Blog: Day 4 of Easley campaign finance hearing

5:40 p.m. – Leake adjourns the hearing and says the board will meet behind closed doors Friday morning to discuss how to handle the Easley case before announcing its decision at about 9:45 a.m.

5:20 p.m. – Bob Hall, executive director of political watchdog group Democracy North Carolina, which filed a complaint that led to the elections board hearing, says documents introduced in the hearing show the emperor has no clothes.

Hall said it would be "ludicrous" for Easley's campaign not to want to know how much money Easley was bringing in to the Democratic Party through the "governor's fund" within the party.

The campaign had a "conscious plan" to route as many expenses as possible through the party, he says. He says he's also worried about corporate money being brought to the party by Easley.

"It's one thing to have a political party that is organized in support of a ticket," he said. "Where it's taking us ... is you can set up a shadow committee or a duplicate committee for your own candidate (within the party)."

The rising cost of campaigns are driving the move to more create fundraising and spending, Hall says.

Board member Robert Cordle says state law allows for unlimited contributions to and spending by political parties.

"I think it is illegal for a candidate to circumvent the $4,000 limit," Hall responded. "In practice, this is an end run."

"In practice, it is what our law allows," Cordle said.

Winfree says a donor's intent is critical to determining whether a circumvention of the contribution limits has occurred. Other than Lanny Wilson saying he gave money to the Democratic Party to help Easley, he says, there wasn't any evidence of such intent during the hearing.

"The campaign has much too much authority in how that money (raised for the party) is used," Hall said.

5:10 p.m. – Board Chairman Larry Leake says the obvious discrepancy in the testimony leaves the board with obvious choices of whether violations occurred that might require criminal prosecution. He asked incredulously whether Hicks knew what he was asked in calling for the DA to look at the case.

Easley is the one pushing for the DA to review the elections board's findings, Hicks says.

"Whatever happens, the public is going to ask, 'Did Mike Easley slip one over on the board?'" he said.

Board member Charles Winfree says the board cannot send the case to the DA just to clear Easley's name if they don't believe any crime occurred.

Winfree asks why Campbell would make allegations that make him look bad, and Hicks says he probably got caught in a lie and kept digging himself in deeper.

"There's a lot of it that just doesn't make sense," Hicks said, adding it makes even less sense for Easley to condone fake bills to his campaign.

4:55 p.m. – Easley believes it's important to refer any questions about campaign finance violations to the Wake County District Attorney's Office to err on the side of caution, says his attorney, Tommy Hicks.

Campbell should have known his services would have to be paid for, and he insisted on several occasions that he had been paid for his flights, Hicks said. Then, he said he never was paid.

"Here we have a young man who has become a sycophant to the former governor of this state who is essentially playing a shell game," Hicks said. "It seems he does not want to admit he has done wrong."

Hicks says it doesn't make sense for Easley to ask Campbell to bill the campaign for house repairs under the pretense that it was campaign travel. He says Easley wouldn't have gotten as far as he has in life by doing such foolish things for a few thousand dollars.

"For him to suggest that to McQueen Campbell would be absolutely ridiculous," he said.

Easley's testimony was consistent and credible, Hicks says.

Campaigns might need more internal controls to account for every penny more closely, he says.

"The question is, do you refer the case to the district attorney: Please do," he says.

4:45 p.m. – Cooney says three issues involve the Democratic Party: the flights, the "reattributed" checks and the purported scheme to funnel money from the party to the Easley campaign.

The party gave up the money related to the value of the flights, even though there was no reason to believe they were improper in-kind contributions, Cooney says.

"There is no control you could put in place if an individual and an organization agree to participate in a sham transaction," he said.

It would be impossible to do a background check on every contribution to determine if it's legitimate, he says.

The "reattributed" checks fall under the same umbrella, he says, in that the party took the donations at face value and properly reported them to the Federal Election Commission.

Cooney says the internal memos from the Easley campaign suggested some improper dealings, but the Democratic Party cooperated with the investigation to demonstrate that no scheme existed.

"We have been an open book," he said. "We've given up strategic, tactical documents."

After the state investigation, there is no evidence that the party channeled money to Easley to skirt contribution limits, Cooney says. The party would have spent money on Easley's campaigns in 2000 and 2004 to help him win and boost other Democratic candidates, regardless of how much money he brought to the party, Cooney says.

"The General Assembly has made what happened perfectly legal," he said about allowing unlimited contributions and spending by political parties.

4:35 p.m. – David Long, another lawyer for the Easley campaign, says there are no regulations for a compliance officer in a political campaign. In 2000, many companies didn't even have such positions because the collapses of Enron and other firms hadn't even happened yet, he says.

