Source: http://nyccfb.org/law/advisory-opinions/2003-2-matter-fratta-2001/
Timestamp: 2019-04-18 19:28:28+00:00

Document:
$1,827 for failing to respond in a timely manner to the draft audit report directed to the Committee, care of Rachel Mann. See New York City Administrative Code §§ 3-703(1)(d), (g), 3-710(1). This amount represents 2% of the public funds received by the Committee.
$1,250 for filing the Committee's Disclosure Statement 10 (570) days late. See New York City Charter §1052(a)(8), New York City Administrative Code §3-703(6), and Board Rule 3-02.
filing the Committee's Disclosure Statements 11 and 12 (10) days late. See New York City Charter §1052(a)(8), New York City Administrative Code §3-703(6), and Board Rule 3-02. The Board found the Advance Group, Inc. to be in violation but did not assess a monetary penalty.
$80 for filing the Committee's Statement 15 (2) days late. See New York City Charter §1052(a)(8), New York City Administrative Code §3-703(6), and Board Rule 3-02(c).
On May 1, 2003, the Board considered penalties against John Fratta, Fratta 2001 (the "Committee"), and the Committee's treasurer for the following violations of the Campaign Finance Act (the "Act"): (1) failure to respond in a timely manner to the draft audit report; (2) accepting an in-kind contribution from an unregistered political committee; (3) prohibited post-election expenditures; and (4) the late filing of four disclosure statements.1 Ms. Mann, partner of the Advance Group, and Mr. Fratta appeared before the Board. Ms. Mann testified at some length. The Board assessed $3,157 in penalties against the Advance Group, as the "agent" of the Committee, for the late submission of the response to the draft audit and disclosure statements 10, 11, 12, and 15, and $300 in penalties against the Committee.2 The Board also found the Committee to be in violation of the Act, but assessed no penalties, for these same violations, and assessed penalties against the Committee for other violations of the Act. 3 Statement 10 was submitted 570 days late, Statements 11 and 12 were ten days late, Statement 15 was two days late, and the response to the draft audit was submitted 39 days late, and then only after the Committee and the Advance Group received a notice of recommended penalties from the Board's Legal Unit.
On May 27, 2003, the Board informed the Advance Group that it had decided to reopen the matter to give the Advance Group an additional opportunity to appear at its meeting on June 4, 2003.4 Scott Levenson, the Advance Group's president, appeared before the Board at that meeting. The Board then deferred any decision on the matter to a later date in order to provide the Advance Group with an opportunity to comment on written material to be supplied by Board staff. On June 26, 2003, the Advance Group was provided with a memorandum from Board staff, and on July 17, 2003, the Advance Group submitted its response to the June 26 memorandum.
Under the Act, candidates who join the Campaign Finance Program (the "Program"), their campaign treasurers, and their agents are subject to civil penalties.10 When the term "agent" is used in a statute, its meaning is to be determined from the context and subject matter of the statute. See Lumiere v. Mae Edna Wilder, 261 U.S. 174, 178 (1923). The Act explicitly includes "agents" among those who can be subject to penalties, thus confirming that individuals and entities that have undertaken the responsibility for campaign compliance cannot avoid liability. Otherwise, there would be reduced incentive for these individuals and entities to carry out their undertaking to comply with the law on behalf of campaigns.
Similarly, New York State Labor Law §240 imposes liability on "[a]ll contractors and owners and their agents" to erect safety devices for the use of employees. While the courts have decided several issues with respect to the liability of a particular agent under this section, the courts appear never to have questioned whether an agent can be held liable under the statute, since §240, like Administrative Code §3-711, provides for statutory liability. Thus, under § 240, the court's ability to impose liability on an agent is beyond question. See, e.g., Conti v. Pettibone, 445 N.Y.S. 2d 943 (Sup. Ct., Trial Term, N.Y. Co. 1981).
