AZ Clean Elections Commission finds 'reason to believe' Republican Ralph Heap violated law

The Arizona Citizens Clean Elections Commission voted to release hundreds of thousands of dollars in public campaign funding to Republican Ralph Heap, despite finding “reason to believe” he violated state campaign finance laws.

Heap is running for the Arizona Corporation Commission as a Clean Elections candidate, meaning his campaign has agreed to forgo large donations and outside funding in exchange for nearly $370,000 in public dollars distributed by the commission.

Clean Elections Executive Director Thomas Collins initially withheld Heap’s funding after the candidate declined to sign a sworn affidavit confirming the accuracy of his campaign finance reports, which detail spending and fundraising.

Heap signed that document this week.

But Collins asked the commission to continue withholding the campaign cash after finding evidence Heap violated Clean Election rules and state campaign finance laws when he failed to disclose who paid for hundreds of campaign signs placed throughout the state during the primary election.

“The rule asks whether there's evidence of illegal activity sufficient for the commission to exercise its discretion to not distribute public funds, and I think on the information before us that is the case,” Collins said.

Attorney Timothy La Sota, who represents Heap, submitted a sworn affidavit from Mesa Sign Shop owner Jim Torgeson, claiming he extended Heap a line of credit in April to pay for the signs, though he acknowledged he had no written contract with Heap’s campaign and has yet to send him an invoice.

“You saw Mr. Torgeson say it's not overdue. He's not concerned with it. It remains an extension of credit,” La Sota said. “So you should just dismiss this whole thing.”

And La Sota argued state law exempts lines of credit from reporting requirements even though Clean Elections rules clearly state participating candidates must report those agreements.

But Collins argued Heap’s violation went well beyond failing to report the signs, because Clean Elections candidates are prohibited from taking on debt that exceeds the actual amount of money their campaigns have in the bank, called cash on hand, before they qualify for funding.

“Dr. Heap ordered the signs in April; they were completed in May. He didn't qualify until July 20,” Collins said.

The Heap campaign currently reports it has $9,555 on hand. And a report covering the campaign’s fundraising through March 31 — the last report before Heap’s sign agreement with Mesa Sign Shop in April — reported less than $2,000 cash on hand.

“We have clear evidence that the amount in question is greater than any cash on hand that's ever been reported,” Collins said.

Ultimately, the Clean Elections Commission decided there “is reason to believe that Dr. Heap has violated a statute or rule of which the Commission has jurisdiction.”

And it voted unanimously to proceed with an investigation.

But the commission also voted 3-1 to release Heap’s Clean Election funding in the meantime, including $147,836 for the primary election and $221,754 for the general election.

The commissioners didn’t explain their vote.

But La Sota, Heap’s attorney, had argued it would be unfair to withhold the funding on the suspicion that Heap violated the law after the commissioners already rejected his request to leave the program, so he could fundraise through traditional means.

“This is like something out of the old Soviet Union. You can enter, but you can't leave,” La Sota said.

In an email to La Sota after the meeting, Collins confirmed he will release the funds.

But Heap’s campaign is not out of the woods yet.

The commission’s vote finding “reason to believe” a violation occurred triggers further investigation into the allegations that could result in an array of future penalties, including large fines and even removal from the ballot.

State law allows the commission to levy fines up to 10 times the amount of the violation and require candidates who break the law to repay the public money they received from their personal funds.