Complaint alleges Dunleavy campaign engaged in ‘scheme’ to use public funds

A complaint filed Tuesday to the Alaska Public Offices Commission accuses Republican Gov. Mike Dunleavy, who is running for reelection, of engaging in a “scheme to subsidize and coordinate” the activities between his official campaign and an independent expenditure group working on his reelection, and scheming “to improperly subsidize his campaign with public resources.”

The complaint asserts that Dunleavy’s campaign spent a “laughable” sum on staffing while key positions were filled on a “volunteer” basis by people paid tens of thousands of dollars in publicly funded no-bid contracts, with direct and illegal contact between staff in the governor’s office, the governor’s reelection campaign and an independent expenditure group supporting Dunleavy.

Campaign spokesman Andrew Jensen said in an email Wednesday that the complaint is “a gross exaggeration of the facts” and “entirely inaccurate.”

The complaint was filed by attorney Scott Kendall, a longtime Dunleavy critic, on behalf of two watchdog groups, the Alaska Public Interest Research Group and the 907 Initiative. Kendall was chief of staff to former Gov. Bill Walker, an independent challenging Dunleavy in the current election. Kendall was also involved in an early effort to recall Dunleavy from office and in the voter-approved ballot measure that resulted in ranked choice voting and other Alaska election reforms, and he worked on previous campaigns of Sen. Lisa Murkowski, R-Alaska.

Jensen said Wednesday that “it was expected, yet still unfortunate, that Kendall would use public resources to further his personal agenda.”

According to the complaint, Dunleavy’s campaign expenses on staff “would be low for a state legislative race; in a statewide governor’s race, for the incumbent, it is laughable.”

Based on campaign finance reports cited in the complaint, Dunleavy paid staff $6,200 leading up to the Aug. 16 primary election in the period beginning in February and ending July 15. By contrast, Walker had spent nearly 30 times what Dunleavy spent — around $180,000 — during the same period. Democratic gubernatorial candidate Les Gara had spent eight times what Dunleavy had spent in the same time period — over $50,000. In the equivalent reporting period leading up to the 2018 gubernatorial election, Dunleavy spent upwards of $50,000 on staffing.

Other reports not cited in the complaint show additional spending on staff by the Dunleavy campaign that is still far less that the sums spent by the Walker and Gara campaigns in the same timeframe.

Dunleavy’s campaign has relied on senior campaign operatives who also work for the state, paid with public funds.

Dunleavy’s campaign manager is Jordan Shilling, who worked for Dunleavy in an official capacity beginning in December 2018 until the spring of 2022, when he was awarded a no-bid contract with the governor’s office that pays him up to $50,000 in public funds to provide “strategic planning” about renewable energy and the Department of Motor Vehicles. At the same time, he runs Dunleavy’s campaign as a volunteer. The contract runs through September, according to documents contained in the APOC complaint.

Shilling did not respond to a request for comment.

Brett Huber, who worked as Dunleavy’s gubernatorial campaign manager ahead of his 2018 election and was later a senior adviser to the governor, was awarded a no-bid contract in April to work for the governor through October 2022, capped at $50,000, to consult on legal matters relating to “Statehood Defense.” Days later, Huber was hired to manage an independent expenditure group supporting Dunleavy’s reelection, according to the APOC complaint. His consulting firm was paid $80,500. Huber was listed as deputy campaign treasurer for Dunleavy’s 2022 official reelection campaign until the end of May, briefly overlapping in working for both the official campaign and in the independent expenditure group, the complaint alleges.

Coordination between a candidate and an independent expenditure group is illegal. Federal law says that people may only work for an independent expenditure group following a mandatory 120-day cooling off period of separation from the candidate.

“It is tough to imagine how one could avoid coordinating with oneself,” the complaint authors wrote.

According to the complaint, “these facts add up to the clearest case of unlawful coordination between a campaign and an IE (independent expenditure) organization that APOC has ever been presented with,” the complaint said.

Responding on Tuesday to the allegations in the complaint, Huber called it “specious, false and a negative campaign targeting the governor.” He said his state contract was dissolved “months ago” and that the complaint is “wrong.” Huber’s contract was dissolved June 1, according to Dunleavy spokesman Jeff Turner. Huber said he “sought advice from the Department of Law” and that his “activities were deemed legal and compliant.”

“This is an example of a state entity being used as a platform for a false and misleading complaint,” Huber wrote in an email.

Kendall said even if the contract has been dissolved, the coordination already took place, since the 120-day “cooling off period” between ceasing contact with Dunleavy and beginning work on the independent expenditure group, A Stronger Alaska, was not followed. That cooling-off requirement exists in federal law, but Kendall said it could be applied by the state commission. Huber’s contract with the governor’s office was signed on April 21, and his contract with the independent expenditure group was signed April 29 — a week apart, according to the complaint.

Jensen disputed the cooling off period would apply to a state race, saying in an email that “just as contribution limits apply to federal races but not Alaska state races, the 120-day period is not a state law or regulation applying to a state race.”

Responding to a question about the cooling-off period, Huber said, “I have violated no laws or regulations and in fact left legitimate money on the table to avoid even a perception of conflict.”

Records requests sent on Aug. 25 by the Anchorage Daily News to the governor’s office for invoices and reports submitted by Shilling and Huber as part of their respective contracts with the governor’s office have not been answered.

The complaint asks the public offices commission to dissolve the independent expenditure group, A Stronger Alaska, or force it to pause its activities during the current election cycle. The commission may take up the complaint ahead of the election or hold off on making a decision.

