Doug Forrester is financing his own campaign for governor of New Jersey. He has not made active overtures for funds from private individuals, nor has he sought significant support from the party. Now, having spent $11 million of his own on the race, there is a move afoot to effectively shut down his campaign under terms of an old state law.

The law bars insurance companies and other state-regulated industries doing business in New Jersey - and individuals with majority ownership in the companies - from contributing to candidates or political organizations in the state.

Forrester holds a 51 percent ownership interest in an insurance company that sells most of its policies to governmental clients in New Jersey.

"All of the kinds of things we've done with regard to contributions have been done appropriately and have been examined by appropriate legal counsel," Forrester said in an interview Friday.

Yet the state election law could put into question the contributions that Forrester has made, including those to his own campaign, since he formed his insurance company in 2003. Under the law, designed to prevent undue influence by insurance companies, banks and other state-regulated industries, prohibited contributions might have to be returned.

The Attorney General's Office, which has strictly interpreted the law over three decades to apply to insurance companies and their subsidiaries, declined to comment.

Forrester's company, Heartland Fidelity Insurance Co., was established by him in 2003 to sell health-benefits insurance. Heartland is managed by a second Forrester company - the New Jersey-based BeneCard Services Inc. - which brokers and administers the Heartland contracts. Forrester said he has made more than $50 million from his business, and he is financing his campaign for governor almost exclusively with his own money.

Since forming Heartland, Forrester has spent $11 million to win the GOP gubernatorial nomination and has said he will also personally finance his fall campaign against Democratic U.S. Sen. Jon S. Corzine.

In addition, Forrester has contributed several hundred thousand dollars to various GOP candidates and committees in the state since forming his insurance company.

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Forrester, after consulting with his attorneys, drew a fine line Friday between the corporate status of the two companies. He said the New Jersey campaign-finance restrictions for insurance companies do not apply to him because he licensed Heartland Fidelity in the District of Columbia.

Heartland "is a D.C. company. It is not regulated by the State of New Jersey," he said through his campaign spokeswoman, Sherry Sylvester. "The statute is not intended to reach beyond the boundaries of New Jersey."

The state law, however, covers companies that "do business" in New Jersey. Heartland's business is produced through BeneCard, a Forrester-owned company with about 100 employees, located in Lawrenceville.

An official at the New Jersey Department of Banking and Insurance said the issue is where Heartland does business, not where it is licensed and regulated.

"If Heartland is selling insurance to New Jersey entities through BeneCard, they're conducting the business of insurance in New Jersey," said Anne Marie Narcini, ombudsman and manager of consumer protection at the state department.

Now lets look at this for a moment. The goal of the law is to prevent corporate interests from buying influence. However, this is not someone seeking to buy influence -- this is the candidate himself, spending his own cash. Yt is impossible to argue that this is the intent of the law at hand.

There is, of course, another issue. If strictly interpreted, it prohibits the candidate himself from giving anything of value to himself for campaign purposes? Can he buy clothing which he will wear at campaign events? Can he pay for his own dry-cleanting? Heck, can he pay for his own meals or gasoline? To construe this law as applying to expenditures by the candidate himself would result in such logically absurd questions. Furthermore, it would put Forrester and like individuals at a disadvantage relative to other citizens of New Jersey, in that it would prevent him from engaging in political speech activities on his own behalf that are open to every other New Jersey citizen.

I think that any court challenge would have to look at the holding in Buckely v. Valeo, the seminal case on campaign finance law. It held that there can be no limits on a candidate's expenditure of his own funds on behalf of his own candidacy unless the candidate accepted public financing of his campaign. The majority held that such limits infringed upon a First Amendment right "to engage in the discussion of public issues and vigorously and tirelessly to advocate his own election." This is precisely the case here. Furthermore, the court noted that "the use of personal funds reduces a candidate's dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse to which the contribution limitations are directed." In other words, Forresters expenditures serve the very end sought by the statute.

Ultimately, we have before us a classic example of why political speech limitation laws campaign finance reform laws are unwise and tread dangerously close to infringing on essential liberies -- and probably cross the line.

Posted by: Greg at 02:43 PM | No Comments | Add Comment
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