Beth Mason Denies Campaign Finance Misconduct Allegations

On Tuesday, Councilman-at-large Ravi Bhalla leveled allegations of campaign finance misconduct against Second Ward Councilwoman Beth Mason's campaign for the May 2009 mayoral election. Yesterday afternoon, Mason issued a statement in response to Bhalla's accusations. The statement is part defense, part salvo. In it, Mason denies having illegally distributed cash to campaign workers and says the report is mistaken due to a clerical error.

"No one was paid in cash. Not one penny," Mason said in the statement. "Every campaign worker was paid through a check issued by the campaign. Every check was reported on our team's ELEC reports. No checks were written made payable to 'cash'."

Furthermore, Mason explained that the checks issued to cash, listed in the General Ledger, are mistakes made by the person who completed the report. "The report will be amended," she added. As proof, Mason has provided Patch with carbon copies of the checks (see the attached PDFs of checks numbered 1070, 1112, 1113 and 1114), indicating that the checks were in fact issued to individuals and not cash.

"We haven't done anything wrong," Mason said in a phone interview this afternoon, noting that she has all 48 checks in question that were issued to individuals. "This is just a smokescreen. Before you make an allegation of a felony offense," Mason said of the campaign finance misconduct allegations, "you better make sure you check your facts."

In his statement to reporters Tuesday, Bhalla declared that Mason's use of street money amounted to "egregious violations of ELEC laws." But, exactly how serious would those violations be had the Mason campaign actually made them? Are they really egregious?

Patch put those questions to a New Jersey attorney who specializes in election law. Josh M. Mann, an attorney at the Morristown-based Porzio, Bromberg & Newman law firm, lent his expertise to Patch by making a cursory assessment of the Form R-1 Mason's campaign filed with ELEC on September 17, 2009, Bhalla's failure to file a Business Entity Annual Statement with ELEC on time, and NJ election statutes 19:44A-11.7 and 19:44A-21. It should be noted that Mann did not give the above documentation as deep an examination as he would to a paying client, but he reviewed it closely enough to provide competent analysis. Moreover, Mann is comfortably outside the fray of Hoboken politics.

Mann has counseled numerous campaigns and says he has always advised campaigns to distribute street money in compliance with NJ statutes and regulations—meaning he's counseled his clients to never distribute currency and to never distribute bank checks issued to cash.

"The state statute is very clear on that," says Mann. So, had the Mason campaign distributed 48 bank checks issued to cash as Bhalla had alleged, that would have constituted a violation of NJ street money statutes and regulations.

However, Mann says, it's important to not overlook Attachment 2 of the Mason campaign's Form R-1 (available in the attached PDF), the itemized list outlining which individuals received which amounts of money from the checks issued to cash.

According to Mann, even if Mason's campaign had issued checks to cash, the itemized list suggests that the campaign was not trying to do anything untoward or cover anything up. All of the names and addresses of every individual who received street money from the checks referenced in the General Ledger were disclosed on the itemized list.

"The purpose of the statute is to prevent money from going to unsavory elements," says Mann. "The reporting is required to preserve open and honest elections." And Mann says the itemized list demonstrates the Mason campaign complied with the spirit of NJ election law. The copies of the checks obtained by Patch would seem to indicate that Mason's campaign complied with the letter of the law as well.

Mann notes that issuing checks made out to cash is certainly a technical violation of election law, but he stopped short of saying that, under this set of circumstances, such a violation would rise to the level of malfeasance. "It's not that smart," Mann says, "but not a major violation."

Regarding some of the discrepancies between dollar values reported in the General Ledger and on the itemized list, Mann says those are possibly simple accounting errors. If ELEC launches an investigation, the commission will likely question Mason on those discrepancies and she might be asked by the commission to reconcile those numbers. For ELEC to launch an investigation, some group or individual must lodge a formal complaint with ELEC, something Bhalla said yesterday that the Zimmer campaign did last fall. As of now, ELEC has not announced an investigation into the Mason campaign and, as a matter of policy, the commission won't comment on whether or not a complaint has been filed.

Mann also notes that if something truly nefarious had taken place, it's highly unlikely the Mason campaign would've gone to the trouble of reporting all of the names and addresses of the individuals who received street money. He points to the opening language of statute 19:44A-21, which states:

Any person who purposely and with intent to conceal or misrepresent contributions given or received or expenditures…

Proving criminal intent to conceal or misrepresent street money on Mason's part would be difficult given that her campaign reported the names and addresses of campaign workers who received money from the checks.

According to Mann, the worst case scenario Mason can expect would be for ELEC to issue her a fine for the tardy filing, not unlike the fine Bhalla will be issued for having filed his BE report late, which Bhalla has said was an honest mistake.

Mann also downplayed any possibility that Bhalla's failure to file the BE with ELEC in and of itself indicates misconduct. He says the BE is an important report, but that it's plausible that, at a small law firm like Bhalla's, executing the filing of the report was unintentionally overlooked.

"I don't think it [his failure to file in a timely fashion] is something that's evil in any way," says Mann.

In her written statement, Mason went on to criticize Bhalla for failing to comply with Pay-to-Play reform law for three years and said, "Bhalla is a big-time player in this corrosive system. Yet he masquerades as a reformer."

As for how this imbroglio will play out, Mason did not reiterate her call for Bhalla's resignation, and Bhalla has not officially called for Mason to step down. Mann says he doesn't think either Bhalla or Mason has allegedly engaged in conduct that should warrant their resignations.

"From what I know," Mann says, "I don't think anything being tossed here should threaten the careers of these elected officials."

Update 5/6/10:

This afternoon Second Ward councilwoman Beth Mason provided Patch access to original carbon copies of the checks listed in the General Ledger and Itemized List of her R-1 Form filed with ELEC on September 17, 2009, including the 48 checks that were reported as having been issued to cash. Mason told Patch that the information on the General Ledger indicating that checks had been issued to cash was a clerical error made by someone at Professional Financial Services, Ltd., the North Arlington-based CPA that completed the report. She said the firm has taken responsibility for the mistake and has pledged to correct the error.

Patch's review of the checks confirmed that all 48 checks in question were in fact issued to individuals, the names and addresses of which can be found in the Itemized List. When asked why the checks were cashed and then cash was disbursed to more than one individual, Mason responded that she didn't exactly know why that had occurred, noting that as the candidate she relied on others to carry out those types of tasks. But a spokesman speculated that it may have been the result of the way campaign workers interpreted the section on "street money" found on page 28 of ELEC's Candidate Compliance Manual (PDF). The spokesman, who did not work on the campaign, said the language of the laws governing street money use and the guideline contained in the manual read slightly differently and a layman may have interpreted it to mean that doing so was kosher. They both pointed to the fact that every individual who received money is accounted for by name and address on the Itemized List.