Landlord-backed group fined for campaign violations

The FCPC commissioners review their papers before a meeting. From left: Brad Smith, Jennifer Lombardi, Patrick O'Donnell, and Anna De Leon. Photo: Frances Dinkelspiel

The FCPC commissioners review their papers before a meeting. From left: Brad Smith, Jennifer Lombardi, Patrick O’Donnell, and Anna De Leon. Photo: Frances Dinkelspiel

The Fair Campaign Practices Commission on Thursday levied its second heaviest fine in 20 years on a landlord-backed group that spent more than $42,500 during the 2012 election.

The FCPC approved a stipulation agreement worked out between city staff and the people behind a Slate Mailer Organization that sent out five campaign mailers in support of the TUFF (Tenants United for Fairness) Rent Board slate.

The FCPC determined that the Slate Mailer Organization (SMO), its treasurer Rita Copeland, James Jay, an officer and rent board candidate, two of its donors, and Sid Lakireddy, the president of Berkeley Property Owners’ Association, violated Berkeley’s Election Reform Act in the way they administered the SMO and distributed its funds.

The FCPC also determined in another stipulation agreement that the four candidates running on the TUFF slate had violated Berkeley’s election laws by failing to file campaign spending reports on the in-kind support they had gotten from the mailers. Incumbent Nicole Drake (who was defeated) agreed to pay $300 in fines, as did two other defeated candidates, Kiran Shenoy and James. Judy Hunt, who won election to the Rent Stabilization Board, agreed to pay $20 in fines. Her fine was less because she amended her campaign reports two days after she realized she had violated the law. That was before the election. The others only did so a few weeks later.

All the parties also pledged to do a better job complying with the law in the future.

The vote to accept the stipulations came after more than an hour and a half of public testimony and commissioner discussion about whether the fines were proportional to the transgressions. Many speakers felt that the $4,000 fine was too small.

“It doesn’t seem to me the amount of the penalties are commensurate with the amount of money raised,” said Linda Franklin. “I don’t think this was a mistake or a misunderstanding. I think this was a conscientious effort to subvert the laws we all have to comply with. A message needs to be sent that this is not okay.”

At least three of the commissioners, all appointed by City Council members who are seen as more pro-tenant than pro-landlord,  agreed with this assessment. Anna De Leon, a Jesse Arreguin appointee who took her seat for the first time on Thursday, introduced a number of substitute motions that were defeated. She first suggested that the stipulations be rejected. Then she suggested that the FCPC hold a hearing to learn more about the matter. While two commissioners – Al Murray and Spencer Pritchard  (appointed by Max Anderson and Kriss Worthington) — supported her efforts, the motions did not pass.

“We’re talking about $50,000 raised by mega-landlords skirting the law,” said De Leon. … “The fines imposed should be reflective of that amount.”

The FCPC did vote to approve one of her motions: to delete a paragraph in the stipulation that absolved the SMO group of malice. It read: “Staff has not found evidence of any intent on the part of Respondents to deceive or mislead the public.”

Patrick O’Donnell, the chair of the commission and a Laurie Capitelli appointee, reminded the crowd that the FCPC had only been given the authority last year to assess fines on violations of campaign law, but they are only allowed to assess $1,000 per violation. While the fines may seem modest, they are the second highest amount levied in 20 years, he said. The last time the FCPC levied fines was in the 1990s when it and the state fined Don Jelinek more than $5,000, he said.

Commissioner Jennifer Lombardi said in response to De Leon’s remarks that the FCPC had voted in previous meetings – before De Leon took office – not to hold hearings on the violations but to try and reach a negotiated settlement. The FCPC has appointed a subcommittee to examine the laws surrounding SMOs, she said. Lombardi, who was appointed by Susan Wengraf, also said that the matter has been referred to the state, which has much more jurisdiction over SMOs than Berkeley does.

“I don’t believe this is going to end in this room,” said Lombardi. “I believe it has legs beyond us.”

Commissioner Brad Smith said he thought the SMO had made mistakes, but not intentionally.

“I think the people involved in this are not as evil as they are being characterized,” said Smith, who was appointed by Gordon Wozniak. “They thought – I believe – they were operating within the laws. They thought they had gotten expert opinion. The people were doing the best they could. They took advantage of a tremendous hole in the system that needs to be changed. Our commission should spend its time on how to block that hole in Berkeley.”

The SMO and the four Rent Stabilization Candidates will pay their fines into Berkeley’s general fund.

