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Hahn Files Complaint Over Newsom's Fundraising

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Is San Francisco Mayor and Lt. Governor candidate Gavin Newsom violating the Political Reform Act by accepting contributions from donors who gave the maximum allowable amount during his gubernatorial attempt? When running for Govenor, Newsom was able to accept up to $25,900 per donor, but now running for Lt. Governor, he can only receive up to $6,500. Opponent Janice Hahn, a Los Angeles City Councilmember, today alleged that Newsom is violating state law by soliciting donations from the same maxed out donors from his gubernatorial bid.

Newsom's Attorney calls shenanigans, speaking to Capitol Alert: "The fact is that the funds raised by Mayor Newsom for his gubernatorial committee were spent supporting his run for Governor, an election from which he withdrew from in October 2009. Now, five months later, he is running for a different office, involving different issues and different opponents."

Hahn says Newsom has already spent $3 million for the June 8th primary with funds from his gubernatorial committee. The full complaint, which was sent to the California Fair Political Practices Commission this morning, is below.

Gary Winuk Director of Enforcement Enforcement Division California Fair Political Practices Commission 428 J Street, Suite 620 Sacramento, CA 95814 Re: Verified Formal Complaint Against Gavin Newsom and Newsom for California - Lieutenant Governor 2010 (ID# 1325415) Dear Mr. Winuk:

Pursuant to California Government Code section 83115, we are writing on behalf of the Janice Hahn Lieutenant Governor 2010 Committee to file a formal complaint against Gavin Newsom and the Newsom for California - Lieutenant Governor 2010 committee for violations of the California Political Reform Act (“PRA”). Under the unique circumstances resulting from his actions as a former candidate for Governor in this same election, Mr. Newsom, who recently announced his candidacy for Lieutenant Governor, is violating the PRA by raising and spending money in contravention of the contribution and voluntary expenditure limits imposed on candidates for Lieutenant Governor.

The clear intent of Proposition 34, the voter approved initiative in 2000, is to limit the amount of money used to influence candidates. State law imposes a higher $25,900 limit on contributions to candidates for Governor, compared with the $6,500 limit on contributions to other statewide candidates. By raising and spending large contributions up to $25,900 through his gubernatorial committee, spending all of that money, dropping out of the race for Governor, and then raising additional contributions from the same contributors for a down ballot office in the same election, Gavin Newsom has flouted state law in an unprecedented manner.
Violation of Contribution Limits

Under the PRA, a person, other than a small contributor committee, may not make to any candidate for Lieutenant Governor, and a candidate for Lieutenant Governor may not accept from any person other than a small contributor committee, any contribution totaling more than $6,500 per election. (Cal. Govt. Code § 85301(b), 83124; 2 CCR § 18545(a) (2).) Contributions from small contributor committees to candidates for Lieutenant Governor are limited to $12,900 per election. (Cal. Govt. Code § 85302(b), 83124; 2 CCR § 18545(a) (5).) An “election” is defined in the PRA as “any primary, general, special or recall election held in this state.” (Cal. Govt. Code § 82022.)

Mr. Newsom received up to $25,900 from contributors to his failed gubernatorial campaign during this same primary election - the maximum amount any person is allowed to contribute to a candidate for governor. (Cal. Govt. Code § 85301(c), 83124; 2 CCR § 18545(a) (6).) Mr. Newsom’s gubernatorial campaign committee, Newsom for California - Governor 2010 (ID# 1308175), reported raising approximately $3.4 million in contributions. As of December 31, 2009, the committee reported only $40,083.18 remaining in cash on hand, and $47,614.68 in debt. This means that Mr. Newsom’s campaign already has spent almost $3.4 million in contributions he received for the June 8, 2010 Democratic primary election.

Mr. Newsom’s latest campaign for Lieutenant Governor, now reports receiving maximum contributions for the same election from some of the largest contributors to his gubernatorial campaign. For example, on Friday March 11, 2010, Newsom for California - Lieutenant Governor 2010 (ID# 1325415) reported receiving a $6,500 contribution on March 10, 2010, from Susie Tompkins Buell, who previously contributed $25,900 to Mr. Newsom’s gubernatorial campaign on October 1, 2009. (See Semi-Annual Report, 7/1/09-12/31/09, Schedule E.) Mr. Newsom has thus effectively received $32,400 from Ms. Buell -- and potentially other donors -in the same election, in violation of Government Code section 85301(b).
Potential Violation of Voluntary Expenditure Limit

Unlike other state candidates who have raised money during the same election cycle for multiple offices and then transferred funds from one committee to another using the transfer and attribution rules, Mr. Newsom raised and spent the funds he collected at the higher gubernatorial limit - which no doubt served to benefit his candidacy in the June 8 election. This distinguishes Mr. Newsom from other similarly situated candidates. Because Mr. Newsom is now raising additional money from the same maxed-out donors to be spent in the same election, he is using contributions totaling amounts well in excess of the $6,500 limit.

Moreover, under the PRA, candidates for Lieutenant Governor who accept the voluntary expenditure limit may not spend more than $5,178,000 for the primary election. (Cal. Govt. Code § 85400; 2 CCR. § 18545(b)(4).) Mr. Newsom filed a Candidate Intention Statement (FPPC Form 501) on February 17, 2010 indicating that he would abide by this spending limit, thereby enabling him to place a candidate statement in the state ballot pamphlet. (Cal. Govt. Code § 85601(a).) A copy of the Candidate Intention Statement is enclosed.

There is no question that the money spent by Gavin Newsom in his campaign for Governor has significant residual value in his race for Lieutenant Governor. Having already spent over $3 million in connection with the June 8 primary election from his gubernatorial committee, Mr. Newsom, unlike any other candidate, will be able to spend up to $8.5 million for the primary election, well in excess of the voluntary spending limit. The inequity of this situation, and its obvious affect in subverting the intent of Proposition 34, must be prevented.

The FPPC recently made clear that it will not sanction “candidate behaviors that seek loopholes and are potentially misleading to the public…” (Brown Adv. Ltr. No. A-09-276). For the unique reasons set forth above, Mr. Newsom’s campaign for Lieutenant Governor is impermissibly thwarting state law curbing the influence of contributors on candidates for public office. Therefore, the FPPC should take all necessary action to ensure that Mr. Newsom and his campaign abide by the applicable contribution and voluntary spending limits. Unless the FPPC takes immediate action to investigate these violations and enforce state law, the other candidates in this race will be severely prejudiced by Newsom’s ability to raise and spend money in excess of the limits.

Very truly yours,

Stephen J. Kaufman

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct, or if stated on information and belief, I believe it to be true and correct. Executed this 17th day of March, 2010 at Los Angeles, California.

Stephen J. Kaufman