson wrote the letter. Mr. Parker told me he had no interaction with Mr. Kelley regarding this mailing and Mr. Parker does not know why the letter said it was paid for by Mr. Kelley?s campaign committee. On October 26, 2018, Mrs. Dianna Kelley, who I believe is Mr. Kelley?s mother, purportedly filed a Statement of Organization with the Board for the Dan PAC USA. See Exhibit C. i say purportedly because the telephone number and email address listed for Mrs. Kelley are Mr. Kelley?s telephone number and email address. See Exhibit D. Shortly before the general election, a letter was sent to households in District 29 which was signed by Mr. Kelley and had an attribution statement on it indicating it was paid for by DAN PAC USA. See Exhibit E. That letter encouraged people to ?[v]ote Republican on or before November Possible Campaign Finance Violations Iowa Code sections 68A.302 and 68A.303 indicate how candidate funds may and may not be spent. This letter, which opposes one candidate and supports another in an election {neither of whom is Mr. Kelley} does not fall into a permissible expenditure for Mr. Kelley?s campaign under either section 68A.302 or 68A.303. Moreover, iowa Code section 68A.301 expressly prohibits one candidate committee giving a monetary or in?kind contribution to another candidate committee. Iowa Code section 68A.405 requires a ?paid for by? attribution statement on ?published material,? including ?direct mailing,? that is ?designed to expressly advocate the nomination, election, or defeat of a candidate for public office.? The attribution statement must disclose ?who is responsible for the published material.? It appears that either Mr. Kelley misused his campaign committee to make an impermissible in?kind contribution to Mr. Snodgrass?s campaign or Mr. Kelley allowed his campaign committee?s name to be referenced in the attribution statement mailer by the Snodgrass campaign in order to conceal who was truly responsible for the distribution of the letter. Moreover, because this year is not an election year for the Kelley committee, no disclosure will be made until January. Mr. Snodgrass?s campaign reports make no mention of the letter. Iowa Code section 68A.402A requires a campaign committee to report all of its ?nancial activities. Mr. Parker said Mr. Snodgrass gave him $2500-$2800 in cash to pay for the postage to mail the copies of the letter. Iowa Code section 68A.203 and iowa Administrative Code rule requires all monetary contributions to be deposited in a committee?s bank account and rule prohibits expenditures made with cash. It?s unclear at this point where the cash originated. Mr. Parker told me he helped out with other Snodgrass campaign mailings. Mr. Parker told me Mr. Snodgrass game him a campaign check for the postage for the 4?5 other mailings Mr. Parker assisted. Mr. Snodgrass owns a corporation, Rebel?s Custom Designs, Inc. which does business under the name Ail American Exteriors. Mr. Parker said Mr. Snodgrass paid him using a corporate check rather than a committee check. Mr. Parker said he?d been working for the Snodgrass campaign since 6/ 10 until 10/ 18 when he resigned. Mr. Parker said he got paid $l2/hour and worked about 40 hours/week.1 Iowa Code section 68A.503 prohibits a corporation from making a monetary or in? kind contribution to a committee, except for a ballot issue committee. As for the DAN PAC USA, it appears to be created by Mr. Kelley himself. His mother is listed as both the treasurer and chairperson but Mr. Kelley?s phone number and email address are listed in lieu of Mrs. Kelley?s contact information. Iowa Code section requires a PAC to list both a treasurer and a chairperson, which the Board has previously opined must be different people. See IECDB A0 2003-01. It?s not unusual for a PAC to list the same person for both chair and treasurer. Typically, we require separate individuals be listed before we 1 Mr. Snodgrass?s campaign reported one expenditure to Mr. Parker on July 16, 2018 in the amount of $1,908. 