Council Member Mathieu Eugene Fined $10,717 for 2017 Campaign Violations

The New York City Campaign Finance Board (CFB) voted on Friday to levy a $10,717 fine on Brooklyn Council Member Mathieu Eugene’s 2017 campaign. The fine was for nine violations of campaign finance law, including failure to report transactions and making impermissible post-election expenditures.

Eugene, who won his 2017 race, represents the 40th Council District, which includes parts of Flatbush and Prospect-Lefferts Gardens. He is now running for Brooklyn Borough President.

Each of the nine violations carried with it involved a separate monetary penalty. The heaviest fine, for $3,327, was for failing to report transactions to the CFB. Campaigns are required to report all financial transactions in disclosure statements provided to the CFB, but Eugene’s campaign failed to report credits totaling $202.04 and debits totaling $66,345.

Another violation, for making impermissible post-election expenditures, cost the campaign $2,709. After an election, candidates can spend campaign funds only to pay expenses incurred during the preceding election, or for “routine activities involving nominal cost” related to shutting down the campaign. But the CFB found Eugene’s campaign made $10,839.63 in post-election expenditures that were impermissible because of their timing, amount or purpose.

The campaign also accepted contributions from corporations and LLCs, despite the law prohibiting such contributions. The resulting fine was $1,912. The violations, which involved small amounts of money, were as follows:

• The campaign received a $75 contribution from Grace Contracting of NYC, Inc., on December 11, 2016. It refunded the contribution on July 17, 2017, two months after the March 15 deadline to refund such transactions.
• The campaign incurred an unpaid liability of $365.41 to the corporation Progress Printing, which is considered an in-kind contribution.
• The campaign provided a contract with the law firm Pitta LLP indicating that post-election services would be billed separately, but did not provide invoices or report payments or outstanding liabilities to Pitta for that work, resulting in the work being considered an in-kind contribution.
• The campaign owed the political consulting firm the Advance Group $40,640.48,  but only reported and documented payments totaling $39,887. The remaining $743.48 was considered an in-kind contribution.

Additional violations included failing to demonstrate compliance with cash receipts reporting and documentation requirements; failing to report a transaction in a daily pre-election disclosure statement; failing to document transactions; accepting over-the-limit contributions; accepting a contribution from an unregistered political committee; and failing to demonstrate that spending was in furtherance of the campaign.

At a CFB hearing on Friday, Eugene’s campaign, through its attorney Ardian Tagani from the consulting firm Pitta Bishop (which is affiliated with the Pitta LLC law firm mentioned above), declined to contest the violations. But the campaign did contest a request by the CFB to repay some public funds, in what appears to have been a bizarre comedy of errors.

According to Tagani, in August 2017, Eugene’s campaign made a $11,062 payment to the political consulting firm the Advance Group for mailers in advance of the September primary election. The payment was at first incorrectly disclosed to the CFB as having been paid to an entity called Flatbush Prospect Realty, “apparently as a result as the transaction being added in C-SMART under Flatbush Prospect Realty’s vendor profile,” Tagani said, referring to the online system used by candidates to disclose financial activity.

“The exact circumstances of this particular disclosure mistake are not clear at this time,” Dagani said, because the campaign “has not been able to contact its treasurer,” Sadie Hyppolite, since the beginning of the post-election audit process.

In a complicated back and forth over several months in 2019 and 2020, the campaign provided the CFB with digital and hard-copy evidence demonstrating that it had, in fact, given the money to the Advance Group, and not to Flatbush Prospect Realty.

Nevertheless, at the Friday hearing, the CFB’s attorney, Bethany Persky, said Eugene’s campaign had not amended its filing to reflect the correction.

Tagani, surprised, said the amendment was submitted in August 2020. Persky then said the amendment was not included in the disclosure filing because it was provided after the CFB sent its “notice of enforcement” document to the campaign.

“The CFB does not permit campaigns to amend reporting after the enforcement notice has gone out,” Persky said, adding that the deadline was “stated in 10 different places” in an earlier draft audit report that had sent to the campaign before the enforcement notice.

But CFB’s draft audit report also included a typo – in a footnote, it again instructed the campaign to amend its disclosure report, even though the deadline for doing so had already technically passed (according to Persky, the text of the enforcement notice itself made clear the deadline had passed).

When asked by CFB chair Frederick Schaffer why Eugene’s campaign had not submitted the correction by the earlier date, Tagani again said the campaign “had no contact with the treasurer, and contact with the candidate has been restricted with a certain level of technical proficiency issues.”

“I can’t speak to the draft audit report portion of the post election audit,” he said. “I began my work on it on the enforcement notice, but we have had a consistent issue with no ability to contact the person who made the initial disclosure or any amendments following that.”

The CFB ultimately decided not to require Eugene’s campaign to repay the CFB the $11,062 in public funds it had used to pay the Advance Group.

Requests for comment to Eugene were not immediately returned. Eugene’s lawyer declined to comment on the ruling.