When the Josh Mandel campaign returned $105,000 last month to donors who had come under FBI scrutiny, the campaign was left with political egg on its face.
But should the Mandel campaign have refused the donations in the first place -- or at least questioned the donors to find out whether the contributions were completely legal?
Yes, say Democrats, who are busy trying to define the Republican state treasurer as "a politician we can't trust."
No, say Republicans and several campaign-finance-law experts contacted by The Blade, who said campaigns can't be expected to know where donors get their money or to level accusations without good evidence.
Mr. Mandel is running against incumbent Democratic U.S. Sen. Sherrod Brown, who is seeking a second term. The race is viewed nationally as a toss-up, in part because of Mr. Mandel's success in raising campaign cash.
On May 22, Mr. Mandel's campaign returned contributions of $5,000 each to 21 people after it became public that the contributions were under investigation by the FBI -- but months after The Blade raised questions about the contributions.
So far, the FBI has announced no findings from its investigation.
And the Mandel campaign said it was returning the donations only out of an abundance of caution, not because it had reason to doubt they were legitimate. That the Mandel campaign returned the funds months after the FBI investigation apparently began, and only after it came to light in the media, has raised questions of its own.
Justin Barasky, spokesman for Mr. Brown, said Mr. Mandel or his committee should know who his big-ticket donors are, and his campaign has an obligation to vet its donors to make sure they can make legal contributions.
"Josh Mandel does nothing but fund-raise. He has an entire team of fund-raisers, probably has a compliance officer, treasurer, research staff. They should have known when they got $100,000 from employees at one company, and they're maxed-out contributions, and you realize none of them has given money before, and many of them didn't have means to do so, [so] that should have set off alarms," Mr. Barasky said.
"It's very clear that Josh Mandel only returned $105,000 in shady campaign cash after the FBI investigation became public and created negative headlines for him and that sort of behavior is consistent with hiring unqualified political cronies and missing every single board of deposit [meeting] his first year in office."
The Mandel campaign declined multiple requests for interviews and failed to respond to written questions for this story. After a speech in Toledo on Thursday night, Mr. Mandel avoided a Blade reporter and rushed out of the building through a service entrance.
But Bob Bennett, chairman of the Ohio Republican Party, said campaign treasurers and finance directors don't know enough about most of their contributors to take the step of questioning the legality of their contributions.
"They're not going to be able to tell that," Mr. Bennett said. "That's an impossibility to get into the mind of a contributor. We know that in some cases -- and this goes for both parties -- people will arrange to reimburse people who have made contributions. That is illegal. Every finance director knows that and will go over that with whoever the host is and will caution them."
"It's a pretty high standard," said Bob Biersack, senior fellow with the Center for Responsive Politics, a nonprofit organization that tracks political contributions and advocates for strong campaign finance regulations. "The [Federal Elections Commission] would never say it is the responsibility of the [campaign] treasurer to make sure these people have the wherewithal to do this."
"If somebody presents them with information that these really were contributions in the name of another, which I think is what we're talking about here, or that they were compelled to make these contributions, then yes, the campaign is compelled to act," Mr. Biersack said.
The Federal Elections Commission has published regulations saying that a campaign committee won't be fined if it has made "best efforts" to collect and report accurate information.
The rules, spelled out in the 2011 Congressional Candidates and Committees Guide, explain what contributions are illegal. If a campaign committee learns that a contribution appears to have been made illegally, it must refund the contribution within 30 days of making the discovery.
Who gave what?
The FBI is investigating more than $200,000 in campaign contributions from employees at the Suarez Corp., a Canton direct-marketing firm owned by Benjamin Suarez, a frequent financial supporter of Republican causes.
The Blade reported in August that 16 of the firm's employees and some of their spouses gave maximum allowable $5,000 contributions to Mr. Mandel, U.S. Rep. Jim Renacci (R., Wadsworth, Medina County), or both candidates. Mr. Renacci is seeking re-election against U.S. Rep. Betty Sutton of Copley Township in Summit County. The two are facing each other because congressional redistricting has changed district boundaries.
Many of the employees had never given to federal campaigns before, lived in modest homes, and held job titles such as "copywriter." Almost all the contributions to the Mandel campaign were made on the same day, June 2, 2011; most of the Renacci contributions were made from March 29 to April 1, 2011.
The FBI investigation began at least four or five months ago, according to James Slepian, chief of staff for Mr. Renacci.
