The former deputy director of the Citizens Clean Elections Commission has filed a lawsuit alleging that he was illegally fired for blowing the whistle on a politically motivated inquiry into the campaign finances of then-gubernatorial candidate Matt Salmon.

Mesa attorney Richard J. Harris filed the lawsuit on behalf of Matt Shaffer on Aug. 27 in Maricopa County Superior Court. The lawsuit seeks an unspecified amount of damages to compensate Mr. Shaffer for loss of income and to punish the commission, its executive director, Colleen Connor, and former state elections director Jessica Funkhouser for alleged damage to Mr. Shaffer’s reputation. Mr. Shaffer said he has been unable to find work since being fired Oct. 1, 2002, from the post at which he earned $66,000 a year.

Jay Zweig of the Phoenix firm of Gallagher & Kennedy is representing the defendants, who declined to comment on the lawsuit.

In a statement released Aug. 27, Mr. Shaffer said he believes he was retaliated against for failing to go along with an “untimely and improper report” that stated Mr. Salmon had failed to properly report more than $400,000 in expenditures in the Republican primary race for governor.

Mr. Salmon ran on traditional campaign contributions, declining to accept public funding from the Clean Elections Commission. Even as a privately funded candidate, though, Mr. Salmon was required to file a series of financial reports that were used to determine matching funds for his two publicly funded opponents in the GOP primary, then-Secretary of State Betsey Bayless and then-state Treasurer Carol Springer.

Mr. Shaffer was put on administrative leave on Aug. 28, 2002, the day after advising the commission that Mr. Salmon had properly reported all but about $31,000 in primary campaign expenditures.

Mr. Shaffer’s boss, Ms. Connor, has never given a reason for firing her deputy and isn’t required to do so under state law. Nonetheless, on Aug. 29, the day after Mr. Shaffer was placed on administrative leave, Ms. Connor said a subsequent inquiry into the Salmon campaign finances showed that the late-reported expenditures totaled about $484,000 beyond the $31,000 cited by Mr. Shaffer.

On Aug. 30, Ms. Connor had revised the amount to about $147,000, with the difference blamed on accounting errors by a commission staff member. The Clean Elections Commission subsequently hired a private accounting firm, Sarvas, King & Coleman, that tallied the delinquent expenditures at $98,529.46.

Ms. Funkhouser, who now works in the Attorney General’s Office, at the time of the Salmon flap was state elections director, an employee of Ms. Bayless. Ms. Funkhouser alerted the Clean Elections Commission to possible violations on the part of the Salmon campaign, but then later recused herself from the issue because her boss, Ms. Bayless, was running against Mr. Salmon.

Mr. Shaffer contends that, after recusing herself, Ms. Funkhouser subsequently criticized Mr. Shaffer’s accounting methodology in meetings with Ms. Connor.

Mr. Shaffer said the Salmon campaign, like virtually every other campaign committee, initially reported expenditures on a cash accounting method — that is, to report expenses as the campaign wrote checks for them. The Salmon campaign in late August, after the Clean Elections Commission began looking into the finance reports, switched to an accrual method of accounting, which reports expenses as they are incurred.

The difference in the two methods would show up, for example, if a campaign staff member charged gasoline to a credit card. Under accrual accounting, the expense would be reported for the day the gasoline was purchased; under cash accounting, the expense wouldn’t be reported until the campaign reimbursed the staff member for the expense, which might be 30 or 45 days later.

Two Accounting Methods

Mr. Shaffer contends Ms. Connor didn’t understand the difference in the two accounting methods, and that by following Ms. Funkhouser’s insistence on the accrual method, was part of a politically motivated “attack against the Salmon campaign.”

Mr. Shaffer also said the commission has no clear standards for accounting for campaign expenditures, even though state law requires the commission to set such standards.

The Clean Elections Commission earlier this year levied a fine of $10,000 against Mr. Salmon for the reporting violations. An administrative law judge, acting on an appeal from Mr. Salmon, recommended lowering the fine to $3,471.25, the amount that would be considered late using the cash method of accounting. The Clean Elections Commission on June 24 agreed to go along with Administrative Law Judge Brian B. Tully’s recommendation.

Mr. Shaffer said Aug. 28 that he feels vindicated in his initial assessment a year ago on the Salmon campaign.

“My understanding from reading the administrative law judge’s decision is that he based the (recommended) fine on the amount that was actually reported late using a cash method of accounting,” Mr. Shaffer said. “So we’ve gone from $484,000 to $147,000 to $98,000 to $3,400.”

Mr. Shaffer’s lawsuit said Ms. Connor further damaged his reputation by submitting a report to the Arizona Department of Public Safety that suggested criminal collusion on the part of Mr. Shaffer in his dealings with the Salmon campaign. The Department of Public Safety has sought no criminal charges against Mr. Shaffer. —