After Gov. Chris Sununu’s election win in 2016, lobbying firms and corporations wrote big checks to his inaugural party committee, helping raise an impressive $450,000 to celebrate the state’s first Republican governor in 12 years.
Over the course of three nights that January, Sununu celebrated his victory with inaugural galas in the ballrooms of Portsmouth, Nashua and Bretton Woods hotels. In the traditional fashion, hundreds of lawmakers, lobbyists and campaign workers enjoyed live music, posed for photos, made champagne toasts and ate multi-course meals at tables decorated with hand-crafted art.
But when all the festivities were finished, there was still money left over in the accounts of The Sununu Inaugural Celebration Inc., a 501c(4) nonprofit organization set up to pay for the parties.
And most of the surplus funds, according to the organization’s financial reports, have since been paid out to Sununu, his immediate family and his closest advisers.
The transactions create the appearance of conflicts of interest and improper profiteering, tax attorneys and government ethics experts say, and raise a number of legal questions.
The Sununu Inaugural Celebration Inc. has paid the governor $39,360 over the last two years. All the payments came after his inaugural parties were over and the most recent, for $1,277, was dated Sept. 14, 2018.
The explanations for the payments are vague. Reports filed with the Secretary of State’s office simply state the purposes as “expenses” or “travel.”
The inaugural fund also paid out $1,061 to Sununu’s father, John, a former governor himself, for “van rental/gas reimbursement” and a further $1,049 to Sununu’s wife, Valerie, for “Easter egg hunt expenses.”
In total, the fund has doled out more than $165,000 to Sununu’s family, friends and advisers. It still has more than $40,000 in its coffers, according to its November report.
Through a spokesman, Sununu declined to answer questions for this article, instead referring them to Paul Collins, his senior adviser and treasurer of The Sununu Inaugural Celebration Inc.
Collins declined to provide receipts or specific explanations for dozens of payments from the committee to himself and Sununu.
“Everything that Chris Sununu has been reimbursed for has been as a result of his duties as governor,” Collins said, adding, “We’re a private, not-for-profit organization and we operate as does any such organization. It is not standard practice to turn over receipts, invoices, or those types of things. As I’ve said, we comply with the law and we will continue to do so.”
Sununu’s sister was paid
The inaugural committee is chaired by Sununu’s sister, Catherine.
Neither she nor Collins took salaries from the organization, but both have received large sums of money from it as vendors.
Blue Orchid Interiors, an interior design company owned by Catherine Sununu, has received more money from the organization than any other person or vendor — $50,188 for “expenses,” “supplies and decor,” and consulting. Its biggest check, $37,900 for “inaugural fundraising/consulting,” was written March 30, 2017, two months after the last inaugural party.
The company, which was registered in 2008, has no website and the listed phone number is out of service.
Reached briefly on her personal phone, Catherine Sununu said her company received $50,188 because she had planned all the inaugural celebrations on her own. She did not respond to multiple follow-up requests for information.
“There wasn’t a committee working on it; I did everything,” Catherine Sununu said.
But several of Gov. Sununu’s advisers were paid for similar tasks, according to the expenditure reports. Collins received a $37,900 check on March 30, 2017, for “inaugural fundraising/consulting.”
Between Jan. 30, 2017, and Feb. 26, 2018, he received an additional 11 checks from the committee for a total of $47,755. Most of them were for “expenses,” according to the expenditure reports.
Federal law prohibits directors of 501c(4) entities from profiting from the organization unless they provide a service, at fair market value, that furthers the nonprofit’s social welfare purpose.
Sununu’s committee is not the only one to draw scrutiny. The 501c(4) behind President Donald Trump’s inauguration committee is currently under criminal investigation for misspending, The Wall Street Journal reported on Thursday.
“Any time insiders (at a nonprofit) are getting paid a lot of money, that’s a yellow flag because for those transactions, inherently there’s a conflict of interest,” said Lloyd Hitoshi Mayer, a nonprofit tax expert at Notre Dame Law School.
Without receipts explaining the payments from Sununu’s committee, Mayer couldn’t determine whether they violated the law but he said they are worthy of further inquiry.
“The question would be: Are the services the business provided worth what the nonprofit paid for them?” Mayer said. “Why was the governor’s sister’s company chosen? Was it the best one? Did it offer the best price?”
As a nonprofit, the committee is required to maintain detailed records of its expenses and make them available to the IRS for an audit. If the IRS were to determine that the payments were for personal gain or not at fair market value, it could fine Catherine Sununu and Collins and force them to pay back the money with interest, Mayer said.
“On the tax side, it seems a little questionable in that the purpose of the 501c(4) — a charitable organization that’s supposed to be performing a social welfare function — is not supposed to be channeling funds to the people who run it,” said Richard Briffault, a government ethics and corruption expert at Columbia Law School.
“This does sound like an issue of gifts. And coming from people that do business with the state, and it’s clear that’s where they’re coming from, that’s the kind of thing that raises ethical concerns,” he said.
‘No potential for a conflict’
Collins said the inaugural committee’s surplus money was used to pay for official government activities that taxpayers wouldn’t otherwise cover.
