Former Gov. Mike Easley, at the outset of hearings into possible violations of the state's campaign finance laws, stands accused -- by a friend -- of being a petty grifter.
The accusation is that Easley took $11,000 in campaign funds to pay for repairs to the house he owned on East Lake Drive in Raleigh, a house he rented out during the eight years he occupied the Governor’s Mansion. He hid the transactions by misreporting what they were for, the friend testified.
The repairs were contracted and paid for by McQueen Campbell, Easley’s friend and someone who, according to his testimony, frequently piloted the governor free of charge in airplanes owned by one of Campbell’s companies. The costs, for two different sets of repairs, came to $4,777.50 and $6,300, respectively. They were billed to the Easley campaign not as repairs—since that would’ve been an illegal, personal expense an embarrassing if technically legal expense—but rather as “various flights,” ostensibly to campaign-related events, Campbell testified.
[Update, Day 2: Paying personal expenses from campaign accounts was perfectly legal under state law at the time, according to Dave Horne, who testified this morning, even for something like home repairs. Horne, a lawyer, served as treasurer for Easley's 2000 and 2004 gubernatorial campagins. The only rule at the time, he said, was that such expenses needed to be reported accurately, which if Campbell is to be believed, Easley failed to do. Since the 2004 campaign, state election laws have been tightened. Such things as meals, clothes and cars can still be paid for with campaign funds, but only if the expenditure can be linked to winning or holding a public office; repairs to a rental house would presumably not qualify.]
A campaign aide who questioned the second bill testified that Easley called her and directed her to pay it, even though it was vague and unsupported by any documentation about the flights. In a memo she wrote to her boss at the time, she quoted Easley as telling her he “knows what it says” and wanted it paid anyway.
The aide, Rebecca McGhee, worked for Raleigh lawyer Dave Horne, an Easley confidante who was serving at the time as treasurer of Easley’s 2004 re-election campaign.
She and Campbell testified under subpoena Monday, the first day of hearings by the State Board of Elections into allegations that the Easley campaign and the North Carolina Democratic Party may have committed criminal violations in their handling of contributions from Easley’s supporters. The hearings are expected to continue through the week.
A complaint from Democracy North Carolina, a progressive watchdog group, triggered the probe, SBOE Chair Larry Leake said, which turned up other issues that the board is now investigating. A central issue is whether the Easley campaign and the state Democratic Party colluded to get around statutory limits on what individual contributors were allowed to give the governor.
Leake said Easley, who was also served with a subpoena, will be called to testify on Wednesday or thereafter.
Campbell’s frequent flyer services for Easley may also have violated election laws, since flights to his political events should’ve been reported as in-kind contributions to his campaign—but weren’t.
The 38-year old Campbell, a commercial real estate broker with interests in several other businesses including a Bladen County hog farm, testified that he grew up knowing Mike Easley and his family. Campbell’s father, a wealthy Elizabethtown businessman, helped Easley win his first elective office in 1981 as District Attorney for the southeastern counties (including Bladen and Brunswick County, where Easley lived), Campbell said.
After Easley was elected governor in 2000, he named the younger Campbell to the N.C. State University Board of Trustees, and reappointed him four years later. Campbell played a role—he says not much of one—in getting a lucrative job for Mary Easley, the governor’s wife, at NCSU.
Earlier this year, she was fired by the university, and Campbell resigned, when the fact that Mrs. Easley was being paid $180,000 a year for relatively minor duties came under public attack.
Campbell testified that he began flying Easley around for free soon after he earned his pilot’s license, after Easley had been elected state attorney general. According to Campbell’s personal flight records, he flew Easley on 61 “instances” between September, 1998 and November 4, 2000, when Easley won the governor’s office. An “instance,” he said, equated to one leg of a flight—one start and stop, in other words. Campbell said he’s estimated the value of these flights—what Easley would’ve paid for charter flights had he or his campaign dug into their pockets—at $61,810.
Some of the flights weren’t political, Campbell testified. For example, he flew the attorney general to Charlotte for a Carolina Panthers football game in September, 1998. Many of the flights were political, however, since Easley was running for governor at the time.
Later in his testimony, Campbell estimated the value of flights that he provided to Easley between October 8, 1999 and October 23, 2006—the last time he flew the governor anywhere--at $102,185. He didn’t say how many flights there were during this period. Again, he said, his records indicated that some of the flights weren’t political. But most of them were, and were made after folks from the Easley campaign called to arrange them. The political flights were worth $87,895, he estimated.
Tommy Hicks, a lawyer representing Easley personally (two other lawyers are representing the Easley campaign, and another is representing the N.C. Democratic party), questioned Campbell’s estimates. Hicks noted that a charter flight would include a paid pilot, but Campbell was piloting as a unpaid volunteer.
Campbell said he loved politics, loved flying and considered Easley a close friend, so he never thought to bill anyone for the flights. He paid for the gas and other expenses out of his pocket or his company’s; Easley didn’t pay for anything.
The company, Executive Aircraft Services Inc., buys and sells private aircraft; Campbell, who owns it with his father and brother, used its planes to ferry Easley around.
Campbell operated on the assumption, he testified, that if the flights needed to be reported for campaign purposes, the Easley campaign would be doing so. He was 26 when he first flew Easley, and he didn’t know much about the election laws, he noted. He added that he didn’t learn until this year that none of the flights were ever reported by Easley’s campaigns.
The only “flights” that were reported, Campbell testified as Leake questioned him, were the bogus ones he made up to cover the home repairs.
Campbell said that McGhee, on Easley’s behalf, called him in 2004 and asked him to look into the tenants’ complaints about Easley’s East Lake Drive house. Easley bought the house while he was attorney general. His primary resident was always, and still is, in Southport.
Subsequently, Campbell found that repairs were needed and he hired contractors to make them. Soon, there was another problem with a water leak, and Campbell got that fixed too.
“I fully expected to get reimbursed for it,” he testified.
But when he called Easley to request payment for the first repairs, he went on, the governor replied obliquely, asking him if there weren’t “unbilled flights.”
Campbell said he doesn’t remember the conversation exactly, “I just remember understanding what he was saying”—which was to bill the Easley campaign for the repairs but list them as campaign flights. Which is what he did, submitting a bill for $4,777.5o.
“So the Easley campaign paid for the repairs to Gov. Easley’s home?” Leake asked.
“Yes, sir,” Campbell testified.
Campbell said he talked with Easley again after the second repairs were made, but doesn’t remember anything about the conversation except that the results were the same: He sent “a false invoice” to the campaign for $6,300 and it was paid as well.
That was the bill McGhee questioned, because there was no backup for it, she said, in the form of flight logs or anything else. Easley told her to pay it, which prompted her to write a memo to Horne recording her actions and his.
Leake also produced a document indicating that the Easleys claimed and were paid $5,451.21 for the water damages by an insurance company. He asked whether Campbell received any money from that settlement. Campbell said he did not.
Other testimony focused on the question of whether campaign contributors were told by the Easley campaign that they could circumvent the $4,000 limit on individual contributions by giving additional money to the state party and earmarking it for Easley.
It’s legal for the party to spend money supporting a candidate’s campaign, but it’s illegal it’s simply laundering earmarked money over the $4,000 limit.