FPPC Clears Sheriff of Misspending Funds

The state Fair Political Practices Commission has cleared Orange County Sheriff Brad Gates of wrongdoing following claims by a local citizen that Gates had illegally spent thousands of dollars in campaign funds in winning reelection to a fifth term earlier this year.

Central to the dispute were allegations that Gates had sidestepped state election law by using more than $1,600 in campaign funds to rent space at a San Juan Capistrano equestrian center that his wife owns, and using the space as his reelection headquarters.

State law would have precluded Gates or family members from accepting campaign funds as rent payments, officials said. But the FPPC found that because the Ortega Equestrian Center is owned by a separate corporate entity--not in the name of Gates or his wife--the rental was legal.

Gates’ wife, Diana, is the sole shareholder of the corporate entity, Otra Inc.

“The lease arrangement does not violate (the Political Reform Act’s) personal use provisions,” FPPC Counsel John G. McClean wrote in an Oct. 19 letter to Shirley L. Grindle of Orange, who has monitored the campaigns of county officials since 1974 and brought a complaint with the state against the sheriff in June.

Similarly, the Orange County district attorney’s office in May found no campaign violations in Gates’ action after reviewing Grindle’s claims.

In addition to the equestrian center issue, Grindle had also taken Gates to task for accepting $2,000 in campaign contributions from the firm of Valenti and Coelho Inc. in February, 1989, allegedly in violation of state law that bans donations in excess of $1,000.

The FPPC said in its Oct. 19 letter: “While this appears to be a violation of the (Political Reform) Act’s contribution limits, we have decided not to take formal enforcement action. At the time the contributions were accepted, the contribution limits were new, having become effective on Jan. 1, 1989. Furthermore, (Gates’ reelection committee) returned the excess amount of the contribution following the filing of this complaint.”

The FPPC also noted that the contribution limits were overturned by a federal court in September, throwing the entire issue into confusion.

Grindle had also attacked Gates for his far-reaching use of campaign funds, citing such expenses as limousine service to events and $1,565 worth of Los Angeles Rams football tickets for staff and supporters.

While the FPPC did not address the various expenses individually or respond to Grindle’s request for an audit of Gates, it did say:

“Each of the expenditures complained of is one which could have a relation to a political, legislative, or government purpose, and there is no evidence to indicate that such purposes do not exist. Absent such evidence, we have decided to close this file.”

Gates, who was reelected sheriff in June, defeating Fullerton Councilman Don Bankhead, could not be reached for comment Monday on the ruling, nor could officials in the FPPC office in Sacramento, which was closed for Veterans Day.

Grindle took some satisfaction in the FPPC’s position, noting in particular that the commission may adopt new regulations that would close off the legal technicalities that she said allowed Gates to pay rent to his own wife for his campaign headquarters.

Proposed FPPC regulations could erase the distinction between a corporate entity and a candidate or his family in the regulation of campaign funds.

Gates’ lawyer, Darryl Wold of Costa Mesa, noted that the sheriff probably won’t be able to pay rent to his wife’s company in the future for a campaign headquarters. But because of the overturning of the contribution limits in Proposition 173, he can instead accept the space as a contribution from the company--as he had done before 1989, Wold said.

The end result, Wold said, would be the same: Gates could use the equestrian center for a campaign headquarters.

“This is space he needs for his records and things, so it’s a matter of convenience,” Wold said. “There’s nothing wrong with it. (Grindle’s) allegations were motivated by her support for Gates’ last opponent, Don Bankhead, and she just ginned up these charges with no legal basis because she didn’t understand the law.”