The ethics of Ethics - Page 2

The ethics of Ethics: Campaign finance watchdog growls at a grassroots treasurer while cutting deals with professional handlers
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D, $800,000 of it in the final days of the race, which campaign attorney James Sutton, the treasurer of the utility's front group, San Franciscans Against the Blank Check, didn't report until nearly a month after election day, a violation of campaign finance laws. That act likely scored SFACE's opponents the win.

The Ethics Commission staff launched an investigation, and in 2004, Sutton's old law firm was fined $100,000 — the largest amount ever levied by the city for breaking election laws. The state Fair Political Practices Commission also slapped Sutton with $140,000 in fines for vioutf8g the Political Reform Act (see "Repeat Offender," 10/27/04).

At Knee's recent hearing, Lynn, who was once a finance officer for the Ethics Commission, pointed out she was being fined 14 times what Sutton was fined, and if the same formula had been applied, his fine would have been nearly $1.5 million. "You can't change the standards arbitrarily," Lynn cautioned the five commissioners. "You need to establish standards for these fines, and you need to keep them across the board."

According to the governing law, which mirrors state mandates at the FPPC, commissioners may levy a fine of up to $5,000 or three times the amount of the violation, whichever is greater. Knee's fine could be as much as $230,000, and Sutton's could have been $2.4 million — about the same amount that it costs to run the Ethics office for a year.

The Ethics Commission has never imposed the maximum fine, and executive director John St. Croix doesn't like to draw comparisons between campaigns. "They're like snowflakes, very different," he said.

A review of the past three years of enforcement history, posted on the commission's Web site, bears out this truth and shows fines ranging from a sliver to as much as half of the contested amount. In many cases, fines are dismissed completely for financial hardship reasons. The commission does not abide by a formula, fearing that would handicap it during negotiations, but a number of considerations are weighed, including the experience of the campaign treasurer, the appearance of intent, the overall outcome of the election, and a willingness to make right.

Eric Friedman, spokesperson for New York City's Campaign Finance Board, considered by many good-government activists to be the national gold standard for ethics groups, said its members use similar tactics for settlements, but "the structure that they follow is precedent. They've seen pretty much everything at this point." New York's board is about five years older than San Francisco's and audits all campaigns.

According to investigator Mo, the $26,700 in fines pointed at Knee was an "opening salvo" designed to inspire negotiations, which have not been smooth. Knee and her pro bono lawyer, David Waggoner, initially offered $500 to settle. Ethics continued to press for more, but Knee didn't flinch. "I don't think I should have to pay anything," she said, pointing out that Oliver Luby, the commission's current fines officer, recommended a complete waiver of all fines. St. Croix said Luby doesn't work in the enforcement division and doesn't know all the facts of the case. The current settlement offer from Ethics is $267, which Knee is willing to accept if the commissioners agree.

It's unclear how often such hardball is played. "Frankly, we took that settlement because that's what they were willing to pay," St. Croix said of the Sutton case. So too with a $17,000 fine imposed on Andrew Lee for a variety of campaign finance violations (see "Enforcing Equity," 5/2/07). St. Croix said that was what Lee was willing to pay on the spot.

"I'm not sure we could set a standard," said Commissioner Eileen Hansen, who thought both the Lee and the PG&E fines were too low and said if that's the bar, it should be raised.