News: CJ Exclusives

Board of Elections Refers Easley Case to Wake County Prosecutors

Evidence 'would tend to indicate ... criminal violations'

Less than 11 months after completing his second term as North Carolina’s 72nd governor, Mike Easley may face a criminal probe of his campaign finances.

On Friday, the state Board of Elections in a unanimous vote asked the Wake County District Attorney’s Office to open a review investigating the possibility that the former governor, among others, may have violated the law.

“This board has received evidence which, if believed, would tend to indicate that criminal violations of our election laws and campaign finance laws have occurred on the part of Mike Easley and perhaps others,” board Chairman Larry Leake, a Democrat from Mars Hill, said at the hearing’s Friday session.

The board also fined the Easley campaign $100,000, both for flights that were not reported to election officials and to compensate the board for the cost of its investigation. In addition, it fined the state Democratic Party $9,000, concluding that the Easley campaign had received contributions from donors that exceeded the maximum allowed by law and that campaign officials told those donors they could give additional money to the Democratic Party and designate it for Easley’s use.

Among the others who may attract the attention of criminal investigators are Raleigh businessman McQueen Campbell, who said he flew Easley several dozen times without disclosing the travel or billing the campaign for reimbursement; developers Lanny Wilson, Nick Garrett, and Gary Allen, who testified that they believed donations to the Democratic Party would directly benefit the Easley campaign; and Easley campaign manager Jay Reiff and top fundraiser Michael Hayden, who reportedly put together a fundraising plan outlining how top donors could circumvent contribution limits.

Leake said he did not believe that Easley campaign treasurer Dave Horne should be held liable for any violations the board uncovered because there was no way Horne could have known how often Easley had flown, where he bad flown, or who was on the plane with him. If treasurers are held accountable for everything that takes place in a campaign, Leake said, no one will want to be a treasurer.

Leake conditionally adjourned the hearing a little before noon Friday. He left open the possibility that the hearing could reconvene after a dispute has been resolved with Ruffin Poole, Easley’s former general counsel, who had been subpoenaed to testify. Poole’s subpoena was quashed in Wake County Superior Court under a sealed order. The News & Observer, the John Locke Foundation (publisher of Carolina Journal), and The Associated Press joined in a court filing, demanding that the reason for quashing the subpoena be disclosed. On Friday, the N.C. Court of Appeals ruled against the lower court.

After the board issued its findings, CJ Executive Editor Don Carrington asked Easley attorney John Wallace why the campaign did not resolve the issue of undocumented flights soon after the initial report of them was published by CJ in October 2008, and why the campaign so vehemently denied that any flights had not been completely reported.

Wallace said the 2008 election was about to take place — even though Easley was not running for office — and “we were busy dealing with other things.” When the campaign later found invoices submitted by Campbell, it believed the issue was settled.

Earlier investigations by the Board of Elections have provided evidence that led to criminal convictions and prison terms for former state Agriculture Secretary Meg Scott Phipps, former state House Speaker Jim Black, and former state Rep. Thomas Wright. (Wright has appealed his 2008 conviction on charges of fraud and obstruction of justice. The appeal is expected to be heard in November.)

Rick Henderson is managing editor of Carolina Journal.