California's political watchdog agency filed a lawsuit on Thursday seeking to force a Los Angeles law firm to identify who paid signature gatherers trying to force a public vote on Sacramento's arena subsidy.
The Fair Political Practices Commission's suit against Loeb & Loeb charged that the high-powered firm has "failed and refused" to report the source of the money, despite warnings that it had violated the Political Reform Act by failing to meet a state financial disclosure deadline.
Loeb & Loeb represented the Maloofs when the family reached a deal in January to sell the Sacramento Kings to a group in Seattle. The Maloofs have denied any involvement in the signature campaign, and members of the family were not available for comment Thursday.
Loeb & Loeb paid Tulare-based political consultant Olson Campaigns $80,000 on June 21 to fund signature gatherers collecting petitions for a ballot measure that would require voter approval of subsidies for sports facilities in the city of Sacramento, according to the FPPC complaint. That expenditure was not reported by a July 31 deadline for campaign expenses made through the first six months of the year.
FPPC investigators sent a letter to Loeb & Loeb on Monday threatening legal action if the funding was not disclosed. Loeb & Loeb was given until noon Thursday to comply with the FPPC's orders. Less than three hours later – with the funding still not reported – the chief of the FPPC's enforcement division walked into Sacramento Superior Court and filed the lawsuit.
The case could be heard before a judge as early as Monday. Loeb & Loeb could face a fine equal to the money the firm has refused to disclose, or $80,000, according to the FPPC complaint.
Steve Baric, an Irvine lawyer representing Loeb & Loeb, couldn't be reached for comment. A spokeswoman for the Loeb firm also couldn't be reached.
Petition workers have been in Sacramento since June seeking to collect 22,000 signatures for a proposed June 2014 ballot measure on sports arena subsidies. While the paid effort has apparently stopped, two neighborhood activists running a volunteer effort said this week they would continue gathering signatures.
At issue is the City Council's decision this spring to dedicate $258 million in public money, most of it from bonds backed by parking revenue, toward a $448 million arena planned for Downtown Plaza.
The campaign behind the arena vote has become increasingly contentious amid scrutiny over who was funding the paid signature gatherers involved in the effort. The Sacramento City Clerk's Office said Thursday it had received signed forms from between 1,600 and 1,700 people asking that their names be removed from the arena vote petition.
Attention shifted to Loeb & Loeb late last week, when Paul Olson, the head of Olson Campaigns, and Sacramento consultant Tab Berg said they were quitting the effort. Olson and Berg have said they do not know the source of the $80,000 payment from Loeb & Loeb and that they are cooperating with the FPPC.
The FPPC complaint said that Berg was paid $9,000 by Loeb & Loeb on July 18, although Berg said he received the money on July 29.
Gary Winuk, the FPPC's chief enforcement official, said it was unusual for his agency to file a lawsuit demanding campaign finance disclosure.
"Most people we request compliance of give us compliance," he said.
Thomas Hiltachk, a Sacramento attorney and an expert on ballot initiatives, agreed. "Normally when they (the FPPC) knock on the door, people answer," he said.
The FPPC won a high-profile lawsuit last November, forcing a conservative Arizona nonprofit to reveal that it wasn't the real source of an $11 million contribution to two major statewide ballot initiatives. So far, though, the Arizona group has only revealed that the true donor was a Virginia organization, Americans for Job Security – a group that has yet to reveal its financial backers.
The California attorney general is investigating the matter.
The FPPC said in its complaint filed Thursday that Loeb & Loeb's "wrongful conduct will cause great and irreparable harm to the voters of Sacramento by denying them information regarding the source money spent to collect signatures in support of the effort to place the arena financing on the ballot."
"The information regarding the source of the $80,000 payment to Olson may be highly relevant to a citizen's decision whether or not to sign the petition supporting the initiative effort," the complaint reads.
In the meantime, the volunteer campaign seeking a vote – Sacramento Taxpayers Opposed to Pork (STOP) – said Wednesday it has collected more than half the signatures it needs. STOP also sought to separate itself from the paid signature effort, describing the group in a news release as "a fiercely independent, grass-roots organization."
Still, the signatures that STOP is counting toward its goal include those collected by paid signature gatherers, said John Hyde, a spokesman for the group.
"We are entering the final push to get us over the top," Julian Camacho, president of STOP, said in the news release. "We continue to collect signatures, and our message – let the people vote – has been well received by the citizens of Sacramento."