UPDATE: A month after this story was published, The Louisiana Board of Ethics decided not to pursue the matter, saying in a letter addressed to Citizens’ attorney that the board had found “no evidence” that Citizens received money requiring campaign disclosures.
The Louisiana Board of Ethics is conducting a confidential investigation into Citizens for a New Louisiana, a staunchly conservative anti-tax organization, and its executive director, Michael Lunsford.
Ethics Board investigations are confidential, but the board’s decision to seek legal remedy from the 19th Judicial District Court in Baton Rouge last month revealed the probe into whether Citizens for a New Louisiana, which Ethics refers to as CNLA, violated the state’s campaign finance disclosure laws. While the board did ask the court to seal its pleading and all of the exhibits accompanying it, The Current was able to obtain the document from the East Baton Rouge Parish Clerk of Court’s Office on Aug. 21.
The court filing does not disclose specifics of the investigation but does state that the inquiry has been underway since April 11. The board contends in the pleading that Lunsford sought to “avoid compliance and responsibility” by failing to adequately respond to its subpoena for documents. A subpoena was issued on June 18 by certified mail to Lunsford’s Citizens for a New Louisiana office at 100 East Vermilion St., Suite 150.
On July 10, Lunsford requested an extension to produce the documents, according to the pleading, because he was “awaiting correspondence from the State of Louisiana which will help me answer the subpoena’s questions.” The board apparently went about searching for evidence that Lunsford was telling the truth, noting “no such request or communication has been received by [the Ethics Board].”
The origin and specific aim of the investigation are unclear. But two campaign finance disclosures from 2018 regarding Citizens for a New Louisiana’s efforts to defeat the April 28 library tax renewal in Lafayette may hint at what sparked the Ethics Board’s investigation. On April 24, 2018, Lunsford filed a “Special Report for Propositions/Recall Elections” and on June 7, 2018, filed what’s called an “Other Person’s Report.”
The June 2018 filing reports that Citizens for a New Louisiana received $21,500 from itself to fund campaign activities, giving the appearance of operating as a political action committee while using its nonprofit status to shield the identities of its donors.
In the separate April 25 filing, Lunsford asserts that the organization made contributions from its general treasury for the election, a permissible disbursement so long as the monies were not raised to directly fund the campaign. “No contribution was made to specifically fund the reported expenditures,” he writes.
However, records from the Louisiana Secretary of State show that Lunsford’s organization filed articles of incorporation on April 19, 2018, a week before the library tax renewal vote. (View its annual report here.)
“That’s a weird transaction where they are saying they gave themselves $21,000,” says a New Orleans-based political consultant with experience organizing political action committees. “No, someone gave the group $21,000. [Lunsford] is trying on one hand to say, ‘hey, we’re a 501(c)(4), so therefore I don’t have to disclose my contributors to you, the public, but I’m going to disclose the expenditures we made involving this organization in an election.’ Well, you can’t have one without the other. By filing paperwork with the state Ethics Board in the first place, he’s admitting that it’s not a 501(c)(4) in practice. He’s admitting that it’s, in essence, a PAC.”
It is possible that the Ethics Board could also be acting on a complaint that Lunsford is violating campaign finance disclosure requirements by not filing or filing incorrectly. Ethics does not disclose complaints.
Ethics Administrator Kathleen Allen declined to comment on the investigation, and it’s unclear whether any conclusions have been reached. “I cannot confirm or deny that our office is conducting an investigation,” Allen says. “Documents filed by our office in court were filed under seal.”
Lunsford’s group incorporated in early 2018 as a 501(c)(4), a type of “social welfare” nonprofit that has become the vehicle of choice for so-called “dark money” groups. The major difference between a social welfare group and a political action committee is the public disclosure of donors’ names (donations by individuals and corporations are not deductible for federal income tax purposes). These nonprofits can collect unlimited contributions from virtually any source, but they are not required to disclose their donors publicly or even (since 2018) to the IRS. PACs, on the other hand, must disclose their donors.
Organizations like Citizens for a New Louisiana can engage in candidate and election-related activities, but to maintain their tax-exempt status, the IRS stipulates that politics cannot be their primary purpose. That’s been difficult to define, and their likes have grown exponentially — on both the right and left sides of the political spectrum. It’s a complicated and convoluted structure, to be sure (here’s 501(c)(4) a primer and here’s a breakdown of PACs and other nonprofits sometimes operating in this space), and there appears to be inadequate IRS policing.
“Someone gave them bad legal advice,” the New Orleans PAC consultant says. “They would have been much better filing nothing and acting as a pure 501(c)(4). These filings are inviting ethics to get involved by — in an almost in your face manner — refusing to disclose the actual donors.”
