Matt Kelty Indicted In Campaign Loan Dispute

     Matt Kelty, a dear, dear friend and someone I hold in high regard, was indicted by an Allen County grand jury Tuesday on a series of charges related to how he obtained and reported a loan for his successful May primary election to be the GOP candidate for Fort Wayne's Mayor. This is a serious blow to his campaign, though it was expected once a special prosecutor was named to examine the matter in response to a complaint from Common Cause.

     The important thing to keep in mind -- beyond his absolute standing as innocent until proven otherwise -- is that all of this relates to how he REPORTED a loan he says he made to his campaign.  The squabble in Republican circles in Fort Wayne that spilled over into the mainstream news media and now the legal system is that the loan should of been reported as being made directly to the campaign rather than from the candidate (who obtained the funds from from friends and then loaned them to his campaign committee).  If the candidate misreported the process, and if he mischaracterized the transaction (as is alleged in the nine-count indictment), it means he failed to do his paperwork correctly and missed the standard of candor the Special Prosecutor believes controls the situation.  This is the allegation even though Kelty was "cleared" by the Allen County Election Board and even though our state's leading election law-First Amendment attorney, Jim Bopp of Terre Haute, who is representing the candidate and his campaign, has stated repeatedly publicly the loan was correctly reported and correctly characterized in all the filings.

     Let's hope -- though this is a big wish even for Veritas Rex -- that the matter is resolved before the November municipal elections and that the voters in Fort Wayne benefit from a campaign energized by issues and ideas rather than indictments. 

     (Disclosure:  Jim Bopp's law firm represents IFI as well as Indiana Family Action and Indiana Family Action PAC, the latter which endorsed Matt Kelty in the primary campaign, in navigating the complex state and federal laws and regulations controlling so-called electioneering, political speech, and free speech.)

Comments

[Kenn Gividen]

Do we need a Common Cure for Common Cause?

[Intrigued]

That's an intriguing idea, in that both damage the Commonwealth.

This should never have become a criminal matter...

[Micah Clark]

Well said Curt, thank you for using some facts to put this matter into perspective. I am sure in your years of experience that you have seen scores of candidates do loans to campaigns, and as such, I cannot help but to feel that this reeks of a double standard being applied to Matt. I hope that is not the case.

I am worried that taking a guy to jail in cuffs just weeks after he was cleared by the highest election law officials sends a dangerous message that only wealthy professional politicians need run for office, and by the way, they should also be the party establishment’s first choice. . . but I digress.

I don’t know if Matt Kealty did anything wrong, if he misfiled any reports or if he did anything unique that other candidates have not done, but I am reminded of the official in the Reagan Administration who was indicted and soundly blasted in the media. Months later after he was fully exhonerated and his statement upon being cleared was “which office do I go to now to get my good name back?”

[Kristen Luidhardt]

Thanks for the comments, Micah. We all hope this matter is resolved in a timely fashion, for the good of the voters in Fort Wayne.

[Friendly Critic]

I wish someone would explain to me how comments like "we all hope this matter is resolved....for the good of the voters in Fort Wayne", isn't in essence an endorsement of partisan candidate Kealty? And isn't that against the 501(c)(3) status of the IFI?

And if you are still on the correct side of the line here, I have to ask whether or not, in the name of family values, you believe a good example is being given to Christian youth in saying, in effect: (1) "It's OK because the other side does it, and (2) it's OK to operate just as close to the edge as you can.....that's what Jesus would do."

[Not A Lawyer]

Let me try, from a lay perspective, to shed a little light:

1. Urging the election or defeat of a candidate for public office is known as electioneering and is vigorously protected by the First Amendment. Generally and with limits, caveats, and the like, when organizations engage in electioneering, they need special standing (political action committees, political parties or campaign committees, for example) if they are spending money to broadcast or disseminate those views. There are exceptions, limits, loopholes, conflicting court cases, etc., in this realm as in every other walk of life in our anxious age. But the principle appears to be that the law demands to know who is spending how much to elect or defeat a candidate. Part of the rationale for this demand is that the law sometimes limits how much can be contributed for electioneering purposes. This principle, by the way, is at the very heart of the Kelty case.

2. Advocating the defeat or passage of a public policy measure (bill before a legislative body, measure before the electorate on the ballot, as opposed to a particular individual on the ballot seeking public office) is highly protected speech as well, but it, too, is not tax-favored (so, non-profits formed as C3s shouldn't do that beyond the limits set by thwe IRS). A vehicle for this type of activity (which can include significant amounts of lobbying) can be a so-called C4. Donations to C4s are not tax-decutible for federal income purposes.