The violations all centered on state and local laws regulating Slate Mailer

One of the mailers sent out by the Tenants United For Fairness slate mailer organization during the 2012 election.

One of the mailers sent out by the Tenants United For Fairness slate mailer organization during the 2012 election.

Organizations. SMOs are unusual organizations. They are often for-profit companies that solicit funds to place candidates on targeted mailers. They cannot be controlled by any candidate, party committee, or committee formed specifically to support or oppose a candidate or measure. Any mailing done by an SMO is not considered a direct donation to a candidate, but an in-kind donation that must be listed on a candidate’s campaign spending form.

The SMO supporting the TUFF slate was formed Oct. 5, 2012 to collect funds to send out mailers in opposition to Measure U (a proposed open-government ordinance) and in support of Drake, Hunt, James, and Shenoy, who were perceived to be more landlord friendly then their opponents.

Lakireddy was one of the driving forces behind the fundraising, according to a staff report, although the SMO did not list him as one of its officers and should have. He helped the SMO raise $45,520 to finance five mailers. The East Bay Rental Housing Association Political Action Committee donated $31,000, Diablo Holdings, an Alamo property management company run by John Lineweaver, donated $5,000, and Premium Property Development and Management donated $1,000. Ellis Street Properties, Stuart Street Properties, and Lower Carleton Properties also donated smaller amounts as did some individuals. According to state law, those donations must be allocated to a specific cause, like a mailer.

However, a staff investigation into the SMO, started after Planning Commissioner Patti Dacey filed a complaint in October, determined that $6,000 donated by Diablo Holdings and Premium Property was not allocated to anything specific. When that happened, according to a staff report, the SMO was instantly “converted” into a campaign committee. While the state has jurisdiction over SMOs, Berkeley has jurisdiction over local election committees. Consequently, the SMO should have filed campaign contribution reports, which it did not, according to the staff report. That was a violation of the law.

If Diablo Holdings and Premium Property had allocated the funds and directed them to go to the mailer, however, no laws would have been broken, according to the staff report.

In addition,  when Ellis Street Properties, Stuart Street Properties, and Lower Carleton properties made donations to the SMO, they indicated they wanted those funds to go directly to the candidates, not to the mailer. Berkeley election law prohibits businesses from donating to candidates. The SMO refunded $1,440 to those businesses in November.

The four TUFF candidates collectively received in-kind donations of $6,980 from the SMO but all failed to report those donations on their campaign contribution forms covering from July to October 2012, according to the staff report.  The attorney for the SMO informed the four candidates on Oct 30 that they had to report the contributions. Hunt filed an amended campaign report on Nov. 5, before the election. The other three candidates reported the donations after the election.

The FCPC also voted on a stipulation agreement worked out between the city and the committee, Stand Up for the Right to Sit Down. The group worked successfully to defeat Measure S, which would have made it illegal to sit on the sidewalk in commercial districts from 7 a.m. to 10 p.m.

The committee failed to report a number of late donations made for more than $100, according to a staff report.

The fines amounted to $700, but city staff reduced the amount to $500 in the stipulaton, according to Assistant City Attorney Kristy van Herick.

Commissioner De Leon echoed the feeling of many of the speakers from the audience who felt the fine was too steep, especially compared with the the fine levied against the TUFF group. The commission agreed and voted unanimously to reduce the fine to $50.

Read a draft of the stipulation agreements.

Related:
Commission to consider alleged campaign violations [12.13.12]
Late money flows into Berkeley election campaigns [11.02.12]
Rent Board candidate accuses Capitelli aide of trespassing [11.06.12]

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  • The_Sharkey

    Will any fines be levied in regards to the rampant and systematic destruction, defacement and removal of campaign signs during the last election?

    http://www.berkeleyside.com/2012/10/24/destruction-of-political-campaign-signs-is-rampant-in-berkeley/

  • AnthonySanchez

    Who would they be levied against?

  • AnthonySanchez

    Who would the fines be levied against?

  • Tizzielish

    And I venture to guess that the Fair Campaign Practices Commission lacks jurisdiction. Their jurisdiction appears to be limited to financial campaign behavior. Vandalism is beyond the scope of their work, I suspect (but don’t know for sure).

  • The_Sharkey

    Perhaps the individuals who were doing the destruction? I believe at least one individual associated with Kriss Worthington was caught trashing signs in the lead-up to the last election.

  • The_Sharkey

    Most likely correct. Vandalism probably falls under the purview of BPD.