5 approve the statement of organization. What?s more troubling is that Mr. Kelley appears to be making at least a half?hearted attempt at concealing his involvement in the PAC by listing his mother as the chair and treasurer instead of himself. Iowa Code section prohibits a candidate for statewide or legislative of?ce to ?establish, direct or maintain a political committee.? I told Mr. Kelley via email on 10/ 17 that section prohibits him from establishing, directing or maintaining a PAC as long as he has an open campaign committee. See Exhibit F. For all of these reasons,.I respectfully request you order the Board?s staff to investigate these matters to determine what campaign finance violations have been committed by Mr. Kelley, Dan Kelley for State Representative committee, DAN PAC USA, Mr. Snodgrass, Rebel Snodgrass for Iowa committee and any other actor or entity associated with these alleged activities. Friend, For Six years I served in the Iowa State House as a Democratic Legislator. So I saw how the sausage was made. The Democratic Leadership would bring us into caucus and advise us how to vote based on how much it would bring in from special interests, instead of how it would help Iowans. One of those political back slappers was Scott Ourth, an all-around politician. He grew up in political corruption. He tells people what they want to hear, while voting for what will keep him funded. In 1988 Scott Ourth was press secretary for Congressman Roy Dyson, the of?ce was the target of several scandals. The office assisted aNaval Contractor with securing Defense Contracts that the Navy did not want, in exchange for political contributions. The chief of staff would have the staffers cash checks for personal use. An FBI investigation named ?Operation 11] Wind? began; which ended up convicting more than 50 people including the Assistant Secretary of the Navy of fraud. The Federal Elections Commission started tracking the money. Ourth and other staffers feared culpability. and began talking to the media to out the'Congressman and his chief of staff, Tom Pappas, as homosexuals. When the media published the reports of the homosexual conduct Tom Pappas immediately leaped to his death from a New York When Congressman Dyson was asked about the suicide he cited the smear campaign from the staff as the reason for Pappas? death. Sadly, political stories like this seem almost cliche?. Ourth, new a boughtmandmpaidmfor politician, who outed his boss as a homosexual in a time when it was political suicide, now pretends to care about progressive causes like marriage equality. He will as long as it keeps bringing him checks so he can tell you the storieShe wants you to hear to keep him working for his cronies in Des Moines. I went to the Capitol to serve my district?s interests carrying my Democratic values. The role of a statesman is to consider what is best for everyone in the district and to vote using their moral compass. Ourth lacks both a moral compass and the interest to listen to the people of his district. The people of Warren County should be represented at the capitol and not the wants of cronies in Des Moines. I urge you to vote for the Republican in this race. Former House Representative?Democrat HD 29 Dan Kelley 1104 11 St STD Newton, IA 50208 11.5. POSTAGE PAID EDDM RETAIL Locall Postal Customer :1 .1- . 14: ?21.22. rm . . I .1411 11/353; - .-. "?176, f: .1?1 any?wal Mrmime - 111 me a ltasse1-110.uf ?1:1.3 ?34? ?3 1'3" :1k1:u~h' dam. -. '1 . A11 FBI mvestlga11911.11.eu,1.ed. fo rat 1911.111.W111d..b.e 1111.1. d. 11.12%; 110-;50113 Pmpalgn - 3 the Assistant Semetary of ?1eSNavytt of and. 1e Fede1al El ctioni Con iisio11 ?93? 31:1; - _1 1311? started tracking the -111oney.S U111: feare CU I . and began talki11g_to the media tCoO out ?the Cong1essma11 and his cluef of staff T0111 . if?? ?Wheo the media pubhshed the? reports of the homosexual conduct .Tom. Poppas immedmteiy 1eaped .10 1111511111111 if1.4.1 a New Yo rk When Cohgressmah Dyson Was asked 3 - 5 i g, .-- about the suicide he cited the smear campaign frogm the staff as the reason for A i I death - . '15-'13? . . . 1.11Hash-111.$663 ?6 'mv i 31.1.. ?.715" "1'0 eat? I .S to. IAED . a? .. 5? 8?3 1w? 1 ?15?9? I n\ . ..- ,hnt ??31 ?if Disonunked 0,0 consullan "fsqu dd}; seu mum 'lm'i?eswo?e '113" 11399 $51111; 11111111"; .. 1" 1.. . l? munInf-15? ?3 .. I, I J. .11.:113? . . . 1. an ?.an 11m 1 ii plinth?? Jib?? "l . - - . .311 - . - 11'? .- 1111., u? Jlikl' .I E-dur' b. I . 'n 1" n-t, I . ., 5.: Rep Dyson Says Smear Drove an: Aide to Suicide -. - 111mm: 1? 3 3 {mew a I o. ,P1110?,?: 2 -. 