Based on the actions and statements of both the Advance Group and the Committee, the Advance Group was acting as the agent of Fratta 2001 when it prepared and submitted the Committee's response to the draft audit report and prepared and submitted disclosure statements 10, 11, 12, and 15.19 Mutual consent between the parties to have the Advance Group carry out these tasks is evidenced by the fact that Ms. Mann and her associates were paid by the Committee to prepare and submit the Committee's response to the draft audit report and to prepare and submit disclosure statements. On May 1, 2003, Ms. Mann testified that the late submission of the response to the draft audit report was due to "disorganization on my part" and stated that "our computer had a virus that wiped out C-SMART where all our records were held for John Fratta." (Italics added.)20 She stated that "the candidate and the treasurer were not part of the reason that this filing was submitted late" and that "John Fratta and the treasurer were not at fault in my mind for the penalties."21 The candidate, Mr. Fratta, stated at that meeting that his contract with the Advance Group was "based on fulfilling campaign finance responsibilities."22 In his June 4 testimony before the Board, Mr. Levenson stated that the Advance Group was "not authorized to act independently.. [w]e provided services to the campaign at their direction..", "[w]e could not act on behalf of [the Committee] - by definition any of the filings required their signatures, so we could not act on behalf by definition" and "[i]n fact, all filings required the signature of the candidate and the treasurer."23 These elements of control negate any argument that the Advance Group could be considered an "independent contractor" rather than an "agent."24 Given the large number of compliance duties performed by the Advance Group, the existence of a contract between the Committee and the Advance Group, the testimony by Ms. Mann and Mr. Levenson, the business purposes of the Advance Group, and the fact that the work performed by the Advance Group certainly required the use of some degree of independent judgment, the Advance Group cannot be considered a mere "messenger."
Mr. Levenson is incorrect when he concludes that the Advance Group cannot be characterized as an "agent" of the Committee because the Advance Group was designated by the Committee as its "campaign liaison."26 Without accepting Mr. Levenson's argument that the use of the word "liaison" could define the relationship between the Advance Group and the Committee as narrowly as Mr. Levenson would suggest,27 the actions of the Advance Group, with the consent of the Committee, trump any characterization of the relationship, and clearly demonstrate that the Advance Group was acting as an agent of the campaign. Thus, even assuming that the Advance Group and the campaign characterized their relationship otherwise, an agency relationship existed, notwithstanding the terms the parties used to describe their relationship or the intent of the parties to create it.28 In addition, accepting Mr. Levenson's argument that liability under the Act should be limited to agents who are designated as such in forms filed with the Board would undermine the purpose of §3-711 -- to encourage compliance -- because it would allow individuals and entities representing participating candidates before the Board -- particularly those who are in business to do so -- to avoid liability for violations of the Act and Rules of the Board unless they chose to accept such liability by the formality of being designated by candidates as "agents."
The Advance Group's July 17, 2003 memorandum does not dispute any of the facts or procedural history stated above. Indeed, the Advance Group confirms in the memorandum that "assistance in the compilation and filing of disclosure statements was only one of numerous services provided by The Advance Group to the Fratta Campaign."31 Since the Advance Group admittedly assisted in the filing of the Committee's disclosure statements, and does not dispute the Board's description of its performance of other compliance duties on behalf of the Committee,32 it is reasonable to assess penalties against the Advance Group as the agent for the Committee for the late filing of disclosure statements and the late response to the draft audit of the Committee.
In its memorandum, the Advance Group makes a number of arguments that are not persuasive. First, the Advance Group argues that the Board does not have jurisdiction over the Advance Group, because the Campaign Finance Program is a voluntary program that candidates, not their agents, choose to join, and because the Advance Group was not "notified of any responsibilities owed the CFB." 33 But the Advance Group ignores the plain language of Administrative Code §3-711, which subjects "agents" of candidates who join the Program to civil penalty. Contrary to the Advance Group's arguments, the "lack of [a] contractual relationship between The Advance Group and the CFB" 34 or the assertion that "Ms. Mann did not consent to be considered an agent, or sign any document identifying her as an agent of the committee"35 are irrelevant to the Board's determination, as the assessment of penalties against the Advance Group is based on the plain language of Administrative Code §3-711, not on a contract. The Board had no obligation to notify the Advance Group of the provisions of the Act, as the Advance Group mistakenly asserts, since, especially as a campaign compliance consultant, it was on notice of its potential liability as an agent of the Committee.
