Foes question firm's work for Steve Veres' City Council race

Competing campaigns in race to succeed City Councilman Tom LaBonge are questioning ethics

Los Angeles election law restricts how much campaign money a politician can receive from each donor. But the rules are more relaxed for independent expenditure committees: Those groups can support or oppose a candidate by raising and spending unlimited money as long as they don't coordinate their plans with the candidate and his or her campaign.

The two sides are barred from coordinating, in part, to keep political candidates from circumventing campaign finance restrictions by working directly with independent committees able to unleash unfettered spending. Now at least two of the competing campaigns in the race to succeed City Councilman Tom LaBonge are questioning whether those lines were blurred.

The reason: An Encino political communications firm sent out press releases for candidate Steve Veres at no cost and later went to work for an independent committee backing his election.

"It shocked me," said Parke Skelton, a consultant for rival candidate Wally Knox. "It's a line that, as a consultant, I wouldn't cross."

The juxtaposition of events has left ethics experts and political competitors questioning whether it provided a chance for the campaign to share information or strategies with the committee — the kind of coordination that is supposed to be barred.

"It just seems outrageous," Knox said. "Do they gain knowledge of the structure and strategies and outlook of the campaign — which they then carry into the independent committee?"

Another candidate in the race, Tomas O'Grady, said the spirit of the law was being violated.

"They may not be coordinating technically," O'Grady said. "But the whole thing smells."

The Veres campaign denies any coordination. California Common Cause Executive Director Kathay Feng said similar switches have happened in national races and appear to be "testing the bounds of what is considered to be independent."

"There are so many examples now of people finding the gray area that there is now a big push within the reform community to tighten up and clarify what 'coordination' means," Feng said.

If someone goes from helping a campaign to working on a committee backing the same candidate, she said, "that looks like coordination to the average American. But the law isn't clear about it."

Shallman Communications was listed as the contact on a string of press releases for the Veres campaign starting in September 2013, when the community college trustee announced his candidacy. It continued to send out press releases for months after, promoting many of his early endorsements.

But the campaign never reported any payments to the firm or to Dave Jacobson, the Shallman employee listed on the press releases. The Veres campaign says the media consultants were volunteering their time, distributing material that Veres had written.

"Steve was very heavily pursued by a lot of consultants in town," said Brian VanRiper, Veres' press secretary. "They were helping out in a volunteer capacity."

VanRiper said the volunteering continued through July of last year. Roughly six months later, the same firm started running the media campaign for an independent committee that formed to support Veres — a group called Safe Neighborhoods & Better Schools for Steve Veres.

Both state and city guidelines anticipated that such associations could lead to coordination: A state manual says spending is "presumed to be coordinated" if the spender "retains the services of a person who provides the candidate with professional services related to campaign or fundraising strategy for that same election."

L.A.'s campaign finance ordinance also says there is a "rebuttable presumption" that such spending is coordinated if the spender and the candidate retain the same person or entity to provide campaign services in the same election cycle.

But even if that occurs, such campaigns can rebut the idea that they are coordinating, the Veres campaign said.

Stephen Kaufman, an attorney for the Veres campaign, said the state and local rules do not strictly prohibit someone who provides services to a candidate from working on an independent committee to support him or her "as long as the communications distributed by that person are not coordinated with the candidate."

"In this case, no one from the Veres campaign communicated with or shared any information with Shallman Communications regarding any independent expenditure communications," Kaufman wrote Friday in response to questions from The Times. "Therefore, there has been no coordination."

Shallman Communications spokesman Jacobson, whose name was listed on the campaign press releases, said that Veres was not the firm's client and that the firm had no campaign-related communication with Veres since last summer, months before the independent committee was formed.

"We volunteered to assist Steve with some initial start-up tasks — including a few press releases — when he began his campaign," Jacobson wrote in response to questions from The Times. "The time spent on these tasks was negligible, and all nominal out of pocket expenses were paid for by the Veres campaign."

State guidelines issued by the Fair Political Practices Commission say an individual who donates personal or professional services to a campaign is not making a contribution, but if an employer donates the services of its employees — and any worker spends more than 10% of his or her paid time in a month on campaign activities — the employer has made a contribution.

When asked to clarify if the firm was volunteering or its employees were doing so as individuals, VanRiper said he wasn't sure and Jacobson did not address that specific question.

Skelton, the consultant working for Knox, said it didn't matter if Shallman or its employees were volunteering. "You're not supposed to be privy to the internal strategies of the campaign," he said. "If you've been a part of that process, you've disqualified yourself to be working on the [independent committee] for the same candidate."

The situation "raises some questions whether or not it was truly an independent expenditure," said Robert Stern, former president of the now-closed Center for Governmental Studies in Los Angeles.

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