City Attorney to probe NoDDC campaign money

The Scottsdale City Clerk found reason to believe that most of the allegations leveled by former Councilman David Smith, left, about NoDDC founder Jason Alexander, above, and his handling of NoDDC finances warranted further investigation.

The Scottsdale City Attorney will take a closer look at allegations levied against the NoDDC political action committee and its founder Jason Alexander after the City Clerk found reason to believe campaign finance violations may have occurred.

Former Councilman David Smith lodged a complaint with the Scottsdale City Clerk’s office in May alleging a number of violations the NoDDC PAC and individuals associated with the group, including Alexander, Rebecca Holmes and Mike Norton.

Many of the complaints arise out of an alleged commingling of funds between NoDDC Inc. and NoDDC PAC.

NoDDC Inc., a now defunct Arizona nonprofit, was dissolved in December 2018.

NoDDC PAC, organized in October 2018, is the most recent itineration of an associated political action committee. A previous entity called NoDDC PAC, also headed by Alexander, was active from September to December 2016.

Both organizations were prominent in the fight against the Desert Discovery Center, later Desert Edge, development that was effectively quashed by the passage of Proposition 420 in November 2018.

The complaint included allegations that monies donated to the NoDDC Inc. non profit were funneled to the NoDDC PAC without proper documentation.

Smith also alleged that some of the money may have been used to cover personal expenses for Alexander and Norton — both listed as directors of the nonprofit — and to make donations to City Council candidates in violation of state law.

The City Clerk found no evidence that Norton, who was involved with the NoDDC nonprofit but not the political action committee, committed any violations.

The same cannot be said for Alexander or the NoDDC PAC.

City Clerk Carolyn Jagger referred the complaint to City Attorney Bruce Washburn after finding reasonable cause to support several of the alleged violations.

Jagger’s report also shows she did not find reasonable cause to back up Smith’s allegation that NoDDC PAC violated state law by failing to list all of the bank accounts in which it deposited funds.

The report noted that the PAC filed an amended statement of organization that included a new bank account not listed in the original filing, which would satisfy disclosure requirements.

“No evidence was found to indicate that the deficiencies in NoDDC PAC’s Initial Statement of Organization were not remedied by the PAC’s Amended Statement of Organization,” according to the report.

This is not Alexander’s first time going before the City Attorney due to his work with NoDDC.

Scottsdale resident Paula Sturgeon-Mortensen filed a complaint with the city in September 2018 alleging campaign finance violations by NoDDC, Protect Our Preserve PAC and the Protect Our Preserve nonprofit organization.

In October, Washburn found that NoDDC had violated state law by failing to register as a political action committee, using corporate money to support political candidates, and failing to include proper disclosures on contribution solicitations.

That complaint has since been settled after Alexander paid a $5,000 fine to the city.

In a response to the current complaint, Alexander’s attorney vehemently denied the allegations and characterized the complaint as an “attempt at relit gating issues ended in a prior settlement agreement.”

In his response to Jagger, Alexander, via his attorney, said that the City Attorney already had full access to all of NoDDC’s financial information because of the first complaint and settlement.

“All information relating to NoDDC (including financial records, PayPal records, Facebook ad payments, web hosting information, and cloud storage) was provided to Mr. Washburn during the litigation preceding the settlement agreement. After Mr. Washburn reviewed all the documentation for five weeks, Mr. Alexander entered into the settlement agreement with the City of Scottsdale,” according to Alexander’s response.

However, the Clerk said that is not true.

“NoDDC claims that all information relating to NoDDC, including financial records, PayPal records, Facebook ad payments, web hosting information, and cloud storage, was provided to Mr. Washburn during the litigation preceding the settlement agreement. This statement is not accurate,” according to the Clerk’s report.

The report states the Washburn was not provided access to the books for NoDDC, the nonprofit organization, which would have showed whether or not the organization received donations beyond the PayPal transaction history provided to Washburn last year.

That contention contributed to the Clerk’s finding that there is reasonable cause to believe NoDDC PAC failed to accurately report its donations.

Jagger found reasonable cause to believe that donations originally made to NoDDC Inc., considered corporate donations, intermingled with donations made after that nonprofit was dissolved in November 2018, in violation of state law requiring corporate donations to remain in an account separate from individual donations.

“Any individual contributions received after that date would be personal contributions and must be segregated into a different bank account from the corporate donations that NoDDC, Inc., had already collected,” the report states.

The allegations of financial impropriety extend well beyond the mixing of corporate and individual donations, though.

Jagger also found reasonable cause to believe that Alexander violated state regulations by using surplus PAC money for personal use.

Smith’s complaint detailed 12 transactions totaling nearly $2,000 listed as expenditures in NoDDC PAC campaign financial filings that he alleged could be for personal use.

The transactions included payment for meals, a $402.88 on Amazon for office supplies and three purchases totaling over $700 for photography and video supplies.

NoDDC PAC did not provide Jagger with a justification for those specific purchases, only stating that leftover funds were used for unspecified charitable purposes.

“Mr. Alexander indicates that the remaining funds following litigation were utilized for charity, furthering the mission that started with Proposition 420, follow-up efforts to the election, and general community advocacy. Thus, expenditures for office supplies, equipment, meetings with officers and consultants should raise no red flags,” according to Alexander’s response.

Additionally, Jagger pointed out two transactions — $55 spent on Arizona Corporation Commission filings and notary services — that “that appear to be related to the dissolution of NoDDC, Inc., and would be corporate expenditures, not PAC expenditures.”

Alexander may have also spent some monies donated to specific City Council candidates in 2018 using monies originally donated to NoDDC Inc.

A.R.S. § 16-916(A) prohibits corporations from contributing to a candidate committee.

Jagger wrote that there is evidence that NoDDC Inc. funds may have intermixed with Alexander’s personal funds — citing the $5,000 Alexander paid from a personal account to resolve the first complaint filed against NoDDC PAC.

Later, the PAC’s 2018 fourth quarter filing listed the $5,000 campaign fine as well as $2,122 in associated legal fees as a PAC expense.

“On December 7, 2018, a $5,000 fine was paid from the personal account of Jason Alexander and Rebecca Holmes, which suggests that NoDDC did not transfer all of the corporate monies to NoDDC PAC on or before November 28, 2018. Therefore, there is reason to believe that Jason Alexander may have mixed corporate funds with his personal monies,” according to the report.

If those funds did mix and Alexander used corporate monies to fund any part of three donations totaling $1,005 that he made to two candidates, it would be a violation of state law.

Beyond those alleged financial improprieties, Jagger found reasonable cause to believe other violations occurred, including NoDDC PAC's continued failure to include proper “paid for by” disclosures on its Facebook page, which includes solicitations for donations.

The PAC was required to rectify that violation as a part of its settlement with the city last year, but the page still lacked the proper disclosures, according to Jagger’s report.

Jagger also found evidence that the PAC failed to make “its best effort” to collect donor information as required by the state.

State law requires committees to collect information on donors, including occupations and employers.

NoDDC’s campaign finance reports included 25 donations with incomplete information.