The Public Eye

California lawmakers’ campaign credit-card spending often lacks disclosure, Sacramento Bee review finds

Sacramento

California lawmakers racked up more than $4 million in campaign credit-card charges during the first 18 months of this election cycle.

Some ate in five-star restaurants and reported holding meetings in nightclubs and an amusement park. They bought fruit baskets and wine as gifts. They went to Las Vegas, Hawaii and international destinations.

As long as the spending accomplished what state law calls “a political, legislative or governmental purpose,” lawmakers complied with state rules for use of their campaign money.

A first-ever review of lawmakers’ credit-card spending by The Sacramento Bee found that many lawmakers provided only the barest of descriptions of their expenses on state-required campaign reports – despite a 2008 rule meant to improve disclosure. The lack of detail makes it difficult to determine whether lawmakers are using their campaign accounts to help them win re-election or do their jobs, or whether some have found an easy way to eat out and live a more luxurious lifestyle.

Other charges fell below the state’s $100 reporting threshold for expenses, meaning lawmakers were not required to say how they spent the money. Such expenses amounted to about $400,000.

Robert M. Stern, a former general counsel of California’s Fair Political Practices Commission who helped write the Political Reform Act, said “there are clearly legitimate uses” for campaign contributions. But Stern and other political ethics experts warn that it can be tempting when lawmakers have such easy access to donor-funded plastic.

“I don’t believe in luxury payments. I believe in ordinary, necessary expenses. But it’s tricky. It’s not black and white,” Stern said. The rules create the opportunity for lawmakers to take an aide or donor to dinner and call it a legislative meeting, he said. The worst-case scenario: “They’re raising money for their own personal use.”

That scenario has played out in Sacramento before. Over the years, several politicians have been fined for improperly using campaign money, including former lawmakers Dean Florez, D-Shafter, Carole Migden, D-San Francisco, and Charles Calderon, D-Montebello.

Loyola Law School professor Jessica Levinson, a campaign-finance expert, said state regulations have to be tough enough to deter wrongdoing but avoid “regulating candidates out of the ability to function or even campaign.”

“I’m sure that there are people who want to abuse the system and will take those broad terms and use them to their advantage,” she said. But other lawmakers follow the rules, she said.

Raising money is a central part of life as an elected official. Much of it gets spent as donations to other candidates and political parties, paying consultants, buying signs and other major campaign expenses. Some lawmakers – but not all – also spend a lot of campaign money on another common aspect of political life: wining and dining constituents, interest group representatives or potential donors. They also travel regularly around California, other states or even internationally.

Between January 2013 and June 2014, The Bee found that lawmakers paid more than $4.7 million to credit-card companies, with more than $4 million in itemized purchases. That included charges of almost $500,000 for what were categorized as meetings at Sacramento’s Chops steakhouse, Los Angeles’ Grand Havana Room, Las Vegas’ Bellagio and at dozens of other eateries and bars in California and more than 20 other states and Washington, D.C. They charged more than $561,000 for purchases classified as office expenses. They spent almost $964,000 for travel.

More information required

Under long-standing state rules, campaigns classify expenses by picking one of 27 broad categories, such as “meetings and appearances” or “candidate travel, lodging and meals.” In 2008, the state’s political ethics watchdog agency adopted tougher regulations to require politicians to submit more details about their spending. The changes took effect July 1 of that year.

For meals, campaigns are supposed to supply the date, the number of individuals and whether the lawmaker or a family member was present. For travel, they are supposed to supply the date, and destination, goods or services supplied, the number of individuals and whether the lawmaker or a family member made the trip. For gifts costing more than $100, they are supposed to provide the date, the nature of the gift and the names of recipients.

The California Fair Political Practices Commission said at the time that its goal was to make it possible to assess whether an expense benefited the candidate, members of the candidate’s household, or other people with authority to spend donors’ money.

The change followed media scrutiny of campaign spending by former Senate President Pro Tem Don Perata and former Assembly Speaker Fabian Núñez. Núñez’s spending as a lawmaker at that point included more than $47,000 for airfare, $5,100 at a wine cellar in France, and more than $2,500 in gifts for dignitaries and staff from Louis Vuitton in Paris. No one was fined, but the controversy helped scuttle a February 2008 ballot measure backed by Núñez and Perata to revise the state’s term-limits law.

