In an already contentious Orleans Parish Civil District Court judicial election, the campaign for incumbent Judge Chris Bruno is accusing his opponent, Jennifer Medley, of violating campaign finance disclosure laws.
The allegation involves a $100,000 loan that Medley received in September from IV Capital, a company owned by Sidney Torres — a local entrepreneur, outspoken opponent of Bruno and the primary benefactor of Medley’s campaign. The same day she took the loan, Medley issued an $85,000 loan to her own campaign. A week later, she donated another $15,000 to her campaign. The campaign report says the loans were from Medley herself, and do not mention Torres’ company.
Bruno’s campaign is alleging that this was an indirect pass-through loan from IV Capital to the campaign, and that IV Capital should have been limited to $5,000, the campaign contribution limit for the office Medley is seeking.
“This clearly, to me, exhibits almost election money laundering,” said Megan Kiefer, an attorney working for Bruno’s campaign.
To investigate the loan, the Bruno campaign hired the law firm of Gray Sexton, who served for 40 years as general counsel to the the Louisiana Board of Ethics and The Supervising Committee for Campaign Finance Disclosure, according to his website. On Monday, Sexton sent a report to the Bruno campaign.
“It appears that Medley and IV Capital have conspired to intentionally circumvent the Campaign Finance Disclosure Act through her receipt of loans in excess of her $5,000 contribution limit by filing inaccurate campaign finance disclosure reports erroneously indicating that the loans were made from her personal funds,” the report said.
According to Bruno’s campaign, Sexton’s report has been forwarded to the U.S. Attorney’s Office for the Eastern District of Louisiana, which declined to comment for this story — citing a policy against confirming or denying the existence of an investigation — and the Louisiana Attorney General’s Office, which did not respond to a request for comment.
The report says that, under state law, a candidate is allowed to loan as much money as they want to their own campaign, and that campaigns can borrow an unlimited amount from “state banks” and “federally chartered depository institutions.” But IV Capital doesn’t fit into any of those categories, the report says, meaning it should have been limited to $5,000.
“Unless Medley is able to show that the $100,000 she loaned to her campaign was not derived from the funds she received from IV Capital, LLC or that IV Capital, LLC is a state bank or other federally chartered depository institution, it is believed that the loans disclosed constitute violations of the Campaign Finance Disclosure Act.”
Medley’s campaign and Torres maintain that the loan from IV Capital was to Medley, not her campaign. Medley’s campaign characterized the allegation as “a trick [Bruno’s] pulled from the Trump campaign playbook.” In a statement, Medley’s campaign didn’t directly confirm or deny that the $100,000 in loans to her campaign originated with IV Capital, but said that the loan was “perfectly legal.”
“Unlike her opponent, she doesn’t have millions of dollars of family money lying around. She’s using her own sweat equity to support her run for office because she believes New Orleans deserves better than Bruno in Civil District Court.”
In interviews, Torres and his attorney likewise contended that the loan was legal. The attorney, John Litchfield, said that he had discussed the loan prior to its issuance with state Ethics Administrator Kathleen Allen. Medley’s campaign told The Lens that it was made “with the blessing of the Ethics Administration.”
“I don’t give blessings,” Allen told The Lens in an interview. “It would not be clearance by the board. Any conversation I had with someone would be informal in nature. Usually it is discussion of the law and things of that nature. I don’t remember a specific conversation about the loan you’re referencing.”
In response to Allen’s comments, Medley’s campaign said, “We stand by our statement.” Torres said that from his understanding at the time, and on the advice of his attorney, he didn’t believe there to be any legal issues.
Torres told The Lens that he had no regrets, nor did he see anything unethical or illegal about his fervent support for Medley. He said that what was more unethical was how Chris Bruno has been able to secure his position as judge, alleging that he used his position as judge and his family’s law firm — Bruno & Bruno — to secure campaign support from lawyers, some of whom will have to litigate in his courtroom.
“The problem here is that Bruno has been able for 11 years to fight off people because they can’t financially compete against him,” Torres said. “Well guess what, now he’s got someone who can financially compete. Now he has someone, a candidate, who’s qualified, can handle the job, and has the support of a group of friends and people, just like a group of lawyers, just like a group of law firms.”
‘Strictly hateful’
The Bruno campaign says the loan is another piece of evidence that Torres is using Medley’s campaign to settle a personal score with Bruno. Last year, Torres was in a legal battle over the rights to a piece of property on Frenchmen Street. Bruno ruled against Torres. Torres has said his opposition to Bruno isn’t about the ruling as much as the way he conducted himself while presiding over the case.
The animosity between the two was on display last month, when Bruno was able to secure a last minute temporary restraining order in Civil District Court — the court where Bruno is currently a judge — to stop the Medley campaign from running an ad during the Saints game. The ad, produced by Torres’ production company SDT Productions, alleged that Bruno was a “deadbeat dad” who refused to pay child support for years, a claim that Bruno has denied.
