Three Democrats put checks in the mail Monday to return money they received for legislative election campaigns last year from the South Dakota Telecommunications political action committee, the state chairman for the South Dakota Democratic Party said Tuesday.
Ben Nesselhuf called on Republicans to likewise divest their campaigns of what he called “scam money” from the PAC.
“As of today’s mail, I have not received any returned contributions from any legislators,” said lawyer Scott Swier of Avon, the PAC's chairman and treasurer.
Swier also issued a statement.
“The South Dakota Telecommunications PAC was funded by Free Conferencing Corporation. The South Dakota Telecommunications PAC explicitly followed the guidance of the South Dakota Secretary of State’s Office in reporting the $16,500 contribution in 2012,” Swier said.
In an email Tuesday, Secretary of State Jason Gant didn’t address whether Swier’s statement was true. Gant said PAC contributions are listed in state law. “I would refer questions to the attorney general’s office,” Gant said in his email.
Last week, state Attorney General Marty Jackley said his office and the state Division of Criminal Investigation would look into the matter.
According to Gant’s Internet system for campaign finance records, Swier made a pre-primary report on his PAC’s activities on June 20, 2012. That was several weeks after the deadline for filing a pre-primary report.
In that report, Swier showed Free Conferencing as the only contributor to the South Dakota Telecommunications PAC. He reported $16,500 from Free Conferencing.
State law sets a $10,000 limit from an organization to a PAC.
Swier later filed a statement of organization for the PAC on Oct. 23, 2012, the same date that he filed the pre-general election report for the PAC’s activities.
Swier represents a company, Native American Telecom, which serves as a switching center for long-distance calls on the Crow Creek Indian Reservation.
Free Conferencing markets toll-free calling services throughout the nation and in many foreign nations. Free Conferencing has a direct business arrangement with Native American Telecom. One of Free Conferencing’s top executives has been serving as president for Native American Telecom.
The calls originate on each caller’s land line or wireless phone and go through a long-distance provider. Many of the calls are routed to the Native American Telecom switch at Fort Thompson on the reservation.
Native American Telecom charges the long-distance carrier a termination fee for using the switch. Free Conferencing receives a large portion of those fees from Native American Telecom, while the long-distance carrier pays money rather than making money.
This practice is known as access stimulation or traffic pumping. Native American Telecom, because of its location, was able to charge a higher termination fee as part of a general practice of using termination fees to subsidize rural telephone service.
Free Conferencing has used other rural telephone cooperatives and companies in a similar fashion for routing calls.
The Federal Communications Commission capped the rural fees under a new rule in 2011.
The Legislature in 2010 and 2011 defeated attempts to restrict access stimulation in South Dakota. Most of the legislators who received campaign contributions from the Free Conferencing-funded PAC in 2012 had voted against those attempts.
Native American Telecom is the subject of a complaint filed with the state Public Utilities Commission in 2010 by Sprint Communications alleging improper business practices.