Marc Caputo

Marc Caputo: Dade Democratic dysfunction emerges in governor’s race

A governor’s race doesn’t seem to go by in Florida without Democrats ending up in a circular firing squad.

A disgruntled Nan Rich supporter was the unwitting bullet this time.

Angered with the way the Miami-Dade Democratic Executive Committee treated her, party member Barbara Walters secretly filed an obscure tax complaint with the IRS last October — and then she leaked the information recently to a conservative-website columnist dedicated to tearing down Charlie Crist.

The story targeted the county party’s leader, Annette Taddeo, just after Crist coincidentally chose her to be his running mate.

IRS Investigating a 537 Consulting-Related, Tax-Violations Complaint Against Annette Taddeo, read the Sunshine State News headline, which wondered why the mainstream news media wasn’t looking into the case.

For starters, the complaint about employee classification for tax purposes is without merit, experts say.

And the story’s headline is false.

There is no IRS “investigation,” federal law-enforcement sources confirmed to the Miami Herald. Also, the story drips with hyperbole, misleading innuendo and, in one case, a statement that Walters said is “totally inaccurate.”

“There were probably other ways I should have handled this,” Walters acknowledged on Sunday to the Herald.

Walters’ fellow Democrats are furious. Regardless of the veracity of the story’s headline, it’s now out there. And it reinforces the “Democrats in disarray” narrative that looks all too familiar to a party that, despite superior numbers of voters, hasn’t won a governor’s race since 1994.

“I condemn what she did — not her, but the action,” said state Sen. Dwight Bullard, Taddeo’s likely successor who’s also a top Rich surrogate in Miami-Dade.

“We’ve got to stop doing this to ourselves,” Bullard said. “We don’t want to help Rick Scott win.”

The governor has spent as much as $9 million on negative TV ads just attacking Crist.

The situation is even more galling to Democrats in Miami-Dade because they thought they were getting their act together.

Democrats are a plurality of voters, accounting for 42 percent of the county’s voter rolls compared to 28 percent for registered Republicans (who slightly trail the number of independent voters in the county).

Yet registered Republican politicians hold a majority of seats in the 24-member state legislative delegation and the 13-member County Commission. A Republican is also county mayor.

One reason for the GOP’s success was the relatively fractious nature of the Dade Democrats. It was more a collection of rival clubs than a big-city party.

“I want to change that,” Taddeo said. “I want to raise money, organize and win elections.”

Though she has twice lost elections she ran in, Taddeo as chair of the party had started to rack up wins. Her fundraising prowess was clear last year when, in the third quarter of 2013, the party reported raising almost $149,000 — 71 percent more than its previous high in 2007.

Taddeo made sure, for the first time, to recruit Democratic candidates for every legislative race this year. One of those candidates is Juan Cuba, the executive director of the party whose consulting company, 537 Consulting LLC, is at the center of the complaint.

So Walters’ complaint helped cause headaches for the county party and a legislative and a governor’s race campaign. Scott’s campaign — already criticizing Crist for refusing to release the tax returns of his wife, Carole Crist — sure loves the IRS headline, which could be used in a future mailer or TV ad.

The dispute is also personal.

Walters increasingly became critical of the party’s management after Taddeo became chair in late 2012. Walters focused on the decision to pay Cuba and other professional staff members as independent contractors instead of as employees who receive health benefits from the party — something Democrats advocate when it comes to other employers.

Taddeo and other party leaders said the party couldn’t afford to pay the benefits. And Cuba said he wanted to be paid through 537 Consulting as an independent contractor so he could do other political work, as long as it didn’t interfere with party business.

Prior executive directors were paid as independent contractors, which Walters said she was unaware of, but she said her reading of a tax guide for employers indicated that employees cannot be converted into independent contractors if they are performing “substantially similar” work as any predecessor since 1977.

Walters complained to the Miami Herald in May, but no experts share her interpretation of employer tax law. Walters didn’t want to go on the record with her interpretation of tax law. Walters admits she’s not a tax lawyer or a specialist, nor did she consult with one.

Also, Miami-Dade Democratic members trashed her as a combative person who was increasingly estranging fellow Democrats.

As a result, the Herald didn’t write a story.

Walters said she wanted to “vet” the 537 contract, which she has a right to do, but Taddeo and company refused to let her.

But, Taddeo and others said, Walters helped approve the contract by approving the party’s budget, where the matter was discussed. Walters said she didn’t join in the unanimous vote.

Then, in October, Walters filed her complaint with the IRS. She told almost no one. But then, soon after Taddeo was tapped as Crist’s running mate, she wound up to talking to the conservative blog.

It printed Walters’ complaint, giving her anonymity, and made one clear mistake by saying, “Nor were the DEC’s books and financial records kept in the DEC office or anywhere that the membership or even the Steering Committee could view them.”

Said Walters: “This one I did catch as totally inaccurate.” She said she had no knowledge of this claim, and said she assumed the books were at the DEC office. She also agreed that the article’s attempt to compare the 537 Consulting contract to a secret contract that led to the fraud bust of the former state GOP chairman was misleading.

“Right now, I regret this has gone the way it has gone,” she said. “I do not apologize for believing it was a legitimate complaint, that my concern was legitimate.”

Nine months later, she hasn’t heard from the IRS. Nor has anyone in the Miami-Dade Democratic Party.

That’s because there’s no “investigation.”

The IRS wouldn’t consider this case worthy of an “investigation” because that usually refers to a criminal matter — this matter is a civil issue that, if taken up by the IRS, would lead to what is called an “examination” or audit, said Jeffrey Nieman, a top South Florida tax attorney and former U.S. Department of Justice tax-case prosecutor.

“There are criminal investigations and civil examinations,” said Nieman, a self-described “nonpolitical” registered Republican. “This would be a waste of time to start an audit because it doesn’t look like anything’s there.”

The same goes for what the Sunshine State News wants to call “news.”

But as for Democratic dysfunction in a governor’s race — even if it means helping the Republicans by default — there’s nothing new about that.

Still, it’s news.