Politics & Government

Leland Yee’s campaign debt at root of criminal behavior, authorities allege

In more than a decade of campaigns for the California Legislature, San Francisco mayor and secretary of state, state Sen. Leland Yee raised in excess of $5 million. Yet it was a campaign debt only a fraction of that amount that federal officials allege pulled the veteran politician into a sprawling sting operation.

The 137-page FBI affidavit against Yee and more than 20 other defendants says the San Francisco Democrat’s focus on retiring a $70,000 campaign debt from his unsuccessful 2011 mayor’s race and raising money for his 2014 candidacy for secretary of state led him to accept bribes in return for official favors and arrange overseas weapons deals.

“We’re 32 out now. $32,000 out ... from paying off the debt,” the complaint says Yee told an undercover agent posing as an Atlanta-based businessman – who had already given more than $15,000 to the lawmaker – in the cafeteria of a state office building in San Francisco in September 2012. “So, um, if you could do another 10, that would be good.”

Yee’s fundraiser later told an FBI undercover agent that the senator was “blowing me up every day” with phone calls to push him to raise more money, according to the complaint.

Money is a never-ending concern of politicians facing campaign costs that run into the six and seven figures. State records showed that, since 2001, Yee has pulled in contributions from across the donor spectrum, ranging from labor unions and small businesses to tribes with casinos and major financial firms.

Last week’s federal complaint, though, alleges that Yee’s efforts went far beyond politicians’ normal routine of dialing for dollars and finger-food receptions. In return for campaign contributions, the complaint says Yee offered assistance with state contracts, legislative help in crafting California’s medical marijuana market, and even access to Yee’s “source of supply” for illegal weapons.

“Yeah, man, yeah, so you should just tell him to start getting us the money man, that’s all,” it quotes Yee as telling his fundraiser, after talking to an undercover agent posing as an East Coast member of an Italian organized crime syndicate.

Yee is described as well aware of the risks. As he walked with undercover agents to a Capitol-area meeting he had allegedly arranged for $10,000, Yee is quoted as saying, “I’m just trying to run for secretary of state. I hope I don’t get indicted.”

Yee, 65, has not entered a plea to charges of public corruption and conspiracy to deal weapons without a license and to import weapons illegally. Legal experts said public-corruption charges pose challenges for both sides.

Los Angeles attorney Stephen G. Larson represents a developer accused of bribing San Bernardino County supervisors and staff with campaign contributions to gain approval of a $102 million lawsuit settlement. The legal skirmishing continues several years later.

“For prosecutors the singular challenge is establishing criminal intent – proving that contributions are bribes and not protected speech, something far harder to do in a court of law than the court of public opinion,” said Larson, a former federal prosecutor. “For the defense, the biggest hurdle is overcoming the common intuition that there is something wrong about people financially interested in political outcomes contributing money to politicians.”

The debt from Yee’s failed mayor’s race is mentioned repeatedly in the federal complaint. Yee is said to have told undercover agents that he “could not get started on fundraising for the secretary of state election until he retired the $70,000 debt from the San Francisco mayoral campaign.”

No such rule exists. Debt from one campaign must be retired before a candidate can close that particular account. Yet politicians regularly leave defunct accounts open for years. There also is nothing to prevent someone from raising money for a future campaign while having debt on the books in a previous one.

In some cases, the debt reflects money that the candidate loaned the campaign. That debt usually winds up forgiven. Walking away from other debt, though, can poison a politician’s reputation and require up-front payments for future campaigns, said John Fronefield, a campaign treasurer with clients in the Sacramento area.

It’s also difficult for a losing candidate to raise money. “It’s very hard to make a case to a potential contributor that they should write a check to you to retire a debt. If you’ve already lost, there’s not a whole lot of open checkbooks,” Fronefield said.

The criminal complaint alleges that Yee performed a variety of actions to open checkbooks or, in some cases, receive cash payments.

In October 2012, Yee met an undercover agent posing as a businessman trying to help a client get a contract from the state Department of Public Health. The affidavit says Yee made a telephone call but refused to provide a letter of support until he received $10,000 toward retiring his mayoral debt.

“Yeah, well, you just tell (the agent) to just do it,” Yee said, referring to the desired donation. “There’s got to be some trust around here man, s---.”

Later, fundraising for the secretary of state’s race was underway. In May and July of 2013, the affidavit says, an undercover agent who had become a close associate of Raymond “Shrimp Boy” Chow gave $6,800 to Yee’s secretary of state campaign in return for a Senate proclamation commemorating the 165th anniversary of the San Francisco-based Chee Kung Tong. Chow led the community organization, which the affidavit says was engaged in criminal activities.

Yee, who was leery of Chow’s criminal history, sent an aide to present the proclamation. “He’s still hot stuff,” Yee is quoted as saying about Chow in a call recorded by authorities.

After the charges against Yee, some lawmakers have said it may be time to revamp the state’s campaign-finance system.

“It is legal, it is accepted, and it in fact is necessary for people running for office and for incumbents to raise money from interests and to later vote on measures that those interests have before the Legislature,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Friday. “Might this be a moment and a moment to once again discuss public financing of campaigns or other measures that remove the reality of the present system? I hope so.”

Other lawmakers questioned the impact of such changes.

Senate Republican Leader Bob Huff told reporters that raising money is another way for candidates to demonstrate they have the support of would-be constituents. “If the government’s paying for it, you don’t have the opportunity to go out and make your case,” he said.

Yee’s fundraising could help pay for his legal defense in the coming months.

His secretary of state account contained $134,000 as of March 17, but that doesn’t count $518,000 that Yee paid a media-buying company earlier this year to reserve TV and radio airtime for his now-defunct secretary of state candidacy. It remains unclear how much the campaign will get back.

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