The Advance Group further contends that the Board violated the consultant's due process rights: that the Board could not correct a possible procedural defect by re-opening the penalty hearing to allow the Advance Group the opportunity to appear again at the June 4 Board meeting. First, the Board did not commit a procedural defect by sending the Notice of Penalties dated April 10, 2003 to the Committee, Mr. Fratta, and Marie Zullo, and not to the Advance Group. Any possible procedural shortcomings arose out of the unusual circumstances of this matter: at the May 1 hearing to consider penalties against the Committee, a representative of the Advance Group appeared and surprisingly took full responsibility for the violations. The Board could not have expected such a presentation and thus could not have anticipated the possible need to give the Advance Group specific notice that it might impose penalties against it. Even without such notice, though, Administrative Code §3-711provided ample legal notice of the possibility that the Advance Group could be subject to liability.
In making its determination, the Board considered, among other things, the May 1 appearances before the Board of Ms. Mann, partner of the Advance Group, and Mr. Fratta; the June 4 appearance before the Board of Mr. Levenson, president of the Advance Group; a staff memorandum from Ms. Dodell to Mr. Levenson dated June 26, 2003; a memorandum from Mr. Levenson and Mr. Glaser, Legal Counsel to the Advance Group, dated July 17, 2003; and the unsigned agreement between Mr. Fratta and the Advance Group.
The Board emphasizes that the ultimate responsibility for campaign compliance is always with the candidate.43 The Board does not intend by the issuance of this determination to suggest that it will routinely inquire into - or entertain argument concerning - who within a campaign may have been responsible for campaign committee violations. In this matter, however, the Advance Group, as agent for the candidate and his committee, is in fact responsible for the violations and has admitted its responsibility. If the terms of the Act placing potential liability for violations of the Act on agents (among others) are to have any meaning at all, they certainly apply in this case.
The Advance Group must pay to the Board the full $3,157 owed no later than September 23, 2003. Checks should be made payable to the "New York City Election Campaign Finance Fund," and may be mailed to the attention of Chris Oldenburg, Associate Counsel, New York City Campaign Finance Board, 40 Rector Street, 7th Floor, New York, New York 10006 or delivered to the offices of the Board. If the Board is not in receipt of the full $3,157 by September 23, 2003, the respondent's name and the amount of the unpaid penalties will be posted on the Board's Website and the Board may initiate a civil action to compel payment.
1 See Notice of Alleged Violations, Proposed Penalties, and Opportunity to Respond dated March 10, 2003; and letter from Chris Oldenburg to Ms. Mann dated April 22, 2003.
2 See Final Board Determination dated May 1, 2003.
3 Id. The Committee includes the candidate and the treasurer. See also note 37 infra.
4 See letter to Scott Levenson from Sue Ellen Dodell dated May 27, 2003 and Notice of Alleged Violations, Proposed Penalties, and Opportunity to Respond dated May 27, 2003.
5 See Committee's Disclosure Statements Nos. 5, 6, 8, 9, 10, 11, 15 (on file with the Board).
6 Transcript of testimony of Ms. Mann on behalf of the Fratta campaign, before the Board on May 1, 2003 (hereinafter, "Mann testimony"), p.1 (on file with the Board).