  • AnthonySanchez

    That individual, who I know, is a very troubled person dealing with mental illness. She was also involved with many campaigns that year -and by involved, she would hang around campaign offices and take signs to post without authorization (she did the same for our campaign in 2010, putting out signs in medians when we told her that that was not permitted and would get us in trouble). She’s a rogue element in the truest sense.

    She currently lives in a shelter in downtown.

  • The_Sharkey

    I don’t mean to suggest that Worthington knew about or should be held responsible for her actions. Just that she was positively identified and as such should be held accountable for vandalism, as should anyone else who was identified destroying or defacing signs.

    Considering how many defaced Measure T signs were all around the medians in Berkeley, I assume the person responsible must have been identified at some point.

  • Rob Wrenn

    What’s missing in this discussion is the fact that the East Bay Rental Housing PAC was able to give $31,000, an amount that greatly exceeds the $250 campaign contribution limit for contributions to candidates. They were able to do so by ostensibly giving the money to oppose Measure U. But anyone who has seen the mailers that were paid for with the PAC’s money will see that over 80% of the space in the mailer was given to candidate’s on the landlord-backed rent board slate. Measure U got minimal space.

    Basically SMOs allow the $250 campaign contribution limit to be circumvented. Any special interest like the East Bay Rental Housing PAC that wants to back candidates with donations exceeding $250 need only find a ballot measure to support or oppose. An SMO can be set up to support selected candidates for any city office and to oppose any selected ballot measure, including one that is not even controversial. Token amounts of mailer space can be given to the measure, and the lion’s share of space can go to backing the candidates This tactic could be used in council and school board races as well as in rent board races.

    In the history of rent board elections, there has never been a slate of candidates as dependent on landlord contributions as the TUFF slate. Of course the TUFF slate did not advertise their landlord backing, but instead tried to sell themselves as a pro-tenant slate. With rents at sky-high levels in Berkeley, the average voter is not particularly disposed to vote for landlord-backed and -financed candidates.

  • AnthonySanchez

    Honestly, it is very hard to identify culprits, and if they are, it is hard to prove which signs were destroyed by that person, etc.

    In fact, the photo of the aforementioned person only has her removing signs from the median, which are illegally placed to begin with. No destruction (however likely) can be proven without further evidence.

    All this combines to make enforcement of not worth it, unless a motivated person can help provide ample evidence identifying the culprit and destruction at their hands.

    Personally, to avoid this inevitable hullabaloo every campaign, I am keeping tight control of signs and that people requesting more than 1 sign must sign them out and pledge that they will take responsibility of those signs -meaning they cannot be illegally posted anywhere).

    As for people destroying signs, I don’t know what else one can practically do except for having both campaigns come out in the beginning with an agreement to condemn all sign destruction and urge the public to be civil. There’s no way to prevent it, and I am open to suggestions so our next campaign cannot be accused of any of these distractions (I imagine a replication of the hyper reporting for partisan gain, since it worked well in 2012).

  • The_Sharkey

    Seems like a lot of hullabaloo about nothing, given how poorly TUFF did at the polls.
    If the result of the campaign finances mean that people like the Lakireddy’s lose a lot of money and fail to have any influence, that doesn’t seem so bad to me.

  • The_Sharkey

    campaign finances = campaign finance violations

  • Charles_Siegel

    In this case, yes. But there might be a future election where two candidates are close and where this loophole is decisive, because it allows one candidate’s supporters to circumvent the limit on donations.

  • The_Sharkey

    Good comments, Anthony, though I was under the impression that signs on the median were legal? If not I would have been out there removing them from the medians near my house since I hate the visual clutter of election season.

    It’s ridiculous that so many people involved in Berkeley’s politics are so willing to be deceptive and destructive in order to get their way, but with cases of petty vandalism like we saw in the last election there’s not much that can be done.

    Maybe one of the local news outlets (or Stanley Roberts?) could be convinced to do a sting operation as a news story where they set up a hidden camera and try to catch people in the act of vandalizing campaign signs.

  • Frances Dinkelspiel

    Rob,
    The way the funds from the East Bay Rental Housing PAC were applied to the mailers was completely legal, according to the FCPC staff attorney. Essentially the SMO law only required a small amount of the mailer to be devoted to Measure U so it was legal to devote a larger proportion to the TUFF slate. The $250 limit imposed by Berkeley is not applicable here,
    But these are laws drawn up and overseen by the state of California, not the city of Berkeley. That is why some of the commissioners want to focus on trying to change the law and getting the state to look at what happened in this election rather that spend a lot of time trying to get the SMO group to pay higher fines.

