Traverse City Record-Eagle

July 11, 2010

Prosecutor faces big guns in Meijer case

BY BRIAN McGILLIVARY
bmcgillivary@record-eagle.com

TRAVERSE CITY — If it's true a little guy still can make a difference, Grand Traverse County Prosecutor Alan Schneider has a chance to be a real difference-maker.

Schneider finds himself firmly cast in the little guy's role in a case pending before Michigan's Supreme Court. He wants the court to uphold a lower court's November ruling that allowed him to investigate officials from Meijer Inc. for possible criminal violations of state campaign finance laws in Acme Township between 2005-07.

But his opponents are formidable and include deep-pocketed special interest groups. Retail giant Meijer, for one, is a heavyweight in Michigan's political arena, its influence earned through funding of politicians and public causes.

Schneider also must contend with the Michigan Chamber of Commerce, Michigan Teamsters and Michigan Education Association, groups whose political action committees spent millions over the past decade to support candidates and tilt the state political scale to their causes.

They're backing Meijer's efforts to fend off Schneider in the looming Supreme Court tussle.

"Everyone in the political establishment of both parties is against (Schneider)," said Rich Robinson, executive director of the non-partisan Michigan Campaign Finance Network.

Meijer and its backers want the Supreme Court to uphold the status quo, in which the secretary of state, who possesses no authority to conduct a criminal probe, hands out discipline for campaign finance violations. Deals — so-called "conciliation agreements" — are struck with offenders and penalties are limited to civil infractions and fines.

A Schneider victory could force changes to the campaign finance game. Observers like Robinson believe the threat of criminal prosecution — a state appellate court panel in November agreed with Schneider's position — could curtail illegal behavior.

"For the interest groups, it makes cheating a more risky proposition, because it's always been the case they can say mistakes were made and then reach a conciliation agreement," Robinson said. "Now it gives them less leeway with the law, and they will have to be straighter with the way they interact with the campaign finance act."

The Supreme Court this month agreed to hear the case. Oral arguments have yet to be scheduled, and it could be months before a decision is rendered.

'Not on a crusade'

Meijer acknowledged in 2008 it violated state law when it secretly and illegally spent more than $100,000 on lawyers and a public relations firm to create front groups to influence a 2005 Acme Township referendum and a 2007 effort to recall the township board. Meijer had targeted township officials during a zoning dispute over a development that included a Meijer store.

Meijer then struck a deal with Secretary of State Terri Lynn Land, paid $190,000 in a civil fine and costs, and apologized in an unsigned statement. Grand Rapids-based Meijer never disclosed who in its corporate hierarchy sanctioned the illegal activity.

Schneider said he plans to investigate potential criminality by individuals who orchestrated the recall. He said he didn't set out to create new policy and isn't pursuing a political agenda.

"Contrary to what my opponents say, I'm not on a crusade," Schneider said. "My reasons are not so glamorous or sensational. I'm just doing my job."

The appellate court panel in November ruled Meijer's conciliation agreement with Land did not preclude criminal prosecution, a decision that caught Lansing's attention, Robinson said.

That ruling prompted usual adversaries such as the Michigan Chamber, MEA and Teamsters to join hands and support Meijer with a petition that asked the Supreme Court to overturn the lower court decision.

The MEA's entry in the Meijer dispute doesn't sit well with Virginia Tegal, an Acme Township planning commissioner who recently retired after 25 years as an educator and MEA member.

"I was quite disappointed and somewhat embarrassed to see the MEA choose to respond that way," Tegal said. "In this day and age it is so difficult to find out who is behind any decision."

John Scrudato, who retired June 30 as president of the Traverse City Education Association, said he didn't know about MEA's intervention until he read about it in the Record-Eagle. He believes the MEA picked the wrong side.

"I don't know why an education association would get involved in something like this," Scrudato said.

MEA's plea to the Supreme Court isn't about Meijer, said organization spokesman Doug Pratt.

"Our brief does not pertain to the details of the Meijer case at all," Pratt said. "We frankly don't care one way or the other about Meijer."

"It's an immensely technical act that needs uniformity," he added. "It's about the authority of the secretary of state to be the final settlement regarding a claim of violation. That's the issue."

Undermine the law?

Conciliation helps determine "gray areas" when it comes to interpreting the act, Pratt contends, and said allowing 83 county prosecutors to second-guess the secretary of state would undermine the law.

Peter Henning, a former federal prosecutor and professor of law at Wayne State University Law School, said he doubts county prosecutors will run amok, but he understands the threat of criminal prosecution might generate concerns among some in Lansing.

"It creates uncertainty, and nobody likes uncertainty, especially an elected official," he said.

But Henning agrees with the appellate court that civil settlements normally don't preclude criminal prosecutions. He said he's not aware of any state criminal law that excludes enforcement by a county prosecutor.

"The usual rule is that a prosecutor's office can pursue it unless the statute specifically states otherwise," Henning said. "If the Legislature enacted criminal penalties, then they must have expected someone to enforce them. The secretary of state can't."

Land, the secretary of state, also filed a brief that asked the Supreme Court to overturn the lower court ruling. She was represented by Michigan Attorney General Mike Cox and his solicitor general, Eric Restuccia.

Meijer contributed thousands of dollars to political funds controlled by both Land and Cox over the past several years, state records show.

Land changed her stance on prosecution since she struck the deal with Meijer in 2008. She initially said individuals not named in the conciliation agreement still could be prosecuted, but now says in her Supreme Court brief that the deal erases the violation.

"Once a conciliation agreement is entered into, there is no violation remaining with respect to which a criminal penalty may be pursued," Restuccia wrote for Land.

Land's office did not return a call seeking comment.

The state has an argument, said Richard Friedman, a professor at the University of Michigan Law School. But he said Schneider's stance is stronger and he expects him to prevail before the top court.

"The base line is, county prosecutors have the ability to prosecute all crimes occurring in their jurisdiction unless the authority is taken away from them by the statute," Friedman said. "I don't think the argument that it takes it away is foolish, but what goes more smoothly with the statute is that sure, he can prosecute."

Henning said it's unlikely allowing local prosecutors to pursue criminal violations would change how campaigns are run. Perhaps 10 to 12 prosecutions occur at the federal level each year, he said, and he doubts the state would produce anything close to that number.

Schneider said fellow prosecutors have shown no interest in his case. He queried some about campaign finance prosecutions and no one acknowledged taking on such a matter.

"One prosecutor said he just refers everything to the secretary of state," Schneider said. "That never occurred to me. Someone came in with a complaint and I just asked the state police to investigate."

Former Acme Township attorney Chris Bzdok, now Traverse City's mayor, filed the complaint with Schneider in 2008 on behalf of Acme Township trustees.

Land cut the deal with Meijer for political and personal reasons, Bzdok contends, and said Schneider is the rightful authority to determine if laws were broken.

"He's been fighting these battles alone ... he's willing to be independent and not beholden to anybody," Bzdok said. "These prosecutors are the only people who are going to exercise independent judgment and not be beholden to these other interests."