KROB LAW OFFICE, LLC

Attorneys at Law
MEMORANDUM
To:

cc:

Darin Atteberry
Fort Collins City Manager
Wanda Winkelmann
Fort Collins City Clerk
Carrie Mineart Daggett
Fort Collins City Attorney

From:

Scotty P. Krob

Date:

March 9, 2016, Amended March 10, 2016

Re:

Ward Luthis request for investigation

PRIVILEGED AND
CONFIDENTIAL

NOTE: City Manager permits

release of this report
03/11/16.

This memorandum is being provided to summarize my investigation and conclusions regarding

an election complaint received by the Fort Collins City Clerk, Ms. Wanda Winkelmann, from
Mr. Ward Luthi in connection with the Citys April 7, 2015 election. This Amended memo is
identical to the one provided yesterday, except on page 8 under the heading d. Conclusion I
added the last sentence to the third paragraph in the interest of clarity. Mr. Luthis complaint
asks the City to inquire into (1) whether Larimer Energy Action Project (LEAP) violated the
Citys election laws relating to reporting independent expenditures and (2) whether The
Coloradoan newspaper violated the Citys election laws relating to endorsements and
contributions.
ISSUES PRESENTED
1.
Did Larimer Energy Action Project (LEAP) fail to file proper notices of
independent expenditures?
2.
Did The Coloradoan newspaper provide in-kind contributions to mayoral
candidate Troxell and/or city council candidate Martinez, by including photos and the papers
endorsements of these two candidates each time users of the newspapers website searched for
letters to the editor regarding any candidates?

8400 East Prentice Avenue, Penthouse, Greenwood Village, Colorado 80111

Telephone: (303) 694-0099 Fax: (303) 694-5005 www.kroblaw.com

SUMMARY OF CONCLUSIONS
The notices filed by LEAP lack the detail regarding expenditures contemplated by the
Citys election laws. However, they are consistent with notices filed by others in the 2015
election and in previous elections, and accepted by the City.
Although there is substantial circumstantial evidence calling into question whether LEAP
obligated funds on the dates indicated in their notices, and LEAP refused to provide readily
available documentation that could alleviate the issue, there is not sufficient evidence to establish
probable cause to believe the dates in LEAPs notices are incorrect.
The Coloradoans displays were endorsements and not in-kind contributions, regardless
of the number of time the endorsements were displayed.
Based on my analysis, I do not believe that further proceedings against LEAP or The Coloradoan
are warranted.
DISCUSSION
In analyzing these issues the Fort Collins City Councils intent in enacting the Citys election
laws should be kept in mind:

Sec. 7-131. - Legislative declaration.

The City Council hereby finds and declares that large campaign contributions to political
candidates allow wealthy contributors and special interest groups to exercise a disproportionate
level of influence over the political process; that large campaign contributions create the
potential for corruption and the appearance of corruption; that the rising costs of campaigning for
political office prevent qualified citizens from running for political office; and that the interests
of the public are best served by limiting campaign contributions, full and timely disclosure of
campaign contributions and strong enforcement of campaign laws.
1.

LEAPs independent expenditure reporting

a.

Applicable sections of Fort Collins election laws

Sec. 7-132. - Definitions.

The following words, terms and phrases, when used in this Article, shall have the meanings
ascribed to them in this Section:
Candidate committee shall mean a person, including the candidate, or persons with the common
purpose of receiving contributions and making expenditures under the authority of a candidate. A

