2008-6: Clarification of Reporting Requirements for Intermediary Provisions of Administrative Code Section 3-702(12)

Re: New York City Administrative Code ("Admin. Code") §§ 3-702(12), 3-703(1)(d), (g); Campaign Finance Board Rules 3-03(c)(7), 4-01(b)(5); Op. No. 2008-6.

The New York City Campaign Finance Board (the "Board") is issuing an advisory opinion in response to a query from John Siegal of Baker Hostetler on behalf of Weiner '09, Anthony Weiner's principal committee for the 2009 mayoral election, requesting clarification of "the new intermediary rule contained in Section 3-702(12) of the Campaign Finance Act."¹ This advisory opinion addresses the following questions:

• Where the known person or entity soliciting a contribution is different from the person or entity delivering the contribution to the campaign, does the campaign report the solicitor or the deliverer as the intermediary?
• If there are several known solicitors involved with a contribution, should the campaign report all the involved solicitors as intermediaries? If not, which of the solicitors should the campaign report as the intermediary?
• For a non-campaign sponsored event, when there is both a designated member of the host committee and another individual not on the host committee who claims to be a solicitor, which individual should the campaign report as the intermediary?

Increasing Transparency and Reducing the Appearance of Influence

The purpose behind the reporting requirements of Section 3-702(12) is to increase transparency, informing the public of the various relationships between candidates and those involved with contributions to the campaign.² Such transparency limits the appearance of the possible undue influence individuals or entities that solicit and/or deliver contributions to a campaign may have.³ While there is nothing intrinsically wrong with contributions that are solicited or delivered by intermediaries, the disclosure of such persons will help prevent the perception, regardless of whether such perception is accurate, that such individuals or entities have a higher level of influence on and access to the City's elected officials.⁴ Transparency in reporting and public disclosure will help ensure the public's confidence in the election process and in the fair dealings of the City's elected officials. The Board trusts that campaigns believe in the goal of increased transparency and want the public to know this intermediary information.

Expansion of the Definition of Intermediary to Include Solicitors

In 2007, Section 3-702(12) was amended to broaden the definition of an intermediary, also known as a "bundler," to include anyone, known to the campaign, who solicits a contribution for a campaign. Prior to this amendment, candidates were required to report contributions to the Board that were delivered through an intermediary (emphasis added).⁵ Under this more limited definition, unless the intermediary actually delivered the contribution to the candidate or his or her authorized committee, the campaign did not have to disclose such person as an intermediary.⁶

In order to close this "loophole,"⁷ the current language of Section 3-702(12), added in 2007, requires campaigns to report as intermediaries those who solicit contributions and are known to a campaign, ensuring that campaigns will disclose those responsible for soliciting a contribution regardless whether those persons or entities personally deliver the contribution:

The term "intermediary" shall mean an individual, corporation, partnership, political committee, employee organization or other entity which…(ii) solicits contributions to a candidate or other authorized committee where such solicitation is known to such candidate or his or her authorized committee. For purposes of clause (ii) of this subdivision only persons clearly identified as the solicitor of a contribution to the candidate or his or her authorized committee shall be presumed to be known to such candidate or his or her authorized committee.

In common practice, there are individuals and entities that solicit contributions for a campaign, yet do not actually deliver the contribution to the campaign; rather, the contribution is delivered by a different individual or entity. In such a scenario, where there is both a solicitor and a deliverer, it is the solicitor of the contribution that should be reported. The Board believes that, in most cases, by reporting the solicitor rather than the deliverer, the campaign is disclosing to the Board and the public the individual or entity that played a larger role and exercised greater influence in obtaining a particular contribution for a candidate.

Solicitor Must Be Known

Section 3-702(12) makes clear that a solicitor of a contribution must only be reported if the solicitor is "known to such candidate or his or her authorized committee." The Board is concerned with increasing transparency and limiting the influence of those outside the campaign who solicit contributions for the campaign; by requiring campaigns to disclose solicitors known to the campaign, such influence is limited and the public is aware of the solicitation. In practice, solicitors of contributions are often known to a campaign; however, if a solicitor is unknown to a campaign, then such solicitor does not have any influence or contact with the campaign, thereby obviating the need for disclosure.

A solicitor will be presumed to be known to the campaign only if an individual or entity is "clearly identified as the solicitor of a contribution to the candidate or his or her authorized committee."⁸ In order for a solicitor to be "clearly identified" to a campaign, there must be direct evidence linking an individual or entity to a particular contribution such as intermediary information listed on a contribution card or elsewhere. If a solicitor has not been "clearly identified" as the source of a contribution, then the campaign is not presumed to have known the solicitor and thus there is no requirement to report any solicitor for that contribution; the Board does not require or expect a campaign to investigate and track down possible solicitors for each and every contribution. The solicitor must be known to the campaign through clear identification.

