Ethics equity

Pub date July 24, 2007


In the 2003 mayor’s race, Gavin Newsom’s campaign outspent Matt Gonzalez’s nearly six to one, shattering all previous city spending records and leaving the campaign committee with a $600,000 debt that wasn’t cleared for three years.

An apparent plan to pay down that debt illegally with money raised by a separate unregulated inaugural committee was the subject of several Guardian stories at the time (see “Newsom’s Funny Money,” 2/11/04) and corrective actions by Newsom treasurer Jim Sutton, although top San Francisco Ethics Commission officials tried to cover it up rather than investigate it.

It was one of several Newsom-campaign irregularities that raised red flags, including the return of dozens of checks by contributors who had exceeded the $500 limit, the failure to notify regulators in a timely fashion that the campaign had broken a voluntary spending cap, and issues related to whether the heavy campaign debt should have been considered a loan and regulated as such.

So guess whose campaign has recently been investigated and fined? And guess whose has never been scrutinized by Ethics Commission officials, who claim they don’t have enough resources to do a “global canvas” of all the campaigns from 2003, as they’ve traditionally done each year?

Gonzalez campaign treasurers Randy Knox and Enrique Pearce this month agreed to pay $3,300 in penalties to the Ethics Commission over 234 names of contributors that were filed with missing or incomplete donor information, 8 percent of the total. The agency began its review three years after it received an anonymous complaint in the days leading up to the runoff election, exactly when the Newsom camp dished the same allegations to reporters.

“It’s my fault, but it was inadvertent and not deliberate misfeasance,” Knox told the Guardian recently. The Ethics Commission concluded that no evidence proved a willful attempt to defraud the public and that most of the donors had failed to cite their street addresses or to provide complete employer information.

But to Knox and Ethics reformers we’ve interviewed for a recent series on the commission, there’s an important issue of fairness involved in this matter. Gonzalez, who did not return our calls seeking comment, was contemputf8g another run for mayor last year when he was contacted by Ethics officials and threatened with a $30,000 fine for violations that were more than three years old. “It was clearly politically motivated, to clear the field for the mayor’s race,” Knox said.

Yet even if that wasn’t the case, why didn’t Ethics Commission staffers review the Newsom campaign after they decided to pursue Gonzalez? And why did Executive Director John St. Croix order staffers not to do the normal global canvas of campaign documents for 2003 — and only 2003 — claiming the agency didn’t have enough resources and needed to “triage” its work?

“It seems odd that we would allow an anonymous complaint, which is informal, to create an exception to our triage order for 2003, especially since the [percentage] of Gonzalez contributions with info errors was apparently less than the state standard for filing officers to require mandatory amendments,” Ethics officer Oliver Luby noted to agency bosses earlier this month, according to internal memos the Guardian obtained through a Sunshine Ordinance request.

St. Croix, for his part, didn’t take over the agency until a year after the 2003 election. He told the Guardian that dozens of other complaints needed to be investigated too, but his office, with only one investigator, couldn’t do so until years after the fact.

“There was a point in 2006 where I said we’re not going to go back and begin anything new for election years prior to 2004,” St. Croix acknowledged. “We had so many backlogs. We were just hopelessly mired, and we kind of needed a fresh start.”

Sutton did not return our calls for comment, but Newsom’s campaign manager then and now, Eric Jaye, told us, “I’m empathetic to [the Gonzalez campaign]. I’m sure they weren’t intentional errors.”

He added that just because the Ethics Commission didn’t investigate the Newsom campaign after the election doesn’t mean the mayor got a free ride. “I feel like everything we do is audited and scrutinized,” Jaye said, noting that the campaign was fined $2,500 by the California Fair Political Practices Commission during the race for an illegal mailer.

Still, even if the commission won’t disclose ongoing investigations, as far as the public knows right now, the Ethics Commission has repeatedly ignored problems with the 2003 Newsom campaign and others managed by Sutton. Consider:

Several entities affiliated with a real estate outfit called Olympic View Realty made a total of $14,000 in contributions to the Newsom campaign, but filings didn’t reflect the otherwise clear association. “Newsom’s failure to report correct cumulative-to-date amounts is an ongoing violation of state law,” Luby wrote in the aforementioned memo.

The Newsom campaign’s $600,000 in postelection debt wasn’t paid off completely until late last year, much of it being carried by Jaye’s consulting firm and Sutton. Former Ethics staffer and commissioner Joe Lynn believes that could amount to an unreported loan to the campaign. “If Ethics was doing its job, it would investigate Newsom’s use of accrued debt,” Lynn told us.

The Building Owners and Managers Association of San Francisco — a key Newsom supporter — urged members in December 2003 to make unlimited donations to Newsom’s inaugural committee that would also be used, it said, to help cover “transition activities,” which should legally be subject to contribution limits. But Ethics, as far as we can tell, never probed whether inaugural committee funds were used inappropriately for the new mayor’s transition to room 200.

Newsom may have collected contributions exceeding the legal limit. During runoff elections, candidates are allowed to accept additional contributions from individual donors who have otherwise reached the maximum of $500. The total then permitted would be $750, which can be used to cover debt from the general election. As soon as general-election debt is retired, however, the candidate can no longer take advantage of the increased limit. But as far as the public can tell, there was no analysis conducted by Ethics to determine if Newsom’s campaign continued to collect $750 checks after having paid down its general-election debt.

St. Croix said most pending enforcement cases, more than ever before, were initiated by staff rather than complainants and the ideal scenario would be to emphasize aggressive earlier sweeps of all the campaigns. But unfortunately, he said, “we’re far away from that.”*