First, a refresher on some campaign finance basics. In Massachusetts, of course, no one may contribute more than $500 to a campaign, except the candidate herself, whose contributions are unlimited. Spouses fall under this rule, just like everyone else. From an OCPF memorandum (emphasis in original):
Is there a limit to how much I can contribute to my campaign? No. You may contribute to your campaign without limitation. In contrast, individual contributions from others, including contributions from your spouse or other family members, are limited to $500 per calendar year.
The difficulty arises in figuring out how to sort out a married couple’s assets. You’ll recall that John Kerry faced a similar problem in 2004. Teresa has tons of money, but most of it is hers, not joint property. When Kerry mortgaged his Beacon Hill home to raise some cash, a Globe article noted the following:
Kerry’s personal wealth is dwarfed by his wife’s, the Heinz ketchup heiress, who is worth roughly a half-billion dollars. Federal law prevents Teresa Heinz Kerry from donating large sums to John Kerry.
The same principle applies under Mass. law. If Kerry Healey is spending joint property to self-finance her campaign, no problem. If, however, she is spending Sean’s money, big problem.
The big question, then, is how do you tell? They’re married, after all, so any money Sean receives as salary, or otherwise in the ordinary course of events, would presumably just wind up in their checking account and become joint property.
Fortunately for us, Kerry Healey herself has told us whose property the stock options are. They belong to Sean Healey. Here’s a page from her 2004 Statement of Financial Interests indicating who owns what in their investment portfolio (click for a larger image):
You will note that “Spouse,” i.e., Sean, is listed as the sole owner of the equity in Affiliated Managers Group, Inc.
So, clearly, Sean Healey could not, for example, sign over ownership to more than $500 in AMG equities to Kerry Healey’s campaign. But that’s not what he did. Instead, he liquidated stock options, and deposited the cash in a joint checking account. Thereafter, Kerry Healey has drawn upon those funds to finance her campaign, to the tune (so far) of over $4 million, with much more to come.
Is that OK? Or is it basically money laundering? To answer that question, one must determine whether the stock options were liquidated with the specific intention that the money be used “for the purpose of influencing the nomination or election of said individual or candidate” (to quote the definition of “contribution”). If that intention can be shown, the transfer of more than $500 of the stock option proceeds into Kerry Healey’s campaign account would seem to be illegal — the intermediate stop of a joint checking account shouldn’t matter. If not, it’s OK.
Usually, of course, it’s quite difficult to prove specific intentions of this kind. But in this unusual case, even publicly available sources make a pretty good case that Sean Healey liquidated those options for very specific reasons: to scare off potential Republican primary challenger Charlie Baker, and then to finance his wife’s campaign against the Democratic nominee for Governor — particularly the TV advertising blitz that she has been promising for months.
Here are a few quotes from Globe articles generally noting that Sean Healey’s massive stock option liquidations, over $13 million in 2005 and nearly $6 million earlier this year, were expected to be used to finance Kerry Healey’s campaign.
With AMG stock options worth an estimated $82 million, Sean Healey exercised a portion of them, netting about $13 million earlier this year. At least some of the proceeds are available for a Healey-for-governor campaign. To win in 2002, Healey spent $1.8 million of the couple’s money. Link
Healey, raised in modest circumstances in Florida, now owns five houses with her husband, Sean, that are worth about $9 million in all. The couple’s wealth stems largely from his 20 years as president and chief executive of Affiliated Managers Group, a Beverly-based asset management company. Sean Healey exercised some of his AMG stock options last year, netting $13 million before taxes, some of which Healey could use for her campaign. Link
Since May, Healey’s husband, Sean M. Healey, has netted $13 million by cashing in stock options in his firm, Affiliated Managers Group Inc. The money is widely expected to help finance his wife’s potential campaign. Link
The television blitz, meanwhile, will be so lengthy it will not only exhaust Healey’s $900,000 campaign kitty in short order, but begin drawing down the personal financial reserve that Healey and her husband established for the campaign when they sold an estimated $13 million worth of stock options last year. Link
The family lives in the Prides Crossing section of Beverly, one of the state’s wealthiest neighborhoods. Last year, Sean Healey cashed in a reported $13 million worth of stock options — more than enough to self-finance a campaign for governor. Link
And here are some quotes specifically referencing Charlie Baker and the likelihood that Sean Healey’s massive cash-out in 2005 was intended to keep Baker out of the Republican primary.
[Charlie] Baker was quickly losing ground to Healey because, as a nonprofit healthcare executive, he could not, under ethics guidelines, raise political funds or carry out political activities.
Campaign-finance laws limit individual donations to $500 a year and Baker is not personally wealthy. On the other hand, Healey has millions of dollars in personal funds to draw on. Since May, her husband, Affiliated Managers Group chief executive Sean M. Healey, has cashed in $13 million worth of stock options in his firm. Link
Sean Healey already has cashed in more than enough of his AMG stock options to fuel a political campaign. He cashed in $13 million of options last summer, widely seen as a warning shot aimed in [Charlie] Baker’s direction, and raised another $5 million by exercising more options just two weeks ago. Link
One person who is not waiting for Romney to reveal his decision officially is Lieutenant Governor Kerry Healey. She used the summer to set herself up as Romney’s heiress apparent, and used her husband’s wealth to scare off Republican challengers. Sean Healey cashed in $13 million in stock options, and Harvard Pilgrim CEO Charlie Baker opted out of a GOP gubernatorial primary. Link
Healey faces no primary challenger, in part because she and her husband sold off an estimated $13 million in stock options last year. The threat of heavy advertising supported by those personal funds convinced Harvard-Pilgrim executive Charles Baker and other potential candidates to forego a campaign. Link
the state’s political world watched as Governor Kerry Healey lifted her political stature considerably by letting it be known that she is prepared to use the $13 million in stock options her husband, Sean Healey, exercised in his company, Affiliated Managers Group.
Her strategy, in part, led Harvard Pilgrim Health Care chief executive Charles D. Baker to back off challenging her for the Republican gubernatorial nomination, if Governor Mitt Romney does not run for reelection. Link
Can there be any serious doubt as to why Sean Healey was liquidating his stock options? Was there any pressing family business or other reason (beyond the upcoming Governor’s race) for the Healeys to want millions of dollars lying around in their checking account? Of course not — the twofold purpose was, first, to keep Charlie Baker out of the Republican primary, and second, as one of the quotes above says, to create a massive cash reserve on which Kerry Healey could draw as necessary to finance her campaign.
And that, friends, looks an awful lot like an ongoing multimillion dollar campaign finance law violation. Kerry Healey is allowed to spend unlimited amounts of her own money, but not of her husband’s. Sean, like everyone else, is only allowed to donate $500.
