Who paid for Republican Arizona Corporation Commission candidate Ralph Heap's campaign signs?

As Republican Corporation Commission candidate Ralph Heap faces allegations that he violated Arizona law by failing to report who paid for his campaign signs, a sitting GOP official accused the Arizona Free Enterprise Club and state Sen. Jake Hoffman of asking him to engage in a similar scheme four years ago.

By running as a Clean Elections candidate, Heap had agreed to forgo money from PACs, corporations and other large donors in exchange for up to $370,000 in public funding from the Arizona Citizens Clean Elections Commission.

But, before any of that funding came through, Heap asked the commission to let him withdraw as a Clean Elections candidate and resume fundraising through traditional means.

That came after Clean Elections Executive Director Tom Collins told Heap’s attorney that, under state law, the commission cannot give him any money until Heap signs an affidavit affirming he has filed accurate campaign finance reports that show how much money his campaign raised and how it was spent.

Heap never signed the affidavit.

The complaint

At the same time, he is facing a complaint filed with the Clean Elections Commission by West Valley Republican Lisa Everett, who accused Heap of failing to report who paid for hundreds of campaign signs that appeared across the state during the primary election.

Campaign signs can cost anywhere from $25 to $50 apiece when purchased in larger quantities, but Heap only reported one $644.47 expenditure for signs at Mesa Sign Shop on his campaign financial disclosures.

“That enormous difference deserves an explanation,” Vincent La, a Republican voter, said. “The commission should determine who ordered Heap signs and who paid for them.”

Nick Myers, a Republican member of the Corporation Commission, claimed those allegedly ill-gotten signs gave Heap an unfair advantage in the Republican primary, where Heap narrowly defeated Myers by less than 2 percentage points.

“Campaigns for down-ballot offices like the ACC are decided disproportionately on name recognition,” Myers said. “Signage is often the single largest driver of that recognition, especially in the final weeks of the race. An advantage of 1,000 illegally funded signs isn't insignificant.”

Timothy La Sota, Heap's attorney, downplayed the sign allegations during a meeting with the Clean Elections Commission.

“What Dr. Heap's been accused of is sort of commonplace in campaigns where sometimes you know, at least just taking the accusations as if they were true, it's certain parts of the campaign get ahead of themselves, so it's very much a garden-variety accusation,” La Sota said.

And he denied the allegations that Heap's campaign coordinated with other candidates to install the signs.

"I heard a lot of weird, unsupported conspiracy theories today and that was one of them," La Sota told KJZZ.

But La Sota downplayed the sign allegations during a meeting with the Clean Elections Commission.

“What Dr. Heap's been accused of is sort of commonplace in campaigns where sometimes you know, at least just taking the accusations as if they were true, it's certain parts of the campaign get ahead of themselves, so it's very much a garden-variety accusation,” La Sota said.

Four years ago

Myers also told the commissioners that the Heap controversy reminded him of a situation he found himself in four years ago, when he first ran for the Arizona Corporation Commission as a Clean Elections candidate.

“It's widely believed that the individuals who advised this scheme are the same individuals who approached me four years ago with a substantially similar, if not identical, proposal,” Myers said.

Myers did not tell the commissioners who approached him four years ago.

But he told KJZZ that he was referring to the Arizona Free Enterprise Club and Hoffman, a state lawmaker and political consultant who recruited Heap to run for the Corporation Commission.

Four years ago, Myers said he could not buy campaign materials, because his Clean Elections funding had not come in. That could have put him at a disadvantage against his Democratic opponents, who were also running as Clean Elections candidates but benefited from millions in outside spending, according to campaign finance records.

That spending, called independent expenditures, is made without coordination with a campaign and is not considered a campaign donation.

Myers alleged the Arizona Free Enterprise Club suggested he skirt Clean Elections rules so that he could buy campaign signs.

“They said ‘Go buy it and pay yourself back when you get your funding, and we will make sure you get your funding,’” Myers said.

He accused Hoffman of making a similar pitch.

“Jake offered to buy signs and said, ‘You can pay me back, because you have to get your signs out now,’” Myers said.

Myers said he rejected both offers because he believed they violated Arizona law.

He said he has no knowledge about whether either group approached Heap with similar suggestions.

“And it just seems to line up so cleanly with what's going on in Heap’s campaign,” Myers said. “Is there a correlation? I don’t know, but I think this is a good time for some transparency.”

La, the Republican voter, told commissioners he saw many of Heap’s signs placed next to signs for Rep. Alexander Kolodin, who is running for secretary of state, and Treasurer Kimberly Yee, who is running for superintendent of public instruction.

“That raises an obvious question: Were the signs printed or installed by the same vendor or organization?” La said. “Yee and Kolodin each reported roughly $70,000 in sign spending.”

Both Yee and Kolodin were recruited by Hoffman.

Yee's campaign has paid $102,397 to Forged Communications, a company owned by Hoffman. Kolodin’s campaign paid the company nearly $90,000, according to campaign finance reports.

Hoffman denied the allegations.

"Any notion that Yee or Kolodin have anything to do with this is a tinfoil hat conspiracy theory," he said.
"Nick Myers is a liar and crazy person, which is presumably why he lost his reelection."

A spokesman for the Arizona Free Enterprise Club did not respond to a request for comment.
Under the Citizens Clean Elections Act, participating candidates are barred from accepting most outside money, including donations from political action committees, businesses, corporations, political parties, and labor unions.

They are required to collect a certain number of $5 donations to qualify for Clean Elections funding and can also accept donations of up to $220 from individuals.

Heap’s critics claim the sheer number of signs his campaign placed around the state — and the lack of paper trail showing who paid for them — outline a clear violation.

The commission

The Clean Elections Commission voted 4-0 to deny Heap’s request to withdraw as a Clean Elections candidate.

Under Clean Elections rules, candidates can withdraw without the commission’s permission until they “qualify” for Clean Elections funding. However, the Secretary of State’s Office notified the Heap campaign that it qualified for that funding on July 20 after collecting the required number of $5 donations.

If he has been found to violate Clean Elections rules, Heap could be forced to pay significant fines or, in certain cases, face disqualification as a candidate in the Corporation Commission race.

La Sota said Heap should be allowed to withdraw as a Clean Elections candidate, because he hasn’t actually received any money from the program.

“If we had qualified, where's our check? Where's our money?” La Sota said.

He said that, even if Heap withdrew, he would still be subject to Arizona’s campaign finance rules and could face penalties if the Secretary of State’s Office found he violated those laws.

The Clean Elections Commission’s decision puts Heap in a difficult financial position heading into the general election.

That’s because, as long as he remains a Clean Elections candidate, Heap cannot accept large individual donations or money from outside groups, like PACs and corporations.

At the same time, he can’t tap into the approximately $370,000 in public funding that is available to qualified Clean Elections candidates for the Corporation Commission, because he hasn’t signed that affidavit affirming his campaign finance reports are accurate.

That leaves Heap’s campaign with under $10,000 in its campaign account.

The three other candidates seeking two open seats on the Corporation Commission — Republican Kevin Thompson and Democrats Clara Pratte and Jonathan Hill — have qualified for hundreds of thousands of dollars in Clean Elections funding.