"It's a campaign committee. It's not a corporation," Long said.

The state would need to change its laws to require campaigns to have official compliance officers, Long says. The treasurer and others on the Easley campaign did the best they could keeping up with contributions and expenses, he says.

There was no basis to make any payments for flights in the 2000 election because there were never any bills submitted.

"It's a matter of records," he said, noting thousands of donations came in and thousands more bills were paid.

4:30 p.m. – Campbell wasn't in the charter service and was flying Easley as a friend, Wallace says. He shouldn't have been using charter rates but should have used a formula created by State Board of Elections Executive Director Gary Bartlett created to determine the value of such flights, he says.

The campaign paid $125,000 for air travel during the 2004 campaign, Wallace says. The campaign might have missed some flights, but it was primarily in compliance, he says.

4:10 p.m. – The campaign committee has found nine flights aboard Campbell's plane during the 2004 campaign, which is roughly what he claimed, Wallace says.

The campaign has found another four or five flights on private planes between 2000 and 2004 that were never reported, and the committee has paid about $3,000 to the elections board to give up the value of the flights, Wallace says.

Applying 2009 prices to the flights on Campbell's plane roughly equaled the $4,700 value that Campbell billed the campaign in late 2004, Wallace says. That bill was one of two invoices Campbell said was really for repairs he arranged at Easley's home in Raleigh.

"Those Campbell flights appear to have been paid," he said.

Wallace calls Campbell's valuation of flights at about $88,000 "more than a little bit deceptive" by using hefty charter rates.

Campbell "failed utterly" in reporting his flights to the campaign committee over the years, and the campaign treasurer cannot report or pay for flights he never knew took place, Wallace says.

Leake suggests that the campaign is ultimately responsible for handling in-kind

"The Mike Easley Committee failed to live up to all of its responsibilities," Wallace acknowledged. "What we're all learning here is that more is required (of campaigns).

"It's the continuing obligation of the committee to get these things right."

Wallace says he thinks the campaign has corrected everything from 2003-04 and is "regretful" for everything that happened.

4 p.m. – Easley campaign attorney John Wallace begins by addressing the GMC Yukon that car dealer Bobby Bleecker provided to Easley. Both the campaign and Easley have paid what was owed on the vehicle, he says, and the campaign also paid interest to the elections board.

"I feel like the committee has done all it can do to make this right," he said. "If the board feels more should have been done, we'll be receptive to the board's guidance on this matter."

Wallace moves on to the unreported campaign flights. The campaign has no records of McQueen Campbell providing flights in the 2000 election, so officials can't figure which flights were personal and which were campaign-related.

In 2004, details from the governor's security detail helped the campaign cross-check whether flights occurred and on which aircraft to determine values for the flights.

"One can never be sure that one has captured all the flights," he said, noting it's difficult now to look back at what happened five or six years ago.

3:55 p.m. – Looks like the Easley campaign has taken the tack of "If we're going down, we're not going down alone" by pulling the GOP into unreported flights debate.

Time for closing arguments by attorneys for all sides.

3:35 p.m. – The elections board has finished calling witnesses in the hearing, and the Easley campaign committee calls Anthony Asbridge, a forensic accountant who previously worked with the IRS.

Asbridge says he reviewed campaign finance reports, flight logs and other information related to the case. He used Flight Aware, a Web site that provides information about the travels of private planes, to look at what flights were provided to former GOP gubernatorial candidates Patrick Ballantyne, Fred Smith and Bil Graham.

Ballantyne took an eight-city tour in 2004, but no payment for air travel was reported by the campaign and no references to in-kind contributions were included in the reports, Asbridge says.

In 2005, there was a credit card payment designated as travel, phone and supplies, he says. But it's unclear whether that covered the flights.

Smith traveled across the state in early 2008 when he was trying to visit all 100 counties in North Carolina. He spent $2.5 million to buy his own plane and that he used that during his campaign.

The Flight Aware Web site reflects 108 flights on his plane in the months leading up to the 2008 GOP primary, but his campaign reports don't reflect in-kind contributions for use of the plane or payments to him, Asbridge says.

"I found none," he says when asked whether he found evidence that the flights were reported to the elections board.

Asbridge also looked into Graham's travels. Graham was a joint owner of an aircraft, he says, and the plane was used 158 times in early 2008. No payments were made to the company that owns the plane, and no reports of in-kind contributions were made, Asbridge says.

Unlike Ballantyne, Asbridge says he couldn't find any credit card payments from Smith or Graham that might have accounted for the flights.