121-?111111 41?13" .x . ?ten-10?29?lid? 1" 0 15' o? 6? .?Rdx?x 4949.0? 611:? {c ?at 1.- .1 Ms. Tooker, October. 19, 2018 In response to your questions I think that you are of the impression that another campaign committee paid for resources to use in my committee. The answer to that is flatly I think you are also of the belief that the intent of the letter was primarily to aid another candidate committee. That was also not my intent. I did not state another candidate's name or committee name and the candidate I did discuss certainly would not consider it a contribution. My intent was to fight back at folks associated with the who have continued an intimidation campaign against me while showing that I am willing to fight back at Democrats now that have changed parties. I wanted to establish that I am loyal to the Republican Party. This mailing will support me in a future campaign as a Republican. In the last cycle I was put through the ringer. People associated with the lowa Democratic Party have continued an intimidation long past my public service. The intimidation has included setting up take social media accounts and taking photos of me in public or pictures of my home and car with comments such as ?he needs to get a new window" or ?it looks like he got a new license plate. These accounts seem to have been deleted since the mailing suggesting that have successfully fought back the reputation they intended to establish and have been helpful to my candidacy as a Republican. i made a lot of Republican Friends and i decided to stand up to the bullies. suggested to a friend who is not a candidate the desire to make it clear that I will fight back against the Democrats who were recently attacking me on social media. i said I would like to go after them by mailing Democrats indicating some of their corruption but i did not have the resources in my committee account to do so. My friend told me that he would specifically pay for mailings to attack Democrats to establish a reputation for me as a Republican candidate. He provided me a personal contribution for that purpose which I plan to disclose properly on my committee account as either an ln-Kind contribution for the mailing or as a contribution to my committee and then an expenditure, which ever way you would advise. i believe this letter will greatly support my candidacy as a Republican candidate which was my intent. As to your specific questions. 1. I do not have money in my campaign account. This is true that I do not have a meaningful amount of money in the account. 2. I did not raise money for my campaign account this year. I expressed the desire to establish legitimacy as a Republican candidate by attacking Democrats and a Republican friend paid to do it which as 1 stated on our phone call I will properly account for. 3. interpreted your question of ?you acted alone" to mean that this was done without the help of support of another committee. This is true. We accomplished this in the way I already stated and planned to do the same in several key districts to establish me as a Republican candidateown money. am not trying to obfuscate any details to get around rules. I am willing to identify more details to you then required ahead of the filing deadline in confidence. However, it seems as the ?ow of information of details gathered by your inquiry immediately get back to the foiks that have been intimidating me for the past several years. You have a great reputation as a fair trustee with non?partisan judgement. In this case you began questioning me and other people without a format complaint and potentially violated the civil liberties of several individuals. It seems to me that you then relay that information to partisan stakeholders in this case. This letter served to establish me as a Repubiican candidate and I intend to report the funding mechanism accordingly. welcome your input on a way to achieve my goal as a Republican candidate by standing up to these bullies. i also would like to change my affiliation of my committee to Republican and need to assign a new treasurer. Thank you for your assistance. Dan Kelley Sent from my iPhone Generated On: 10f29i2018 10:26:30 AM Statement of Organization Computer Committee Name: DAN PAC USA Committee Type: Iowa PAC Committee Code: County: Jasper