Dec 18


Mychajliw’s muddied campaign finances

Use of funds raised as county comptroller could land Mychajliw in legal hot water if he runs for Congress

Stefan Mychajliw may have a federal campaign finance law problem. 

Should the Erie County comptroller ever officially declare his candidacy for New York’s 27th Congressional District seat, he could face fines and sanctions from the Federal Election Commission for the way he’s financed his undeclared but vigorous campaign thus far.

Mychajliw insists he is not currently a candidate for the 27th Congressional District seat.

“I’m not a candidate for anything right now,” Mychajliw told Investigative Post in a recent phone interview. 

And yet he acts like a candidate for the 27th District seat. He sounds like one, too.

And he’s been been spending time and money like a candidate for the seat, going back to August 2018, when Chris Collins’s arrest on insider trading charges threw the future of the seat into question.

The way Mychajliw has spent money in pursuit of the congressional seat, as well the money’s source, may violate federal election law, according to election law attorneys Investigative Post consulted. Those violations could complicate Mychajliw’s entry into the race. 

The problems are these:

First, Mychajliw appears to have spent more than $5,000 “testing the waters” for a run, a threshold that requires him to declare his candidacy and register a federal campaign committee with the FEC. 

He has done neither.

Second, those expenditures come from his state-registered campaign committee — the one he’s used to fund his two campaigns for Erie County comptroller.

Federal election law forbids that.

Testing the waters

Both issues could complicate Mychajliw’s official entry into the race, according to Brian Svoboda, a partner in the Washington, D.C., law firm Perkins Coie, which has done campaign finance work for a long line of Democratic candidates for federal office.

Even money an undeclared candidate for federal office raises and spends “testing the waters” — that is, laying the groundwork for a campaign, lining up support, conducting polls, etc. — must eventually be reported to the FEC, Svoboda told Investigative Post.

“You can defer filing if your fundraising and expenditures are solely for the purpose of testing the waters,” Svoboda said. “But your expenditures must eventually be disclosed if you run. And they must be solely be about the decision to run or not. They can’t manifest actual candidacy.” 

“Testing the waters” means gauging support, not soliciting it. But Mychajliw appears to have spent money doing both — and well in excess of $5,000.

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Federal law governing political fundraising, especially in regard to corporate donors, is far more restrictive than New York State law. State law allows a candidate to raise money from corporations and labor unions, for example, but federal campaign law does not. Federal law also forbids raising campaign money from federal contractors. A candidate for federal office can’t spend money raised from those sources on “testing the waters” or anything else.

That’s why a candidate can’t simply transfer money from a state-registered campaign account to a federal campaign account. And that’s why a candidate can’t use money from a state-registered campaign account to fund a campaign for federal office.

Money raised under New York’s campaign finance law, a local Democratic political operative told Investigative Post, just isn’t “clean” enough for the FEC.

More than a quarter of the $576,000 Mychajliw has raised since 2012 under state election law has come from corporate sources forbidden by federal election law. 

Mychajliw’s “unofficial” campaign

In the past year, Mychajliw has been clear about his interest in running for the 27th District seat:

  • “My heart is set on running for Congress in NY27 if and when that seat opens up,” he told the Buffalo News in December 2018.
  • In February 2019, Mychajliw told WBFO he will not benefit from pay raises for Erie County elected officials scheduled to take effect January 2022. That’s because, WBFO reported, “[Mychajliw] is running for the 27th Congressional District, currently represented by Chris Collins.”

In talking to Investigative Post, Mychajliw certainly sounded like a candidate for the 27th District seat. 

He acknowledged he’s received “positive, strong encouragement” from the “town chairs, county chairs, and taxpayers” with whom he’s discussed his candidacy. 

He reiterated the case he’s been making for more than year: He’s a rock-ribbed, right-wing conservative and Trump loyalist, characteristics which he said match the political temperament of the district. 

He noted he’s been elected twice in predominantly Democratic Erie County, proving he has crossover appeal. That might prove important, he said, if the special election to fill the vacant 27th District seat is the same day as the state’s Democratic presidential primary. 

And he took some shots at Jacobs, who officially declared his candidacy in May and has already raised more than $1 million.

In fact, during his recent interview with Investigative Post, Mychajliw only stopped sounding like a candidate when asked about campaign finance issues. In response to those questions, he insisted he is not a candidate and has not decided whether he will be.

He said so several times, in fact.

Traveling the 27th

Nonetheless, Mychajliw has been barnstorming political events all across the 27th District for more than a year. Mychajliw’s tours of the district’s so-called GLOOW counties — Genesee, Livingston, Orleans, Ontario, and Wyoming — began with stumping for Collins in 2018, after Collins decided to seek re-election despite his indictment. Collins narrowly beat off Democratic challenger Nate McMurray, the Grand Island town supervisor, who is running again this year.

Since Collins’s re-election, and especially since Collins pled guilty and resigned his seat in September, Mychajliw has been stumping for himself. 