Click here for a summary of the Louisiana Campaign Finance Disclosure Act, which includes potential penalties for not following the law, and here for a summary of the Louisiana Campaign Finance Disclosure Act for PACS, along with potential penalties.
Ethics’ Allen, who did agree to discuss campaign finance disclosure issues in general, appears to agree — at least in part. “When you refer to a 501(c)(4), that’s irrelevant to us,” she tells me. “The question for us is are they a political committee required to register with our office, and if they’re not a political committee do they still need to file reports with our office as an ‘other person’ (one of the designated filing statuses) if they’re participating in elections. There’s not a registration with that, but there’s a reporting requirement.”
Lunsford said in an email to The Current last month that a compromise was reached with the Ethics Board on the subpoena matter. “The Board accepted our compromise,” he said. “They withdrew the motion. They withdrew the subpoena.” He did not say whether he provided the state Ethics Board with the documents it was seeking.
The Current was unable to obtain the judgment resulting from the Ethics Board’s motion, which was signed by District Judge Trudy White on Aug. 5, because, according to an employee in the clerk’s office, the entire court file has since been sealed. (After this story was published, The Acadiana Advocate was able to access portions of the file online; the Ethics Board’s motion to compel return of the subpoena, however, had been sealed from view.)
“It kind of seemed like a waste of time to me,” Lunsford said. “No wonder the Board of Ethics is so far behind on their caseload. But I can’t talk about the case — it’s supposedly confidential, at least for now.”
Lunsford, who is chairman of the St. Martin Parish Republican Party, did not respond to a follow-up question this week about whether there is a “social welfare” purpose to his organization, which bills itself as “Lafayette’s local government information source.” CNLA’s activities have been conspicuously political, as the organization has conducted paid social media and mailer campaigns to defeat tax measures in the parish. The organization sprouted from the Facebook page Citizens Against the School Tax, which was created in April 2017 and changed its name a month later to Lafayette Citizens Against Taxes, or LCAT as it quickly became known. Facebook records show that LCAT changed its name to Lafayette Citizens for Smart Growth in March of this year but by May 1 had rebranded the page to Citizens for A New Louisiana.
A review of its Facebook page over the years reveals that Citizens for a New Louisiana has actively urged voters to vote down nearly every tax measure that has been on the ballot since 2017. Arguably, it has been influential in several low-turnout elections, though often misleading in its analysis and statements; for example, it regularly posts images of council members with commentary implying they voted for tax increases when in truth they only voted to put a measure before the public.
Potentially, Citizens for a New Louisiana could be penalized and fined late fees by the Ethics Board if the board determines that it’s a political committee (this 2018 Advertiser story referred to Citizens for a New Louisiana as a PAC), but the bigger question is whether the organization will be forced to disclose its donors.
“If it’s deemed a political committee, yes, it would have to disclose the source of its funds,” Allen says. “If it’s not a political committee … but it participated in an election, it may not have to disclose all of its contributors because the question is [whether] it is using its general funds or did it receive contributions for the specific purpose of the election,” Allen continues. “If it’s for the specific purpose of the election that it got the money, it would have to disclose those people.”
It’s worth noting that one of CNLA’s former directors, Chris Comeaux, filed similar campaign finance disclosures for two other failed tax measures, the school board tax that appeared on the ballot in April 2017 and the two property tax proposals in November 2018. Comeaux’s Policies for Louisiana’s Future, which also was incorporated as a (c)(4) non-profit and has a steadfast anti-tax position, disclosed in one post-election filing that it raised and spent — for the period covered by that filing — $48,000 to defeat the school board sales tax. Like Lunsford, Comeaux showed his own organization as the contributor in each of his campaign finance disclosures, with more than half of the expenditures paid to his company, Brave New Television, for media buys and video production services. Comeaux, a former campaign manager for U.S. Rep. Clay Higgins, told The Current in May that he was working on Simone Champagne’s campaign for mayor-president.
(UPDATE: After this story was published, Ethics Board Administrator Kathleen Allen responded by email to a question about Chris Comeaux’s disclosure being filed more than two years after the school board tax appeared on the April 2017 ballot. She says his organization was assessed a $1,000 late fee, which it paid.)
Comeaux did not respond to a text message about those campaign finance disclosures, and the Champagne campaign did not respond to a Facebook message today seeking additional contact information for Comeaux and asking whether he is still involved with the campaign.
Gray Sexton, who served as the state Ethics Board’s administrator for four decades, believes his former board wants more information on Lunsford’s contributors. “It appears the issue is that the group failed to disclose its contributions,” he says.
Allen says as part of this type of campaign finance investigation, the Ethics Board may have to go to donors directly to get answers, which could indicate that the board subpoenaed Lunsford’s donor list. “[We] may have to go to those contributors and/or the organization. Did it solicit for this purpose? Were [the funds] given for this purpose?”