The City Council will debate whether to pursue legislation that would give the state’s campaign finance watchdog power to enforce local election rules after the Huntley Hotel managed to funnel nearly $100,000 in illegal contributions without local detection. After a two year secret investigation, the Fair Political Practices Commission (FPPC) hit the hotel with $310,000 in fines in August 2017, stunning local officials who learned about the settlement only after it went public.
The FPPC investigation into the hotel’s campaign finance violations in 2012 and 2014 operated completely under the radar of city officials, according to a new report by the City Attorney’s Office. By the time the FPPC announced the penalties against the Huntley, the statute of limitations had run out on the city’s chance to prosecute local violations. The investigation found the Huntley illegally channeled $97,000 in donations through employees and businesses to several current City Council members, including Mayor Ted Winterer, Mayor Pro-tempore Gleam Davis, and Terry O’Day.
“Here, the FPPC may not have alerted local authorities based on a determination that a simultaneous local investigation would undermine its efforts,” said the report. “The FPPC may have determined that local interests would be vindicated by the substantial fines imposed and public attention paid to its ultimate findings and penalties.”
In November, the City Council asked city staff to review the case in order to see whether a special counsel should look into Santa Monica’s enforcement of its own laws. The FPPC is still investigating complaints against former City Council candidate Armen Melkonians and the Yes on Measure LV campaign.
Local election code prohibits any person from contributing more than $340 to a candidate or controlled committee of a candidate. It also requires committees raising funds to support or oppose an initiative or referendum to file financial disclosure documents with the City Clerk.
Other local jurisdictions have run into issues enforcing their own campaign finance laws because of the inherent conflict of interest between a city attorney’s office and elected officials. In Santa Monica, the Clerk is responsible for reporting local violations to the Criminal Division of the City Attorney’s Office who then determines whether they or the Los Angeles County District Attorney should investigate, depending on the potential for conflict-of-interest concerns.
Three local jurisdictions including San Bernardino County, Stockton, and Sacramento have authorized the FPPC to act as the civil prosecutor to enforce their local ordinances. The jurisdictions reimburse the cost of those investigations. Sacramento decided to outsource enforcement as part of a plan to save money and increase oversight last year since the FPPC already specializes in campaign investigations.
The Council could also decide to support legislation that would allow any local entity to contract with the FPPC.
“Such legislation has been previously introduced in the Assembly and Senate but has not passed,” the report said. “No such bill is currently pending.”
As a final option, the Council could formally send a request to the FPPC asking them to communicate and coordinate with local agencies in sufficient time to allow for local prosecution.
Earlier this month, the FPPC reported a record year of enforcement with 340 cases with proven violations generating over $1.1 million in fines. The agency’s annual report touted the Huntley case, which uncovered a scheme where employees and friends made contributions to various slow growth candidates with the promise of being reimbursed. California state law prohibits making contributions in the name of another person.
The Huntley investigation resulted from a data review rather than a complaint or tip. The enforcement division used a spreadsheet do identify patterns in the flow of funds, such as multiple contributions from the same employer or address or from a group of unemployed individuals.