Six years later, however, lawmakers continue to list many credit-card charges with little description. The Bee’s review found that lawmakers provided detailed information about meetings 64 percent of the time. They followed state disclosure rules for travel 76 percent of the time. More than 50 lawmakers had travel expenses that included no description, or one that was incomplete.

Some campaigns said their lack of reporting on meetings complied with subsequent interpretation of the FPPC requirements.

In an advice letter to a Democratic campaign law firm later in 2008, the FPPC narrowed the rules’ application by offering guidance on what constituted a meal: “food and beverages suitable for a typical breakfast lunch or dinner.” It said money spent by campaigns on drinks, snacks and appetizers didn’t require any additional information. Catered food at fundraisers, it said, also required no additional reporting unless it met the definition of a meal. It also said that when a campaign buys gifts in bulk, it does not need to disclose recipients if each gift costs less than $50.

The Bee found about 500 credit-card charges of $500 or less at various restaurants, bars, sports venues and other places categorized as “fundraising.” No additional information was provided for $105,000 in spending on meetings, and almost $78,000 in travel expenses. State filings show almost $69,000 in purchases described as gifts, most with a recipient identified.

Carmen Balber, executive director of Santa Monica-based Consumer Watchdog, helped craft the 2008 rules. Balber said she was disappointed to learn that the subsequent advice letter tightened the definition of a meal and when gift recipients have to be disclosed.

“There’s a spirit behind these rules,” she said. “If you spend $600 at a restaurant but spend it only on finger foods and choose not to call it a meal, you’re violating the spirit of the law.”

To enforce campaign finance rules, the Franchise Tax Board randomly audits campaign committees in 25 percent of Assembly and Senate districts every two years.

An audit is what snared Florez, the former state senator who paid a record $60,000 fine last fall after investigators found that Florez spent campaign money on personal expenses such as gasoline, parking passes, and purchases at Bed, Bath and Beyond and SiriusXM satellite radio.

A year later, The Bee’s review of credit-card charges found that other lawmakers spent about $500 on purchases at Bed, Bath and Beyond and about $1,300 for SiriusXM.

Jay Wierenga, an FPPC spokesman, said the agency believes the July 2008 regulation has improved disclosure. “Of course, with self-reporting comes a responsibility by candidate committees to know the regulation and follow it,” he said. “If we are ever made aware of a potential violation ... FPPC Enforcement will do its job and look into any questionable activity.”

Holes in disclosure

State Sen. Tom Berryhill, a veteran Central Valley lawmaker, reported more than $10,000 in credit-card charges for meetings at Chops, Ella Dining Room and Bar, Simon’s Bar and Cafe, and more than 20 other restaurants in three states and the District of Columbia. About $8,000 of the charges were for amounts of $100 or more, according to the Twain Harte Republican’s filings. None of the purchases included any description.

Berryhill’s campaign declined comment.

State Sen. Ricardo Lara, D-Bell Gardens, reported $138,000 in credit-card payments, among the most in the Legislature. Those included a June 19, 2013, charge of $1,716 for what was described as a meeting at Drai’s nightclub in Los Angeles, one of more than $8,000 Lara spent on meetings since January 2013 that lacked any description.

Lara spokesman Jesse Melgar said the Drai’s expense was actually a fundraiser, not a meeting as reported by the campaign, and so it didn’t require more detailed reporting. The campaign said other meeting expenses either fell below the July 2008 rule’s $100 threshold or were not meals as defined by the FPPC.

Former Assembly Speaker John A. Pérez’s Assembly 2012 campaign committee reported buying $11,000 in wine from a Yountville winery sometime during the first half of 2013. The purchases were described as “gifts of commemorative wine bottles for undetermined recipients.”

The bottles bore a special speaker’s label, which Pérez gave to colleagues, supporters and others. Their identities are unknown, though, because Pérez followed the rules. Each bottle of wine cost less than $50 – the threshold for listing gift recipients.

