Erik Paulsen, Dean Phillips campaigns dispute ads, campaign finance

U.S. Rep. Erik Paulsen faced fresh criticism Friday for a TV ad critical of Democratic opponent Dean Phillips, while Phillips threw in $1.3 million of his own money as he tries unseat Paulsen.

As the Nov. 6 election nears, the competitive race for the Third Congressional District seat is becoming increasingly contentious as Paulsen, a five-term congressman from Eden Prairie, fights for re-election. Phillips, a distillery heir and businessman from Deephaven, is trying to become the first Democrat to hold the seat since 1961.

On Friday, Paulsen was criticized again for making a sexual harassment case part of his campaign. Lori Peterson, a lawyer who represented seven women who sued Allina Health in 2007 over sexual harassment, sent a note Friday to Paulsen's campaign manager demanding the team stop using the women's story in the TV ads, which call Phillips "shady" and charge that he "did nothing" to combat the harassment when he was on Allina's board of directors from 2005 to 2011.

Peterson, who had contacted Paulsen's campaign earlier this month with the same request, said Phillips had nothing to do with the matter.

"You have misrepresented their experiences, lied about your opponent, and further traumatized these women," Peterson wrote Friday. "You have dragged these women into your campaign against their will and you won't even respond to their requests that you stop."

Paulsen's campaign said the ad stopped running on TV last Wednesday as scheduled. Previously, the campaign has said that Phillips should've known about the Allina allegations since they were widely published in the Star Tribune.

The Third District race has attracted a barrage of TV ads and has become the most expensive race in Minnesota this election, with about $18 million spent between the two candidates and outside groups on their behalf.

On Thursday, Phillips said he's putting $1.3 million of his own money into his campaign — an amount he decided on because it's half of the $2.6 million that Paulsen has received from political action committees (PACs) as of Sept. 30. Phillips said the money is needed to compete with Paulsen, and that Paulsen and outside groups supporting him are outspending Phillips three-to-one.

"My intention is still to have this campaign be entirely people powered," Phillips said in an interview, adding that he hopes to raise the $1.3 million to pay off the loan to the campaign. "In my ideal campaign finance world, campaigns would be powered by individuals only, with lower contribution limits, eliminating entirely special interests."

Phillips is one of only a handful of candidates across the U.S. refusing to take any PAC money, even from labor unions or Democrats. Phillips said he wouldn't have self-funded if Paulsen would have agreed to his "Minnesota Way" pledge not to accept special interest money or self-fund. But Paulsen's campaign said Phillips just broke his own pledge.

"Despite calling self-funding not democratic, Phillips is giving his campaign over a million dollars of his inherited wealth, ditching his self-proclaimed number-one issue to buy the only thing that hasn't been handed to him — a seat in Congress," John-Paul Yates, Paulsen's campaign manager, said in a statement.

According to the Center for Responsive Politics, outside groups have spent $9.1 million in the Third District, more than half to oppose Phillips. Nationwide, that puts it seventh in the nation for outside spending on House races.

Staff writer J. Patrick Coolican contributed to this report.