Johnson Calls for Investigation of Murphy Campaign; Alleges Front-Runner Broke the Law

Democratic gubernatorial candidate Jim Johnson of Montclair today called for an Election Law Enforcement Commission (ELEC) investigation of former Goldman Sachs executive Phil Murphy.

A former Treasury Department undersecretary, Johnson said Murphy broke New Jersey election law by using what he described as “dark-money organizations” as exploratory committees for his run for Governor. Johnson’s action brings light to the illegal use of Murphy’s non-profits, New Start New Jersey and New Way for New Jersey, to support his Governor’s campaign, the candidate said.

“This is a deadly serious filing,” Johnson said, chalking the timing of it up to a newly reconstituted ELEC.

Murphy set up and used non-profits to prepare his run for Governor and for his personal political benefit, which allowed him to avoid registering, disclosing or being held accountable by ELEC or or the public during the initial phase of his campaign, the Johnson Campaign charged. In New Jersey election law, exploratory committees are required to register as candidate committees with ELEC. New Jersey law clearly states “any individual who spends or raises funds solely for the purpose of determining whether or not they should become a candidate is considered a “candidate” under state law and must register with ELEC”  Based on Phil Murphy’s actions and statements, it is clear that the nonprofits were formed to help Murphy begin his run for Governor, in violation of state law, argued the long-shot Democratic candidate for governor.

“By illegally using these non-profits in the early part of his campaign, Phil Murphy was able to avoid disclosing some contributors and expenditures that were for the sole purpose of supporting his candidacy — they ran TV ads, conducted polling, and developed campaign policy positions without making the required disclosures under New Jersey election law, and potentially accept contributions far in excess of the $4,300 per election campaign donation limit. It also allowed him to avoid the public and media scrutiny that would have come with declaring a campaign for Governor in 2014,” the Johnson campaign noted.

In response, Murphy Campaign Spokeswoman Julie Roginsky said in a statement,”There is absolutely no merit to this and we look forward to its dismissal by ELEC. There has been complete transparency in every action by Phil Murphy. This complaint is nothing but a hypocritcal political act by the Johnson campaign.”

In a conference call with reporters this afternoon, Johnson described himself as a concerned multi-generational New Jersey resident.

“It’s simple – the same rules apply to all of us.  His own statements make it clear that Phil Murphy viewed these non-profits as a way to get a head start on his run for Governor, which is clearly illegal under New Jersey law.  New Jersey desperately needs leadership who will change the way our state government does business, and by failing to be honest and transparent with voters about his candidacy, Phil Murphy’s campaign have shown they are committed to bringing more of the same,” said Johnson.

Johnson’s complaint presents what he described as extensive evidence that Murphy founded his nonprofits and spent much of their funds solely for the purpose of raising his profile and testing his run for Governor. The non-profits spent over $5.1M in support of his campaign,he said. Many other instances show that Murphy’s non-profits were functioning as candidate political committees. For example, 98% of funds spent by New Way for New Jersey went to individuals and vendors who now work for Murphy’s campaign for Governor. Similarly, “policy” polling conducted for New Start New Jersey shaped Murphy’s policy platform.

“After eight years of failed leadership and scandal in Trenton, we need someone who is committed to reforming our broken system in order to put the needs of the people first, not acting as if he has his own set of rules,” Johnson said.

The candidate presented the following foundations for his argument:

  • New Jersey law is clear that “individuals who engage in pre-candidate activity, commonly knows as ‘testing the waters’ are defined by law as candidates” and must comply with state campaign finance and disclosure law

  • By not doing so and instead implementing this political scheme, Phil Murphy was able to avoid public disclosure to ELEC of over $5.1M in donations and expenditures in support of his campaign for Governor.  Since 501(c)(4)s do not have to disclose donors or disbursements (with a few exceptions) we do not know what dark money he spent or received, or what over-the-limit contributions were collected.

  • Murphy used the non-profits to avoid the scrutiny of being a formal candidate for office.

  • All but one of New Start New Jersey’s hires was a prominent NJ political operative.

  • As widely reported by the media – New Start New Jersey and New Way for New Jersey were vehicles used to retain and pay for Murphy’s eventual campaign team in advance of his “official” announcement. Unreported by the media, however, is that 98% of the funds spent by New Way for New Jersey went to individuals or vendors (from media consultants all the way down to field organizers) who went on to work for Murphy’s campaign.

  • Murphy may have received over the limit contributions if New Way for New Jersey contributions are viewed as campaign contributions.

  • On June 30, 2016 Murphy’s campaign purchased New Way for New Jersey’s assets. On that same day they refunded Murphy personally for a similar amount. And then, on that same day, Murphy in-kinded “staff salaries” in a similar amount to his campaign.  The resulting path of transactions indicates that Murphy’s campaign really paid just $13,000 for assets it valued at over $80,000.

  • New Start New Jersey did “policy” polling that became the same “policy” for Murphy’s run for Governor. Murphy even admitted at one point New Start’s policy work would be the foundation for policy if he ran for Governor. In fact, one of New Start’s few “studies” was a poll done by Benenson Strategy Group on what issues NJ voters care about. The group’s other studies were re-publications of policies by other prominent think tanks.  Benenson Strategy Group now works for the campaign.

  • New Way for New Jersey shut down when Murphy declared for Governor, offering evidence that its purpose was pre-campaign activity. Staffers left New Way and were hired by the campaign.

  • Unreported is that when it shut down, New Way for New Jersey, which was funded mostly by Murphy, actually refunded Murphy the remaining funds in New Way’s bank account.

  • Unreported – New Way for New Jersey redirected its website to Murphy’s campaign. It began redirecting when Murphy launched his run.  As of March 30, 2017 New Way for New Jersey is still redirecting to Murphy’s campaign site.

  • Murphy’s campaign bought New Way for New Jersey “assets” and uses b-roll and still photos from the 527 in its campaign materials.

  • Murphy’s media buys seamlessly span both the 527 and the campaign. Every two weeks the 527 would purchase ads. It stopped, and the campaign picked up where it left off.

 

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