Political Party: Republican District: 0 Date of Election: Year Standing for Election: 2018 Office Sought: Status: Fiied Date: 1012612018 Purpose Advocate for Statesmanship and true representation of constituents in iowa Treasurer Last Name: Keiiey [First Name: Dianna Mt: Address: PO Box 395 City: Newton State: IA Zip Code: 50208 Phone: 641-841-0825 E-Matl: Committee Chairperson Last Name: Ketiey FirstName: Dianna Mt: Address: PO Box 395 City: Newton State: iA Zip Code: 50208 Phone: 841-841-0825 E-Mail: dankelley@mchsi.com Statement of Affirmation By Treasurer and Candidate; or Political Committees, By Chairperson STATEMENT OF AFFIRMATION: By ?ling this document the committee af?rms the following: 1. The committee and ail persons connected with the committee understand that they are subject to the iaws in towa Code chapters 88A and 688 and the administrative ruies in Chapter 351 of the [ewe Administrative Code. 2. That iowa Code section 58A.402 and rule 3514.9 require the ?iing of disclosure reports and that the failure to ?le these reports on or before the required due dates subjects the candidate or chairperson (in the case of committees other than a candidate's committee) to the automatic assessment of a civil penalty and the possibte imposition of other criminal and civil sanctions. 3. Thai towa Code section 68A.405 and rules 351-488 through 4.41 require the placement of the words "paid for by" and the name of the committee on all political materials except ior those items exempted by statute or rule. A committee that wishes to register a committee name for purposes of using the shorter "paid for by? and does not intend to cross the $1000 ?ling threshold shatl ?le the Form DR-SFA term in lieu of ?ling this form. 4. That towa Code section 68A.503 and rules 3514.44 through 4.52 prohibit the receipt of corporate contributions by all committees except for ballot issue PACs. 5. A candidate and a candidate's committee may only expend campaign funds as permitted by Iowa code sections 68A.301 through 68A.303 and rule 351-425. 6. That the committee will continue to ?le disclosure reports until activity has ceased, committee funds spent. debts resolved, and a ?nal report and a statement of dissolution (DR-3) has been ?led. Candidate: (signature and date) Treasurer: (signature and date) IOWA ETHICS AND CAMPAIGN DISCLOSURE BOARD 510 EAST 12th. SUITE 1A I DES IA 50319 (515) 281-40 Generated On: 11l1312018 12:26:21 PM Statement of Organization Edited udlted Computer Committee Name: Dan Kelley for State Representative Committee Type: State House Committee Code: 1946 County: Jasper Political Party: Democratic District: 29 Date of Election: 6!?!2016 Year Standing for Election: 2016 Office Sought: State Representative Status: Adjusted Date: 10/2312018 Purpose Treasurer Last Name: Kelley First Name: Dan Ml: Address: 1104W118t.8 City: Newton State: lA Zip Code: 50208 Phone: 641?841?0825 E-Mail: dankelley@mchsi.com Candidate Last Name: Kelley Daniei Ml: Address: City: Newton State: iA Zip Code: 50208 Phone: 641?841-0825 E?Matl: dankeltey@mchsi.com Statement of Affirmation By Treasurer and Candidate; or Political Committees, By Chairperson STATEMENT OF AFFIRMATION: By ?ling this document the committee af?rms the fotlowing: 1. The committee and all persons connected with the committee understand that they are subject to the laws in lowa Code chapters 68A and 688 and the administrative rules in Chapter 351 of the lowa Administrative Code. 2. That lowa Code section SBAAOZ and rule 351-4.9 require the ?ling of disclosure reports and that the failure to ?le these reports on or before the required due dates subjects the candidate or chairperson (in the case of committees other than a candidate's committee) to the automatic assessment of a civil penalty and the possible imposition of other criminal and civil sanctions. 3. That iowa Code section 68A.405 and rules 3.51?4.38 through 4.41 require the placement of the words "paid for by" and the name of the committee on alt political materials except for those items exempted by statute or rule. A committee that wishes to register a committee name tor purposes of using the shorter "paid for by" and does not intend to cross the $1000 ?ling threshold shall ?le the Form DR-SFA form in lieu of ?ling this form. 4. That iowa Code section 68A.503 and rules 351-4414 through 4.52 prohibit the receipt of corporate contributions by alt committees except for ballot issue PACs. 5. A candidate and a candidate's committee may only expend campaign funds as permitted by Iowa code sections 68A.301 through 68A.303 and rule 351-425. 