Dec. 9 2008 05:57 PM

Doug Manchester allegedly used his company for political purposes


In October 2007, Meagan Papp needed a job. Who doesn't, after all, when they're 23 and recently graduated from college? A friend posted a notice on MySpace for an office-assistant position, and Papp jumped at the opportunity.

Without even an interview, she was offered the job, working for Manchester Financial Group. A few days later, she was in the Grand Hyatt, working for Holly Lienert, assistant to hotelier and developer “Papa” Doug Manchester.
Papp had been told she'd be cleaning up an out-of-date corporate contact list, but on her first day, she allegedly got different orders: Raise money for the presidential bid of former Massachusetts Gov. Mitt Romney.

But Papp was paid directly by Manchester Financial for her work in support of Romney, which isn't allowed under federal campaign law. To prevent big-money corporations from using their substantial resources to dominate federal campaigns, the Federal Election Campaign Act forbids corporations from contributing directly to campaigns.

The database Papp was told to update was a vast list of current and former employees of Manchester Financial Group and Manchester Resorts, contractors who'd done business with either company, members of clubs to which Doug Manchester belonged and friends of the hotelier. Papp learned that the list hadn't been updated in six years, so she and two other young women would be calling the contacts to confirm their physical addresses, e-mail addresses and phone numbers. She was a little surprised when her duties changed soon after she walked in the door on that first day.

“Holly said, ‘I wanted to have you do this, but Papa Doug said do this first,” Papp said. “She had wanted to update the contacts, but Papa Doug wanted people doing this Mitt Romney stuff.”

The “Mitt Romney stuff,” Papp said, was making fundraising calls for Romney's campaign for the Republican nomination for president.

“We had a script,” she said: “‘Papa Doug wants you to give money to Mitt Romney'—that kind of thing. If they said yes, we mailed something out to them, but very rarely did anybody say yes. As we did that, we were cleaning up the contacts.”

CityBeat spoke with Chelsea Tichenor, one of the other contractors who did this work and Papp's friend who helped her get the job. Tichenor did not want to discuss the events in detail because she doesn't “want to be involved with anything negative,” but she confirmed that, like Papp, she had worked for and been paid by Manchester Financial, and that she also had made fundraising calls on behalf of Romney at Lienert's and Manchester's request. CityBeat was unable to identify the third worker.

For two months, the three contractors went through the database, making the calls and asking for money. Papp said they weren't especially successful, but anyone who did actually contribute but gave less than the maximum, she later had to call again to get them up to the maximum. Someone Papp believes was from the Romney campaign would occasionally come and listen in on the calls, but she never spoke to him (the person's status and identity remain unclear). Then, in December, Papp and Tichenor were told to stop and switch to more traditional fundraising calls.

Papp continued to work there until May, when she was laid off.

Papp acknowledges that she's not a big fan of Manchester or his conservative politics. He has a long history of supporting the conservative Lincoln Club (including a $5,000 donation this year). He financially supported Republicans in Congressional races, and he gives to the Republican Party. Most recently, Manchester made headlines for establishing a separate political action committee to support Proposition 8 in November's election, which sought to amend the California Constitution to prevent same-sex marriages. He has also made headlines as the developer of the Navy Broadway Complex on the Downtown bayfront.

But back in 2007, his cause was Romney for President. He was one of Romney's earliest donors, making the maximum $2,300 contribution in March, just six weeks after the campaign officially launched. Manchester's wife, daughter and several of the top officers (including Lienert) at Manchester Financial would all give the maximum. On, Manchester has a “Romney for President” section, complete with a fundraising letter that includes Manchester's campaign account number (campaigns track who recruits the most donors). In January, Manchester and his wife gave an additional $2,300 each for the general-election fund, though both checks were refunded in February after Romney dropped out of the race. Even still, Manchester gave $5,000 to Romney's Free and Strong America PAC.

Manchester did not return numerous phone calls from CityBeat, nor did he respond to a letter sent to his office. When contacted, Lienert was reluctant to speak with CityBeat, and she later told Papp that she would begin screening calls to avoid questions. But on those occasions when she did speak, she denied that Papp and Tichenor were doing any fundraising. She said that, at most, they were “doing follow-ups” for a fundraiser Manchester held for Romney in late 2007.