In the event there are multiple known solicitors for a particular contribution, the Board requires the campaign to report only one solicitor for the transaction—the solicitor that the campaign believes had the most influence and played the largest role in obtaining the contribution. A campaign cannot report more than one solicitor per contribution.

In the event a campaign is unsure which individual or entity it should report as the intermediary of a contribution, a campaign can utilize certain easily accessible resources to determine who is primarily responsible for the solicitation. For example, a campaign can contact a specific contributor to request clarification as to which individual or entity was most responsible for the contribution. Additionally, campaigns are required to provide intermediaries with forms in which an intermediary must list which specific contributions he or she was responsible for soliciting.⁹ If a campaign reports an intermediary for a contribution, then that intermediary must sign the required form attesting to the contribution, under threat of criminal penalty.¹⁰

Non-Campaign Sponsored Event

Section 3-702(12) states that "where there are multiple individual hosts for a non-campaign sponsored event, the hosts shall designate one such host as the intermediary." The query posed to the Board is, for a non-campaign sponsored event, whom should a candidate report as the intermediary when, in addition to a designated member of the host committee, there is also a person not on the host committee who has identified herself as the solicitor of contributions for the event? Although there is some tension between this hypothetical and the process by which solicitations actually occur in practice, the Board will provide the requested guidance.

In keeping with the purpose of the intermediary rule, the candidate should report the individual—the non-committee member or the designated host committee member—that it determines had the most influence in soliciting the contributions for the candidate. Again, if the campaign is unsure as to which individual or entity to list as the intermediary, it can contact the contributor and/or it can review the intermediary statement, as explained above under the section titled "Solicitor Must Be Known."

Conclusion

In sum, in order to achieve the purpose of increasing transparency and limiting the appearance of undue influence associated with contributions, campaigns are required to disclose a known solicitor for a particular contribution. Where the known person or entity soliciting a contribution is different from the person or entity delivering the contribution to the campaign, the campaign should report the known solicitor as the intermediary. In the case where there are several known solicitors involved with a contribution, the campaign should report one intermediary—the one the campaign deems to have been the most responsible for the solicitation of the contribution. The same principle applies with regard to non-campaign sponsored events, when there is both a designated member of the host committee and another individual not on the host committee who claims to be a solicitor—the campaign should report as the intermediary the one it deems to have been most responsible for the contribution.

NEW YORK CITY CAMPAIGN FINANCE BOARD

¹See Letter from J. Siegel to Hon. Joseph P. Parkes, S.J., dated June 20, 2008 (available on NYCCFB website at http://www.nyccfb.info/PDF/aor/aor-2008-06-Weiner.pdf)

²See Testimony of Anthony W. Crowell, Counselor to the Mayor, before the New York City Council Committee on Government Operations, June 12, 2007, p. 4 (testifying that an expansive definition of intermediary will improve disclosure by informing the public of "the variety of relationships between intermediaries and candidates").

³See City Council Elections: A Report by the Campaign Finance Board, Vol. 1, at 20 (Sept. 2004) (discussing the concern that intermediaries may be exerting the same influence previously exercised by large individual contributors).

⁴ See Council Report of the Governmental Affairs Division and the Committee on Governmental Operations, Proposed Int. No. 586-A, Section III(A), June 21, 2007 (for similar analysis of reducing undue influence of those "doing business" with the City).

⁵See Admin. Code §3-702(12) (2004) ("The term ‘intermediary' shall mean an individual, corporation, partnership, political committee, employee organization or other entity which, other than in the regular course of business as a postal, delivery or messenger service, delivers any contribution from another person or entity to a candidate or authorized committee.")

⁶See Council Report of the Governmental Affairs Division and the Committee on Governmental Operations, Proposed Int. No. 586-A, Section V(D) (June 21, 2007).

⁷ Testimony of Anthony W. Crowell, Counselor to the Mayor, before the New York City Council Committee on Government Operations, June 12, 2007, p. 4 ("The expansion of the definition of intermediary to include those who solicit contributions will close the loophole in the current disclosure process and allow the public to see the variety of relationships between intermediaries and candidates"). See Public Dollars for the Public Good: A Report on the 2005 Elections, at 126 (September 2006) (stating that expanding the definition of intermediary to include solicitor will "provide fuller, more comprehensive disclosure").

⁸See Admin. Code §3-702(12) (2007).

⁹See Board Rule 4-01(b)(5) (Intermediary contribution statements).

¹⁰Id. See also 2009 Intermediary Statement ("The making of false statements in the Intermediary Statement is punishable as a Class E felony pursuant to Section 175.35 of the Penal Law and/or a Class A misdemeanor pursuant to Section 210.45 of the Penal Law. I hereby affirm that I did not, nor to my knowledge, did anyone else, reimburse any contributor in any manner for his or her contribution and none of the submitted contributions was made by the contributor as a loan.")