7 The Advance Group was requested by Chairman Schwarz on June 4, by telephone call from Ms. Dodell on June 5, by fax from Mr. Oldenburg on June 5, and by fax from Ms. Dodell on July 23, to provide a copy of its contract with the Committee. In his June 4 testimony before the Board, Mr. Levenson claimed that a copy of the contract was provided to the Board, and in a memorandum to the Board, Mr. Levenson stated that "[a] copy of the contract was forwarded to the CFB shortly after the parties entered into this agreement." Transcript of testimony by Scott Levenson before the Board on June 4, 2003 (hereinafter "Levenson testimony"), pp. 1-2 (on file with the Board); Memorandum from Scott Levenson and Ezra Glaser to the Campaign Finance Board, June 17, 2003, p. 3 (hereinafter "Levenson/Glaser memorandum"). The Board notes that the Levenson/Glaser memorandum, id., refers to a contract which "was signed in March, 2000 and expired completely in September 2001," indicating that the Advance Group was in possession of a contract but for some reason chose not to share it with the Board. Despite the claims of Mr. Levenson, the Board had not received a copy of the contract and until the instant matter arose, there would have been no particular reason for the Board staff to have requested it. On June 5, 2003, after Ms. Dodell told Mr. Levenson that the Board wanted a copy of the contract by June 6, he told Ms. Dodell that "if I can find it, the Board will get it." On June 23, 2003, Mr. Levenson informed Ms. Dodell that he was not in possession of a copy of the contract, and that he would attempt to obtain a copy from the Fratta campaign. On June 24, 2003, a Board staff member spoke to Mr. Fratta and Marie Zullo, treasurer of the Committee, who said that they did not have a copy of the contract. Ms. Zullo said "the Advance Group kept everything." Mr. Fratta confirmed that there was a contract, and said that he had given a copy of it, along with all other Committee documents and files, to the Advance Group in order for the firm to prepare for the Board audit. On June 26, 2003, Mr. Levenson informed Ms. Dodell that he would continue to look for a copy of the contract. On July 28, 2003, the Board received by mail an unsigned copy of an agreement between the Advance Group and Mr. Fratta, with a cover letter dated July 24, 2003 from Mr. Glaser, Legal Counsel, the Advance Group, that stated that "[t]he signed copy, as had been previously stated, is not currently available."
9 In contrast, at the June 4 Board hearing, Mr. Levenson stated that "our contract in fact terminated with the primary." Levenson testimony, p. 1. We note that the undated contract states that it terminated in November 2001.
11 See Deborah DeMott, The Lawyer as Agent, 67 FORDHAM L. REV. 301, 302-03 (1998), construing Restatement (Second) of Agency § 1 (1958).
12 "The messenger merely repeats what the sender of the message has communicated. An agent, on the other hand, acts on independent judgment, though of course within the limits of the principal's instructions. The instructions may be minute and precise, leaving little to the exercise of the agent's judgment, but unless they do away with the necessity of independent judgment altogether, the agent is distinguishable from a mere messenger." 2A NY Jur 2D AGENCY AND INDEPENDENT CONTRACTORS § 13 (1998) (citing Brilliant v. Raidy, 70 N.Y.S.2d 126 (Mun. Ct. 1947)).
13 See id. § 12 (1998) (citing Travalja v. Maieliano Tours, 213 A.D.2d 155, 622 N.Y.S.2d 961 (1st Dep't 1995)).
14 "A principal is liable for the tortious acts of its agent committed within the scope of employment. Accordingly, a principal must answer to an innocent party for the misconduct of its agent acting within the scope of its actual or apparent authority." (Citations omitted.) 2A NY Jur 2D, AGENCY AND INDEPENDENT CONTRACTORS §285.
15 Levenson/Glaser memorandum, p. 8, citing Goldstar Smoked Fish, Inc. v. Greenfield Partners, 614 N.Y.S. 2d 559 (2d Dept. 1994); Pekham Road Corp. v. Town of Putnam Valley, 631 N.Y.S.2d 172 (2d Dept. 1995); Spain v. Howard Holmes, Inc., 108 A.D.2d 741 (2d Dept. 1985); and Marcraft Recreation Corp. v. Frances Devlin Co., Inc., 459 F. Supp. 195 (S.D.N.Y. 1978).