candidate shall have only one (1) candidate committee. A candidate committee shall be
considered open and active until the committee has filed a termination report with the City Clerk.
Issue committee shall mean:
(1) Two (2) or more persons who are elected, appointed or chosen, or have associated
themselves, for the purpose of accepting contributions and making expenditures to support or
oppose any ballot issue or ballot question; or
(2) Any partnership, committee, association, corporation, labor organization or other
organization or group of persons that has accepted contributions or made expenditures to support
or oppose any ballot issue or ballot question. For purposes of this Paragraph (2), the term
expenditure shall not include expenditures made by persons in the regular course and scope of
their business or in connection with communications sent solely to their members. The term
expenditure also does not include a contribution, as defined in this Section.
Issue committee shall not include political committees or candidate committees as otherwise
defined in this Section.
Political committee shall mean two (2) or more persons who are elected, appointed or chosen, or
have associated themselves, for the purpose of making contributions to candidate committees,
issue committees or other political committees, or for the purpose of making independent
expenditures. Political committee shall not include:
(1) Issue committees or candidate committees as otherwise defined in this Section; or
(2) Any partnership, committee, association, corporation, labor organization or other
organization or group of persons previously established for a primary purpose outside of the
scope of this Article
Independent expenditure shall mean the payment of money by any person for the purpose of
advocating the election, defeat or recall of a candidate, which expenditure is not controlled by, or
coordinated with, any candidate or any agent of such candidate. Independent expenditure shall
include expenditures for political messages which unambiguously refer to any specific public
office or candidate for such office, but shall not include expenditures made by persons, other
than political committees, in the regular course and scope of their business and political
messages sent solely to their members
Sec. 7-135. - Campaign contributions.
(a) Limits. No person may make contributions and/or contributions in kind totaling more than
one hundred dollars ($100.) to the candidate committee of any candidate for the office of Mayor.
No person may make contributions and/or contributions in kind totaling more than seventy-five
dollars ($75.) to the candidate committee of any candidate for the office of Councilmember. No
person shall make a contribution or contribution in kind in the name of another person or
knowingly permit one's name to be used by another person to effect such a contribution or
contribution in kind. These limitations shall apply to all contributions or contributions in kind,

whether made directly to a candidate committee or indirectly via earmarked gifts passed through
an intermediary, except that these limitations shall not apply to:
(1) Contributions or contributions in kind made by a candidate to his or her own candidate
committee;
(2) Independent expenditures;
.
Sec. 7-139. - Independent expenditures.
Any person or political committee making independent expenditures totaling more than one
hundred dollars ($100.) shall deliver notice in writing of such independent expenditures to the
City Clerk no later than three (3) business days after the day that such funds are obligated. Said
notice shall include the following information:
(1) The name, address and telephone number of the person making the independent expenditures;
(2) The name of the candidate whom the independent expenditures are intended to support or
oppose;
(3) The name and address of the vendor(s) providing the property, materials or services;
(4) A detailed description of the independent expenditures;
(5) The amount of the independent expenditures; and
(6) The date the funds were obligated.
For the purposes of this provision, funds shall be considered to have been obligated as soon as an
agreement is reached for the provision of the property, materials or services in question,
regardless of when payment is to be made for such property or services.
b.

Factual background

According to its website:

Larimer Energy Action Project (LEAP) is dedicated to fostering informed debate surrounding
our energy policy to ensure our citizens make positive, informed choices about energy
development and production, and understand the implications of placing bans on energy.
LEAPs representatives indicated to the City Clerks office that LEAP was neither an issue
committee nor a political committee in connection with the Citys 2015 election.
Between March 30, 2015 and April 10, 2015, LEAP filed six (6) completed Notices of
Independent Expenditures in Excess of $100, using forms provided by the City Clerks office.
The information disclosed in those six notices may be summarized as follows:

Date funds
Date
Obligated
of filing
3/30/15
4/1/15

Amount
$20,000

Purpose
of expenditure
Support Martinez

4/1/15

4/6/15

$10,000

Support Martinez

4/2/15

4/7/15

$15,000

4/3/15

4/8/15

$33,000

Support Martinez,
Kronwall
Support Martinez,
Kronwall

4/4/15

4/9/15

$35,000

Support Martinez,
Kronwall

4/7/1 5

4/10/15

$32,000

Support Horak

Description
of expenditure
Neighborhood Canvass &
Literature Distribution
Neighborhood Canvass,
Literature and associated
expenses
Direct mail literature and
distribution
Literature distribution,
neighborhood canvass,
outreach calls
Literature distribution,
neighborhood canvass,
outreach calls
Literature distribution,
neighborhood canvass,
outreach calls

On December 30, 2015, Ward Luthi, an unsuccessful candidate for mayor in the April 2015
election, filed an election complaint with the City Clerks office, asserting, in part, that LEAP
had failed to file the necessary reports in a timely manner, and further alleging that according to
its disclosure reports, LEAPs contributions were spent in the last seven days prior to the
election. The complaint does not indicate more specifically how the complainant believes the
election code was violated, nor identify the particular sections of the Citys election code he
believes were violated.
c.

