Elizabeth Warren prime recipient of questionable law firm donations

Elizabeth Warren prime recipient of questionable law firm donations

Thornton Law Firm, a progressive Massachusetts-based firm that donates heavily to Democrat campaigns, including that of Elizabeth Warren, seems to have bit of a problem with its (now former) “bonus” scheme.  Many of Thornton’s “bonuses” to its partners were in the exact same amount of said partners’ “personal” donations to political campaigns . . . often paid within ten days of their making said political donations.

Explaining that Senator Jon Tester (D-MT) flew to Boston to join other political candidates hoping to cash in at Thornton Law Firm, The Boston Globe reports:

But a striking thing happened the day Tester visited in 2010. Partner David C. Strouss received a payment from the firm labeled as a “bonus” that exactly equaled his $2,400 contribution to Tester’s campaign, the maximum allowed. A few days later, partner Garrett Bradley — until recently the House assistant majority leader on Beacon Hill — got a bonus, too, exactly matching his $2,400 gift to Tester.

This pattern of payments — contributions offset by bonus payments — was commonplace at Thornton, according to a review of law firm records by the Spotlight Team and the Center for Responsive Politics, a Washington-based nonprofit that tracks campaign finance data.

From 2010 through 2014, Strouss and Bradley, along with founding partner Michael Thornton and his wife, donated nearly $1.6 million to Democratic Party fund-raising committees and a parade of politicians — from Senate minority leader Harry Reid of Nevada to Hawaii gubernatorial candidate David Ige to Senator Elizabeth Warren of Massachusetts. Over the same span, the lawyers received $1.4 million listed as “bonuses” in Thornton Law Firm records; more than 280 of the contributions precisely matched bonuses that were paid within 10 days.

Thornton Law Firm insists that its donation reimbursement program complies with applicable state and federal campaign finance laws.

The Boston Globe continues:

Thornton, through a spokesman, said its donation reimbursement program was reviewed by outside lawyers and complied with applicable laws. Campaign finance experts said that without reviewing the firm’s records, they cannot say the payback system breaks the law, but that it raises numerous red flags.

That’s because reimbursing people for their political donations is generally illegal, several experts said. When political donors are repaid for their donations, it can conceal the real source of contributions, and enable the unnamed source of the funds to exceed state and federal contribution limits. And in some states — Massachusetts among them — political donations to state candidates from corporations and partnerships such as Thornton Law Firm are flatly illegal.

Reimbursing donors is “among the most serious campaign violations, in the view of both the Federal Election Commission and the Department of Justice,” said Daniel Petalas, an attorney who served as acting general counsel of the FEC until September.

“Using straw donors to make contributions is illegal,” said Larry Noble, general counsel of the Washington-based Campaign Legal Center and a former general counsel of the FEC. “People can go and have gone to prison for this.”

Thornton’s attorney on the matter, told the Globe that “bonus” was an inaccurate term because the monies really come from the partners’ equity in the firm.

The Boston Globe continues:

Thornton officials declined to comment, instead hiring a former federal prosecutor to respond to the Globe’s questions.

The ex-prosecutor, Brian Kelly, said the bonuses should not have been called bonuses at all because they were paid from the lawyers’ own money. He said an accountant deducted the payments from their equity, or ownership, in the firm. When lawyers leave Thornton Law and cash in their equity, he said, their financial settlement with Thornton would be reduced by the amount of the bonuses.

Kelly provided a written statement from Michael Thornton saying that “an error made internally” led to the payments being called bonuses. Thornton said he changed the way they were labeled in 2015, several years into the program, when he discovered the mistake.

“It’s obviously not a crime to make lots of donations to politicians, and they certainly did that,” said Kelly. “But their donation program was vetted by prior counsel and an outside accountant, and the firm made every effort to comply with all applicable laws and regulations.”

Thornton’s “donation program” has helped a long list of politicians from Elizabeth Warren and Chuck Schumer to Harry Reid and Joe Biden (emphasis added):

By donating as individuals, lawyers for the firm were able to collectively give far more to individual candidates in a single year than the firm could have donated directly under federal law.

Over a 10-day period in 2013, for example, Thornton partners gave $52,000 to Senator Chuck Schumer of New York, a subcommittee chairman on the Senate Judiciary Committee — 20 times as much as the $2,600 that the partnership itself could have donated. (Corporate contributions are illegal under federal law, but partnership contributions are not.)