3. C3s can speak to public policy issues, educate the public, encourage responsible (in its view) public policy making, conduct research, advocate for policies and laws that foster greater alignment with its mission, and the like. And, of course, it has limits, exceptions, conflicting attitudes, a shifting body of law and regulation, and vexations extraordinare seeking to stifle its speech rights as well. But C3s must declare and with some consistency pursue a social welfare purpose in order to receive funds that donors may then be able to exempt from federal income taxes (again, subject to limitations, disclosure, no personal benefit tests, etc.). C3s may engage in a minor amount of "lobbying" but cannot engage in any electioneering.

As for the above blog, it did not advocate the defeat or election of any candidate. It merely expressed the wish -- deemed a long-shot by its author, if I read it correctly -- that the campaign in Fort Wayne would be energized by issues and ideas, not indictments about paperwork and the standard of candor best (a decision many believe is best left for the voters to decide).

[Kristen Luidhardt]

Friendly Critic, I merely stated that I want the issue resolved for the voters. I don't think it's healthy for this to hang out there indefinately when there is an election coming up.

My hope is that it will be resolved (one way or the other) before Election Day. I also never stated support for any candidate in my comment.

You're really grasping at straws here.

[Last Word, Not]

If someone wanted to help a candidate, drawing attention to his or her nine-count indictment for alleged election irregularities is not the way to push them forward.

[Friendly Critic]

Is it grasping at straws when the "No More Paper Tiger" item on SJR7 advocated that the legislature pass it and send it to the voters seems to fly in the fact of Not A Lawyer's paragraph 2?

[Still Not A Lawyer]

Again, Friendly Critic, 100 exceptions, variations, loop holes and strategic IRS ambiguity abounds. But, from a lay perspective, a C3 may engage in a limited amount of what by some definitions is lobbying (as in suggesting SJR7 is good public policy and deserves to be the law of the land we call Indiana). The IRS, for federal income tax exemption status purposes, for example, refuses to define this vague standard (which generally applies to churches as a subset of nonprofit)as well. Also, election law definitions and standards may and usuaully do differ from tax law edicts. The IRS, for example, doesn't consider appearing before a legislative body to testify as lobbying, nor does it consider a communication to a group's members to be lobbying even if that communications encourages a contact with legislators on a public policy matter. Real complex, real confusing, and real expensive to navigate. Free speech isn't as free as it used to be, for sure.

There are tons of non-profits who testify on issues for the legislature, each expressing their views on various bills. It's silly to bring up SJR 7 and question the IRS status as a result.

This is different than campaigning for a candidate for office. That's why many tax-exempt organizations have PACs and C4's.

[Kenn Gividen]

http://www.indianacleanelections.org/

Common Cause has a "Citizen's Summit" scheduled for Sept 29 in Indy; (surprised to see Andy Downs on the list of speakers.)

Note the group's objectives for "clean elections."

[Friendly Critic]

I'm appreciative of the complexities that the IRS code presents. The problem I and others have is that the organizations you associate yourselves constantly preach what you consider high Biblical standards in conducting one's life, and that includes, as the recent item about God's reality, applying those principles in the civic affairs arena. Somehow the New Testament at least would not seem to espouse the taking advantage of "loopholes", or saying "well, it really doesn't actually SAY that" when interpreting a campaign finance disclosure law. There seems to be a very convenient literalism when it suits one's purpose, but something else when it does not. Was that in the spirit of the Beatitutes, the Sermon on the Mount? Perhaps there is someone familiar with the relevant chapter and verse of scriptural passages that could jump in there an illuminate us all.

[Supercon]

Jesus Christ, the author and embodiment of the Beatitudes in Matthew 5-7, was no legalist. He would abhor the tax code of this day, as He did the legalism of that day (read about the conversion of Zaccheus, the chief tax collector, in Luke 19). But He didn't focus on the legalities -- he preached his meassage. Read the story about "rendering unto Caesar what is Caesar's (Matthew 22:20-21) and the denarius to see how he dealt with legsal particulars. Bible-literate Christians seek to follow and honor the civil law as citizens under its authority even as we acknowledge grace and mercy of the Gospel that is Jesus Christ. In America, where the First Amendment was so-named because it is our first freedom, we have the right (some would say duty) to speak out on issues of public concern except as limited by the Legislature, enforced by the executive, and affirmed by the courts.

[Kenn Gividen]

Critic,

I wrote a book outlining the Sermon on the Mount and can see no correlation between that passage and tax loopholes. However, I suppose anything, if stretched and twisted, can be made to fit.

The common problem with the "render to Caesar" scenario: Too often Christians render to Caesar whatever he demands and give whatever is left over to God, family, etc.