SD Democrats Under Investigation

From the Argus Leader this morning:

The secretary of state's office has forwarded possible evidence to Attorney General Larry Long that at least two Democratic political action committees failed to report $55,000 in contributions from an out-of-state donor.

"We have turned all of that over to the AG," Secretary of State Chris Nelson said.

Long said last week he can't confirm or deny the existence of an investigation.

But Nelson said his office forwarded items to the attorney general indicating that South Dakota PACs might have violated the state's campaign-finance law by not reporting the contributions.

Nelson didn't name the PACs, but he did say they are related to a controversy surrounding contributions made by the wife of a prominent Democratic politician in Minnesota.

Nelson's office began looking into the matter in July after news reports in Minnesota linked the political contributions of Lois Quam, a wealthy businesswoman there, to at least two Democratic-controlled political action committees in South Dakota.

The contributions, made in 2003, were allegedly funneled through the PACs to the South Dakota Democratic Party. The state party then sent most of the money back to the Democratic-Farmer-Labor Party in Minnesota. Documents faxed anonymously to Minnesota reporters purportedly show that the money ended up in a DFL campaign committee controlled by Matt Entenza, Quam's husband.

Entenza is the minority leader in the Minnesota House. Last month, he withdrew from the Minnesota attorney general's race after admitting to hiring a firm to research Mike Hatch, Minnesota's current attorney general and a DFL candidate in this year's governor's race.

The South Dakota inquiry focuses on what happened to the checks allegedly written by Quam. Nelson said the checks aren't reflected on the finance reports that PACs are required to file with the state.

Nelson declined to say how many PACs were involved.

Quam reportedly wrote a check for $30,000 to a PAC controlled by Bret Healy, the former executive director of the South Dakota Democratic Party. Another check for $25,000 allegedly was written days later to a PAC controlled by Debra Elofson.

Elofson currently serves as the legislative director for state Democrats.

The PACs didn't report the checks in their year-end reports. Elofson did not return a call left at the party's office in Sioux Falls on Wednesday.

Healy said the checks were deposited into a separate account and reported on another PAC report.

"It's much ado about nothing," he said.

When asked how checks written to two PACs ended up in the account of a third PAC, Healy said, "The reality is, if you go deposit something at a bank, it processes pretty easily."

Healy identified the third PAC as the South Dakota Legislative Leadership PAC. A review of secretary of state records found a similar PAC called the South Dakota Leadership PAC, but no reports exist for the entity before 2004.

The South Dakota Democratic State House Fund, another PAC, did report $45,000 in contributions from Quam in 2003. But it isn't clear if that $45,000 was a separate contribution.

Quam could not be reached for comment.

Jason Schulte, the current executive director of the South Dakota Democrats, said the contribution predates his arrival at the party.

State political parties "routinely transfer different types of money to each other to maximize resources," Schulte said.

"This is a question as to whether or not those two PACs accurately reported income," he said. "To the best of my knowledge, the state Democratic Party reported all of its activity accurately."

In Minnesota, campaign-finance complaints are handled by the Minnesota Campaign Finance and Disclosure Board, a six-member board that has the power to investigate and punish violators.

Executive Director Jeanne Olson said Tuesday that she's barred from confirming or denying the existence of a complaint. She did say all complaints are investigated and that the board issues a public decision about each complaint.

"When a complaint is filed, we have to issue findings concerning probable cause," Olson said.

Decisions aren't available until 24 hours after they're issued, she said.

Earlier this month, the board fined Entenza $28,105 for violating Minnesota campaign-finance limits last year.

Both Entenza and Quam have ties to South Dakota. Entenza attended Augustana College, and the two have contributed thousands of dollars to South Dakota Democrats during the past few years, according to federal campaign reports.

The story by Jonathan Ellis can be found here.

UPDATE

I imagine this group will have more to say about this story.