2:15 p.m. – Hearing in recess until 3:30 p.m. Chairman Larry Leake says it's unlikely the hearing will conclude today.

2:10 p.m. – In 2000, the state party wanted fundraising assistance from then-President Clinton, but not in North Carolina, Falmlen says. The party flew donors to Washington, D.C., for an event. Wilmington businessman Lanny Wilson attended that event and wrote two $5,000 checks to the state party, Falmlen says.

Falmlen says he never questioned the validity of in-kind contributions or "reattributed" donations from the Easley campaign.

2 p.m. – Cooney's back at bat to discuss fundraising during the 2004 election. Easley raised more than $1 million for the party, which was double the amount he pledged to raise for the coordinated campaign. The party spent about $736,000 on his campaign.

1:55 p.m. – John Wallace, an attorney for the Easley campaign, notes that he obtained information in 2004 from Gary Bartlett, executive director of the elections board, about how to handle flights on private planes as in-kind contributions.

1:50 p.m. – Easley attorney Tommy Hicks asks Falmlen about events that raised money for both the campaign and the state party. Falmlen says Easley often would rally support for the party, which qualified the events as party functions.

Falmlen again says he relied on the documentation from McQueen Campbell that the flights provided to Easley were legitimate in-kind donations. Because of questions about the flights, the party paid the elections board to rid itself of the value of the flights, he says.

1:40 p.m. – Overton flew Easley to the Democratic Governors Association meeting in November 2003, which was an in-kind contribution to the party, Falmlen says. Because it also benefited Easley by putting him in touch with donors, the party made the flight an in-kind contribution back to the Easley campaign, he says.

The party opened a special account in the 2006 election cycle to handle money Easley raised for legislative races. The account was reopened for the 2008 election.

The account was different from the "governor's fund," which was the code the party used to determine how much money Easley was bringing into the coordinated campaign efforts in 2000 and 2004, Falmlen says.

Money the party spent on the Easley campaign came from the party's non-federal account, and notes were made in the "governor's fund" ledger to keep track of what the party needed to report to the elections board as in-kind contributions, Falmlen says.

1:30 p.m. – "Reattributed" checks from Easley donors to Democratic Party were deposited into the party's federal account, Falmlen says.

Cooney brings out his easel again for more visual aids. He says he asked Falmlen to prepare a report to reflect people who donated to Easley's campaign and the state party during the 2000 campaign.

The donors gave $885,800 to the state party, according to the report. The Easley campaign gave another $50,000 to the party, Falmlen says.

Meanwhile, the party gave $237,000 in cash contributions and $292,000 in in-kind contributions to the Easley campaign, he says. About $200,000 of the cash contributions came from the Democratic National Committee through a "soft money" account, he says.

Falmlen says the state party gave the Easley campaign roughly $326,000 in support during the 2000 campaign while he raised about $935,000 for the party.

1:25 p.m. – The Republicans also play money games: Cooney show a chart reflecting a number of donors to 2000 GOP gubernatorial candidate Richard Vinroot also contributed to the Republican Party after reaching their $4,000 limit to the Vinroot campaign.

Falmlen says there was nothing wrong with those donations or similar donations to the Democratic Party by Easley donors.

1:20 p.m. – Falmlen reviews information provided by Democratic Party attorney Jim Cooney regarding lists of donors.

Easley raised about $64,000 for the party, and the party supplied only in-kind support to the campaign of about $116,000.

Wherever the campaign was getting fundraising and spending numbers included on memos, they weren't coming from the party, he says.

1:15 p.m. – Falmlen says the party paid the elections board for the in-kind donations to the Easley campaign – several flights and some Christmas ornaments – despite never receiving money for them.

1 p.m. – Falmlen says he doesn't know anything about Easley campaign memos noting "soft money" raised by the Democratic Party.

Looking at a check from Nick Garrett, Falmlen says it looks like the contribution should be attributed to Easley's fundraising goal for the coordinated campaign. Garrett said Monday that he gave to the party with the understanding that the money would be sent back to the campaign.

"If I had any indication that this was an earmarked contribution for the Easley campaign, I wouldn't have accepted it," he said.

12:50 p.m. – Under questioning by board member Anita Earls, Falmlen says the party didn't use codes to track donations from candidates other than Easley because no one else was raising the kind of money the governor was.

The tracking code wasn't used on all party expenses on behalf of Easley, he says, including in-kind donations that didn't involve the party spending money.

"The flights were a little bit of an anomaly," he says. "These were unusual in that they were 'in-kinded' back to a (campaign) committee."