Mychajliw’s visits in just the past three months, as chronicled on his Facebook page, include:

  • A Sept. 14 chicken barbecue in the Town of Canandaigua, in Ontario County, to support Republican candidates in town races.
  • A Sept. 15 meeting of the Orleans County Conservative Party.
  • A Sept. 15 Republican Party barbecue in the Town of Farmington, in Ontario County.
  • A Sept. 20 dinner hosted by the Ontario County Republican Party, where he had his picture taken with keynote speaker David Bellavia, the Medal of Honor winner whose decision not to run for the 27th District seat potentially cleared a path for Mychajliw’s candidacy.
  • The Oct. 6 Town of Sheldon Republican Party barbecue, in Wyoming County, where he had his picture taken with Sheldon GOP Chairman Dan Henneberger.
  • A Nov. 19 meeting of a gun rights advocacy group in Orleans County, where he had his picture taken with Orleans County Conservative Party Chairman Paul Lauricella.

Earlier this year, Mychajliw joined a delegation that toured the federal detention facility in Batavia — a facility located in Genesee County, for which he has no oversight or funding responsibility.

Checkbook candidacy

And in the last year he’s been writing checks to county and town GOP committees whose most obvious political utility to Mychajliw is their support of his pursuit of the 27th District seat.

Those donations include $1,000 each to Orleans County Republican Committee, the Livingston County Republican Committee, and the Ontario County Republican Committee. He gave another $1,850 to the Niagara County Republican Committee and $564 to the Town of Stafford Republican Committee, in Genesee County.

Those expenditures alone, if meant to advance his pursuit of the 27th District seat, exceed the $5,000 threshold that should have triggered Mychajliw to declare his candidacy and register a campaign committee with the FEC, said Svoboda, the attorney. 

Taxpayers for Stefan made smaller donations to town and village GOP campaign committees and candidates throughout the GLOOW counties totaling close to $700, state campaign finance records show. Those records also indicate Mychajliw also used his comptroller’s campaign committee to buy tickets to several gun raffles, a banquet, a brunch, a steak roast — all in places outside Erie County but within the 27th Congressional District.

Mychajliw told Investigative Post supporting Republican and Conservative party candidates and committees outside Erie County is part of being “a team player.” 

Prior to 2018, when the hunt for the 27th District seat began, however, Mychajliw made no such donations.

Mychajliw’s campaign committee purchased some polling in the past year, too: $7,000 worth from the Remington Research Group, based in Kansas City, Mo., in August 2018 and January 2019.

When asked if that polling concerned the 27th Congressional District seat, Mychajliw said he couldn’t recall. He said the polling and the donations might have been related to other political aspirations requiring support outside Erie County: a run for the state Senate seat currently occupied by Jacobs, for example, or for state comptroller.

“Like any elected official, I have my eye on a lot of different offices,” he said.

On October 30, Mychajliw visited Washington, D.C., where he met with at least two Republican congressmen: North Carolina’s Mark Meadows and Arizona’s Andy Biggs. Both are leaders of the House’s right-wing Freedom Caucus. Biggs is currently chair of the group of 30-odd congressmen — there are no women — and Meadows is a past chair. Mychajliw told Investigative Post he was there to solicit support for his candidacy.

In October and November, the conservative super PAC Club for Growth Action — which has supported members of the Freedom Caucus — spent more than $50,000 on mailers, television ads, and radio ads attacking Jacobs, the frontrunner. Mychajliw, along with other conservative Republicans interested in the seat, benefit from those attacks.

Possible penalties

None of this matters unless the FEC chooses to investigate. The FEC may do so in response to a complaint or on its own initiative.

Currently the FEC lacks a quorum to meet. (The FEC is meant to have six commissioners, with four comprising a quorum; there are currently only three commissioners.) And the FEC’s enforcement division is understaffed, down 30 percent since 2010. That has slowed action on investigations into campaign finance violations

But that hasn’t stopped FEC staff from collecting and analyzing reports, Svoboda said. At some point, action will be taken — and, in some cases, fines imposed — in the nearly 300 pending cases on the FEC’s docket.

Indeed, even lacking leadership, the FEC is far more attentive to financial disclosures than the New York State Board of Elections. Just ask Mychajliw’s rival, Jacobs, whose campaign committee has been dinged three times in the last month with FEC letters demanding corrective action on potential violations.

“I would not advise a client to ignore federal election law because the FEC currently lacks a quorum to enforce it,” Svoboda said, noting that the statute of limitations on violations of federal election law is five years.

A local Democratic political operative drew this comparison between New York State and federal election law: Running a federal campaign account is “like having the IRS come to your house and examine your books every day,” the operative told Investigative Post. Running a local campaign is like operating with “a desk drawer full of cash.”

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Svoboda said the consequences for Mychajliw’s action, if proven to be violations, would likely be a fine in some multiple of the expenditures deemed illegal. The size of the fine depends in part on whether the FEC considers the offense knowing or willful.

Mychajliw’s federal campaign committee, should he form one, would also need to repay any “testing the waters” expenditures to his state campaign committee, Svoboda told Investigative Post. That repayment would not be timely, however, which is also counter to federal election law. 

In short, when and if Mychajliw makes his year-old congressional campaign official, it’ll kick off with a bookkeeping mess. 

“He’ll be starting out behind the eight-ball,” said a local GOP official who asked to remain anonymous.

“He’s the Erie County comptroller, who’s supposed to keep track of public finances, and he’s starting his campaign for office with possible violations of campaign finance law, at both the state and federal level. It’s a really bad look.”

Investigative Post

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