Torres and Medley’s campaign cast suspicion on how quickly Bruno was able to get a temporary restraining order from one of his colleagues in Civil District Court. A motion for the order was filed and stamped on Sept. 21 just after 3 p.m. The order was signed at 3:30 p.m. the same day, according to court records.
“He’s got a history of using the court system to get what he wants,” Torres told The Lens. “He got a [temporary restraining order] in 29 minutes. That’s unheard of.”
Medley’s campaign asked all the Civil District Court judges to recuse themselves from the case, which they did late last month.
For Bruno’s campaign, the “deadbeat dad” advertisement was more proof that Torres was just out for revenge.
“I know that people put their money behind candidates all the time, but this is pretty unique where the motivation is strictly hateful,” said Joseph Bruno, Chris Bruno’s brother, who commissioned the Sexton report. “You look at her campaign contributions, and they’re all his associates, his mama included.”
An article from The Times-Picayune/New Orleans Advocate last week reported that donations from businesses owned by Torres and his business associates, plus a donation from Torres’ mother, made up the majority of Medley’s campaign contributions for the period covered in the report, at $36,000.
Bruno also pointed out earlier this week that although Torres’ production company, SDT Productions, has been working on behalf of the campaign, the company didn’t appear on Medley’s most recent campaign finance report, filed on Oct. 5.
Will Vanderbrook, an accountant for Medley’s campaign, told The Lens on Tuesday that the invoices from SDT Productions to the campaign had so far only included expenditures to stations to buy air-time for ads. He said that SDT had not included any service fees in the invoices.
Vanderbrook said, and Allen confirmed, that campaigns are supposed to list where they placed their ads rather than the company those expenditures were funneled through. Eventually, Vanderbrook said, the SDT services will either have to be reported as fees on the expenditure report or as in-kind donations from SDT on the contributions report.
On Wednesday, however, Medley filed an amended version of the report she submitted on Oct. 5. While the original showed no expenditures for SDT Productions, the amended version showed 17 payments from mid-September to SDT Productions adding up to $13,202.
“If something walks like a duck, has a beak and has webbed feet’
Allen, the state ethics administrator, wouldn’t say during an interview whether Torres’ loan was legal. She said there were myriad details, such as whether Medley would have been able to get that same loan from another lender, that would be needed to determine legality. But she said in principle, a candidate can borrow money to lend to their campaign.
“You’re personally responsible for it,” she said. “If you default, they’re coming to you to pay back that loan. So I think you’d report it as yourself.”
On the other hand, she said that it is against the law to make a campaign contribution or loan on behalf of someone else or in someone else’s name.
“The true source of the funds is what should be disclosed on the report,” she said. “So if someone wants to help your campaign, then their name has to be on a report. They can’t give it to someone else so that their name’s not on a report and to avoid disclosure and limits.”
Alesia Ardoin, one of the lawyers who worked on the Sexton report and a former attorney for the Louisiana Board of Ethics, said that it would create a huge loophole if Medley was allowed to immediately use the money from the IV Capital loan to issue a loan to her own campaign.
“The actual source of the loan is not her personal funds,” Ardoin said. “And it’s a wide gaping hole you would create for contribution limits if you could just go to a friend and say, hold my pink slip and give me $50,000.”
Torres’ lawyer, Jonathan Litchfield, said that this wasn’t a pass through loan, but rather a legitimate loan that Torres viewed to be a good investment, and the IV Capital issued in its regular course of business.
The collateral Medley used for the loan is an investment property she owns on 4725 Baudin Street. The house is assessed at $204,000. And records from the city’s notarial archives show that Medley has taken out loans on it totalling $269,000. As a result, the Bruno campaign characterized IV Capital’s $100,000 as essentially an unsecured loan to Medley. It’s unclear how much she still owes on the property. One of the mortgages — for $119,000 _ dates to 2013. The other one, however — for $150,000 — was finalized just this year.
Torres told The Lens that a private assessment valued the property at nearly $300,000, and that he personally thought the Mid-City double was worth even more. He also said that there was only $155,000 in debt attached to the house.
“I promise if she does not pay him back he will foreclose,” Litchfield said. “That’s what he does.”
“I’m more of a Chinese lender,” Torres said. “They lend more off of real estate. They lend off of property and collateral. They don’t really look at the individual. Because at the end of the day if you don’t pay me back I take the property. I do the same thing.”
Torres and Litchfield argued that the loan was a sound financial investment, not a roundabout way to give the campaign cash.
“It’s not a pass through,” Litchfield said. “It’s a perfectly legitimate business deal. … It’s not illegal as long as the requirements of the lending institution were met, and that it wasn’t a wink and a nod lending it to the campaign.”
To the Bruno campaign and the lawyers it hired to write the report, the wink and nod seems obvious.
“If something walks like a duck, has a beak and has webbed feet, it’s a duck,” said Megan Kiefer, an attorney working for Bruno’s campaign. “So here we have a situation where it’s completely known and admitted that Sideny Torres is funding this campaign almost fully.”
Madeline Aruffo contributed to this report.