“No, they were making calls to find out an update to the database,” Lienert said. “And if they made any calls regarding the invitation, it was just to ask whether people had received an invitation. In no way, shape or form did they raise money.”

However, between terse conversations with CityBeat, Lienert called Papp to discuss the matter. Papp said Lienert told her that the former was bound by a non-disclosure agreement (Papp denies that) and that Lienert provided a story for Papp to give CityBeat. Papp described her conversation with Lienert in an e-mail. (Karolyn Dorsee, whom Papp references, is a California fund-raiser who works with Manchester.)

“So Holly called me this evening,” Papp wrote. “Pretty much she had spoken with Carolyn Dorsey (sic) who had calmed her down a bit. I guess the story Carolyn/Holly (sic) are using is that Chelsea and I were hired to update the company contacts, and followed up on a Romney event invitation.” Papp rejected Lienert's proposed narrative. “Yeah, we did some follow-up on invitations, but we were definitely campaigning,” she said.

Neither set of facts would exculpate Manchester. CityBeat described the situation to several experts in election law, and Manchester appears to have violated federal campaign-finance laws, which ban the use of corporate resources in the service of political campaigns in most circumstances. Whether Papp was working on a fundraiser or not appears irrelevant.

“On the face of it, it sounds absolutely illegal,” said Chip Nielsen, an election-law specialist. “Corporate funds can't be used to fund a federal campaign.”

Nielsen, who's been in the field since 1974, said that what was described is “one of the more serious violations” of the Federal Elections Campaign Act.

“The use of staff like that,” said Joe Birkenstock, a Washington, D.C., election-law attorney, “for the supervisor to tell the employees, forget about the day work—you are instructed to spend your 9-to-5 to do this, make these phone calls, follow up. That's one of the things that the FEC considers corporate solicitation.”

In contrast to Nielsen, Birkenstock described the alleged infraction as “garden-variety” but also said Manchester could be penalized with a fine of $5,000 per violation.

“They can get creative with that, in terms of how they define it,” Birkenstock said. “Is every phone call a separate violation? Arguably, yes. The theoretical penalties can get very large. In practice, that's not what the FEC does.”

He said that if the FEC investigates and determines there was a violation, it would probably base the penalties on how much money was raised. There would also be the question of whether Manchester knew the rules before he asked for the work to be done. He said that, typically, a campaign would provide major fund-raisers with a packet, or at least “a one-pager” providing basic guidance on the rules, at least one of which is commonly “don't use your secretary to make the calls.”

No one from Romney's now-defunct campaign returned CityBeat's calls.

There are ways to get around the law. Manchester could have formed what the FEC calls a Separate Segregated Fund, essentially a corporate PAC. But FEC records show no such PAC attached to Manchester's companies or Manchester himself. He also could have had a donor fund the work by making a payment in advance for the work Papp and Tichenor did. The payments would appear on campaign records as in-kind donations. While anyone could have made these donations, neither Manchester nor any of his top staff made an in-kind contribution to the campaign, and most of the donations were made in mid-November, well after Papp and Tichenor had begun making calls.

“You wouldn't be able to track that,” Nielsen said. “You'd need to be a federal investigator to get that stuff.”

The Romney campaign would not be on the hook for Manchester's alleged infraction, unless the person Papp believes was a campaign rep knew the details of the fundraising.

In the end, Papp said she and her colleagues probably didn't raise much money, something she's pleased about.

“We didn't get a lot of people,” she said. “I hope I contributed to that.”    

UPDATE: Readers who like to look at reader comments at the bottom of a story may have noticed two long comments from one of the sources of this story, Meagan Papp. The comments made Papp seem like a radically politicized source with a vendetta against Manchester. CityBeat asked Papp about the comments, and it turns out she did not enter those comments. With some research, CityBeat discovered the comments were posted from a computer with an IP address registered to Karolyn Dorsee, according to the ARIN Whois database. Dorsee appears in the story above. She is a professional fundraiser with close ties to Doug Manchester and a strong supporter of Republican causes.

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