John Wallace on the defense fund

This has been a point of attack for Republicans, who have hoped to push the story beyond a sex scandal into a full-blown campaign finance issue.

"I am requesting that the State Board of Elections investigate the source of funds used by the NCDP to arrange a reported financial settlement in connection with an alleged case of sexual harassment at the NCDP," said Francis DeLuca, president of the conservative Civitas Institute.

During a news conference, Chairman David Parker said he didn't know whether the party had a legal defense fund or how much might be in it. We got that answer from party lawyer, John Wallace. He e-mailed the following this afternoon:

I represent the North Carolina Democratic Party and have done so for a number of years. In the late fall of 2011, I undertook representation of the Democratic Party in a personnel matter arising from certain contentions made by a former employee. Those contentions were disputed.

An Equal Employment Opportunity Commission (EEOC) charge was filed arising from this dispute. Matters of this sort are routinely negotiated and settled confidentially. In fact, the processes of the EEOC, are confidential. The EEOC's mediation and settlement processes are confidential. The system put in place by the EEOC promotes compromise and settlement, as was done here.

My task was to address and resolve the matters presented to me equitably and appropriately. I did so. I engaged in a polite, respectful negotiation with the complainant, resulting in a mutually agreed resolution satisfactory to both parties. I addressed the matter in a manner that was professional and respectful of the interests of the former employee. The parties contemplated that the terms of the agreement would remain confidential. The former employee has acknowledged that he had a satisfactory working relationship with the Democratic Party.

A legal fund is maintained on behalf of the North Carolina Democratic Party, in accordance with the guidance provided by the Advisory Opinion issued by Gary O. Bartlett, Executive Director of the North Carolina State Board of Elections, on December 10, 2010. Pursuant to that opinion, activity in the account is not required to be reported to the State Board of Elections as with other accounts. However, I will disclose that the deposits to the account from its inception in 2011, until today, total less than $11,000 and its disbursements total approximately $10,000. No monies deposited to the legal fund come from taxpayer check-off money.

This dispute is a personnel matter and, as such, I have not and cannot discuss details with anyone other than my client in the matter, the NC Democratic Party. Beyond this statement, I cannot and will not comment.

It's unclear to me whether that legal fund money was used in this particular case. I've asked Wallace for clarification. If the money for this settlement didn't come from the legal fund, it's possible we'll see it on campaign finance reports to be filed later this month.