Joe Kennedy III campaign says it improperly spent $1.5 million in Senate primary

Congressman Joe Kennedy III spoke on Sept. 1, the day he lost the Democratic Senate primary to Ed Markey.Charles Krupa/Associated Press

The campaign of Representative Joseph P. Kennedy III said Friday that it improperly spent $1.5 million of donations intended for the general election during the final weeks of his bitter and ultimately unsuccessful primary challenge to Senator Edward J. Markey.

The spending was a clear violation of federal campaign finance rules, which prohibit candidates from using general election money on expenses for the primary.

In a statement to the Globe, Kennedy said he did not know the campaign had been improperly spending general election funds during the primary, and that the violation came to his attention shortly after the Sept. 1 election. Kennedy said he reimbursed his campaign with $1.5 million of his own money in late September to cover all of the improperly spent funds.

“After an internal review, I believe it was an honest mistake by those involved, resulting from misinformation, not malintent,” Kennedy said. “But as the candidate, I take full responsibility for the error that occurred and have worked to rectify it as expeditiously as possible.”

Kennedy said he and his campaign self-reported the violation to the Federal Election Commission last week. Under federal campaign finance rules, individuals can contribute a maximum of $2,800 to a candidate’s primary campaign and another $2,800 to a general election bid.

The revelation is an embarrassing coda to the primary loss for Kennedy, who framed himself as a hard-working and conscientious politician who doesn’t color outside the lines.

“I apologize for — and deeply regret — the error and believe that strict transparency and accountability in campaign finance are the cornerstone of fair elections," said Kennedy. "I have taken these rules seriously my entire career and remain as committed as ever to the cause of electoral integrity — particularly at this moment in time.”

The campaign blamed the decision to spend general election money on two senior officials: campaign manager Nick Clemons, an experienced veteran whose resume includes serving as state director of Hillary Clinton’s successful 2008 New Hampshire presidential primary effort, and the campaign’s treasurer, Gemma Martin, a principal at the Chick Montana Group, a campaign finance firm.

The Kennedy campaign said Friday that Clemons and Martin believed that FEC rules allowed them to spend general election money as long as it was paid back with additional contributions after the primary.

Clemons and Martin did not respond to a Globe request for comment Friday.

Neither is affiliated with the campaign or Kennedy any longer, the campaign said. Kennedy brought on a new treasurer in late September after the campaign finance violation was discovered.

General election funds were tapped for primary election expenses starting in August, according to the campaign.

Once the improper use of campaign funds came to light, Kennedy immediately worked with the campaign’s counsel, Washington, D.C.-based law firm Sandler Reiff Lamb Rosenstein & Birkenstock, to conduct an internal review to figure out how and why general election money was spent.

Using Kennedy’s personal funds, the campaign has since fully reimbursed all donors who contributed money earmarked for the general election — well ahead of the Nov. 1 deadline set by FEC rules for those refunds to be made.

FEC rules require campaigns that don’t advance to the general election to refund any donations made for the general election within 60 days of the primary.

“All current obligations to staff, donors, vendors, and creditors have been met. Any remaining campaign expenses this year will be fully paid,” Kennedy said.

The improper use of general election funds coincided with a downturn in Kennedy’s electoral fortunes, and indicates that the Newton Democrat faced a bigger financial crunch in the closing days than previously known.

While the 40-year-old congressman started his primary challenge ahead in the polls, the race tightened considerably in its final weeks, ultimately reversing. Markey, the incumbent, not only closed the polling gap, he also entered the final stretch with a fund-raising advantage over Kennedy, helped by strong enthusiasm and small-dollar donations from young progressives.

The Kennedy campaign also had spent about $2.4 million from its war chest on two different TV ads in the spring, months before Markey went on the airwaves, spending that analysts say ultimately gained Kennedy little in the race.

Super PACs supporting both candidates poured millions into the race as well, and Kennedy’s campaign enjoyed significant support from a pro-Kennedy group that spent heavily on TV and other advertising in the closing weeks.

That super PAC, the New Leadership PAC, received a significant boost from Kennedy’s father, former congressman Joseph P. Kennedy II, who transferred $2 million to the super PAC in two separate infusions from his old campaign account in August.

In sharing the details of the campaign finance violation Friday, the Kennedy campaign argued the operation had no reason to willingly violate the rules because the candidate’s personal wealth meant he could have contributed the money if necessary.

Markey campaign manager John Walsh said Friday evening the campaign will not be commenting.

The Globe asked a top campaign finance expert to weigh in on the Kennedy campaign’s disclosure. “The rule is clear: You cannot spend general election funds prior to the primary," said Paul S. Ryan, vice president of policy and litigation at Common Cause, a campaign watchdog group.

The reason the rule matters, he said, is that it enforces the integrity of the FEC’s contribution limits on how much money individual donors can give to a candidate — $2,800 for the primary and another $2,800 for the general election.

Typically, only donors wealthy enough to max out their contribution limit for the primary give general election money before the primary is over, he said.

“Our contribution limits are intended to safeguard against corruption or even the appearance of corruption. They’re intended to prevent wealthy individuals from having undue influence over candidates and officeholders," said Ryan.

Ryan said in the 20 years he’s spent watching money in politics, he can’t recall an instance of a high-profile candidate such as Kennedy committing this sort of campaign finance violation.

And he said improperly spending $1.5 million is “significant” considering it accounts for close to 10 percent of the $15.6 million the Kennedy campaign spent through September, according to the latest federal filings.

Still, Ryan applauded the way the Kennedy campaign has responded, admitting the mistake and self-reporting to the FEC.

It remains unclear how the FEC will respond. The agency currently lacks enough commissioners to have a quorum to meet, which means it cannot carry out enforcement actions.

Ryan said, most likely, the Kennedy campaign would face a fine, which is likely to be reduced given it self-reported the violation. He did not think it likely that the FEC would find criminal enforcement appropriate, which requires proof of a “knowing and willful violation.”