TRAVERSE CITY -- The Village at Grand Traverse LLC paid lawyers thousands of dollars to work on a 2005 Acme Township election campaign, but did not report the expense to state officials.
A Village official in lawsuit testimony last month said he was unaware he paid for campaign work in 2005. Secretary of State Terri Lynn Land's office learned of the Village's campaign transactions in 2008, but excused officials from the Village because its development partner, Meijer Inc. assumed responsibility for campaign finance violations.
"There was no expectation for the Village of Grand Traverse to report. It didn't know it was making the election payments," said Ken Silfven, Land's spokesman. "Meijer paid for (the attorneys) and took full responsibility."
But critics contend the Village should have been required to disclose its financial role in attempting to shape a 2005 referendum on a "big-box store" moratorium in Acme.
"Wow, this just sounds like an open license for some parties to reinvent history, and I don't know how you hold parties responsible in an environment like that," said Rich Robinson, director of the nonpartisan Michigan Campaign Finance Network.
Details of the Village's undisclosed financial role in the 2005 election emerged during deposition testimony from Steve Smith, the Village's managing partner. Former Acme Treasurer Bill Boltres is suing the Village, and Smith was deposed last month.
Plans by the Village and Meijer for a sprawling, mixed-use project pitted them against township officials in a zoning dispute. The battle led to lawsuits by the developers against township officials in 2005; Acme officials then turned the tables and sued the Village and Meijer for malicious prosecution.
In separate cases, Boltres in late 2007 agreed to an undisclosed financial settlement from Meijer to halt his lawsuit, while five other Acme officials recently received a $1.5 million settlement from Meijer and the Village to end their suit.
Boltres' original suit exposed Meijer's illegal campaign activity in 2005 and 2007, and the retailer paid the state $190,000 in fines to avoid criminal charges.
The Village, Meijer split legal costs
Smith testified in April that he paid all development project-related attorney bills from 2004 until 2006, and Meijer later reimbursed him for half that expenditure. The Village paid half the legal bills for the 2005 big-box store moratorium vote, the act some contend constitutes a campaign finance law violation.
Smith said he didn't realize he made legal bill payments tied to that election.
"I never looked at a single bill from attorneys," said Smith, who employed seven law firms over the last six years. "I'd pay it, send it on to Meijer, and they'd pay half."
Neither the Village, Meijer, nor any other group reported Smith's financial assistance in the 2005 election to state campaign finance officials. In 2008, while trying to settle its own illegal campaign finance actions, Meijer sent Smith a check to reimburse the Village for its campaign-related legal expenditures.
Smith said he doesn't recall if he ever cashed the check, according to his testimony in Boltres' current suit.
Traverse City attorney Grant Parsons represents Boltres. He said he was surprised to learn from Smith's deposition that the Village funded lawyers to work on campaign matters, and was "shocked" to learn state election officials were aware of the payments.
"This means there is nobody guarding the election process in Michigan," Parsons said. "It's the most fundamental thing about our elections, to know who is spending money and who is involved. They ought to have some sense of morality."
Smith testified he didn't have to report the expense because it wasn't a campaign contribution. Instead, he contended he was a vendor who provided a legal service to Meijer.
"We, VGT, have absolutely no violation of election laws," Smith told Parsons during his testimony. "I had every single bill gone through by an expert in election law."
Smith said he hired the law firm Dykema Gossett PLLC in January 2008 to review all his bills "when the stuff hit the fan about (Meijer's) election violations."
Smith said he wanted to make sure he hadn't paid any bills from Seyferth Spaulding Tennyson Inc., a Grand Rapids public relations firm hired by attorneys who represented Meijer and the Village to run the 2005 and 2007 elections.
Smith testified there were no bills from Seyferth, but the law firm discovered he paid lawyers at Dickinson Wright PLLC, as well as Smith & Johnson Attorneys, P.C., of Traverse City, for election work.
Since the election work aided Meijer, not the Village, Smith said he shouldn't have paid those bills and asked to be reimbursed.
But the initial payments should have been reported as a loan or an in-kind donation to the campaign, even if Meijer eventually reimbursed the Village, said Robinson, of the Michigan Campaign Finance Network.
Village role obscured
Meijer in 2008 hired Lansing attorney John Pirich to conduct an internal investigation of its campaign finance violations. Pirich negotiated a conciliation agreement with Land in which Meijer paid a $190,000 fine and avoided criminal prosecution.
There is no mention of reimbursements to the Village in Pirich's Feb. 12, 2008, report to Land's office. Two months later, Pirich delivered a supplemental report that stated he discovered three more legal bills that totaled $7,600 and related to the 2005 election.
"Meijer has not yet made these payments ... and seeks your guidance as to how best to do so in compliance with the Michigan Campaign Finance Act," Pirich wrote.
Silfven said Meijer wrote checks to the legal firms, then signed those checks over to the Village. For the 2007 election, an attempted recall of Acme elected officials, Meijer paid all legal bills directly and the Village had no involvement.
The Record-Eagle obtained the Secretary of State's Meijer-related documents and correspondence in 2008, and Meijer's reimbursement to the Village is not mentioned.
The Village also paid for legal work in a third township referendum election that occurred in January 2008 over a proposed zoning change to encourage open space preservation. Area farmer Gene Veliquette and James Goss, a minority partner in the Village, opposed the land change.
"VGT was a vendor to the farmers' group," Smith said. "We provided a service and we were reimbursed."
Veliquette didn't file the required campaign statements until a month after the election. His campaign committee spent $4,861 on the election. Veliquette reported he paid $2,544 to Village at Grand Traverse for legal services provided by Dickinson Wright.