U.S. May Audit Shelley’s Use of Election Funds

A federal agency threatened Wednesday to conduct a full-scale audit to see how Secretary of State Kevin Shelley spent millions of dollars in election funds and whether any were used for partisan purposes.

DeForest Soaries Jr., chairman of the U.S. Election Assistance Commission, said he sent a letter to Shelley on Tuesday asking that he explain what effect the controversy surrounding California’s use of Help America Vote Act funds would have on the ability of counties to conduct a smooth presidential election.

“We want some facts,” Soaries said in a telephone interview. “In the short term, we want to know the impact on local jurisdictions to prepare the Nov. 2 election in five weeks. I don’t want for election officials to say on Nov. 3 that we had problems ... because money was tied up because of the controversy.”

The federal scrutiny is the latest blow to Shelley, whose campaign finances are being probed by federal and state authorities. The news came as records released by Shelley’s office showed that employees he hired with voting act money attended Democratic fundraisers and other partisan functions -- and submitted reports about the events.

A spokesman for Shelley said his office would cooperate with federal officials and said Shelley plans to hire a statewide coordinator to oversee the program.

The Schwarzenegger administration recently froze million of dollars in election funds amid published reports that some of the contractors hired by Shelley had political ties to him. Most of the $17 million was later released. But Shelley on Sept. 10 asked for authorization to spend $25 million more that he said was critical to the November election and the timely implementation of voting reforms.

Soaries noted that the federal money is designed to help ensure that California voters know how to use unfamiliar voting machines and provisional ballots and can find new polling places.

Contracts released by Shelley’s office showed that some of the dozens of businesses and individuals who received $6.4 million for administration and voter outreach had ties to Shelley and fellow Democrats. One was a law firm that included his campaign treasurer. Other pacts went to Los Angeles County Supervisor Zev Yaroslavsky’s son, David, for encouraging college students to vote, and former San Francisco Mayor Willie Brown’s former press secretary won a contract for public relations work.

A new set of documents released this week showed that contractors spent dozens of hours at events with little or no apparent connection to voter participation. Among them: a fundraising event for Democratic presidential nominee Sen. John F. Kerry, a fundraiser for Democratic lawmakers, and a meeting of the California delegation to the 2004 Democratic National Convention, where Shelley’s position as a delegate for Kerry was secured.

At one such event, sponsored by Platinum Advisers, a lobbying firm owned by a Democratic fundraiser, Shelley’s representative hobnobbed with political leaders including Assembly Speaker Fabian Nunez (D-Los Angeles) and Oakland Mayor Jerry Brown.

Another Shelley representative filed a report detailing the people Shelley met at a Sacramento fundraiser for Kerry in March. That employee, Jason Vega, also reported that he attended an April meeting in Sacramento for Shelley to “confirm his status as a ... delegate for presidential candidate John Kerry at the 2004 Democratic National Convention.”

Another Help America Vote Act employee filed a memo in January suggesting that Shelley meet with Sukhee Kang, a Democratic activist, because he would be “an ideal surrogate to the Korean ethnic community” for outreach efforts from the secretary of state’s office.

Shelley spokesman John Pachtner, who was a voting act contractor until mid-September, said the partisan activities had nothing to do with voter outreach and were inappropriate for the contractors.

“That is regrettable,” he said. “We acknowledge that. We see the problems caused by a lack of [statewide] management.”

Pachtner said Shelley plans to hire a statewide coordinator.

Robert Stern, president of the Center for Governmental Studies in Los Angeles, said the records suggest the Shelley representatives viewed attending the partisan functions as part of their job. “They are claiming credit, saying this is part of their activities,” Stern said. “That is the damning part.”

The California Republican Party this week called on the Election Assistance Commission to audit Shelley’s handling of federal voting funds. But Soaries, a Republican minister from New Jersey, said he had written Shelley before the party’s letter arrived.

Shelley’s office is in the process of awarding another $2.1 million in Help America Vote Act grants, but Assemblyman Dave Cox (R-Fair Oaks) recently questioned in a letter to the state Finance Department whether the applicants are qualified to conduct nonpartisan voter education.

On Wednesday, Cox called for legislative hearings on Shelley’s election funds spending.

Vying for voter education contracts of up to $50,000 each are more than 300 applicants, including the League of Women voters as well as racial and ethnic minority groups, community organizations, churches and unions, some generally viewed as supportive of the Democratic Party.

Shelley’s office said the selection was suspended in July during budget debate and never got started again.

“The process is in limbo,” said Mark Kyle, Shelley’s undersecretary. “With each passing day, it’s less likely” to be completed in time for the presidential election.

That concerned Soaries, who said, “I would consider that a major development requiring as active a response as we could initiate.”

Soaries said the federal government wants to know whether any money was used for unauthorized or partisan purposes. But he also cautioned that partisan groups sometimes are capable of doing voter education, such as teaching voters about new election equipment or helping them find polling places.

“There is a perception that any expansion of participation in certain minority groups [is] to the benefit of Democrats,” Soaries said. “And that is fueled by explicitly partisan preferences by many minority groups and leaders.

“We have to be careful not to discriminate against groups because of race and ZIP Code.”

Following a San Francisco Chronicle report, the FBI and the state attorney general began investigating contributions to Shelley’s 2002 campaign by people and companies who received part of a $500,000 state grant that Shelley as an assemblyman helped arrange for construction of a San Francisco community center.

Soaries said his agency will monitor an ongoing state audit of the funds and, if necessary, undertake a special audit that could result in California having to return any improperly spent funds.