Sacramento lobbyist Kevin Sloat has set a new record in California, agreeing to pay the state a fine of $133,500 – the largest ever for violating state laws that regulate lobbyists.
Sloat’s agreement with staff of the Fair Political Practices Commission says he acknowledges providing wine, liquor and cigars at numerous political fundraisers he hosted at his house – items that counted as nonmonetary campaign contributions, which are prohibited from lobbyists. He also acknowledged arranging and giving gifts to lawmakers in violation of state law, including tickets to 49ers and Kings games.
The FPPC sent warning letters to 37 politicians whose campaigns benefited from Sloat’s hospitality, including the Capitol’s most powerful: Democrats Gov. Jerry Brown, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez; and Republican leaders Sen. Bob Huff and Assemblywoman Connie Conway. Two Democrats in line to become the legislative leaders later this year also were warned: Sen. Kevin de León and Assemblywoman Toni Atkins.
The size and scope of the enforcement action produced some talk of changing behavior.
Sloat, founder of the Sloat Higgins Jensen & Associates lobbying firm that is one of the biggest players in Capitol politics, responded by issuing a prepared statement saying he and his firm had “failed in our obligations to be as vigilant as possible in complying with state political reform laws.” The negotiated settlement between Sloat and the FPPC became public Monday and faces a commission vote on Feb. 20.
“We take this matter seriously and have already put in place enhanced internal measures designed to prevent any future administrative violations. We regret these mistakes and look forward to developing the best compliance standards in the business,” Sloat’s statement says.
Atkins, who is in line to become the next Assembly speaker, received a warning letter after holding a fundraiser at Sloat’s house with six other lawmakers in April 2012. She said Monday she’ll likely put the kibosh on raising campaign cash at lobbyists’ homes.
“While technically not illegal, it’s now a heightened sense of awareness related to those things, so more than likely, I will not be doing events at lobbyists’ homes anymore,” said Atkins, a San Diego Democrat. “Just (out of) an abundance of caution.”
The case highlighted a contradiction in California’s lobbying and campaign finance laws: Even though lobbyists are prohibited from donating to candidates running for offices they are registered to lobby, they are acting under a separate section of law that allows anyone to host campaign fundraisers that cost under $500 at their home or office without triggering a reportable contribution. At these events, lobbyists can legally connect their clients, who give campaign contributions, with the officials whose decisions they seek to sway.
Bob Stern, the FPPC's first general counsel who helped write the state’s 1974 Political Reform Act, which regulates lobbyists and campaign finance, said he never intended lobbyists to be able to host fundraisers. Yet the law doesn’t explicitly say they can’t do it.
“You can’t write every single rule down on everything you think might happen,” Stern said. “I think they found a loophole.”
He said the FPPC’s pursuit of the Sloat case, however, is likely to alter practices around the Capitol: “My prediction is the lobbyists won’t be doing this anymore.”
Sloat ran into trouble because the events at his house exceeded the $500 limit. Although the candidates typically paid for the catering, the FPPC settlement says, Sloat provided alcohol, flowers and cigars that were not billed to the candidate’s campaign – amounting to illegal nonmonetary contributions.
Sloat’s settlement with the FPPC says he thought he was following the law by limiting his own expenditures to $500. But the rule concerns the total cost of the event – not only what the lobbyist spent.
Connie Emerson, a professional fundraiser who works for Democratic candidates, said she’s planned many fundraising events at lobbyists’ homes. But she said she generally advises the candidate to pay for everything that’s served “so that there is just no issue.”
The $500 rule has been interpreted differently by different people, she said, causing some confusion about what’s allowed.
“I can think of a lobbyist who used to host events at their home who stopped doing that because of this fine line, and not wanting to cross it,” Emerson said.
The FPPC’s warning letters tell the officials who had events at Sloat’s house that they properly reported the fundraising expenses they knew about.
