Thao fined for campaign finance violations

St. Paul rep denies findings, says race a factor

State Rep. Cy Thao has been fined $3,000 and ordered to repay the state $1,721 for violating campaign finance rules. The Minnesota Campaign Finance and Public Disclosure Board determined that the St. Paul DFLer knowingly filed a false report with the state agency in 2008 and made several questionable campaign payments. Thao strongly denies the allegations.

In particular, the campaign finance board took issue with payments by the Cy Thao Campaign Committee to friends and neighbors of the legislator. In 2008, for instance, the committee paid $2,000 to Sunlight Services, a company owned by Thao’s family, for 12 months of office rent. But the state watchdog agency could find no evidence that Thao actually established an office there.

“He had no desk in the space and did not have the right to use the computer there,” the report concludes. “He never used the space for any campaign purpose and did not use the office address or telephone numbers for committee purposes.”

In addition, the campaign finance board criticized what it determined to be inflated payments for lawn sign distribution and campaign literature design. The agency also knocked Thao for failing to keep adequate records of his campaign expenditures so that they could be scrutinized.

“During the course of the investigation, the Board sought various records and information from the committee only to find that most of the requested records never existed,” the ruling notes.

The campaign finance complaint was filed in October by St. Paul resident Nathan Haase. According to Thao, Haase intends to run against him this year. However, Haase has not registered a campaign committee and did not return a call from Capitol Report seeking comment. Another potential opponent, Jeremiah Ellis, who works for the St. Paul Public Schools, has stated that he intends to challenge Thao for the DFL endorsement.

The incumbent is currently serving his fourth term. He won his last three re-election campaigns with at least 75 percent of the vote in an overwhelmingly Democratic district. The electoral landslides seem to have led to complacency. Thao told the campaign finance board that initially his campaign team was very organized. But in subsequent elections, he testified, “as we progressed, people got lazier and lazier.”

Thao insists that the campaign finance flap is much ado about nothing. He argues that the disagreement with the agency is simply a disagreement over how much he should be paying for campaign services. “They agree with me that there’s nothing wrong with paying these people,” he says. “They just disagree with the amount.”

Thao also argues that the campaign finance board was mistaken in ruling that he’d paid $2,000 for campaign office space that wasn‘t utilized. He notes that renting space on the open market and purchasing a computer, fax machine and other equipment  would have been much more costly.

“Do they want me to use pen and pencil?” he asks. “In reality, I need that equipment and that space to run the campaign.”

Thao, who is Hmong, also believes that racial discrimination may be playing a part in the controversy. He notes that Haase’s initial complaint referred to Thao’s “cultural clan” and that the allegations only targeted Asian individuals who did work for his campaign. Thao says he’s considering a discrimination complaint with the Minnesota Department of Human Rights.

“I’m pretty pissed off about that piece,” he says. “I think it is racially motivated.”

But ultimately Thao will likely pay the roughly $4,700 in penalties. There’s no formal appeal process for campaign finance board decisions.

“The statute is unclear as to the route for appeal,” says Gary Goldsmith, executive director of the state agency. “We typically advise people who want to seek redress for  a board decision to discuss that with their legal counsel.”

Thao is unlikely to fight the ruling in the courts. He closed the year with roughly $8,000 in his campaign coffers, according to a filing with the campaign finance board.

“I don’t think I have the money in my campaign to get legal counsel,” he says. “Logically, it saves me a lot  more money to just pay the fine.”

Thao does acknowledge that one allegation made by the campaign finance board has merit: shoddy record keeping. “I’m a sloppy guy,” he says. “I agree with them on that. Maybe I should pay someone to keep records for me. But then they’re probably going to nail me for that, too.”