Complaint against Rossi "insufficient"

OLYMPIA — The staff of the state's campaign watchdog agency is moving to dismiss a complaint by the Democratic Party alleging that Republican Dino Rossi waged an illegal campaign for governor for much of the past two years.

After an extensive investigation, the staff of the Public Disclosure Commission (PDC) did not find evidence to support the complaint. The staff will recommend the commission dismiss the complaint when it meets next week.

"We've been telling the truth all along and Christine Gregoire's political operatives have been lying," Rossi said after hearing the news.

Democratic Party attorney Kevin Hamilton said the staff recommendation is "seriously wrong-headed" and said the party was evaluating its legal options.

"The PDC staff and Republican Dino Rossi have created a huge loophole in the law that allows unregulated campaign activity," Hamilton said in a written statement. "Though dishonest about it, Rossi has obviously been campaigning all year, while keeping his financial backers secret."

Rossi, a former state senator from Sammamish, lost to Democrat Gregoire in the 2004 governor's race, the closest and most expensive race in state history.

Last month, Rossi ended months of speculation and anticipation by announcing he would take on Gregoire again in 2008.

But for months leading up to Rossi's announcement, Democratic Party officials accused Rossi of running an illegal campaign and using a "sleazy front group" to help in that effort.

Rossi said he thinks the complaint was part of an attempt by the Democrats to scare him out of running in 2008. "I think it actually had the opposite effect," said Rossi, who was in California Thursday for a Republican Governors Association meeting.

He also said he thinks Gregoire should have to answer for all the "vile things" party leaders have been saying about him.

"I want her to apologize for that because it came from her people," Rossi said.

Gregoire laughed when told of Rossi's remarks.

"I will consider the apology when he apologizes for the misrepresentation and the nastiness with which he has begun his campaign," Gregoire said.

The Democrats' complaint, filed last June with the PDC, centered on the Forward Washington Foundation, a nonprofit group Rossi formed last year with the help of some of his key political advisers.

Rossi has said the foundation's purpose is to help seek solutions to pesky state budget and policy problems.

Democrats alleged Rossi was using the foundation to run a de facto campaign for governor and skirt the state's campaign-finance-disclosure laws.

Rossi, who has since stepped down from the foundation, was paid by the foundation to make speeches across the state. Often in those appearances, Rossi touched on many of the same themes he focused on during his 2004 campaign.

But in findings released Thursday, the PDC staff said the foundation "acted in a manner consistent with its stated goals and mission as a social-welfare organization ... and not as a political committee engaged in electoral activity."

The staff has drafted a proposed dismissal letter that, if approved by the commission, will be sent to Dwight Pelz, chairman of the state Democratic Party.

Over the past few months, PDC investigators conducted nearly two dozen interviews and reviewed Forward Washington Foundation's financial records and many of the speeches Rossi gave on behalf of the foundation.

"PDC staff believes that there is insufficient evidence to support the allegation that the Forward Washington Foundation was acting as a political campaign committee for Mr. Rossi's 2008 gubernatorial candidacy or that Mr. Rossi evaded political campaign contribution limits and disclosure requirements," the staff wrote in the proposed dismissal letter.

Doug Ellis, a spokesman for the PDC, said staff recommendations carry a lot of weight — but are not a sure thing. In the past, he said, the commission has reversed or changed staff recommendations.

"You never know what the commission is going to do," Ellis said. "We investigated the case and our report speaks for itself."

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com