I first heard about Bernero's City Administrative Account in a 9/29/09 story in the Lansing State Journal by Derek Melot. $194,900 had been raised since 1/1/2006, including $2500 from the Lansing Board of Water and Light. Other stories followed. Here are the ones I am aware of:
And here is an article from way back in 2006: Michigan politicians use loophole to collect corporate cash, Alex Nixon, mlive.com, 10/26/06.
Supposedly it is all legal, but it sure smells funny. The payments are not campaign contributions, for which there are strict limits. They are not reported to the county clerk, as campaign contributions are. It is a "political organization", yet not a campaign committee. This IRS Fact Sheet may or may not clarify these "527" accounts.
The custodian of the account is Charles L. Moore of C.L. Moore & Associates, P.C. He describes the purpose of the organization on a Form 881, Political Organization Notice of Section 527 Status that he filed with the IRS:
Does Bernero really need all this spending money ($308,620 in 7.5 years)? Doesn't he get a salary and an expense account? I'd say that if money isn't budgeted for "expenses incidental to the holding of the Office of Mayor", he shouldn't incur them. It would be the people's way of saying "Stay in your office and work."
The contribution and expenditure reports are available online at the IRS site. I've compiled the data from the reports through 12/31/2012. Here are the reporting period totals:
Here is the detail:
If you would like to look at the actual IRS data, go to this page on the IRS' website. Under Basic Search, click the box for Form 8872 and in the box for Employer Identification Number (EIN), enter 20-3950788. Then click "City Administrative Account".
Do these individuals and companies just get up in the morning and think "Today I'd like to contribute to Virg's slush fund"? I don't think so. The dates and amounts of contributions suggest that they were solicited directly, with suggested amounts. We don't have anything recent, but we do have a copy of one letter: the one sent to IBEW Local 665 dated June 12, 2006. It was attached to their lawsuit, which was the subject of stories in the Lansing State Journal on 10/15/09 and 10/28/09. It invites the recipient to become a founding member of the Lansing Booster Club at one of 3 levels: Player for $1000, Coach for $5000 or Director for $10,000. And if the recipient did not wish to become a member at this time, they could still support the Lansing Booster Club for $250 or $500: "Corporate checks are welcome." The letter states that the purpose of the Lansing Booster Club is to "provide a core foundation of support for public/private initiatives . . ." An examination of the list of expenditures suggests that the main private initiative is to keep Virg Bernero well fed.
In August 2012, I wrote a "guest column" on Bernero's 527 account for Bridge, the online magazine of the Center for Michigan. In that article, I mentioned that I'd reported Virg to the IRS. I got a reply from the IRS dated January 10, 2013.