Perhaps as a result of the shortened statute of limitations introduced by the Elections Transparency Act, ELEC has (anecdotally, at least) been growing increasingly aggressive about investigating, and filing complaints against, New Jersey political candidates, PACs, and political party committees.  For example, in July 2024, ELEC filed sixty-nine complaints regarding activity from the June 2023 primaries with potentially additional complaints to come.

As ELEC is potentially ramping up enforcement, it becomes increasingly important for all committees to familiarize themselves with updated reporting deadlines and new ELEC regulations, and to consult with professionals to ensure compliance and avoid penalties. It is also crucial to know what to expect if ELEC does open an investigation or file a complaint.

Investigation or complaint?

There are important differences between an investigation and a complaint. Investigations are prompted when ELEC’s investigators have questions about legal compliance or discover reporting errors. Once an investigation is prompted, ELEC generally sends a letter to the committee and the treasurer, requesting documents such as copies of checks, receipts, invoices, and copies of allocation letters. Alternatively, ELEC may request bank records directly from the committee’s bank and, depending on bank policy, the committee may or may not be notified. An investigation is generally conducted outside of public view.

Generally, the most effective way to prevent ELEC from escalating an investigation to a formal complaint is to submit all of the necessary documents to ELEC as promptly as possible. This can also serve as a valuable opportunity to voluntary review compliance, clarify reports, and amend previous filings to proactively address any concerns.

ELEC has the authority to bypass the investigative process and proceed directly to a complaint. A complaint is a formal legal document that alleges certain facts and violations of New Jersey law, and is made public on ELEC’s website. Complaints can allege violations as minor as failure to report the employer address of a campaign contributor or it can include more serious allegations such as failure to refund excessive contributions. ELEC will sometimes proceed directly to the complaint stage, which leaves the committee in the dark until receipt of the complaint.

If a complaint is issued, you can expect to pay a monetary penalty.

By law, ELEC is permitted to issue a monetary penalty of up to $9,800 for each reporting violation, which is almost a 30% increase from the maximum amount from just a few years ago. ELEC uses a formula to calculate the penalty amounts, taking into consideration the number of violations, the monetary value of the transactions that were not reported properly, and the number of days that have elapsed until the violation was corrected. Penalties do not commonly reach the maximum per-violation amount, but New Jersey committees should be aware of the various types of penalties that may be imposed once a complaint is issued.

Complaints can be settled after amendments are made.

Receiving a complaint is not the final word on the matter. After a complaint is issued, the committee has the opportunity to request a hearing before an Administrative Law Judge where it can dispute the allegations in the complaint.

Alternatively, the committee can enter settlement discussions with ELEC. As part of the settlement process, ELEC will generally require that amendments of reports be filed to correct any ongoing violations of the law. For example, if the necessary information for a given contribution was omitted, ELEC will require that information to be disclosed as part of an amended report before proceeding with the settlement.

After the necessary amendments have been filed, ELEC will calculate a proposed penalty amount. The settlement process is a beneficial resolution tool for a committee because ELEC has historically discounted the penalty amount by up to 20% for those committees that voluntarily enter a settlement. ELEC has also shown a willingness to allow payment plans for penalty amounts.

Once the penalty amount is paid and the settlement language is finalized, ELEC’s Commissioners consider the settlement agreement at their monthly meeting, where the settlement is officially approved and finalized. Settlement documents are posted publicly on ELEC’s website. Overall, the settlement process can span a few months before it is finalized.

Compliance Tip: Not all complaints are subject to amendments. For instance, pre-election reporting is specifically intended to disclose activity before Election Day. For example, 2024 pre-election reports must be filed within 72 hours in the period immediately before the election –  a timeline that gets shortened to 24 hours within the week before Election Day. If these deadlines are missed, there is no opportunity to file an amendment and reduce the penalty. Consequently, all candidates and committees should pay particular attention to pre-election reporting to prevent an irreversible ELEC violation and penalty.

Avi D. Kelin is a founding partner of PEM Law LLP, and chairs the firm’s Political Law and Non-Profit Law practices. He helps businesses, organizations, individuals, and political organizations to influence policy while complying with the law. Thank you to Jessica Clifton, summer associate at PEM Law LLP, for assistance with this article.

This column is for educational and informational purposes only and is not intended and should not be construed as legal advice. It is recommended that readers not rely on this column, but that professional advice be sought for individual matters.