Analysis

Although it supported at least three specific candidates, LEAP was not a candidate committee
because it did not have the common purpose of receiving contributions and making
expenditures under the authority of a candidate. There is no indication that any candidate gave
LEAP authority to collect contributions or make expenditures on the candidates behalf.
LEAP was not an issue committee because there is no evidence its members associated
themselves for the purpose of accepting contributions and making expenditures to support or
oppose any ballot issue or ballot question. The notice of expenditures do not indicate any issue
LEAP supported or opposed, but only provided support for candidates.
LEAP was not a political committee because there is no evidence its purpose was to contribute to
candidate committees, issue committees or other political committees. Although LEAP made
independent expenditures, it does not appear LEAP was organized for that purpose, but rather to
oppose certain energy bans and related issues.

The funds expended by LEAP were independent expenditures because they were payments made
to support candidates, but which were not controlled by or coordinated with the candidates or
any agent of the candidates. As independent expenditures, the contributions by LEAP are
expressly exempted from the monetary limits set forth in Section 7-135 of the City Code.
Although independent expenditures are expressly exempt from monetary limits, they must
comply with the reporting and disclosure requirements set forth in Section 7-139 of the City
Code. That section requires that for any expenditures exceeding $100, the person making the
expenditure must provide notice in writing within three business days after the day such funds
were obligated, not including weekends or holidays.
In discussing Mr. Luthis complaint with him, one concern he identified was whether the dates
LEAP reported as the dates funds were obligated were accurate. Some of the dates funds were
obligated as specified by LEAP were so close to the date of the election that the reports were not
filed until on or after the date of the election. Mr. Luthis concern was that this prevented the
public from knowing before they voted how much LEAP spent to support candidates. Mr. Luthi
also expressed skepticism that some of the items, such as literature, were not obligated for until
the final few days before the election.
Based on my discussions with Mr. Luthi and his written complaint, as well as my review of
LEAPs notices of independent expenditures, I identified two issues that I requested LEAP
representatives to address: (1) the lack of detail in describing LEAPs expenditures and (2)
support for the date funds were obligated as indicated by LEAP in the notices it filed with the
City.
Detailed description of expenditures
Subpart (4) of Section 7-139 of the Election Code requires that the notice include a detailed
description of the independent expenditures. The filings by LEAP include a general
description, but not detail. For example, LEAPs notices state Literature distribution,
neighborhood canvass, outreach calls.
As part of my investigation, I asked representatives of LEAP, Mr. Jeff Martin and Ms. B.J.
Nickel, as well as LEAPs attorney for a more detailed description of what each of the
expenditures were for and I provided an example of the type of detail I was seeking for
example 300 fliers in support of Candidate X, purchased from Office depot on April 2, 2015.
The representatives of LEAP have declined my request for greater detail. According to their
attorney, the descriptions LEAP filed with the Fort Collins City Clerk were similar in detail to
those filed by other individuals or entities making independent expenditures in the Fort Collins
election and were also consistent with what LEAP filed in other jurisdictions.
I do not believe that one or two or even three word phrases such as those used by LEAP in their
notices constitute a detailed description of how LEAP expended more than $100,000, as
required by Section 7-139(4). This is particularly true when the issue is viewed in the context of

