Georgia ethics officials file new complaint against Oxendine over loan

Former Georgia Insurance Commissioner John Oxendine’s years-long battle with the state ethics commission has taken yet another turn with a new complaint alleging that he illegally benefited personally from loans totaling $237,000 in leftover campaign money to his own law firm.

Oxendine, whose troubles with the commission began in 2009 when he was the front-runner in the race for governor, lost a bid in June to have previous campaign-finance-related ethics charges thrown out by the Georgia Court of Appeals.

Now his lawyer is fighting a subpoena for bank records related to the loan, which wasn't disclosed until after The Atlanta Journal-Constitution raised questions about why Oxendine was holding onto more than $500,000 in leftover campaign money years after he'd left office. Under state law, candidates must return leftover money to donors or give it to charity. For the most part, Oxendine did neither, and he reported having $587,771 in his account as of Dec. 31, 2016, the last time he was required to file.

It is legal for the campaign to use leftover money to pay ongoing legal expenses.

Oxendine’s campaign lawyer, Douglas Chalmers, said Georgia law states that campaigns can invest funds they raise. He noted that Oxendine’s campaign fund made almost $9,000 worth of interest on the loans.

“This (complaint) is just the latest development in an eight-year-old case in which the commission has harassed Mr. Oxendine,” he said. “What is costing the campaign money is the need to defend itself against baseless allegations such as the ones that have been pursued for the last eight years.”

Chalmers has filed a response to the commission asking that it dismiss the complaint, saying the loan to Oxendine’s law firm was legal.

But ethics officials have questioned whether the loans were used to “subsidize” Oxendine’s business and “lifestyle.”

In the new complaint, Stefan Ritter, the commission’s executive director, wrote, “The General Assembly imposed a clear ban on the use of campaign funds by a candidate/public officer for said candidate/public officer’s personal gain.”

The new complaint asks the ethics panel to require Oxendine to give the leftover money to charity.

Oxendine, who served as Georgia's insurance commissioner for 16 years, has been battling ethics issues since the early days of his gubernatorial campaign. Following an AJC report, a complaint was filed accusing two insurance companies of funneling $120,000 in illegal contributions to his campaign.

An ethics complaint against the insurers accused of giving the money to Oxendine was dismissed in 2014 because the ethics commission’s staff had made so little progress on it. But the commission didn’t dismiss charges against Oxendine, the recipient of the donations.

The case remained largely dormant until the AJC reported in 2015 that he failed to return more than $500,000 worth of leftover contributions from his gubernatorial bid and spent money raised for Republican runoff and general election campaigns that he never ran because he lost in the GOP primary.

Oxendine amended his reports in October 2015 to show more than $700,000 left over, including the $237,000 in loans to his law firm, which he repaid with $8,700 worth of interest.

Following the AJC report, ethics commission staffers filed an amended complaint, accusing him of improperly spending more than $208,000 raised for the runoff and general elections and accepting more than the legal limit in contributions from 19 donors. The commission dismissed many of the charges in December 2015 after Chalmers argued that the statute of limitations had run out on charges involving the 2010 campaign.

But the commission kept alive the allegations that he took illegal contributions from the insurance companies and spent money raised for races he never ran, and the Georgia Court of Appeals declined to dismiss the case in June.

Commission officials hinted last year that they might go after Oxendine on the late-reported loans to his law firm in 2013 and 2014.

In his motion to quash the subpoena for bank records, Chalmers wrote that it appears that there haven’t been any previous ethics cases involving similar loans by candidates to their businesses.

“Even if it is now determined that the (campaign finance) act does not permit a campaign to loan funds to an entity owned by a candidate, that interpretation was not available to petitioner (Oxendine) at the time he made the investments,” Chalmers wrote. “Subjecting petitioner to sanctions for conduct that he could not have known at the time was improper would violate his rights to due process.”

But Sara Henderson, the executive director of the watchdog group Common Cause Georgia, said contributions should be used for campaigns.

“Those contributors were not supporting Oxendine’s business or personal affairs,” Henderson said. “When a candidate runs for office, they solicit donations from various sources to help them run for and win a particular office. That solicitation does not include asking individuals to support the candidate’s personal and private financial affairs. “

Henderson said Oxendine should have returned leftover funds to contributors “within a reasonable amount of time.”

“The fact that Mr. Oxendine continued to hold onto these funds without pursuing another candidacy within an eight-year period definitely gives the impression that Mr. Oxendine has no intention to zero out his campaign account in a manner provided by law,” she added.