“Surplus inaugural funds have been used on a variety of official travel by the governor and staff, such as to attend meetings of the National Governors Association and events throughout the state” as well as paying for coffee with the governor and events like the annual Easter egg hunt, Collins wrote in an email. “As the inaugural committee does not have a credit card, the governor and staff must sometimes spend their own money for the things previously noted and are then reimbursed by the committee.”
Sununu’s travels in particular required hefty reimbursements — $4,438 on Sept. 22, 2017; $6,616 on Jan. 5, 2018; and $5,039 on Feb. 15, 2018, among others. Beyond referencing a trip to the National Governors Association meeting, Collins declined to say where Sununu traveled at the committee’s expense and why.
New Hampshire’s ethics law restricts what kinds of gifts public officials and their family members can accept. And state employees, including the governor, must file disclosure forms when they are reimbursed for certain travel, lodging, and other expenses by third parties.
During his time in office, Sununu has not filed any gift or travel reimbursement disclosures, according to the Secretary of State’s records, despite receiving $19,716 from the inaugural celebration organization for travel.
John Formella, the governor’s legal counsel, sent the Union Leader a letter laying out several reasons he believes Sununu does not need to file reimbursement or gift disclosures relative to the inaugural fund.
Gov. Maggie Hassan, Sununu’s predecessor, did not file any reimbursement reports, Formella wrote. Hassan wasn’t required to disclose payments from her inaugural committee, so it is unclear if she ever received money from it in the first place.
Formella also said the public’s desire for transparency is satisfied by the fact that Sununu’s inaugural committee filed expenditure reports.
“No potential for a conflict of interest arises when a governor uses surplus funds from his own inaugural fund to cover expenses associated with his official duties,” he wrote. “This is because the governor’s inaugural committee is not a private interest or a third party that has separate interests from the governor himself.”
The money that swelled The Sununu Inaugural Celebration Inc.’s accounts came from companies and lobbyists with important business before Sununu’s administration. Several of the same players did the same for former Gov. Maggie Hassan.
Eversource was one of three $25,000 contributors to the Sununu inauguration committee. The company is one of the main energy suppliers in the state and has been waging a tumultuous legislative and legal battle for approval of the $1.6 billion Northern Pass transmission line.
The state Site Evaluation Committee rejected the project, but Sununu has been a consistent backer of Northern Pass, which is now the subject of a state Supreme Court case.
“We have been proud to support every New Hampshire governor’s inaugural celebration as far back as we can recall … (it) is part of our work as a local New Hampshire business to help serve the neighborhoods where we work and live,” said Eversource spokesman William Hinkle, a former Hassan staffer.
Centene Management Company, which manages Medicaid plans under one of the most lucrative contracts in state history, also contributed $25,000 to the inaugural committee.
Since it was first approved in 2012, Centene’s billion dollar contract has been renewed several times, most recently in June by Sununu and the Executive Council.
And the Gallagher, Callahan & Gartrell law firm, the third $25,000 donor to the committee, regularly lobbies state government on behalf of dozens of clients, including Eversource, the New Hampshire Bankers Association and a health insurance industry group.
The $10,000 and $5,000 donor clubs included other energy providers, lobbying firms, a tobacco company and many large corporations.
Checks cut to lobbyists
Lobbyists that helped raise money for the inaugural celebration have also benefited from the leftover funds.
The committee wrote a $9,500 check for “inaugural fundraising/consulting” to Jamie Burnett, a Republican strategist with close ties to the Sununu family who was a registered lobbyist at the time of the payments. He continues to lobby on behalf of clients, including Eversource.
The Stump Group, a consulting firm owned by Sununu campaign adviser Patrick Griffin, also received $10,000 for “fundraising and communications” from the inaugural committee. While Griffin is not currently a registered lobbyist, he is the CEO of Merrimack Potomac + Charles, which employs lobbyists.
A Washington, D.C., consultancy, 1735 Group, also received $9,500 for fundraising.
Those payments all came several months after Sununu took office. Griffin and 1735 Group were all being paid simultaneously by The Sununu Inaugural Celebration Inc. and the governor’s campaign fund.
The state’s Executive Branch ethics law states that no public employee shall be employed or have an ownership interest in an entity that also pays lobbyists.
Neither Sununu nor Collins received salaries from the inaugural committee, but they did receive money from it.
Sununu is the first New Hampshire governor who has been required to file expenditure and receipt forms for his inaugural committee with the Secretary of State’s office, due to a law passed in 2016.
Former Gov. John Lynch, who held the office from 2005 to 2012, voluntarily filed disclosures for his committee. Hassan did not.
While the majority of the donations to the Lynch inaugural committee were from individuals for less than $500, Lynch also accepted large contributions: $25,000 from Citizens Bank, $25,000 from New Hampshire International Speedway and $17,000 from the Anthem Insurance PAC.
The voluntary expenditure reports filed by the John Lynch Inaugural Committee do not appear to contain any payments to Lynch or members of his family, however.
Besides the 2016 law mandating financial disclosures, there are no state rules governing how much money a governor’s inaugural committee can collect from any one source or how that money can be spent.
“Inaugural committees are, in many ways, on the edge of the campaign finance world,” said Edwin Bender, executive director of the National Institute on Money in Politics.
“Those big contributions from people who will be discussing public policy with (Sununu) raise the specter or the appearance of conflict of interest,” he added. “That is the sort of thing that should cause folks in New Hampshire to pause and ask questions.”