San Francisco's Campaign Finance Laws Are Complex. Eluding Them? That's More Simple.

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'It's good to be the king' -- and it's always good to have powerful folks in your corner pulling some strings
San Francisco's campaign finance rules are so beastly complex that professional treasurers with decades of experience have been known to drive sharpened pencils through their palms in fits of desperation. Yet eluding these Byzantine laws need not require the greatest level of legal or administrative sophistication. In fact, you can employ the same strategy the rich kid in your high school did to get out of trouble after he crashed his BMW into the main quad. Just have one of dad's influential friends send the principal a letter and -- voila! -- suddenly there are novel new ways to interpret rules meant to keep cars off of school lunch ladies.

That's not to say Supervisor Carmen Chu was doing any thing so cavalier as executing doughnuts on the lawn with her 325i. Instead, she was caught apparently violating campaign fund-raising rules that also tripped up her erstwhile colleagues Chris Daly and Gerardo Sandoval in years past. Yet while those progressive supes were audited, cited, and fined, Chu skated.

Unlike Daly and Sandoval, Chu had Jim Sutton -- the lawyer, adviser, and svengali for Mayor Gavin Newsom and all the moderates in town -- in her corner to write letters and make phone calls to the city's Ethics Commission. After Sutton got involved, the case was yanked out of the hands of the staffers who'd been handling it -- without their even knowing it -- and handled discreetly by Mabel Ng, the commission's deputy director. A staffer who brought up the Daly and Sandoval precedents was threatened with termination. And -- surprise, surprise -- Ng found a way to reach a conclusion along the lines of what Sutton, one of the city's most powerful movers and shakers, was pushing for.
 

Much as we'd like to write a story about campaign finance without delving into the city's intricate laws, it's just not possible. So we'll keep it short and painless. The laws that ostensibly tripped up Chu involve two rules: In the last 16 days before an election, candidates are required to make a public filing within 24 hours every time they receive a donation of $1,000 or more -- this, logically enough, is to prevent shady folks from dumping huge amounts of money into elections at the last minute and having no one be the wiser until after all the votes are counted.

The other rule involves San Francisco's $500 contribution limit. If someone owns multiple businesses, he's not permitted to give $500 from Business A and $500 from Business B. Yet that's just what a pair of "affiliated entities" did with Chu. So, put the rules together, and you've got a $1,000 donation that should have resulted in a filing within 24 hours. But Chu didn't make the filing -- she received a delinquent notice in April from Ethics -- and she still hasn't.

In years past, Sandoval and Daly were found to have violated a scenario essentially exactly like that described above; as mentioned before they were audited, cited, and fined. It's all a matter of public record and you can see the results online here and here. Yet because much of Chu's case was handled behind closed doors, so to speak, after Sutton weighed in and Ng yanked it away from Ethics' staff, you won't find a good deal of this material without executing a public records request (which we did, resulting in nearly 40 files being sent our way).

In a letter earlier this month to Sutton, Ng stated that, after further review, she agreed with Sutton. There was no need to make any of those pesky filings because it was "unclear" if Chu's campaign had a duty to check and see if the two $500 donations it received were from businesses owned by the same people. To put it mildly, this is an extremely generous ruling. And to see why, let's look at the donations that are at the heart of all this:

They come from a pair of businesses with nearly identical names (Wines of California/Gifts and Wines of California Wine Bar) with nearly identical addresses on Pier 39; both checks were signed by the same person, Sal Chiavino, and were donated on the same day. If you're scoring at home, Ng has gone on the record stating that campaigns need not raise a finger to investigate whether businesses are owned by the same people when they have near-identical names, near-identical addresses, the checks are signed by the same person, and the money is received on the same day. 

In the same letter, Ng assures Sutton that Chu won't have to make that filing -- which should have been done within 24 hours of receiving the $1,000 from Wines of California -- as the cumulative report every candidate must turn in after the election has already been filed. This, she says, was what California's Fair Political Practices Commission (FPPC) told her.

That may be the way the FPPC sees it, but it certainly hasn't been the way the Ethics Commission has enforced it -- either now or in the past. At the same time Ng was assuring Sutton that Chu need not make her delinquent 24-hour filing, Ethics was meting out large fines on a number of Chu's fellow candidates for doing exactly that. To just name a few, successful District 1 candidate Eric Mar and failed D-3 hopefuls Mike DeNunzio and Claudine Cheng were dinged for thousands of dollars for failing to make the same filing that Chu apparently doesn't have to make. Going back a few years, Andrew Lee faced a $17,000 fine for failing to make similar filings.

Does this look bad? Even Ethics' staff thinks so. "Handling this matter secretively and excluding ... staff from awareness of what is going on doesn't look good," wrote Ethics' fines collection officer, Oliver Luby, in an office-wide e-mail (part of the trove of records we received). Luby had been handling Chu's case, but found out the matter was taken over by Ng not from her but when he called Chu's accountant -- who told him "Jim Sutton is handling this with Mabel."

E-mails obtained by SF Weekly indicate that Ng e-mailed Luby and told him the case was settled and that he was to do no more work in the matter. When he wrote back noting the Daly and Sandoval precedents, Ng decried him as insubordinate and threatened him with termination.

So, after all that, what have we learned here? Well, for one thing, Mel Brooks was right in History of the World, Part I when he intoned that "It's good to be the king." And if you can't be the king, it's good to have powerful folks in your corner pulling the strings for you. 

In the end, the amount of money Chu could have been fined if the apparent Daly, Sandoval, and other precedents were followed is probably dwarfed by the total spent during budget month on pizza for City Hall staffers burning the midnight oil. But this isn't all about the money. Sometimes it's informative to get a glimpse at how the machinery that ostensibly keeps our politicians honest is working.

Or isn't.

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