April 23, 2015
Digest: A judicial candidate may, if permitted by law, personally guarantee to Paypal and credit card issuers that he/she will use his/her personal funds to repay them for “chargebacks” for monies mistakenly or wrongfully paid to the candidate’s campaign.
Rules: Judiciary Law § 212(2)(l); 22 NYCRR 100.0(Q); 100.5(A)(1); 100.5(A)(2); 100.5(A)(4)(c); 100.5(A)(5); Opinions 14-148; 09-218; 02-06.
The inquiring judicial candidate’s campaign committee wishes to set up an account with an online payment system and accept campaign donations paid via credit card.1 The candidate says the company will not allow the campaign committee to do so,
without the personal guarantee of someone to repay Paypal and credit card issuers for any chargebacks that may be made for monies wrongfully paid to the campaign or because disgruntled supporters want their money back. The obligation to repay can exist for months after the campaign is over and the Committee lawfully disbanded. The rationale, so I am advised, is that since the Committee is a new organization, Paypal and the credit card issuers will not sign it up without prior financials or the personal guarantee because those entities have apparently been burned by past political committees that are broke after the election.
The candidate asks if he/she may give this personal guarantee.
A judge or non-judge may, subject to certain restrictions, engage in political activity to further his/her election to judicial office during his/her window period (see 22 NYCRR 100.5[A]; 100.0[Q]). Furthermore, a judicial candidate must not personally solicit or accept campaign contributions, but may establish a committee of responsible persons to do so on his/her behalf (see 22 NYCRR 100.5[A]; 100.5[A][c]; 100.5[A]).
After the judicial candidate’s window period (which ends six months after Election Day), he/she must close the campaign account (see e.g. Opinion 14-148) and, if elected, abstain from all direct and indirect political activity except as expressly permitted by the Rules Governing Judicial Conduct (see 22 NYCRR 100.5[A]). Nonetheless, the Committee has advised that a judge may agree to “refund” a political contribution a charitable organization made several years ago to the judge’s re-election campaign, by donating his/her personal funds to the charitable organization in the amount of the campaign contribution (see Opinion 09-218). Even though this “refund” would necessarily occur long after his/her campaign account was closed out, the Committee concluded it would not constitute impermissible political activity in these circumstances (see id.).
In the Committee’s view, the Rules Governing Judicial Conduct also do not preclude a judicial candidate from making a personal guarantee to Paypal and credit card issuers that the candidate will use his/her personal funds to repay them for “chargebacks” for monies mistakenly or wrongfully paid to the candidate’s campaign (or otherwise requested to be refunded), provided it is lawful for the candidate to do so.
Though the payments, if any, to satisfy the requested personal guarantee would be made outside the window period (see 22 NYCRR 100.0[Q]), they do not constitute impermissible political activity within the meaning of the Rules Governing Judicial Conduct. That is, the candidate would not be making a political or other contribution, but would instead be, to the extent legally permissible, reimbursing or “making whole” Paypal and/or the credit card issuer(s) for losses they would otherwise incur when the original contributor demands a return of funds.2 Indeed, as in Opinion 09-218, the candidate would essentially be “un-making” a contribution.
If the candidate is asked to satisfy his/her personal guarantee, he/she should, to the extent practicable and legally permitted, seek to avoid knowledge of the identity of the original contributor (see e.g. Opinion 02-06). The candidate may enlist responsible persons to assist in the process by, for example, reviewing the full details of the chargeback including the identity of the original contributor and the amount contributed (see 22 NYCRR 100.5[A] [judicial candidate may appoint a committee of "responsible persons" to solicit and accept financial contributions]).
The Committee may not comment on any legal questions, including the lawfulness of the proposed guarantee or any possible reporting obligations (see Judiciary Law § 212[l]).
1 According to the company’s website, its service “enables [users] to pay, send money, and accept payments without revealing [their] financial details.”
2 The Committee understands from the inquiry that the candidate will make his/her payment directly to the online payment company or the credit card issuer.