“Mr. Sloat did not inform you that he was providing this nonmonetary contribution and, therefore, it appears that you were unaware that he provided it. Additionally, it appears your campaign committee properly disclosed all other known contributions and expenditures associated with the event,” says a warning letter to Sen. Jerry Hill, D-San Mateo.
Like other lawmakers who received the letters, state Sen. Cathleen Galgiani, D-Stockton, was unhappy that she received a warning for receiving a contribution she didn’t know about. She said she has long made it a habit to chronicle all contributions – both monetary and nonmonetary – because it helps demonstrate the strength of a campaign.
“It’s frustrating to me because I always strive to make sure I report everything,” Galgiani said.
In addition to the limits lobbyists face in hosting fundraising parties, they are prohibited from giving lawmakers gifts of more than $10 a month – enough for two hamburgers and a Coke, Brown famously said when he campaigned for the Political Reform Act in 1974. Lobbyists are also forbidden from arranging such gifts.
Sloat, whose clients include the San Francisco 49ers, acknowledges in the FPPC agreement that he and his firm gave or arranged gifts in excess of the $10 limit. That included:
Lobbyists learn the laws they’re supposed to follow at annual ethics trainings put on by the Legislature’s attorneys. The $10 gift rule is heavily emphasized.
Less discussed is the need to keep fundraisers under $500 at lobbyists’ homes and offices, said Cary Rudman, chief counsel to the Senate’s Committee on Legislative Ethics, who puts on the training.
“I will make sure there is no confusion,” Rudman said. “We will incorporate that more clearly in our next presentation.”
Politicians who received warnings
Here is a full list of the people receiving warning letters from the FPPC for holding campaign events at Sloat’s house:
Statewide officers and candidates
Gov. Jerry Brown
Lt. Gov. Gavin Newsom
2010 gubernatorial candidate Meg Whitman
Senate President Pro Tem Darrell Steinberg, D-Sacramento
Sen. Marty Block, D-San Diego
Sen. Lou Correa, D-Santa Ana
Sen. Kevin de León, D-Los Angeles
Sen. Cathleen Galgiani, D-Stockton
Sen. Jerry Hill, D-San Mateo
Sen. Ben Hueso, D-San Diego
Sen. Bob Huff, R-Diamond Bar
Sen. Ted Lieu, D-Torrance
Sen. Alex Padilla, D-Los Angeles
Sen. Norma Torres, D-Pomona
Sen. Rod Wright, D-Baldwin Hills
Assembly Speaker John A. Pérez, D-Los Angeles
Assemblywoman Toni Atkins, D-San Diego
Assemblywoman Connie Conway, R-Tulare
Assemblyman Paul Fong, D-Cupertino
Assemblyman Mike Gatto, D-Los Angeles
Assemblyman Isadore Hall, D-Compton
Assemblyman Roger Hernandez, D-West Covina
Assemblyman Richard Pan, D-Sacramento
Assemblyman Henry Perea, D-Fresno
Assemblyman V. Manuel Pérez, D-Coachella
Sen. Gil Cedillo, D-Los Angeles
Sen. Michael Rubio, D-East Bakersfield
Sen. Gloria Negrete McLeod, D-San Bernardino
Sen. Juan Vargas, D-San Diego
Assemblywoman Karen Bass, D-Los Angeles
Assemblyman Bob Blumenfield, D-Los Angeles
Assemblyman Charles Calderon, D-Whittier
Assemblywoman Mary Hayashi, D-Castro Valley
Assemblywoman Alyson Huber, D-El Dorado Hills
Assemblyman Jeff Miller, R-Corona
Assembyman Jose Solorio, D-Santa Ana
Former Assembly candidate
Garrett Yee, D-Fremont
Editor's Note: This story has been updated from online and print versions to correct Bob Stern's former position at the FPPC. He was general counsel, not chairman. Corrected at 9:23 a.m. on Feb. 12, 2014.