Holden Lawsuit Targeting Ethics Fines Advances

A judge ruled Thursday that City Councilman Nate Holden can proceed with his lawsuit against the Los Angeles Ethics Commission, setting the stage for a legal test of the panel’s powers to prosecute politicians.

The Ethics Commission had requested that the court dismiss Holden’s suit challenging $6,500 in penalties for campaign finance violations.

Superior Court Judge David P. Yaffe ruled that Holden filed his lawsuit within the 90-day statute of limitations for a challenge. He also rejected a city request for sanctions against Holden and his attorney, Mark Geragos, for naming Ethics Commission Executive Director LeeAnn Pelham personally in the lawsuit when the commission, not Pelham, makes decisions on enforcement actions.

“The irony of the city Ethics Commission, which is supposed to uphold the strict interpretation of the law, trying to weasel out on a technicality was rebuffed forcefully by this judge, and we look forward to further showing that city Ethics was completely off-base in this entire vendetta against my client,” Geragos said afterward.

The judge set July 24 as the date for a hearing on the merits of Holden’s lawsuit, which represents a fundamental challenge to the Ethics Commission’s ability to levy fines and order restitution.

The panel decided in May 2002 that Holden had committed 11 violations involving acceptance of campaign contributions that exceeded allowable limits, and 20 duplications of applications for city matching funds. The panel ordered Holden to reimburse the city for $4,500 in matching funds and pay another $2,000 in fines.

Holden said the mistakes were unintentional. In setting the fine, the Ethics Commission said he also had been fined $27,000 for 41 violations involving his 1995 campaign.

The councilman is suing to set aside the Ethics Commission action, contending that city ethics law does not allow fines for mistakes in seeking city matching funds.

Holden “cannot be penalized for violating a statute that prescribes no penalty,” his lawsuit said.

“The commission crossed the line here and that is wrong,” Holden said after the hearing. “They just ramrodded every point Ms. Pelham wanted them to.”

Deputy City Atty. Ellen Freedman said that city law clearly sets a formula for providing matching funds to candidates and that Holden violated that formula, so penalties are authorized.

“You can’t double-dip, and if you do, you have to pay the city back,” she said.

Holden said the amount he is spending to challenge the commission is more than the amount of the penalties he is contesting. The case is likely to be a complicated one, but the stakes are high for the Ethics Commission, which voters created more than a decade ago. Three city attorneys attended the hearing and more than 4,000 pages of documents have been submitted to the court for consideration.