Staff for the Maine Ethics Commission is recommending an investigation into a shadowy casino campaign designed to benefit a controversial gambling developer.
The commission will meet Friday to discuss the investigation recommendation by the commission's staff into the Horseracing Jobs Fairness ballot campaign.
The campaign is facing the potential of hefty fines for obscuring its financial backers for more than a year. Amended finance reports released in April showed the campaign is bankrolled almost exclusively by offshore investment companies and a Las Vegas firm.
Prior to the new disclosure, the campaign reported funding only from Lisa Scott, the sister of controversial casino developer Shawn Scott.
Penalties for not reporting the real sources of funding could be steep.
According to the law governing late filings for ballot question committee, the penalty for late reported activity over $50,000 can be 100 percent of whatever is reported late. The three ballot question committees that filed reports Wednesday reported activity of more than $4 million.
But ethics staff has more questions, including whether the campaign intentionally hid its funding sources.
While the commission could make findings of violations based on the information at hand and move on to the penalty phase of the proceedings, the staff believes that further investigation is warranted first," ethics staff wrote in a memo to the full commission on Friday.
Attorneys for the campaign and its funders are blaming ethics staff for not knowing what it was supposed to disclose.
The memo from ethics staff to the commission recommends the scope of a potential investigation. It includes requesting bank documents provided to the campaign, emails between the campaign and its funders. It also includes potentially taking sworn testimony from Lisa Scott and Cheryl Timberlake, the treasurer of the campaign.
The Ethics Commission will meet Friday to discuss the recommendation.
In March, lawmakers on the Veterans and Legal Affairs Committee took the unusual step of holding a public hearing to question the campaign. At the time, Dan Riley, an attorney hired shortly before the hearing, said he didn't know enough about the campaign to answer questions.
Nonetheless Riley did reveal that he had been hired by Bridge Capital, located in the Mariana Islands and for which Shawn Scott is a partner. It was the first time the company had admitted it was backing the campaign. But Riley has since sent a letter to the ethics commission saying he was mistaken when he testified that he was hired by Bridge Capital. Riley said he was hired by a different company and that he doesn't know who owns it.
Nonetheless, the original revelation prompted the Maine Ethics Commission to request a meeting with the campaign.
Bridge Capital is a high-risk investment firm based in Saipan of the Mariana Islands. Shawn Scott is a partner in the firm, which also bankrolled an unsuccessful campaign last year to build a slots parlor near Suffolk Downs in Massachusetts.
Bridge Capital was fined by Massachusetts regulators $125,000 for originally hiding the firm's involvement. It was later revealed that the firm gave $1.4 million to the campaign.
Rep. Louis Luchini, an Ellsworth Democrat, and Sen. Garrett Mason, a Republican from Lisbon Falls, chair the Veterans and Legal Affairs Committee. They have requested an investigation into the campaign.
"Because of the large amount of money involved in this campaign, and given the fact that both (ballot question committees) in Massachusetts and Maine involve similar backers – including Lisa Scott and Bridge Capital LLC – we urge the commission to begin an immediate investigation,” Mason and Luchini wrote in a letter to the commission. “Any potential findings could directly influence the decisions made by the VLA Committee, and the Maine Legislature, during this legislative session.”
The Maine casino effort has thus far operated well outside of the realm of traditional campaigns. It was denied access to the ballot last year after the Secretary of State rejected its petition effort, citing widespread irregularities. It has since qualified for the ballot, but lawmakers have scrutinized the proposal because of Scott's involvement.
The campaign has spent $4 million just to get the signatures to qualify for the ballot.
Scott first brought gambling to Maine after his campaign successfully convinced Bangor voters to approve slots at a race track there in 2003.
Scott later obtained a racino license, but not before the Maine Harness Racing Commission accused him and his business associates of operating a web of shell companies and “sloppy, if not irresponsible financial management.” The report also revealed Scott and his associates were involved in over two dozen lawsuits over an eight-year period.
The trail of litigation has followed Scott and his associates ever since he sold the Bangor facility to Penn National in 2004, netting $51 million. That includes the seizure of a gambling facility run by Bridge Capital by the government of Laos two years ago over corruption charges.
The way the ballot initiative is written, Scott would be the only person who could build the casino.
In a press statement released in April, Lisa Scott said the campaign did not intentionally mislead the ethics commission and did not understand Maine's disclosure requirements.