    If you click on the links at the bottom of the story you will find early Berkeleyside stories that talk about how this much money flowing into the Rent Board election was unprecedented.

  • guest

    Isn’t it a bit hypocritical of you to keep harping about sign vandalism, which you falsely and incessantly used to tar “Worthington supporters” generally during the election, while on the other hand telling Rob Wrenn that campaign financing and mailer fraud in service of anti-renter candidates is “a lot of hullabaloo about nothing”?

    “It’s ridiculous that so many people involved in Berkeley’s politics are
    so willing to be deceptive and destructive in order to get their way,”

    Yes, it is.

  • AnthonySanchez

    I’m for that. Excuse my language, but I hate these assholes who do it -they end up hurting the campaign/candidate they may support, especially when you have one side that is media savvy to take pictures and report it for their own gain, even though it cuts both ways (this was used to great effect by Laurie’s campaign -all the reporters were politically active allies). It’s juvenile and a complete waste of time as far as a campaign goes.

    Anyhow, campaign signs cannot be placed in medians/divisional islands. The City, again, doesn’t really enforce because it is not practical. They do, however, send letters to the campaigns upon complaint saying, “hey, you can’t do that. Don’t do it again.”

    Hmmmmm, actually this actually should be looked at to see how we can make campaigns more accountable for the signs that go out. I personally hate signs in the median, too. It’s a visual blight.

  • Rob Wrenn

    I didn’t say it was illegal, only that it allows special interest groups like the BPOA and its president Sid Lakireddy to get around local election laws. Of course, state laws are more permissive; no surprise there.

    The TUFF slate was so sloppy that there were some serious violations of local laws and your story quotes the commission chair as saying that they are getting fined the second highest fine ever in Berkeley.

    As far as impacts on future elections is concerned, the real news is that real estate interests have found a way to put large chunks money into races for local office. The TUFF SMO is so tainted by the scandal that we may not hear more from them, but new SMOs with the same special interest backers could easily be formed. I wouldn’t hold out much hope that state law will be changed to grant cities more power to curb these practices.

  • The_Sharkey

    “Hypocritical” — I don’t think that word means what you think it does.

    Based on the results of the elections, the defacement and destruction of signs relating to ballot measures that Bates supported (most of which were defeated) seems to have had a more significant impact than the Lakireddy’s and other landlords throwing money behind candidates who weren’t able to get elected even with massive financial support.

  • The_Sharkey

    If it’s really in violation of local ordinance, couldn’t the city just send out Public Works employees to clear the median once a week or something?

    I can see why trying to track down and punish the people putting up the signs would be futile, but if they were consistently removed rather than just ignored by the city, people might be less likely to stick them up where they shouldn’t be.

  • AnthonySanchez

    That’s expending valuable city resources from a staffing perspective -at least that’s the response I’d imagine from the City.

  • The_Sharkey

    Perhaps this situation calls for a grassroots volunteer-based city beautification organization. :-)

  • AnthonySanchez

    That’s one way to put it. I just came up with a spitball idea that may be worth thinking about: a large swath of people/groups coming together before the election season for a press conference calling on campaigns to not place their signs in the medians -maybe even get campaigns to make a pledge.

    Hell, it’s anti-environmental, maybe the Sierra Club may jump on board.

    We could use the stick approach, but I like the possibility of casting public shame on campaigns that violate this community standard.

  • EBGuy

    And speaking of unlimited PAC funds, I was disturbed by the amount of money independent expenditure committees dumped into the District 5 race. Sophie Hahn got almost $4k of support from the firefighters and real estate interests spent over $19k for Laurie Capitelli . As a footnote, the same real estate independent expenditure committee spent over $18k to help get Darryl Moore reelected.
    And as a dishonorable mention, let’s not forget Jesse “my independent expenditure committee isn’t evil” Arreguin.

  • Tizzielish

    The low fines sorta kinda give the impression that stealing democracy by spending money illegally in elections is cheaper than following the law.

  • Tizzielish

    I don’t consider petty sign vandalism anywhere near as serious as the financial chicanery the landlord coalition used that resulted in this pitifully puny fines. The sign vandalism is wrong, I totally agree, but using money to try to control elections is far more dangerous to a community. Vandalism kinda is part of being a community. Trying to illegally influence elections is much more troubling to me.

