Judge slaps political committee in local metro district with record high penalty 

Campaign pain

click to enlarge One of the flyers used to persuade voters. - COURT CASE EXHIBIT
  • Court case exhibit
  • One of the flyers used to persuade voters.

The guy some Colorado politicos love to hate has given them another reason to loathe him.

Matt Arnold, who runs Campaign Integrity Watchdog and has prevailed in numerous campaign finance violation cases, notched another win on May 9, which included the largest fine ever imposed in state history in such matters, $23,148.

Arnold, who's won dozens of similar cases, some against prominent political figures, including the El Paso County and state GOP, frequently goes after nonprofits set up to protect donors from disclosure, commonly known as 501(c)(4)s. That was the situation with the recent case, his second consecutive victory in challenging elections in the Woodmen Hills Metropolitan District.

Administrative Law Judge Matthew Norwood ruled that Citizens for Reasonable Rational and Responsible Governance (CRRRG) violated the Fair Campaign Practices Act (FCPA) by failing to register as a political committee, failing to report contributions and expenses and ignoring statutory contribution limits.

Although campaign finance laws enabled Norwood to slap the committee with more than $58,000 in fines, the judge imposed a lower amount that he termed "appropriate."

Woodmen Hills Metro District, formed in 1996, delivers water, wastewater and recreational services to 2,500 homes and businesses northeast of Colorado Springs.

The 2016 election, which gave rise to the recent ruling, is the second to spark a dispute in the district. In 2014, then State Rep. Bob Gardner, now a state senator, and political consultant Sarah Jack were involved in Alliance for a Safe and Independent Woodmen Hills, a 501(c)(4) that mailed thousands of postcards to voters.

Arnold alleged it failed to register and failed to file finance reports in violation of the FCPA. Gardner, listed as Alliance's registered agent, said at that time the committee didn't have to file unless it took an advocacy role and that "the definition of political committee doesn't apply to us."

But in August that year, Administrative Law Judge Robert Spencer disagreed and levied $9,650 in penalties against Alliance. Since then, Arnold has pushed to force payment not only from the Alliance but also Jack, since the group itself is broke. It's one of only two campaign finance fines imposed by an administrative law judge since 2012 that hasn't been paid, state records show.

Arnold says Secretary of State Wayne Williams is bound by law to collect such fines. Williams says in an interview, that he's notified the committee via its registered agent, Gardner. But, he says, "Registered agents are not liable for any type of corporate or committee debt." No billing has been sent to Jack and Secretary of State spokesperson Lynn Bartels simply notes via email that Alliance was "invoiced ... but the committee had no assets."

Arnold, described by The Denver Post as "polarizing and litigious," pursued Alliance and Jack in District Court. After a judge ruled the statute of limitations had expired for Arnold's filing, Arnold, who's not a lawyer, appealed and won a reversal in the Colorado Court of Appeals in February.

Gardner has since appealed that ruling to the Colorado Supreme Court, but the outcome won't affect Alliance's ability to pay, he says. "The Alliance has no assets — it can't pay that penalty," Gardner says, adding about Arnold, "He should get a real job."

But Arnold says he means business. "If they refuse to comply," he says, "they can be held in contempt of court and be fitted for orange jumpsuits."

The Alliance has since filed campaign finance reports, which named the same contributors as those who gave to the CRRRG in the newest case — developers Benjamin "Rusty" Green and the Randy Case family, who are developing property in the Woodmen Hills district. Green gave $10,000 to the Alliance in 2014 and $17,957 to CRRRG in 2016. Case gave $7,500 to the Alliance in 2014, and $10,000 to CRRRG in 2016.

Green didn't respond to a phone message seeking comment, but Case tells the Independent he wasn't aware of the legal case or that his firm gave money. "They're an important provider of water, wastewater and recreational services in that area," he says, "so we want to make sure they're being led well in a businesslike manner."

The judge ruled that CRRRG is a political committee that should have filed finance reports and limited donations to $575 per donor.

CRRRG mailed thousands of flyers, which, as described in Judge Norwood's decision, promoted certain candidates and denigrated others. One depicts losing candidates Ron Pace and Janette Hudson shipwrecked on an island encircled with shark fins labeled "Ron's restraining orders," "Ron's foreclosure" and "Ron's arrest record." It's worth noting the Alliance and CRRRG were successful in keeping certain candidates off the Woodmen Hills board.

Pace admits he's had financial problems and was arrested years ago after a quarrel with a girlfriend. But he says the committees' chief goal is to silence his persistent questions about district finances and water supply.

Regardless, the committee's activities led Norwood to label the committee's "major purpose" as supporting or opposing candidates; he also said it coordinated with candidate campaigns — another no-no under the law.

Not surprisingly, CRRRG's registered agent is a well-known political figure — ex-state GOP chair Ryan Call, who didn't respond to a request for comment.

The CRRRG is required to pay the $23,148 fine by June 9. If it doesn't, Williams says, the state will try to collect from an insurance company that funded CRRRG's legal defense "and, therefore, might also be responsible for the debt."

As for Arnold, he hopes the case drives home a point. "The use of 501(c)(4)s to get around campaign finance laws in Colorado has been abused for years," he says, "and these two cases will be a slap in the face of people trying to use these to flip the bird at the law."

This story has been updated with corrections.

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