Once a complaint is filed, commission staff have a week to determine whether it meets the requirements to proceed. If it does, the responding parties have 15 days to submit a reply, after which commission staff can take up to a month to investigate the complaint before discussing the contents of the complaint at the commission’s next scheduled meeting, which is set for December. Once the commission meets, commissioners have 10 days to issue a final decision. But the complaint filers can request an expedited review. If granted, that would allow the commission to adjudicate the complaint before the November election.

Authors of the complaint hoped it would make the public more aware of Dunleavy’s staffing and campaigning practices, according to 907 Initiative director Aubrey Wieber. The 907 Initiative is a newly formed political transparency nonprofit. Wieber collaborated with AKPIRG, a consumer advocacy nonprofit, on submitting the complaint, which was written by Kendall. Wieber is a former Anchorage Daily News reporter who left the organization in 2020.

Veri di Suvero, executive director of AKPIRG, said the organization collaborated with Kendall and the 907 Initiative in filing the complaint because they saw Dunleavy’s campaign practices as “an overall threat to our democracy.”

“It’s pretty unprecedented and really critical to make sure that this is flagged during an ongoing election to make sure that our regulatory structures are working to prevent exactly what they’re designed to prevent against,” said di Suvero. “Unprecedented isn’t just hyperbole. Truly, this has never happened.”

Asked in an interview with the Anchorage Daily News last month about his campaign staffing practices, which have included using state employees or contractors in volunteer roles on the campaign, Dunleavy said he didn’t see any downside to the crossover between his campaign staff and official staff “as long all of the applicable ethics rules are being followed.”

“They’re not working on campaigns during work hours if they’re employed by the state,” Dunleavy said. “We don’t have people that are working on the campaign and being paid by the state to work on the campaign.”

Dunleavy also said at the time that crossover between campaign staff and official staff is common in campaigns for governor and the state Legislature. Kendall said there is a difference between what Dunleavy’s aides are doing and what he and others have done previously. Even if staff members volunteer their free time for a campaign, it is unheard of for a seven-figure campaign by an incumbent to be run almost entirely by volunteers, political consultants have said. And coordination between independent expenditure groups and the candidate is expressly illegal.

Kendall said that when he was chief of staff to Walker, he would work on Walker’s campaign during his lunch hour, “but you can’t run a campaign that way.”

Kendall said he searched for similar cases both at the state and federal levels, and couldn’t find “a single case of something this blatant.”

“They didn’t leave breadcrumbs that they’re all connected. They left an eight lane highway,” he said.

Di Suvero said that AKPIRG plans to file an Executive Branch Ethics Act complaint on top of the APOC complaint over the use of state resources for partisan purposes. The act states that public officials may not “use or authorize the use of state funds, facilities, equipment, services, or another government asset or resource for partisan political purposes.”

“This isn’t a partisan issue. It’s a process and a governance issue,” di Suvero said. “This is happening right now. We don’t have a choice except to file this in the middle of the election because retroactive Democracy isn’t democracy.”

But the ethics act also states that if a complaint is submitted during an election cycle, it can either be dismissed out of hand or taken up after the election, meaning such a complaint would likely go uninvestigated during an election cycle. APOC, however, has the power to act even with the November election looming.

Also in the complaint is reference to a decision by the Republican Governors Association to fund $3 million for the independent expenditure group supporting Dunleavy two days before a new law went into effect requiring the disclosure of the source of the funds. Kendall says that while not in itself illegal, the group is subverting a law passed by voters through citizens initiative — one Kendall helped author.

“It doesn’t have to be nefarious, but it’s something that voters are entitled to know now under the law they enacted,” said Kendall.

The Republican Governors Association did not respond to a request for comment sent by email.

Several other members of Dunleavy’s state-paid staff are directly involved with the campaign, including communications assistant Jensen, who works for the governor on a full-time, $90,000 per year basis, while also serving as the campaign’s spokesperson. While legal — as long as Jensen takes appropriate leave from his job when working on the campaign — that has made communication with the campaign challenging; Jensen is often unable to comment on matters pertaining to the campaign except after 4 p.m. or during his lunch hour. Before joining the governor’s office in late 2021, Jensen was managing editor of the Alaska Journal of Commerce, which is published by the Daily News.

“Nobody else is authorized to speak to the press and I would ask you to not go around me if you are interested in having a productive working relationship with the campaign,” Jensen recently told a reporter by text message. “I’m not happy that I have to fill out a leave slip to deal with this during working hours.”

Dunleavy campaign staffers have said that the relatively reduced personnel costs are because the campaign runs a lean crew and that other campaigns have decided to spend more on staffing for worse election results. Back in 2018, when Dunleavy first ran to be governor, Huber, his then-campaign manager, received a regularly listed paycheck up to the primary election, and so did then-deputy campaign manager, Amanda Price.

Leading up to the primary election in 2018, Walker’s financial disclosure documents show that the campaign had several high-level staff earning regular paychecks for his aborted reelection attempt, including campaign manager John-Henry Heckendorn, who had traded in a job at the governor’s office in May of that year for full-time work on the campaign.

Jensen has argued that it’s not possible to make an “apples to apples” staffing comparison with prior races because of Alaska’s new open primary system. “I think that what people are seeing may look unusual, but it also reflects the reality of a new system that we’re under,” Jensen said.

Anchorage Daily News reporter Sean Maguire contributed reporting.

This story has been updated to clarify that the 120-day mandatory cooling off period is stipulated in federal law, not state law.