Hawaii's Republican Party says Rhode Island Senate candidate Matt Brown and Democratic groups from three states "laundered" $25,000 in campaign contributions.

01:23 AM EST on Thursday, March 23, 2006

BY JOHN E. MULLIGAN
Journal Washington Bureau

WASHINGTON -- The Republican Party of Hawaii will file a federal complaint charging that Rhode Island Senate candidate Matt Brown and Democratic organizations from three states ille

gally "laundered" $25,000 in contributions to his campaign, Hawaii's GOP chairman said yesterday.

The action by the Hawaii Republicans follows the disclosure that Brown helped to engineer the donations from the Democratic parties in Hawaii, Maine and Massachusetts. Brown got four of his wealthy backers, in turn, to give the state parties a total of $30,000.

The individual donors had each given Brown, the secretary of state, the legal maximum, so the arrangement raised the question of whether the Democrat had created a mechanism for evasion of the lawful contribution limits.

"If the stories that we read are in fact true, the Matt Brown campaign is in serious violation" of federal campaign law, Hawaii Republican Chairman Sam Aiona said by phone.

The Rhode Island GOP may join in the Hawaiians' complaint to the Federal Election Commission, the local party's executive director, Mary Diamond, said in an interview. "We are definitely welcoming" the Hawaii complaint and will consider co-signing it, Diamond said.

"This is Republicans lodging a complaint against Democrats," Brown responded. Brown , a candidate for Republican Sen. Lincoln D. Chafee's seat, said that his transactions with the state parties were "all completely legal, and the FEC will find that."

FEC spokesman Ian Stirton would not comment on the complaint, which has not yet been sent to the commission. But he said the bipartisan body has "wide discretion" in assessing civil penalties when it finds violations of federal election law.

A campaign committee can be assessed a fine as large as the full amount involved in fundraising efforts deemed unlawful, he said. If a violation is "knowing and willful," the commission can assess much larger fines -- up to 10 times the amount of money involved, he said. Stirton said the FEC could consider many factors in assessing penalties, such as a violator's previous record of infractions, if any.

It is not uncommon for FEC complaints to go unresolved for months, sometimes lingering long after the election campaigns that produced them. But even if nothing comes of the Hawaii complaint, the episode has already exacted from Brown's campaign a dear cost in bad publicity and lost momentum.

Brown, who modeled himself as a reform-oriented "outsider" candidate, has struggled to change the subject as the story of his fundraising maneuver has reverberated for three weeks.

One of the most damaging chapters came when Jane Sugimura, treasurer of the Hawaii Democrat party, explained her role in the maneuver in a way that was widely interpreted as acknowledging an illegal quid pro quo -- her state party giving $5,000 to Brown in return for money back to the Hawaii Democrats from Brown backers. Richard Bready, chief executive of Providence-based Nortek, who had already "maxed out" on the lawful limit of his campaign contributionsto Brown, gave $6,000 to the Hawaii Democratic Party.

Sugimura later told the Associated Press in Honolulu that the transaction had not been a quid pro quo.

The Hawaii Democratic Party demanded its money back from Brown shortly after the first stories about the contribution. Brown said he would comply.

Hawaii GOP Chairman Aiona said yesterday that the Hawaii Democratic Party's involvement triggered his organization's complaint. According to an account to the AP by Keith Nakano, executive director of the Hawaii Republican Party, a draft of the complaint read in part:

"There is reason to believe that the Brown campaign provided an alleged contribution-laundering scheme, whereby it steers donors to the Hawaii, Maine and Massachusetts state parties, with the explicit or implicit agreement that the state parties would, in turn, contribute to the Brown campaign."

While asserting the legality of the fundraising arrangement, Brown announced within days of the initial stories that his campaign would also give all the money back to the state campaigns in Massachusetts and Maine, each of which had given $10,000.

More repercussions came Sunday, when Maine's Democratic Party adopted new financial rules to prevent a recurrence of the Brown controversy. At the same meeting, Maine Democratic Chairman Patrick Colwell surprised the party by resigning -- although he did not cite the fundraising flap as a factor.

Brown has likewise said that his appointment of a new campaign manager last week had nothing to do with it.

Aiona said the Hawaii Republicans invited their colleagues in Maine, Massachusetts and Rhode Island to join in the complaint. Maine's GOP executive director, Julie O'Brien, said the state party welcomed the complaint but would take no official part in it.

Calls for comment yesterday from the Massachusetts GOP and the Massachusetts Democratic Party went unanswered.

Maine's Democratic Party spokesman, Arden Manning, said, "Most people are going to see this for what it is -- partisan wrangling. We expect the FEC will find this charge has no merit."

Manning was asked why the complaint would be seen as mere partisanship in light of the fact that Maine Democrats revised their campaign-contribution rules in explicit reaction to the controversy.

Even "the perception of wrongdoing is too much for the Maine Democratic Party," Manning said.

jmulligan@belo-dc.com / (202) 661-8423

VIDEO: Journal Washington bureau staffer John E. Mulligan wraps up the complaint against U.S. Senate candidate and Secretary of State Matt Brown, at:

http://projo.com/mbrownvideo