6. That the committee will continue to ?le disclosure reports until all activity has ceased, committee funds spent, debts resolved. and a ?nal report and a statement of dissolution (DR-3) has been ?led. Candidate: (signature and date) Treasurer: (signature and date) IOWA ETHICS AND CAMPAIGN DISCLOSURE BOARD 510 EAST 12th, SUITE 1A DES MOINES, 50319 (51 5) 281-40 1mage1.;peg 111?6f2018 1H 101199018 State of iowa Mail letter circulated in House district 26 Tooker, Megan letter circulated in House district 26 1 message Tooker, Megan Wed, Oct 17, 2018 at 11:17 PM To: dankelley@mchsi.com Dan, The purpose of this email is to memorialize our telephone conversation yesterday. You confirmed you are behind a letter that went out to House District 26 residents which was critical of Representative Ourth and stated urge you to vote for the Republican in this race." The letter indicated it was paid for by Dan Kelley for State Representative. I contacted you for two reasons. First and foremost, this letter is not a permissible campaign expense. Iowa Code section 68A.302 and 68A.303 indicate how candidate funds may and may not be spent. This letter, which opposes one candidate and supports another (neither of whom is you), does not fall into a permissible expenditure under either section 68A.302 and 68A.303. Moreover, Iowa Code section 68A.301 expressly prohibits one candidate committee giving a monetary or in?kind contribution to anther candidate committee. Secondly, your most recent campaign reports indicate you have a negative balance of approximately $2400. You and I have spoken more than once about your cash on hand and you have told me since the end of 2016 that you didn?t have any money in your account and needed to find your accounting errors. You have yet to do so. Yesterday, you reiterated that you don't have any money in your campaign other than $3 or $4 in your bank account. This obviously raises the question of where you got the funds to mail this letter to what appears to be every mail box in district 26 and at least a few in outside the district. You were very evasive with me and refused to tell me where you got the money. You told me four things that all cannot be true: 1. You don't have any money in your campaign account. 2. You have not raised any money for your campaign account this year. 3. You acted alone in sending this letter 4. You didn't use your own money. The only reasonable explanation is that you are attempting to misuse your dormant campaign committee to conceal or at least delay disclosing who was involved and where you got the money. I am very frustrated with your lack of candor. I would like to help you try to fix this very serious campaign finance violation but I cannot do so if you aren't being honest with me. If you coordinated the expenditure with the Snodgrass campaign, the campaign has to report the expenditure as an in?kind from the individual(s) who paid for the mailing or has to report the expenditure on its expenditure schedule if the campaign directly paid for it. If you raised money to pay for this mailing, then you 1i2 10i1912018 State of Iowa Mail - letter circulated in House district 26 should have registered a PAC and disclosed the money raised the cost of the mailer. (the next filing deadline is 10/19) The problem with you registering a PAC is that as a legislative candidate, you are prohibited under Iowa Code section from establishing, directing or maintaining a PAC. We will continue to consider you a legislative candidate as long as you have an open campaign committee. Finally, if you sent the mailer without prior approval or coordination with the Snodgrass, then an independent expenditure statement would have been required within 48 hours of making the expenditure. Dan, you need to come clean and tell me who was involved and where the money came from. an Megan Tooker Director and Counsel Iowa Ethics and Campaign Disclosure Board 510 E. 12th Street, Suite 1A Des Moines, IA 50319 tel. (515) 281-3489 Like us on Facebooki 2i2