FPPC Halts Probe Into Ties Between Gov., Publisher

The state’s political watchdog agency has dropped an investigation into whether Gov. Arnold Schwarzenegger’s multimillion-dollar contract with the publisher of several fitness magazines was a conflict of interest.

In a letter to a Petaluma couple who had filed the allegations, officials at the Fair Political Practices Commission wrote that the governor was immune from punishment for such conflicts under California law.

The commission continues to investigate a separate complaint about the magazine contract filed by the California Democratic Party. But party officials say they have yet to hear from investigators and see little hope for the commission to take action.

The Petaluma couple filed their complaint in July, after The Times revealed the governor was receiving at least $1 million a year to, according to his contract, “further the business objectives” of a company that owned several fitness magazines. The governor’s pay was based on advertising revenue from the magazines, some of which was generated from the dietary supplement industry.

The couple, who blame their son’s suicide on steroid use, noted in their complaint that while the governor was on the payroll of Florida-based American Media Inc., he vetoed a 2004 bill that would have limited the use of dietary supplements in high schools.

The commission did not rule whether there was a conflict. Instead, it dropped its investigation after determining that the law did not allow for sanctions on a statewide official even if a conflict did exist.

The letter to the couple, Denise and Raymond Garibaldi, noted that state law specifically says sanctions for conflicts of interest “shall not be applicable to elected state officers.”

“This is quite an astounding thing,” said Morgan Smith, an attorney for the couple. “If their interpretation is correct, there is nothing they or anyone can do.”

Schwarzenegger administration officials declined to comment on the case.

The governor announced soon after the details of the arrangement became public that he had stopped taking a salary from American Media.

Officials at the commission, meanwhile, refused to discuss the Oct. 4 letter, which was obtained by The Times through the state open records law.

But officials did note that they continue to investigate the complaint filed by Democrats.

In addition to alleging conflict of interest, the Democrats also accuse the governor of receiving illegal honoraria and gifts and of failing to disclose payments made by American Media to a nonprofit organization the governor runs.

Lance Olson, an attorney for the party, said he had not heard from investigators and was not optimistic the commission would act on the complaint. He said he had grown frustrated by what he saw as the commission’s unwillingness to take on cases involving the governor.

“What is annoying is that the commission doesn’t even try,” Olson said. He said even if the law shields the governor from sanctions, the commission should at least try to determine whether a conflict of interest existed.

“There is nothing that precludes them from looking at this and telling the public, ‘This is a violation. It is just that we can’t impose any sanctions, and maybe the Legislature should change that,’ ” Olson said.

FPPC officials recently confirmed that they had closed 225 cases since May because the commission lacked the money to finish the investigations.