Update: California agency rejects GOP complaint about Gavin Newsom’s home, says he followed law

California’s campaign finance watchdog agency swiftly rejected a complaint from the state’s Republican Party on Thursday, saying Gov. Gavin Newsom had properly disclosed information related to his home in Fair Oaks.

The California GOP had filed a campaign finance complaint that morning alleging Newsom failed to report important details regarding his $3.7 million Fair Oaks mansion in campaign filings.

The Fair Political Practices Commission issued a letter Thursday afternoon dismissing the complaint and saying the governor had followed the law, according to a copy of the letter provided by Newsom’s campaign. The FPPC also provided a copy of the letter to The Bee.

In the letter, Christopher Burton, assistant chief of the commission’s enforcement division, referred to a decision the FPPC reached last month following an investigation into a similar complaint filed anonymously.

The commission “determined that the subject real property transactions did not give rise to any reportable interests.”

“Because the allegations have been disproven, we are closing this matter without further action,” Burton wrote in the letter.

Allegations that Newsom had failed to properly disclose the home first arose in a conservative blog post last year. In response, Newsom spokesman Nathan Click told The Bee that Newsom and his wife were the only members of the LLC that owns the home and that Newsom didn’t need to disclose it on his statement of economic interest because elected officials are not required to report their residence on that form.

When the Newsoms first bought their home, they were in the process of moving their family to Sacramento so the governor-elect could take office, Click said.

“The transaction moved very quickly and did not allow for the normal period to secure a mortgage,” Click wrote in an email. “As a result, funds to purchase the home were advanced by an immediate relative of the Newsoms with the understanding they would apply for a mortgage and repay the funds.”

The Newsoms later started the mortgage process and transferred the title of the property from the LLC to themselves and repaid the family member who had given them the original money to buy the house, Click said.

Why FPPC closed complaint into Gavin Newsom’s home

In his letter, Burton of the FPPC wrote that the money the Newsoms used to purchase the property didn’t constitute a gift or income that the governor needed to report because the money came from close family members.

“Our investigation found that all payments related to the purchase of the subject property emanated from either Newsom himself or an exempted family member; therefore, the payments did not give rise to any reportable gift or income interests,” Burton wrote.

In December of 2018, an LLC managed by Newsom’s cousin Jeremy Scherer purchased the Fair Oaks property.

The Newsom family moved in around May 2019, the Republican Party’s complaint says, and in October the LLC gifted the estate to the governor “free and clear,” claiming Newsom had an ownership interest in the company and therefore was able to avoid the property transfer tax. Scherer is a co-president of PlumpJack, the hospitality company Newsom founded.

California GOP’s argument

Under the California Fair Political Practices Commission rules, government officials must disclose business interests when they own 10% or more of a company on a statement of economic interests.

“However, Governor Newsom has never reported an ownership interest in the LLC or Fair Oaks property, either directly or by way of a trust,” the GOP wrote in its complaint. “Had his ownership interst been held in a blind trust, he would have known of the ownership interest no later than 2019 and should have amended his Form 700 filing.”

Assuming Newsom held ownership in the LLC that purchased the home, he would have had to disclose it in campaign filings, the party argues. If Newsom does not hold ownership in the LLC, then he failed to report a $3.7 million gift from a business entity, the party said.

“Gavin Newsom knowingly and willfully violated reporting requirements, hiding relevant information from the public, which reveals both his incompetence and arrogance,” said California Republican Party Chairwoman Jessica Millan Patterson in a statement.

“He has been filing Form 700s for decades, so the only logical conclusion is that he didn’t want the public to know about his $3.7 million Sacramento mansion.”

This story was originally published August 26, 2021 at 9:44 AM.