. . . . From 2010 through 2014, Strouss and Bradley, along with founding partner Michael Thornton and his wife, donated nearly $1.6 million to Democratic Party fund-raising committees and a parade of politicians — from Senate minority leader Harry Reid of Nevada to Hawaii gubernatorial candidate David Ige to Senator Elizabeth Warren of Massachusetts. Over the same span, the lawyers received $1.4 million listed as “bonuses” in Thornton Law Firm records; more than 280 of the contributions precisely matched bonuses that were paid within 10 days.

. . . . In 2012, the lawyers gave Warren $42,200, 16 times as much as the firm could have given her directly.

Thornton’s lawyers were especially generous to Vice President Joe Biden, one of Washington’s strongest advocates for trial lawyers, contributing more than $78,000 to his campaigns from 2003 to 2008.

During President Obama and Biden’s reelection campaign in 2012, Michael Thornton hosted a fund-raiser for the Obama Victory Fund at his house in Cambridge, where Biden was the guest of honor. Some of the biggest donors — some Thornton partners gave $20,000 — were escorted into a private room and offered the chance to be photographed with Biden, said someone who was there. Thornton records show the lawyers were reimbursed for those donations.

According to the Globe, Thornton Law has contributed to only one Republican:  Senator Lindsey Graham (R-SC).

Just one Republican senator has collected contributions from Thornton’s lawyers. Lindsey Graham, an idiosyncratic South Carolinian and former trial lawyer, received $62,800 over the last decade. Graham helped peel away enough GOP support in the Senate to ensure the trust fund bill’s death on Valentine’s Day 2006, according to former Senate aides.

The Globe interviewed former employees at Thornton Law and reviewed bonus checks; they report how the “bonus” system started and that the checks clearly indicate the bonus is reimbursement for a particular candidate.

Once Michael Thornton’s willingness to raise large amounts of money became known among lawyers and politicians, the American Association for Justice, the trial lawyers’ Washington-based lobbying group, increasingly turned to the firm’s lawyers for help, even for little-known candidates running in states far from Boston.

“At first it happened every three or four months, and then it was sometimes three or four times each month,” even though the threat of asbestos litigation reform had faded, said the former employee who requested anonymity.

As the number of fund-raisers started piling up, partners began to grouse. Even though Thornton called the contributions “voluntary,” partners felt pressured to give, according to the former employee. After all, Michael Thornton was the firm’s lead partner, with enormous sway over what the other partners were paid.

So, according to three former employees, Thornton Law Firm adopted the donation reimbursement system.

Bonus checks that were reviewed by the Globe made clear that the payments were for political donations, with notations giving the name of the politician the partner had donated to.

The Globe and the Center for Responsive Politics reviewed records covering payments to three senior partners — Thornton, Bradley, and Strouss — who are among the top shareholders in the firm. Then the Globe and the center matched the bonuses against federal, state, and local campaign records.

The Globe outlines the FEC requirements for partnerships like Thornton to reimburse partners for political donations . . . and notes that’s not what the firm did.

If those donations were determined to have actually been made by the firm — because the lawyers were reimbursed — they would be illegal, since political contributions from corporations or partnerships are prohibited in Massachusetts.

There’s no indication that any of the politicians who received Thornton donations knew anything about the law firm’s questionable reimbursement system.

The FEC does allow partners in a law firm to donate to political campaigns, but only if the funds clearly come from the partner’s own money. According to FEC rules, a partnership can contribute on behalf of its partners, but then must promptly deduct the amount of the donation from the next profit-sharing payments to the partners, called “partnership distributions.”

That’s not what Thornton did.

. . . . [R]eimbursing partners out of their equity in the firm — as Kelly said Thornton did — is likely illegal, said Brett Kappel, a Washington lawyer who specializes in campaign finance.

“If they were legitimate contributions, they should have been deducted from their partnership distributions,” Kappel said.

The Globe also offers a possible explanation for the senior partner’s surprising resignation from the state House of Representatives.

Bradley, the senior partner, abruptly resigned his position as assistant majority leader in the state House of Representatives on June 27 after the Globe had begun asking questions about his firm’s business practices.

His decision stunned colleagues, coming so late in the election cycle that there was no time to take his name off the November ballot.

Bradley explained at the time that Michael Thornton was retiring and that he, Bradley, was being promoted to managing partner of his law firm. As a result, he wanted to focus on his legal work. Thornton is now chairman of the firm.

“I wouldn’t have the time to do this [legislative] job the way it should be done” because of the promotion, Bradley explained to the State House News Service. “It’s bittersweet for me.”

Interestingly, Thornton stopped its campaign reimbursement/bonus program after the Globe began asking questions.

UPDATE 11-4-2016 (by WAJ) – The Boston Globe reports on November 2:

An aide to Senator Elizabeth Warren said that she, too, will return contributions from Thornton lawyers, after initially saying that she would wait for the results of an investigation.

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