Thornton Law Firm didn’t violate state campaign finance laws when it reimbursed its partners for up to $175,000 in donations to state and local politicians, a special prosecutor said Wednesday.
In a statement, Essex District Attorney Jonathan Blodgett said he didn’t find “sufficient evidence” to bring criminal charges against the Boston law firm, but recommended reforms to state campaign finance laws that “address the ambiguities in the law that gave rise to these allegations.”
The changes would ensure that partners’ donations are made from personal checking accounts and would require attorneys to sign annual sworn statements that the donations came from personal funds.
The decision by Blodgett, who was assigned the case as a special prosecutor after Attorney General Maura Healey recused herself, ends the state inquiry into Thornton Law Firm. But the firm still faces federal investigations into election law violations and its billing practices in a class-action lawsuit, which both began in 2016.
“As we have said from the outset, the Thornton Law Firm has fully complied with all applicable rules and regulations concerning campaign contributions,” the law firm said in a prepared statement. “We are pleased that this matter has now been closed with no finding of any wrongdoing.”
The state Office of Campaign and Political Finance last April asked Healey to open a criminal investigation following a report by the Globe and the Washington, D.C.-based Center for Responsive Politics.
The report found that partners at the firm, headed by former Massachusetts House assistant majority leader Garrett Bradley, had a longstanding practice of reimbursing partners for political donations by paying them bonuses in identical amounts, often within days after the donation was made.
The reimbursement program, which involved more than $1 million, helped the firm become a leading supporter of the Democratic Party nationally.
Federal and state laws generally prohibit such reimbursement schemes because they disguise the true source of the donation — in this case, the law firm.
After the story was published in October 2016, the Federal Election Commission and OCPF both launched investigations.
OCPF director Michael Sullivan said he found “evidence of violations” of campaign finance laws that require that political donations be made in the name of the actual donor. He said the firm, as well as 16 individuals, may have broken the law.
Sullivan also said the evidence indicated that Thornton Law violated the state law prohibiting corporations, partnerships, or other businesses from making contributions to a candidate or political party.
His letter marked the first time state officials sought criminal prosecution in a so-called straw donor case.
Sullivan’s investigation focused on $175,000 in donations to state and local candidates and political parties. Sullivan declined to comment Wednesday.
Meanwhile, the FEC looked at the partners’ donations to federal candidates and parties. An FEC spokesman wouldn’t comment, but records show a complaint filed by a Washington, D.C., group, the Campaign Legal Center, has not yet been resolved.
Thornton Law Firm’s attorneys have insisted the reimbursement program was legal and said the bonuses weren’t really bonuses but the partners’ own money, taken out of each one’s equity in the firm. Attorneys said the firm relied on an opinion from an outside law firm that blessed the program a decade ago.
In his statement, Blodgett said a “certified fraud examiner” spent about 280 hours reviewing the material and could not find “adequate evidence” that donations were made with firm funds, or that attorneys were reimbursed by the firm. Blodgett was handed the case after Healey recused herself because she had received donations from Thornton lawyers.
Healey was one of dozens of politicians from around the country —
including Hillary Clinton and Senator Elizabeth Warren — who either returned the donations or gave the money to the US Treasury.
Thornton Law Firm’s legal problems aren’t over, however.
In addition to the FEC probe, US District Judge Mark Wolf appointed a special master last year after the Globe reported that Thornton and two other law firms dramatically overcharged for their services in a class-action suit against State Street Bank. The lawyers in the case received $75 million in fees.
Wolf appointed former federal judge Gerald Rosen to determine whether Thornton and the other two firms — Labaton Sucharow and Lieff Cabraser — intentionally inflated their bills by double-counting lawyers and claiming exorbitant costs for dozens of lawyers, including Garrett Bradley’s brother. Rosen may submit his finding as soon as next week.
The special master has been working on the case for more than a year. Wolf ordered the law firms to pick up the cost of his investigation, so far $3 million.