FEC fines Suf­folk Con­struc­tion

Gift to pro-Clin­ton su­per PAC im­proper

Boston Herald - - NEWS - By MATT STOUT

Fed­eral elec­tion of­fi­cials have slapped Suf­folk Con­struc­tion, led by CEO John Fish, with a prece­dent-set­ting $34,000 fine, rul­ing that the com­pany im­prop­erly poured hun­dreds of thou­sands of dol­lars into a pro-Hillary Clin­ton su­per PAC at the same time it held a mil­lion-dol­lar gov­ern­ment con­tract.

The civil penalty was first re­ported yes­ter­day on boston­her­ald.com and dis­closed this week by a cam­paign fi­nance watch­dog group that flagged Suf­folk’s $200,000 in do­na­tions. It is be­lieved to be the first fine the Fed­eral Elec­tion Com­mis­sion has levied against a gov­ern­ment con­trac­tor for con­tribut­ing to a su­per PAC, ex­perts say.

“There had been no prece­dent,” said Brett Kap­pel, a part­ner and po­lit­i­cal cam­paign fi­nance ex­pert at Ak­er­man LLP, a Wash­ing­ton, D.C., law firm.

“This is ac­tu­ally sim­i­lar to other is­sues with pay-to-play laws,” Kap­pel said. “If you make a con­tri­bu­tion (as a con­trac­tor), it’s a vi­o­la­tion of the law. It doesn’t mat­ter how small a por­tion of your busi­ness it is.”

The $34,000 fine is also no­table, said Kap­pel. Typ­i­cally the FEC fines those who run afoul of the law 10 per­cent of the money in­volved, which would have been $20,000 in this case. “From the FEC’s per­spec­tive,” he said, “this is sub­stan­tial penalty.”

The fine and de­ci­sion were de­tailed in an 11-page let­ter, dated Sept. 25, that FEC of­fi­cials sent to the Cam­paign Le­gal Cen­ter, the non­par­ti­san group that filed a com­plaint al­leg­ing Suf­folk im­prop­erly made two $100,000 do­na­tions to Pri­or­i­ties USA in 2015.

Suf­folk has been awarded more than $168 mil­lion in gov­ern­ment con­tracts since fis­cal year 2008 and at the time of the do­na­tions, held a $1.2 mil­lion con­tract for Depart­ment of De­fense pro­jects, ac­cord­ing to FEC doc­u­ments pub­lished by the Cam­paign Le­gal Cen­ter. Un­der fed­eral law, con­trac­tors are pro­hib­ited from mak­ing con­tri­bu­tions to a po­lit­i­cal ac­tion com­mit­tee.

Suf­folk had ar­gued that its fed­eral con­tract work rep­re­sented just a “small frac­tion” of its busi­ness, and that the PAC had re­funded the do­na­tions in June 2016. But fed­eral of­fi­cials re­jected that ar­gu­ment.

“While Suf­folk may con­sider its fed­eral con­tract work a ‘de min­imis’ por­tion of its over­all work, its $200,000 con­tri­bu­tions to the Com­mit­tee are not de min­imis,” FEC of­fi­cials wrote.

In the agree­ment, FEC of­fi­cials wrote that Suf­folk had “im­ple­mented new in­ter­nal con­trols ... since dis­cov­er­ing the vi­o­la­tion at is­sue,” in­clud­ing hav­ing out­side le­gal coun­sel as­sist with vet­ting “cer­tain con­tri­bu­tions.”

The FEC “did not find that the vi­o­la­tion was know­ing and will­ful,” ac­cord­ing to the agree­ment.

“Once Suf­folk dis­cov­ered the ac­count­ing er­ror, the funds were im­me­di­ately re­turned,” Dan An­tonel­lis, a Suf­folk spokesman, said in a brief state­ment.

It’s not the only time a Fish-led en­ter­prise has run afoul of cam­paign fi­nance laws last elec­tion cy­cle. Suf­folk Cares, a non­profit, which Fish heads as pres­i­dent, ac­knowl­edged it im­prop­erly con­trib­uted $250,000 to a sep­a­rate su­per PAC back­ing Clin­ton called Cor­rect the Record.

Un­der fed­eral tax law, char­i­ties that are or­ga­nized as 501(c)(3) non­prof­its — such as Suf­folk Cares — can’t make po­lit­i­cal do­na­tions. An IRS spokesman said yes­ter­day he could nei­ther con­firm nor deny if the tax agency has taken ac­tion against the char­ity.

STAFF FILE PHOTO BY CHRISTOPHER EVANS

‘FUNDS WERE ... RE­TURNED’: CEO John Fish’s firm, Suf­folk Con­struc­tion, is in hot wa­ter due to do­na­tions made to a Hillary Clin­ton su­per PAC.

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