Sen. Darrell Steinberg, D-Sacramento, who was Senate president pro tem during the reporting period, had a different spending style. His campaign committees did not report any bulk gift purchases. His top category of spending was travel, totaling $27,000, and he reported the detail correctly. Steinberg described spending on gifts totaling about $300.

Spending levels vary

In one hotly contested Sacramento race, the two candidates took very different approaches to refreshments at meetings.

The campaign committee of Assemblyman Richard Pan, D-Sacramento, charged almost $17,000 at Ella Dining Room and Bar and other eateries for meetings and appearances. Several charges, ranging from $100 to $2,700, were described as “appetizers only,” indicating that the food and drinks did not constitute a meal under the FPPC definition. Pan’s campaign did not respond to questions about the spending.

Assemblyman Roger Dickinson, D-Sacramento, Pan’s opponent in the city’s 6th Senate District race, did not report any spending on meetings or appearances during the period The Bee examined.

The review also found that two lawmakers who haven’t faced a tough race in years spent tens of thousands of dollars on fine dining, travel and expensive fundraisers.

Assemblyman Isadore Hall, D-Compton, ran unopposed for re-election in 2012. Yet Hall’s campaign committees reported $219,000 in credit-card payments through June, second only to Republican Tim Donnelly, who ran for governor.

He made four sets of payments totaling almost $23,000 to Los Angeles’ Staples Center for expenses categorized as fundraisers. He paid almost $12,000 to the Fairmont hotel in Hawaii for what was classified as lodging during a November 2013 conference hosted by the Independent Voter Project. That was on top of $2,300 the group paid for Hall’s accommodations during the trip, according to the assemblyman’s most recent financial disclosure form.

Almost all of the $23,000 in itemized charges for what Hall described as meetings at venues such as The Cigar Lounge in West Hollywood and Parq Bar in Beverly Hills described who attended and the purpose. About a third were described as campaign strategy meetings, a quarter as meetings with potential donors, and about a fifth as meetings involving legislative staff or to talk about legislation.

Hall also paid $4,500 in June 2013 for a staff retreat at a 5,400-square-foot, seven-bedroom home in Indio that features an infinity pool and theater room. His campaigns charged $2,400 in cigar purchases and a pair of $100 iTunes purchases classified as campaign paraphernalia and office expenses.

Hall is the strong favorite in a December special election for Los Angeles County’s 35th Senate District. In a statement, Hall campaign spokesman Dave Jacobson said the assemblyman’s expenses are legitimate and fully disclosed. He pointed to activity he thought was more problematic: Various tax-exempt groups that provide international travel to some lawmakers and report few details about those trips.

“Assemblyman Hall has limited his travel, fundraising and legislative expenditures largely to his campaign committee,” he said.

State Sen. Ed Hernandez, D-West Covina, paid more than $116,000 to credit-card companies during the period. The Bee examined. Hernandez – who is running for re-election against a 19-year-old community college student who has raised so little money he doesn’t have to file a campaign report – charged more than $70,000 for fundraisers. The total included $20,305 at the luxury Cosmopolitian of Las Vegas in March and, in March the year before, $18,400 at Las Vegas’ Aria Resort and Casino.

The senator, an optometrist who studied at Indiana University, reported a $462 charge in March 2013 at the school’s bookstore, categorized as a fundraising cost. He also charged $358 at Apple.com for fundraising and $290 for a meeting at Vanguard, a nightclub near the Capitol that bills itself as “an escape for the stylish & sophisticated.”

Hernandez spokeswoman M. Janet Chin said the Las Vegas, Indiana University and Apple.com charges were for an annual fundraiser for the senator’s ballot-measure committee “that was established to bring better health care services to the residents of the San Gabriel Valley.” The 2013 fundraiser coincided with the NCAA basketball championship and every attendee received an Indiana University T-shirt, Chin said. The Apple.com purchase was a raffle prize, she said.

Chin said the nightclub charge “was for refreshments” – not a meal – “served during a meeting with his legislative staff.”

Call Jim Miller, Bee Capitol Bureau, (916) 326-5521. Follow him on Twitter @jimmiller2.

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