12:40 p.m. – Falmlen says the party wouldn't weigh how much a candidate raised for the party against how much the party gave to that person's campaign in in-kind contributions.

Peaslee questions Falmlen about a 2008 e-mail he wrote about moving checks and debits around that suggests the Easley campaign had a balance with the party. Falmlen says he was referring to a coordinated campaign account.

Falmlen says he tried to keep track of cash flow and what balances were so he knew whether to agree to spending money on a request from a campaign. He says there was no set budget on particular campaigns.

12:30 p.m. – Board member Bill Peaslee notes that Campbell flew Easley on his company's planes, so the flights would have been illegal corporate contributions.

Falmlen says the statements signed by Campbell and Overton call them personal in-kind contributions. He says he had no knowledge at that time that there was any problem with them, but in hindsight, he says he probably could have questioned the donations.

Earlier this year, the party paid more than $24,000 to the elections board to account for the flights to make sure there was no problems with the party accepting the flights.

12:25 p.m. – A June 2004 statement from McQueen Campbell noted an in-kind contribution of $1,500 to the party. Falmlen says again that he took the donor at his word that the donation was for the party.

"The dual purpose was the governor was raising money for his campaign and for the party," he says. "He was raising money for the party, for whatever reason."

Winfree says the mechanism allowing the in-kind contributions to be directed to the party invites abuse by donors who couldn't legally give more than $4,000 to a candidate.

12:15 p.m. – Falmlen says the party gave in-kind contributions of $6,000 in flights from Parker Overton and $3,100 in Christmas ornaments to the Easley campaign in late 2003, Falmlen says. He doesn't recall where Easley was flown on the flights.

He says running the in-kind contribution through the party wasn't an effort to skirt the $4,000 limit on contributions to a campaign.

"I believe we had a good relationship with the Easley campaign, and if they said (the flight) was made on behalf of the party, we took them at their word. If a donor said it was on behalf of the party, we took them at their word," he said.

"This was not an everyday occurrence," he said. "I know we believed there was some party purpose (for the flights)... There was probably a dual purpose."

He says the party probably should have divvied up the cost of the flight, breaking out the value to the party separately from the value to the Easley campaign.

Not everything that benefited the Easley campaign benefited the party, Falmlen says.

12:10 p.m. – The party paid for more with the Easley campaign in 2004 because it had the infrastructure in place for personnel, and the campaign wanted to keep its costs down, Falmlen says. In 2000, the campaign had its infrastructure in place through the Democratic primary and carried that forward through the general election, he says.

12 p.m. – Falmlen says some checks turned over to the party by the Easley campaign were for more than $4,000. The campaign couldn't have legally accepted those checks because they exceed the maximum allowable contribution by an individual to a candidate.

Jim Cooney, the lawyer for the Democratic Party, complains about the repeated characterization of money raised by the Easley campaign as a "sub-account," saying that there is no account that the campaign could tap.

"There weren't sequestered funds that the Easley campaign could come and say, 'We want some of our money,'" Cooney said.

Leake tries to smooth out the disagreement by noting the party used bookkeeping entries to show what money was raised by the Easley campaign and other campaigns but that the campaign couldn't make demands on the party as to how the money was spent.

11:50 a.m. – Under questioning by board member Charles Winfree, Falmlen says checks made out to the Easley campaign that were "reattributed" to the state party were deposited in the party's federal account. He says there was no problem with the deposits, even though the Easley campaign was listed as the payee on the checks.

There was no separate bank account for money raised by the Easley campaign or party spending on the campaign, he says. The party has about a dozen bank accounts, he says, and money Easley raised went into several of them.

After some discussion of accounting, Winfree asks how the party determined who got credit for various contributions.

"My rule was, whoever handed me the check got credit for it," Falmlen said.

11:45 a.m. – Board Chairman Larry Leake notes several corporate contributions on the report of money raised by the Easley campaign for the Democratic Party, but Falmlen says those funds would have gone into an account used solely for building expenses.

According to the report, Easley raised more than $1 million for the party in 2000, Falmlen says he raised another $1 million in 2004.

11:45 a.m. – A 15-minute break somehow turned into 50 minutes, but the hearing has resumed.

10:50 a.m. – Hearing is in recess for 15 minutes so elections board members can review the Democratic Party's funding plan.

10:45 a.m. – The party made in-kind contributions to the Easley campaign worth more than $550,000 during the 2004 election, Falmlen says. That's above any spending on the coordinated campaign.

"There are many of these expenses that we would have paid irregardless of the money the Easley campaign raised (for the party)," he said.