the City Councils expressed concern that large campaign contributions to political candidates
allowspecial interest groups to exercise a disproportionate level of influence over the political
process and, therefore there is a need for full and timely disclosure of campaign contributions
and strong enforcement of campaign laws. See Section 7-131.
I further explained to both LEAP representatives and their attorney in connection with providing
greater detail of what the independent expenditures were for, that the notice form requested
LEAP to provide a sample of the materials purchased, if possible. Again, I offered LEAP the
opportunity to supplement by providing the requested samples or explain why it was not possible
to do, and they declined to do either.
Support for the dates funds were obligated
Under Section 7-139, the three day time period for filing notices of independent expenditures
begins with the date funds were obligated and ends with the date each notice was filed with the
City Clerk. I was able to confirm the ending date for each of the notices from the City Clerks
records. The beginning date, the date funds were obligated, is defined in Section 7-139, which
provides:
For the purposes of this provision, funds shall be considered to have been
obligated as soon as an agreement is reached for the provision of the property,
materials or services in question, regardless of when payment is to be made for
such property or services.
According to the notices filed by LEAP it made six expenditures totaling $145,000 and did not
obligate any of the funds for doing so until the final week before the election, and in one instance
not until the day of the election. I requested that LEAP provide the documents reflecting when
funds were obligated. I explained that this should be a relatively simple task that could be
accomplished simply by providing copies of the order forms or contracts or other documents
reflecting when funds were obligated to purchase the various goods or services identified in each
of LEAPs notices. LEAP should have copies of the requested documents and, if not, LEAP
should be able to obtain them easily from the providers of the goods or services. LEAP was
either unable or unwilling to provide documents indicating when funds were obligated.
Each of the notices filed by LEAP indicated that all of the property, materials or services were
supplied by iQu Strategies. I contacted iQu Strategies and asked if they could provide me with
copies of order forms from LEAP or other documents indicating when LEAP had committed to
pay iQu Strategies for the goods and services LEAP purchased. The representative of iQu
Strategies who answered the phone said they would get back to me. Shortly thereafter, the
attorney representing LEAP, Jon Anderson, of Holland Hart, called to inform me that he was
also representing iQu Strategies in this matter. I renewed my request for the relevant documents
or information from either LEAP or iQu Strategies. None of the requested materials were
provided.

I followed up with Mr. Luthi and inquired as to whether he or anyone he knew could tell me
whether LEAP or iQu Strategies were distributing literature or canvassing neighborhoods, or
making outreach calls, etc., prior to the dates LEAP indicated in its notices that it was obligating
funds. Mr. Luthi recalls campaign literature was being distributed by or on behalf of all
candidates well before the election. Mr. Luthi pointed out that since the April 2015 election was
a mail ballot election, it was unlikely LEAP would have waited until the week of or even the day
of the deadline for receiving ballots before committing funds to try to persuade voters. However,
he was unable to attribute any of the efforts or materials to iQu Strategies or LEAP specifically.
d.

Conclusion

Based on the above analysis, I conclude there is probable cause to believe LEAP violated Section
7-139 of the election code by failing to provide a detailed description of LEAPs independent
expenditures and that LEAP also failed to provide samples of the materials it purchased or
explain why it was unable to do so.
However, I reviewed several of the independent expenditure notices filed by others in the 2015
and previous elections. Almost uniformly, the descriptions in notices of independent
expenditures filed by others in 2015 and in prior elections were equally as short and nondetailed as those in LEAPs 2015 notices. Samples were not provided by or required from others
making independent expenditures. Given this consistent historic pattern, I do not believe it is
equitable to prosecute LEAP in connection with the descriptions contained in its notices.
With regard to whether there is probable cause to believe that the dates LEAP indicated funds
were obligated are inaccurate, the timing of when LEAP represents funds were obligated (shortly
before or even on election day), combined with the size of the contributions, and the
unwillingness of LEAP to provide documents or to allow iGu Strategies to provide documents
that are most likely in their possession or easily obtainable, is of substantial concern. Although it
is close, I conclude that these circumstances are not sufficient to constitute probable cause to
believe that LEAPs representations as to when it obligated funds are inaccurate. Based on the
dates LEAP represented in their notices that funds were obligated and the dates the notices were
filed with the City Clerk, the notices were timely because they were filed within three business
days of the date funds were obligated, as required by Section 7-139.
2.

