Olympia, WA – The Freedom Foundation filed a lawsuit on Thursday in Thurston County Superior Court alleging Teamsters Local 117 attempted to conceal political activity worth tens of thousands of dollars – if not more.
The discrepancies come from a Teamsters-operated “separate segregated fund,” which the union created to preserve its tax-exempt status. This SSF is treated as a distinct, separate entity. Federal law, however, generally requires these separate organizations to report the source of their funds and how they’re spent.
A loophole in the law allows the SSF not to file these disclosure forms with the federal government if the fund is reporting under state law, and the Teamsters Local 117 Segregated Fund specifically told the IRS it was claiming that exemption.
However, neither the union nor its segregated fund have filed any disclosure reports with the State Public Disclosure Commission during the past five years.
The scheme allowed the union to conceal from the public – and its own members – tens of thousands of dollars of political activity each year.
Among other things, the union employs a “political action director” paid more than $70,000 each year. It also engages in traditional political activity, such as phoning voters and knocking on their doors, and it contributes significant money directly to labor-friendly candidates and to support its chosen ballot measures.
“It is disturbing that the officials Washington State citizens trust to enforce political campaign disclosure laws choose not to pursue entities which engage in significant political activity,” said Eric Stahlfield, the Freedom Foundation’s senior litigation counsel. “If the laws are complex, confusing, and draconian, the officials should focus on those entities which are deliberately trying to hide massive political efforts from the voters.”
Potential penalties are up to $10,000 for each violation, and $10 for each day the union and/or its segregated fund have not filed required reports. In addition, the union can be fined the amount of each contribution or expenditure not disclosed.
The Freedom Foundation previously asked the Washington State Attorney General’s Office to investigate the Teamsters 117. Because that request was ignored, state law permits the Freedom Foundation to pursue its own lawsuit.
The Freedom Foundation is a member-supported, Northwest-based think and action tank promoting individual liberty, free enterprise and limited, accountable government.
Eric Stahlfield, Senior Litigation Counsel