16 Goldstar Smoked Fish, Inc. v. Greenfield Partners, 614 N.Y.S.2d 559 (2d Dept. 1994).
17 Levenson/Glaser memorandum, p. 8.
18 See supra, note 10.
19 The Board notes that the Advance Group, like any other entity, can be an agent for some purposes, and not for others. The Board finds for the purposes of this Determination that the Advance Group was an agent for Fratta and his committee for, at the very least, the Committee's filings of disclosure statements and the submission of the Committee's response to the draft audit report, for which Ms. Mann took full responsibility.
20 Mann testimony, p. 1. Throughout her testimony, Ms. Mann used the terms "I" and "we" to refer to the campaign when answering questions from the Board, further indicia that she (and thus, the Advance Group) was acting as an agent of the campaign. For example, Ms. Mann stated that "I'm sure now it seems reasonable that I could have [asked for an extension of time to respond to the draft audit report]." Mann testimony, p. 1. At the June 4, 2003 Board hearing, Mr. Levenson confirmed that he did not contest that Ms. Mann was telling the truth at the May 1, 2003 Board hearing. Levenson testimony, p. 4.
21 Mann testimony, p. 1.
22 Transcript of testimony of John Fratta on behalf of the Fratta 2001 campaign, before the Board on May 1, 2003, p.4 (on file with the Board).
23 Levenson testimony, pp. 1, 3.
24 In his testimony on June 4, 2003, Mr. Levenson stated that his firm was "a vendor, not an agent." Levenson testimony, p. 1. This is not, however, a distinction of legal consequence. In addition, even an independent contractor can be considered an "agent" under § 3-711.
25 Levenson testimony, p. 3.
27 The definition of the word "liaison" includes "a close bond or connection" (Merriam Webster on-line Dictionary) and a "close relationship, connection, or link" (Webster's New Riverside University Dictionary, 1994).
28 Restatement (Second) of Agency § 1, cmt. b (1958).
29 One of the key elements of the Campaign Finance Program is to provide timely disclosure to the public of a campaign's finances through a campaign's filing of periodic disclosure statements with the Board. Statement 10 was a particularly important disclosure statement because it was the final statement before the primary election, and was due on August 31, 2001, but not submitted until March 24, 2003, 570 days late. The Advance Group, per Ms. Mann, stated that "I did submit Statement 10 late. I did not submit it 570 days late.. I unfortunately do not have a copy of Statement 10 as submitted to the Campaign Finance Board, but I do have a copy of the Statement 10 I submitted to the Board of Elections on November 15 - which was late for that filing, but not 570 days late." Mann testimony, p. 2. The Board has no record of having received Statement 10 until March 24, 2003. Even under Ms. Mann's scenario, if she had submitted Statement 10 on November 15, 2001, it would have been 76 days late. But in any event, the public (including opposing candidates) were deprived of this important information for a substantial amount of time.
30 Ms. Mann's testimony was that the candidate and the treasurer were not personally at fault for these matters; Mr. Levenson's testimony was that nonetheless the Advance Group should not be subject to penalties under the Act.
31 Levenson/Glaser memorandum, p. 3.
32 See discussion supra p. 3.
37 The Board has routinely brought its actions against treasurers, as well as candidates, when they have refused to pay penalties assessed by the Board. These actions have ended in judgments against both candidates and treasurers, as well as candidates' committees.
39 26 U.S.C. § 6701.
40 26 U.S.C. § 6701(d).
41 Charles H. Koch, Jr., 2 Administrative Law and Practice § 5.71 (citing Charlesworth v. INS, 966 F.2d 1323, 1326 (9th Cir. 1992)).
42 The Advance Group also argues that "prejudice" played a role in this matter. Levenson/Glaser memorandum, p. 13. The Board unequivocally states that it did not; the Board's consideration is solely on the merits.
43 In this matter, the Board found the Committee to be in violation of the Act, but assessed no penalties for the Committee, as distinct from the Advance Group, for the violations of failure to respond in a timely manner to the draft audit report and the late filing of four disclosure statements, for which the Advance Group voluntarily took full responsibility.

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