The Coloradoans endorsements

a.

Applicable sections of Fort Collins election laws

Sec. 7-132. - Definitions.

The following words, terms and phrases, when used in this Article, shall have the meanings
ascribed to them in this Section:
Contribution shall mean:


(3) Anything of value given, directly or indirectly, to a candidate committee for the purpose of
promoting the candidate's nomination, retention, recall or election; or
Contribution in kind shall mean the fair market value of a gift or loan of any item of real or
personal property, other than money, made to or for any candidate committee, issue committee
or political committee for the purpose of influencing the passage or defeat of any issue or the
nomination, retention, election or defeat of any candidate. Personal services shall be considered a
contribution in kind by the person paying compensation therefor. In determining the value to be
placed on contributions in kind, a reasonable estimate of fair market value shall be used.
Contribution in kind shall not include an endorsement of a candidate or an issue by any person
and shall not include the payment of compensation for legal and accounting services
b.

Relevant factual background

Mr. Luthi was a mayoral candidate running against Mr. Troxell in the Fort Collins April 2015
municipal election. Mr. Martinez was a council member candidate in the same election. The
Coloradoan is a Larimer County newspaper that also uses and maintains a website. Prior to the
election, The Coloradoan endorsed Mr. Troxell for mayor and Mr. Martinez for council member.
According to Mr. Luthi (and not disputed by The Coloradoan), for a period of time prior to the
election, when someone would click on the letters to the editor tab on The Coloradoans
website or do a search for a letter to the editor regarding a particular mayoral or council
candidate, regardless of who the letter to the editor was for or against, the website would bring
up the requested letter, but it would also include an endorsement of mayoral candidate Troxell
and, on some occasions, council candidate Martinez. According to Mr. Luthi, The Coloradoan
quit including Mr. Martinez after Mr. Luthi complained. Mr. Luthi provided a screen shot as an
example of what would happen on the newspapers website, and it is attached to this report.
In his December 30, 2015 election complaint, Mr. Luthi asserts The Coloradoan was actively
supporting candidates beyond its endorsement and that The Coloradoan should have filed a
report of its activities and included in the report the amount it would have cost Mr. Troxell and
Mr. Martinez to run equivalent political ads in the paper.
Legal counsel for The Coloradoans parent company, Gannett Co., Inc., Mark Faris, indicated
that the endorsements appear as a result of software used in the papers website that directs
people to other articles or parts of the site based on the items the person asks to look at or
searches for.

c.

Analysis

The definition of Contribution includes anything of value given, directly or indirectly, to a

candidate committee for the purpose of promoting the candidates election.
Contribution in kind means the fair market value of a gift of any item of personal
property, other than money, made to or forthe purpose of influencingthe election or defeat
of any candidate. However, the definition goes on to state that it shall not include an
endorsement of a candidate
To the extent the appearances referencing Mr. Troxell and/or Mr. Martinez on various pages of
the newspapers website were merely endorsements no matter how numerous, by definition
they are not contributions or contributions in kind and need not be reported or accounted for. If,
on the other hand, they were deemed to be advertisements, for example, that The Coloradoan
provided at no charge to either Troxell or Martinez, then they would be contributions in kind,
and their fair market value would need to be reported.
Although the newspapers endorsements of Mr. Troxell and Mr. Martinez were displayed
multiple times as a result of the software used by the newspaper, each time was simply a repeat
of the newspapers endorsement and did not contain any new or different information. The
election code does not indicate a limit on the number of times someone can display their
endorsement of a candidate. Therefore, each display of the newspapers endorsement was
simply that an endorsement, not a contribution in kind.
d.

Conclusion

There is not probable cause to believe The Coloradoan violated the City of Fort Collins election
code by running its endorsement of candidates each time someone searched for a letter to the
editor related to a candidate because endorsements are not contributions in kind.
Based on my investigation and analysis, I do not believe there is probable cause to pursue actions
against The Coloradoan or LEAP for violating the election laws of the City of Fort Collins.

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