The push to derail Sacramento's arena plan was thrown into disarray Friday, when it was revealed a Los Angeles law firm that represents the Maloof family wired $80,000 to the campaign. Two key political operatives resigned from the effort amid a series of denials from consultants and the Maloofs themselves about the source of the funding.
Loeb & Loeb, the law firm that represented the Maloof family in failed attempts to move the Sacramento Kings to Anaheim and Seattle, gave a Tulare-based campaign consultant $80,000 to pay for signature gatherers working on a petition drive for an arena ballot measure, the consultant said in a statement emailed to the media.
Paul Olson of Olson Campaigns in Tulare said he received that payment for the signature gathering campaign in June and that he "traced the wire transfer (that was the source of the money) to a Los Angeles law firm Loeb & Loeb."
Olson identified Orange County-based political consultant Brandon Powers as the person who arranged the payment to him. Powers announced in May that he had been hired to run the initiative campaign by Sacramento Taxpayers Opposed to Pork (STOP) and Taxpayers for Safer Neighborhoods of Orange County. Powers, who heads Powers Communications, did not return phone calls and emails seeking comment.
Olson said in an interview he did not know the origin of the $80,000. He said he received the money around June 21.
Olson and Sacramento political consultant Tab Berg said in a joint press release that they were cutting ties with the campaign. Their resignations came two days after a complaint was filed with the Fair Political Practices Commission alleging that the signature campaign had not properly reported donations and expenditures.
"I have broken no laws, and I am not going to stand in front of those who refuse to take responsibility to try to throw my colleagues or I under the bus," Berg said in an emailed statement that appeared alongside Olson's comments.
Representatives of Loeb & Loeb, a prestigious firm whose legal roster includes former Gov. Gray Davis, did not respond to Sacramento Bee requests to divulge the source of the $80,000. Scott Zolke, a partner at Loeb & Loeb who represented the Maloofs in their negotiations this year to sell the Kings to a group in Seattle and in their attempt to move to Anaheim in 2011, declined to comment.
The Maloof family immediately denied involvement in the funding. George Maloof, the sibling who was the driving force behind the attempt to sell the Kings to Seattle investors, said Loeb & Loeb told him the money was "from another client."
"I know nothing about it. Zero," Maloof said. His family sold the team May 31 to a local group after the NBA vetoed the Seattle deal.
Added his brother, Joe Maloof: "We wish Sacramento all the best. We hope they get their arena. Don't throw us under the bus for something we didn't do."
Mayor Kevin Johnson had no comment, nor did a spokesman for the Kings' current owners.
The money that went to Olson financed a signature drive seeking to place a measure on the June 2014 ballot that would require public approval of public subsidies for sports facilities in the city of Sacramento. That campaign needs to collect 22,000 signatures by mid-December to qualify the measure for the ballot.
Under a plan approved earlier this year by the City Council, the city would contribute $258 million toward a $448 million arena at Downtown Plaza. Critics have charged the true value of the subsidy is much higher. Most of the public money would come from revenue bonds backed by city-owned parking assets.
The FPPC, which serves as the state's political watchdog, is looking into the source of the signature drive's funding amid allegations that the finances were not properly reported to elections officials. Olson told The Bee he met with FPPC investigators at a bank on Thursday and turned over financial documents.
Any individual or group that spends more than $1,000 on a ballot measure campaign is required to file documentation with state elections officials forming a political committee, said Gary Winuk, chief of enforcement at the FPPC. Expenditures and donations made on that campaign must also be reported.
Loeb & Loeb had not reported expenditures on an arena ballot measure as of Friday afternoon, according to secretary of state records. Those filings were due July 31.
If the money used to fund the signature drive originated with someone other than the law firm, that individual or group would also be required to report that activity, Winuk said. To date, no one has reported paying for signature gatherers.
Berg said he was paid by Loeb & Loeb for his work and assumed they represented Taxpayers for Safer Neighborhoods, an Orange County political action committee that announced in May it would help fund the campaign and work with STOP.
In an interview, Berg said he wasn't sure what would happen with the signature effort. He said he still supports the cause and that "the public wants to vote."
"There's a whole lot of signatures, I don't know how those will get handled," he said, adding that STOP is "not going to consider it a good press day."
Veteran Sacramento political consultant Doug Elmets, who worked on the unsuccessful 2006 campaign to pass a sales tax that would have funded a downtown arena, said the impact of Friday's news could be debilitating to the signature campaign.
"Frankly, the nail's in the coffin," he said. Despite the family's denials of any involvement, "the fact that this initiative has now got the taint of the Maloofs definitely seals its fate," Elmets said. The Maloofs had alienated many Sacramentans.
Julian Camacho, the co-chairman of STOP, said his group would continue to gather signatures. STOP is made up mostly of neighborhood activists whose volunteer effort to seek a vote on an arena subsidy goes back to last year.
"We are entering the final push to get us over the top, we are in no hurry," Camacho said. "Our position is clear. As long as we are collecting signatures, we are in front of the electorate with our noble cause: Let the people vote."
Camacho has said STOP's campaign is separate from the effort driven by paid signature gatherers.
James Lacy, an Orange County attorney and the principal officer of Taxpayers for Safer Neighborhoods, also continued Friday to disassociate himself and his committee from the paid signature-gathering campaign. Despite referring a Bee reporter last week to Powers for a comment, Lacy said Friday that he hadn't spoken with the political consultant since "maybe early June."
"I haven't been clued in at all about what he's done on this issue," Lacy said.