State to Dissolve Center Led by Shelley Backer

California Atty. Gen. Bill Lockyer moved Friday to dissolve a nonprofit community center here, alleging that it illegally channeled state construction grant money to Secretary of State Kevin Shelley’s campaign.

In a San Francisco Superior Court petition, Lockyer said the San Francisco Neighbors Resource Center, headed by Shelley fundraiser Julie Lee, apparently diverted charitable assets to make $125,000 in contributions to Shelley’s 2002 campaign.

Shelley asked the attorney general to investigate after the San Francisco Chronicle reported in August that several individuals and companies that received payments from the center soon donated similar amounts of money to his campaign. As a state assemblyman, Shelley had helped arrange a $492,000 grant for the center, which has not been built.

Shelley has said he was unaware of any impropriety involving donations to his campaign, and through attorneys Lee has denied knowingly violating any laws.

The attorney general has regulatory authority over nonprofit organizations such as the center. Although the group voted to voluntarily dissolve itself a month ago, Lockyer said he took action because of the nonprofit group’s alleged political activity and to obtain a thorough accounting of its assets.

Lockyer said his investigation found that of five individuals who received a total of $168,750 in payments from the center, only one did any pre-construction work warranting payment.

He said the investigation was continuing. A federal grand jury in Sacramento is also looking into the matter.