Shea, Matthew: Alleged violations of RCW 42.17A.430 & .445 by donating surplus funds to unregistered charitable organizations and personal use of surplus funds. (EY 18 Dec 18)

Case

#43628

Respondent

Matthew Shea

Complainant

Walter Smith

Description

A complaint was filed against Matt Shea, an incumbent State Representative in the 4th Legislative District, and a candidate for re-election to that office in 2014, 2016, and 2018, alleging violations RCW 42.17A.430 by making expenditures from the Matt Shea Surplus Funds account for unauthorized uses or purposes.

After PDC staff conducted a preliminary review and assessment of the facts, PDC staff opened a formal investigation and held an Initial Hearing (Case Status Review Hearing) for Matt Shea for this case and PDC Case 43628 on February 14, 2019, pursuant to RCW 42.17A.755, and WACs 390-37-060 and 390-37-071.

Concerning the Matt Shea Surplus Funds expenditures to charitable organization, Mark Lamb, legal counsel for Matt Shea stated that many bona fide charities, like some churches or groups that do not solicit donations in Washington State, so they don’t need not register with the Washington Secretary of State’s Office in accordance with RCW 19.09.020(2).   He stated that the plain reading and common-sense interpretation of the “statute is that surplus funds may only be donated to charities that, if the statute requires them to register, are registered.  All of the organizations listed are bona fide 501(c)(3) charitable organizations."

Mr. Lamb stated that the three charitable organizations identified in the complaints are 501(c)(3) charitable organizations and added that Daniels’ Prayer Ministry is a church affiliated (entity) and the other two entities did not solicit contributions generally in Washington State and thus were not required to register under RCW 19.09."  He stated that three of the surplus fund expenditures that were made in June of 2019 to Office Depot and Sears were for office equipment and supplies for Rep. Shea’s Legislative District office “where he conducts legislative business while in district.”  

Mr. Lamb stated the treasurers understanding of surplus funds was that she was required to transfer remaining campaign funds into the Matt Shea Surplus Funds Account as soon as possible after the primary or general election for which they had been solicited was held.  He stated the Treasurer made campaign-related expenditures using surplus fund “in subsequent years with the understanding that such expenses were for the same office."

Mr. Lamb stated that the campaign regrets “this administrative error and, as I indicated to you in our conversation today, seeks guidance as to how to amend and correct this issue and appreciate sincerely your offer to assist in the same.  However, because the items listed below are campaign expenses, it is our position that there is no need to respond to the requests for additional details on them as that request was to determine compliance with 42.17A.430(7)."

Mr. Lamb stated the surplus funds expenditures made during calendar year 2014 and in the early part of calendar year 2015, were outside the five-year statute of limitations in accordance with PDC statutes and rules, but that those expenditures generally fall under the same category.

Between 2015 through 2018, the Matt Shea Surplus Funds Account acknowledged making expenditures using surplus funds that should have been made out of the 2016 and 2018 Re-election Committees to Elect Matt Shea.  Those expenditures made from the Matt Shea Surplus Funds Account for 2016 and 2018 re-election campaign activities are listed in the complaint return letter and Report of Investigation with exhibit that are attached below.

On August 7, 2020, Matt Shea completed a Statement of Understanding (SOU) and emailed it back to the PDC acknowledging multiple violations of RCW 42.17A.430 by using surplus funds to make 2016 and 2018 Campaign related expenditures.  In addition, on August 13, 2020, the PDC received a $750 civil penalty payment in accordance with WAC 390-37-143 (Brief Enforcement Penalty Schedule).     

PDC staff’s review found that had Matt Shea transferred surplus funds back into both his 2016 and 2018 Campaigns, and then made the expenditures listed above and in the Report of Investigation using 2016  and 2018 campaign funds, the expenditures would have been permissible.   Staff also noted that Representative Shea made a decision to not seek re-election and is no longer a candidate for State Representative in 2020.

The $750 penalty assessed in these matters resolves the issues of using the Matt Shea Surplus Funds account to make 2016 and 2018 Campaign related expenditures.  Based on this information and the mitigating factors listed above, PDC staff found no evidence of material violations that would require pursuing any additional enforcement action in these two cases. 

The PDC has dismissed the complaints for PDC Cases #43573 and #43628, in accordance with RCW 42.17A.755(1).

Disposition

Resolved through Statement of Understanding

Date Opened

December 06, 2018

Areas of Law

RCW 42.17A.430, RCW 42.17A.445

Documents

• 43628 Shea Matthew Response.pdf
• 43628 Shea Matthew Complaint.pdf
• Shea Matt Surplus Funds Complaint Return Ltr with SOU Cover Letter (Jarvis and Smith) PDC Cases 43573 and 43628.pdf
• Shea Matt Completed and E-signed Statement of Understanding (Jarvis and Smith) PDC Cases 43573 & 43628.pdf
• Matt Shea ROI with Exhibit (PDC Cases 43573 & 43628).pdf