State Sen. Tony Mendoza (D-Artesia) violated state disclosure requirements when he "significantly underreported" the money he received in a bailout of his temporary home in Sacramento, the state ethics agency concluded Monday.
Mendoza reported gross income from the sale of the house of up to $140,000 on his annual disclosure of personal finances, when an investigation by the state concluded that he actually received $448,000 from the sale.
However, an attorney for the state Fair Political Practices Commission issued a warning letter to Mendoza on Monday rather than seek fines, saying the lawmaker did not try to keep the transaction from public disclosure. Mendoza still lives in the home.
The probe was launched in response to a citizen's complaint that Mendoza may have received an improper gift. An investigation found that Mendoza did not violate the gift provisions of the state Political Reform Act.
"But our investigation did show that Mr. Mendoza significantly underreported the dollar amount of those payments he received from the sale of the property in violation of the act," wrote Dave Bainbridge, a senior commission counsel.
In a statement Monday, Mendoza said: "I am pleased that the FPPC has closed its case against me after a thorough investigation. I have always complied with the spirit and letter of the law and will continue to do so as required of all public officials."
Many state legislators rent apartments in Sacramento to stay in when they are there on business, but Mendoza decided to buy a house where he and other lawmakers, including current Senate President Pro Tem Kevin de Leon (D-Los Angeles), have stayed over the years.
When the real estate market crashed, Mendoza ended up owing more for the house than it was worth, and in 2009 he "began having trouble making the mortgage payments," the FPPC report said. Some people agreed to buy out his interest in the house, including longtime campaign contributor Cecy Groom, who is also his accountant, as well as Beatriz Ricarti, a Los Angeles businesswoman, and Michelle Groom, who is Groom's daughter, and Covina physician Shura Moreno.
Mendoza later filed an annual disclosure report indicating he received gross income of up to $100,000 from Moreno and up to $10,000 each from Michelle Groom and Ricarti. He later reported income of up to $10,000 each from Cecy Groom and Moreno.
Although the supporters paid significantly more than the property was worth, the investigation concluded the deal was legitimate.
However, Bainbridge said Mendoza received significantly more given that the others agreed to assume mortgage debt of $418,000 as part of the purchase agreement. Still, the agency decided a warning letter was warranted.
"While Mr. Mendoza underreported the amount of income he received from the sale of the property, he did disclose the sale and the identity of the purchasers," Bainbridge wrote. "This significantly reduces the harm caused by the violation because it provides the public with significant, although not complete, information about the transaction."