McDonald’s use of funds ethically ‘gray’

Erin Neff

Friday, Jan. 18, 2002 | 9:55 a.m.

When Las Vegas City Councilman Michael McDonald used $23,000 of campaign money to pay his attorney the councilman landed squarely in an ethical gray area.

On one hand, state law is clear that no campaign money can be used for personal use. But no one has ever tested whether defense of an ethics case -- typically dubbed a personal matter not subject to taxpayer expense -- constitutes a "personal" use of the money.

"It's come up before in ethics cases where a council member asks, 'Can the city pay my tab?' " Las Vegas deputy city attorney John Redlein said. "The courts almost universally say no, it's a personal matter.

"Unfortunately, that word has different implications in our campaign law."

Some argue that if taxpayer money -- in other words representation from an attorney employed by the city -- can't be used, neither should campaign money.

"It's pretty greasy," said Ted Jelen, chairman of the political science department at UNLV. "But it is, in fact, a gray area."

On Tuesday Deputy Secretary of State Susan Morandi said that McDonald's use of campaign money to pay fees related to the defense of ethics and criminal charges appeared to make it a personal use of the money.

She also said that absent any written complaint, her office does not typically investigate alleged violations of campaign law. On Thursday a spokesman for the secretary of state's office said nobody has ever challenged the law.

"Nobody has any knowledge of this statute being tested," spokesman Steve George said.

McDonald argued that since the charges were related to his public office, he should be able to pay his lawyer with campaign money. Several city officials said McDonald was upset when he saw Morandi's statement in Wednesday's Sun because he solicited the donations to pay his legal fees.

Reached Thursday on his personal cell phone, McDonald hung up when asked if those who gave him the campaign money agreed to have it pay attorney Richard Wright.

He did not return other calls from the Sun.

In an interview Tuesday McDonald said he was advised by both Wright and the city attorney's office that he could spend campaign money on his legal bills.

City Attorney Brad Jerbic said Thursday that what his staff does is "advise them of what the law says."

"We read the letter of the law to them, but we're not the ultimate interpreter of it," Jerbic said.

He said he could not discuss whether any of his staff's attorneys told McDonald he could pay the legal bills with campaign money.

But Jerbic also said that both the city and Clark County consider such a use of money to "be within the four corners of what the state says."

"Public money cannot be used to defend a complaint against them, but we've been operating under the assumption that they can use campaign money for that," Jerbic said.

McDonald was also surprised by the opinion that he was possibly violating the law, because he said, "Everybody does it."

Although no other examples were found by the Sun in campaign reports required to be filed Tuesday, McDonald alleged others had done the same thing.

County Commissioner Erin Kenny listed a $1,500 payment to lawyer Frank Cremen on her campaign report. But Kenny listed the payment as a consulting expense. Cremen represented her in an ethics case last year.

Las Vegas Mayor Oscar Goodman said Thursday that politicians wear two hats, only one of which subjects them to ethics charges.

"If we are being challenged as a politician, there should be certain avenues that should be available to us," Goodman said. "If someone is charged in an ethics complaint and if you use campaign funds, I don't see anything wrong with that."

When a candidate or elected official has money leftover from a campaign, state law allows several different uses of the money. It can be used for the next election, donated to charities or other candidates, or used to "cover expenses related to the public office."

Redlein said that while the city attorney's office is not the counsel on campaign matters, he believes a public official can use campaign money to pay for defense of ethics cases related to the office.

"Whether he's spending it on campaign signs or on a lawyer, there's no difference," Redlein said. "Campaign contributions are made to keep a candidate in office."

Campaign money is used to pay for everything from lunches to clothing. Donations of vehicles for use in campaigns is also a common practice.

Redlein said McDonald's case last year was a bit different than a traditional ethics case because it also launched a criminal probe by Metro Police. Wright represented McDonald during his interviews with detectives and also represented him before the city and state ethics proceedings and in a civil District Court hearing seeking his removal from office.

"Michael's might have been different because of the criminal matter," Redlein said.

Former President Bill Clinton famously raised millions of dollars for a legal defense fund to pay for fees incurred during the Monica Lewinsky scandal. More recently Sen. Robert Torricelli, D-N.J., raised about $1 million to pay for his defense in a fund-raising scandal.

Apparently that's the way McDonald envisioned his campaign money. He said Tuesday that "none of the people who gave me the money cared."

McDonald received $9,900 from Republic Services and its related entities, $5,000 each from Laurich Properties and Fletcher Jones Imports and $1,000 from Coronado Bay Buffalo LLC. He also listed an $11,000 personal loan to his campaign.

Jelen said politicians have been skirting the spirit, if not the letter, of campaign law for years.

Congress itself only banned personal use of campaign money in 1993, he said, triggering many retirements in 1994.

"They figured if they can't use the money for themselves, why have it?" Jelen said. "It has been at all levels of government a very common practice and it has always been ethically shady."

Sun reporter Diana Sahagun contributed to this report.