Fund-Raising for Charter Reform Bid Is Challenged

A fund-raising event hosted by seven members of the Los Angeles City Council and attended by powerful business and labor leaders is under attack by government watchdog groups that charge that it violated strict new campaign finance laws.

The Feb. 13 breakfast meeting attracted about 130 people, including union organizers, lobbyists and business executives, who were asked to bankroll a charter reform measure on the April ballot that will include a slate of candidates.

The guests were asked to pledge between $1,000 and $25,000 each, far in excess of contribution limits set by Proposition 208, a landmark reform measure that was passed in November and imposes stringent restrictions on campaign contributions and loans. But the organizer insists that the new law does not apply in this case.

Still, authors of Proposition 208 say the measure limits such contributions to $250. The goal of the event reportedly was to raise $750,000. “I think that is a violation of the spirit and the letter of 208,” said Tony Miller, the executive director of Californians for Political Reform and co-author of Proposition 208.

Miller and representatives of other watchdog groups say the event is the first such attempt at circumventing the limits of Proposition 208, but they expect many more in the future.

But Harvey Englander, the veteran campaign consultant who organized the event, said the fund-raiser was a simple business endeavor that is not affected by the new finance limits.

He argued that the breakfast guests paid him to distribute a mailer supporting a ballot measure to create a charter reform panel. State law imposes no limits on contributions to ballot measure campaigns.

The controversy focuses on Englander’s plans to include on the same mailer a slate of candidates for that panel, which he said he will choose in consultation with council members, at no extra cost to the candidates or the contributors.

Proposition 208 authors and sponsors argue that the candidates will benefit from the fund-raising event, and the contributions are therefore subject to the limits set by the new law.

Englander’s attorney, Cary Davidson, insisted that the money collected at the event came in the form of payments to Englander for his services, not campaign contributions, and therefore are not subject to Proposition 208 limits.

“We are working within the rules,” Englander said.

The controversy over the fund-raiser is being played against the background of a power struggle between the council and Mayor Richard Riordan over a ballot measure to create an elected panel to overhaul the city charter.

The council has accused Riordan of investing thousands of dollars of his own money in the reform effort to create a charter that would increase the mayor’s authority at the expense of the council.

In addition to contributing $575,000, Riordan has helped raise another $215,000 to get the measure on the ballot. He also played a key role in raising another $556,600 to fund his own slate of candidates for the panel.

Most of the money for Riordan’s slate--which came in the form of contributions ranging from $25,000 to $100,000 each--was raised just before Proposition 208 contribution limits took effect on Jan. 1.

The breakfast fund-raiser hosted by the council members at the City Club in downtown Los Angeles, however, took place more than a month after the law took effect.

Council members who attended the event said the effort was an attempt to stockpile money for a council-backed slate that would rival the mayor’s candidates.

“It’s a competition of ideas,” said Council President John Ferraro, who attended the event. “If you don’t have an ability to demonstrate your ideas, it’s not fair.”

Neither side has named the candidates it will support, pending word next week from the city clerk’s office on which candidates have qualified for the ballot.

Slate mailers are not new to politics. Several Los Angeles consultants run slate operations in which they ask candidates to pay for a spot on a mailer. The spot usually goes to the highest bidder.

The mailers go to voters with the message that the slate is endorsed by a committee of concerned citizens. In reality, the so-called citizens group is a consulting company that is licensed to use such altruistic-sounding names as “Taxpayers for Reform” or “California Committee for Choice.”

Englander acknowledged that the fund-raising event was a twist on that tactic. Instead of having the candidates pay for the slate mailers in this case, independent contributors pay.

Officials at California Common Cause and the authors of Proposition 208 say the tactic is a clear violation of the limits.

“He is simply trying to launder it,” said Craig Holman, co-author of Proposition 208.

Holman and other sponsors of Proposition 208 argue that Englander has in fact created a so-called “independent expenditure committee,” which is limited under Proposition 208 to contributions of no more than $250.

“I think it is very clear,” said Ruth Holton, executive director of Common Cause, the nonprofit watchdog group that sponsored Proposition 208. “If you have an independent expenditure committee, then the limits are $250.”

Under state law, wealthy individuals and interest groups can spend an unlimited amount of their own money to endorse a candidate, as long as the candidate does not have any control or coordination over the money.

If, however, a group of individuals pool their funds together to support a candidate, they have created an independent expenditure committee, which is regulated by Proposition 208, according to Holman and Holton.

Miller agreed, saying, “If he is exercising control over all of this, either implicit or explicit, it’s one committee.”

Holman said that the fund-raising tactic also “puts Englander in a powerful role, even more powerful than the candidates.”

Holman and Holton said they have urged the Los Angeles City Ethics Commission to investigate the Englander event. Ethics officials declined to comment on the matter.

A spokesman for the state’s Fair Political Practices Commission said its is the responsibility of the city’s Ethics Commission to enforce the Proposition 208 limits in Los Angeles.

“Everyone is sort of stepping back to see what the Los Angeles Ethics Commission is doing about this,” Holman said.

But any kind of enforcement by the Ethics Commission is unlikely while the courts and the FPPC struggle to answer three legal challenges and dozens of unanswered questions raised by the proposition.