10:30 a.m. – The Easley campaign created an "attribution letter" where donations could redirected to the Democratic Party, but Falmlen says that money went into an account that is reported to the Federal Election Commission, not the State Board of Elections.

He says it's not like sending checks to the campaign with a blank payee line that either the campaign or the party then filled in. Federal law recognizes reattributed money, he says.

Falmlen reviews a May 2004 report that includes the names of donors to the party from the Easley campaign during the 2000 election cycle. He says the only reason he can think that it was produced was because the Easley campaign wanted to get a list of people it had tapped previously for money.

10:25 a.m. – Easley supported the 2004 coordinated campaign, and the Democratic Party provided services like polling and paying for campaign staff, Falmlen says.

He again denies allegations that Easley staffers asked the party to redirect money Easley raised back to the campaign.

Falmlen says he had no conversations with Ruffin Poole, Easley's former lawyer, about fundraising during the 2004 campaign. Some checks were sent to Poole's attention during the campaign.

He says Poole delivered contributions to the party that Easley raised for the 2006 coordinated campaign for legislative races.

Party officials talked with Easley about which legislative races would get funding from the party from the money he helped raise in 2006, Falmlen says.

10:20 a.m. – In 2002, the coordinated campaign was headed up by U.S. Senate and congressional races since there was no gubernatorial election. Falmlen says Easley helped raise money for that coordinated campaign, even though he wasn't up for re-election at the time.

Easley never asked that any of that money go back to his campaign, Falmlen says.

10:15 a.m. – Easley was raising most money for Democratic Party in 2000, and party created an internal code to track money he brought in, called the "governor's fund." Falmlen says it wasn't actually a separate account.

The party also tracked its spending on the gubernatorial campaign so it could be properly reported as in-kind contributions, he says. The party also gave some money to Council of State and judicial candidates, he says.

Falmlen says there was no discussion to restrict the money Easley raised for the party for the gubernatorial campaign. Campaign staff never suggested running contributions from major donors through the party, he says.

10:05 a.m. – The party segregates its corporate donations and uses it only for building maintenance and renovations, Falmlen says.

Party officials meet with campaign officials to determine what the needs are and where the party can get the best return on its contributions, he says.

Despite the power of the gubernatorial candidate within the party, requests for campaign assistance to the party weren't treated as demands that had to be met, he says.

"Certainly, there were occasions where we said, 'No, that's not an expenditure the Democratic Party can make,'" he said.

10 a.m. – A candidate's ability to raise money determines how the budget for the coordinated campaign is divvied up among each campaign, Falmlen says. Candidates that can't live up to their end of the bargain by raising the needed funds sometimes get left out of party mailings, he says.

Falmlen says governor usually serves as a firewall for the Democratic Party in North Carolina, he says, because the party hasn't had much success with federal offices. The gubernatorial candidate helped lead the way for candidates further down on the ticket, he says.

"We had a vested interest in 2000 and 2004 for ensuring the best results for our Democratic candidate for governor," he said.

9:50 a.m. – The party usually assembles a plan for funding the coordinated campaign, including asking candidates to raise specific amounts to contribute to it, Falmlen says.

Leake talks with Falmlen about proprietary information in the financial plan and says the board needs to ask him about details but will try to respect the party's attempts to keep its ideas secret.

"The vast majority of the coordinated campaign is turning out voters," he said. "The party doesn't have the ability to focus on message issues because candidates might be running on different issues."

9:40 a.m. – Falmlen says he ran the daily affairs of the state party and assisted in campaigns statewide from late 1999 to early 2005, meaning he was in charge during Easley's two gubernatorial campaigns.

The coordinated campaign works for all Democratic candidates, providing joint services like get-out-the-vote efforts that help them all. The party also helps candidates individually.

Falmlen says the party ran a fairly successful coordinated campaign in 1998 after limited efforts previously. He tried to build on that efforts by developing a plan that as many candidates as possible would support.

9:15 a.m. – The State Board of Elections is expected to wrap up its hearing today into the campaign finances of former Gov. Mike Easley.

After Easley spent nearly five hours on the stand Wednesday, offering his take on allegations that donors and former campaign staff leveled at him the two previous days, elections board Chairman Larry Leake said only one more witness would be called.

Scott Falmlen, the former executive director of the state Democratic Party, will be asked to explain how the party handled contributions from Easley supporters. Two have said they sent sizable checks to the party with the understanding that the money would be funneled right back to the campaign.

WRAL.com's live coverage will again start at 9:30 a.m. If you have a question about the hearing that you'd like WRAL News anchor David Crabtree to address, feel free to add it to the comments section below.