    Does anyone think campaign signs influence voting? I sure don’t, which is why I have never had any in my yard (when I had one).

  • Tizzielish

    Geez, if you want to persuade me to your point of view, Bates is hardly the person to refer to — I’ll never forget he stole those newspapers that came out endorsing his opponent and I will never defend any attempts to subvert his agenda.

    Do you seriously believe signs impact who votes for whom?

    Did you see the campaign literature Lakireddy’s gang sent out? It was so blatantly biased and illegal — all I see when I see campaign signs is noise. I don’t notice who the signs are for. Unless they are prominently displayed on a private lawn and even then I only noticed when it was a neighbor’s sign.

    Signs on public posts? It’s just white noise to me.

    Campaign mailings deceptively pushing a landlord agenda? I notice that and many people do and many people don’t realize they are being hosed with manipulation as they read them.

  • The_Sharkey

    Do I seriously believe signs impact who votes for whom?
    Considering what a large percentage of voters are low-information and the herd mentality that makes low-information voters want to vote for whatever they think is the most popular, yes.

    If you want to talk about deceptive campaigns, the No On Measure S campaign had much better luck deceiving voters than the Lakireddy gang did.

  • The_Sharkey

    “Vandalism kinda is part of being a community.”

    W… what?

  • Albanyan

    Were you even living in Berkeley at the time? If you weren’t, you might consider the source of your information.

  • southberkeleyres

    It’s not just the landlord group, not by any means.

    Don’t steal our signs, Alejandro. Don’t lie about stealing our signs, Alejandro. Don’t send your thug friends to try to intimidate the person who called you out on your BS Alejandro. Don’t run and hide when you see truth coming for Alejandro, Kriss. All you All you All you dirty politicos
    . If people only knew.

  • scot

    Brad Smith is right. It’s not as EVIL as it looks. It is more EVIL then it looks.
    Lakireddi? how long are we going to put up with these criminals? I’d like to know what these same folks donated to Wozniak and the other Republicans on the Council.

  • guest

    No, the fines reflect the commission’s view of the seriousness of the offences. If you choose to tizzify that in to “stealing democracy”, well it’s your tizzy.

  • scot

    Funny you should mention this Shirkey since the “Measure S” led a campaign of lies and hired homeless people that were told they were working for the Obama campaign, used flyers they falsely claimed were from the democratic party (And are still in hot water over that.) And spent thousands in unreported funds (in $100 dollar bills handed out by John Caner himself to hire unsuspecting poor people to hand out flyers at polling places.)The only thing that swung it in the direction of protecting people’s civil rights was that their lies were so blatant, and spokespeople so butt ugly, no one with any sense would believe that crap.

  • brandy

    Sharky,you are Berkeley’s, Albany’s, Biggest idiot.

  • The_Sharkey

    Nah. Posters who contribute nothing but pathetic personal attacks to the conversation are clearly higher on the Idiot Scale that lil’ old me.

    The moderators have been fairly active lately – let’s see how long it takes the mods to delete your clearly TOS-violating comment.

  • The_Sharkey

    Wow, got any proof of any of your wild and, frankly, unbelievable accusation, Scot/Brandy?

    I don’t think I saw the flyer you’re referring to, but the one Measure S related lie we do know most Berkeley residents were exposed to was that hideously deceptive mailer the No On S campaign put out that made several false claims.

  • The_Sharkey

    There aren’t any Republicans on the City Council, Scot/Brandy.

  • guest

    The Lakireddy’s used their properties for an on going criminal enterprise. They should have lost all their property through the RICO law.

  • The_Sharkey

    14+ hours…

    I guess maybe personal attacks don’t violate the Terms of Service any more?

  • guest

    You and a handful of others pretty created the tone around here, Sharkey.

  • The_Sharkey

    Tone is one thing.
    Direct personal attacks, however, are supposedly still against the rules and I’ve had comments deleted in the past for stepping too far over the line.

    The moderation here is getting increasingly inconsistent. Bringing up certain topics or individuals that don’t violate the established commenting rules will get comments deleted, while posts that are obvious rule violations stay up for days, or even indefinitely.
    I wonder if some changes are brewing behind the scenes…

  • Charles_Siegel

    As I understood Rob’s comment, he said:
    –it is legal.
    –that is a dangerous loophole in the law.

  • Kid Shattuck

    Why are you still anticipating getting arrested SNarkey?

  • Durelle Ali

    Great response!