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RALEIGH — The State Board of Elections handed out punishment to three different parties in connection with former Gov. Mike Easley’s campaign finances Friday.

The sanctions and referrals place Easley — a former district attorney, a former N.C. attorney general and the first former governor brought before such an elections tribunal — officially on the wrong side of the law.

Already, federal prosecutors have used a grand jury to probe Easley’s dealings while in office. Judging by subpoenas and witnesses connected to those hearings, the probe extends beyond campaign finances.

But the elections board was focused on whether Easley or his campaign intentionally skirted a variety of campaign finance laws. In its ruling on Friday, the board said the state Democratic Party, the Easley campaign committee and Easley himself bear some level of responsibility.

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The board ordered the state Democratic Party to forfeit $9,000 in contributions as punishment for its part in a kind of political money laundering.

Donors can usually give a total of only $8,000 per campaign cycle to an individual candidate, but there’s no such limit on how much a donor can give to a political party. And there are no limits on how much that political party can give to one of its candidates.

The elections board focused much of its time this week trying to decide if Easley or others connected with his campaign illegally exploited this loophole. Funds donated to the party must be in the party’s control and not at the beck and call of a candidate.

In fact, internal memos entered into evidence during the hearings suggested Easley’s campaign advisers wanted to press this advantage.

In 2000, Easley campaign manager Jay Reiff wrote a memo to other staffers saying, “To my knowledge, the (Gov. Jim) Hunt campaigns have not taken full advantage of this loophole. We should.”

That same memo says that the party is likely to cooperate and that accommodating officials “are willing to let us control the operation.”

The elections board found evidence that at least two donors gave money to the party by way of Easley’s campaign with the express intent and understanding that it would be under Easley’s control.

“We are footing the bill in this instance for actions of other individuals, but the party was found to have done nothing wrong,” said Andrew Whalen, executive director of the N.C. Democratic Party. The contributions in question, he noted, were solicited by officials with the Easley campaign, not by party fundraisers.

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The Easley committee will have to pay $100,000 in fines, one of the stiffest sanctions the state board has ever meted out. Of that, $40,000 is a penalty used to reimburse the board for its cost in investigating the campaign. The rest of the fine punishes the committee for unreported and illegal in-kind contributions of private airplane trips around the state.

Most of those trips were provided by McQueen Campbell, a family friend and political supporter of Easley. The former governor thought highly enough of Campbell to appoint him to the N.C. State Board of Trustees, a highly sought-after post.

Campbell told elections board members that he provided thousands of dollars worth of air travel to Easley that the campaign never paid for or reported.

Lawyers for the campaign committee said that Campbell should have billed the campaign for those flights.

“During the course of the hearing, we learned for the first time from McQueen Campbell that flights apparently occurred in the 1999 and 2000 years leading up to the 2000 election, information that he had never provided to us,” said John Wallace, a lawyer representing Easley’s campaign.

Wallace called the fines “not unreasonable given the wrongs that unfortunately the committee was acknowledging in and throughout the course of these proceedings.”

Wallace said it was unclear whether the campaign would have the money to pay the fine levied by the elections board. If the committee is out of funds, the board may never be able to collect.

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Friday’s final action was reserved for Easley himself.

“This board has received evidence, which if believed, would tend to indicate that criminal violations of our election laws and campaign finance laws have occurred on the part of Mike Easley and, perhaps, others,” Chairman Larry Leake said, introducing the last of several motions Friday.

With that, the elections board referred Easley to the Wake County District Attorney for further investigation and possible prosecution. Board members said they heard “any number of things” that could lead to charges.

However, the two most glaring possibilities include:

• Evidence that campaign and administration officials solicited $50,000 campaign contributions at the same time a key contributor was attempting to land a key environmental permit for a new development.
• Testimony by Campbell that Easley instructed him to submit bogus flight invoices in order to be repaid for repair work the young entrepreneur arranged for Easley’s private residence in Raleigh.

“We’re just glad we’re in a position where the state, which has quite a bit more resources than the board of elections, will be able to make a full examination and leave no stone unturned,” said Thomas Hicks, Easley’s personal attorney.

On Thursday, Hicks asked the board to refer Easley’s case to prosecutors, saying his client wanted a full reckoning and adding that the public would be suspicious if prosecutors were not called in.

However, elections board members said they did not vote merely to reassure the public but because they found evidence of criminal wrongdoing.

If the Easley case follows the pattern of other high profile corruption cases, state prosecutors will not act until federal officials end their investigation.

Easley and Wake County District Attorney Colin Willoughby are good friends.

According to The Associated Press, the court system has reassigned the case to Rowan County DA Bill Kennerly.

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One lingering note: The elections board closed its hearings Friday by saying it still wanted to talk to Ruffin Poole, a lawyer who served as an adviser to Easley during his time as governor. Poole oversaw appointments to state boards and commissions.

Evidence before the elections board showed that Poole may have been involved in both soliciting campaign donations as well as official administration actions of interest to those donors.

Poole asserted that he had access to privileged information that should keep him from testifying before the board. A superior court judge sided with Poole, but the state Court of Appeals Friday night overturned that order. It’s unclear if Poole will appeal to the state Supreme Court.

The Associated Press contributed to this report.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com