On May 22, the Mandel campaign refunded $105,000 to the Suarez donors. It said it was returning the money "out of an abundance of caution." Mandel spokesman Travis Considine has refused to return phone calls or emails seeking more information.
The situation is ironic in that Mr. Mandel is the state's treasurer, with the task of keeping tabs on and properly investing more than $160 billion of the state's money.
Mr. Slepian said Mr. Renacci has declined to return the money because since the congressman's office learned of the investigation, "no new information regarding the inquiry has surfaced and there remains no reason to believe these donors acted improperly. Should we ever hear otherwise, the donations will be returned."
Mr. Suarez has said the employees are paid well and were not reimbursed by him or his company. So far, the FBI has declared no charges or wrongdoing. Nor has the FBI said what the potential wrongdoing could be.
Federal election law prohibits making contributions to political candidates in the name of another person. Violation of the law can result in a heavy penalty.
In 2007, the Federal Election Commission announced that a Virginia company would pay a $1 million civil penalty, the second-largest ever, for knowingly funneling $78,000 in corporate contributions to two federal candidates. The company's owner pleaded guilty to felony election fraud and an office manager pleaded guilty to a misdemeanor. None of the conduits was charged. The FEC determined that neither of the candidates knew of the fraud.
Campaign treasurers and finance directors walk a narrow line.
They want to bank every legal contribution, while making sure the campaign is not tainted by any embarrassing campaign contributions.
Recipe for scandal
An illegal contribution or a donor behaving badly can hurt the candidate, or even the whole party.
Ohio Republicans suffered a rare thrashing in the 2006 election -- in which Mr. Brown was elected to the Senate -- because, at least in part, of voter revulsion with the Tom Noe scandal. The former Lucas County Republican kingpin was convicted that year of laundering $45,400 in illegal contributions to President George W. Bush's re-election campaign in 2004 through conduits and of stealing from a $50 million rare-coin investment fund he established for the Ohio Bureau of Workers' Compensation.
The Bush campaign in 2006 donated the $45,400 to charity.
And in 2008, Hillary Clinton's campaign for the Democratic presidential nomination was sidetracked by revelations that California businessman Norman Hsu, who collected and turned in more than $850,000 in contributions to the Clinton campaign, was a longtime fugitive and had engaged in an illegal investment scheme. Mrs. Clinton gave back the money.
Contributions to federal candidates above $200 are required to be reported by the campaign with the name of the donor, the date the contribution arrived, the person's name and address, his or her occupation, and employer.
Treasurers and finance directors are expected to be on the lookout for illegal contributions. Some are obvious, such as checks that exceed the cash contribution limit, which is $5,000 from an individual in an election cycle, or checks that are written by corporations or foreign nationals, which are prohibited.
In those instances, the check must be returned and the campaign can chalk up the misstep to some contributor not knowing the rules.
It's another thing to accuse a contributor of knowingly contributing money in the name of another person.
Local Democratic fund-raiser Jerry Chabler of Sylvania said the Mandel campaign should have identified the suspicious-looking contributions and inquired about them to make sure the donors were aware they could not accept reimbursements.
"It's not only appropriate, it's incumbent on the treasurer to do that. It's part of his job. This whole thing didn't pass the smell test. When folks were making low wages or low annual incomes and they were making $5,000 contributions apiece, that's reminiscent of something that happened a few years ago," Mr. Chabler said, alluding to the Noe scandal.
Mr. Chabler acknowledged that the campaign can't know what's happening with every check.
"But when you're receiving $5,000 checks or even $1,000 checks, it's up to him to scrutinize that. The finance director knows who the major contributors are and in most cases should be able to tell whether that John Smith has the wherewithal. If nothing else, a spot check," Mr. Chabler said.
Contributions of $5,000 are relatively common in a high-spending U.S. Senate race.
Mr. Brown's campaign reports on file with the Federal Election Commission show 4,236 donors giving more than $200, with 135 giving $5,000 or more during 2011 and 2012.
Mr. Mandel opened his campaign finance account with the Federal Elections Commission in April, 2011. Since then he has logged 3,711 unique individual itemized donors. Of those, 481 gave $5,000 or more -- more than three times the number of $5,000 contributors to Mr. Brown, according to the nonprofit group www.opensecrets.org.
In total contributions, as of the March 31 reporting deadline, Mr. Brown had $6.2 million in his campaign account and Mr. Mandel had $5.2 million.
Contact Tom Troy at: firstname.lastname@example.org or 419-724-6058.