FPPC sues Migden for $9M
by Matthew S. Bajko
A state political watchdog agency filed a $9 million lawsuit against state Senator Carole Migden (D-San Francisco) this week, charging her with violating California campaign finance laws.
The suit ratchets up the legal battle between the Fair Political Practices Commission and Migden, who earlier this month sued the agency in federal court in an effort to gain access to nearly $1 million in surplus campaign funds, a portion of which she has already spent.
Her problems with the FPPC come as she is locked in a bitter battle against two fellow Democrats in the June 3 primary. Both former Marin Assemblyman Joe Nation and Assemblyman Mark Leno (D-San Francisco) are seeking to unseat Migden from her 3rd District Senate seat.
The FPPC has ruled that Migden is restricted from using the money from her 2000 Assembly re-election committee because it became surplus funds when she left the lower house in December 2002, and therefore under California law, the money cannot be used for her current Senate re-election campaign.
Migden has admitted that she already spent $350,000 of the funds and sued the FPPC in order to use the $647,000 that remains. If she loses the lawsuit, she potentially could be fined for spending the money.
The two sides will appear before the United States District Court for the Eastern District of California in Sacramento next week as Migden seeks a preliminary injunction so she can access the funds from her old campaign accounts immediately. Migden's detractors have been quick to note in blog postings that the hearing is scheduled for April 1 â€“ April Fools' Day â€“ and have begun calling for her to quit the Senate race.
Another hearing to consider the merits in the case will take place April 16. The FPPC is also seeking a jury trial to hear the countersuit it filed Tuesday, March 25. In it the watchdog agency claims that Migden and her campaign treasurer, Roger Sanders, deliberately hid the true nature of her campaign accounts from state regulators, potential opponents, the media, and the public.
The FPPC also alleges that Migden failed to report a number of large transactions entirely, while reporting other large transactions that in fact did not occur.
"For years, Senator Migden has been deceiving the voters of California by filing inaccurate campaign statements, fabricating the elimination of committees and concealing campaign funds," FPPC Chairman Ross Johnson said in a statement announcing the countersuit. "The sophisticated and pervasive pattern of deception by her various controlled committees has been ongoing for more than five years."
Migden's attorney in the case, James Harrison, declined to answer questions about the FPPC's countersuit and forwarded the Bay Area Reporter's request for comment to her political consultant, Richie Ross.
Ross did not respond by press time Wednesday. He told the San Jose Mercury News that the commission's action is a "Nixonian tirade" instigated by Johnson, a former Republican state senator who served with Migden in the Legislature, whom he called "a hothead" who is "stamping his foot, and he is in one of his (expletive) tirades. This is punishment because she is filing suit on First Amendment rights."
The agency's countersuit comes five days after the FPPC approved a settlement agreement with Migden in which she will pay $350,000 in fines stemming from 89 violations of the state's campaign finance laws stretching back to 2003. Migden paid $100,000 in personal funds toward the fine last week and has a year to come up with the rest of the money.
She has said the mistakes were due to her battling leukemia and using volunteers to handle her campaign finance reports.
According to the FPPC, it was during its investigation of those violations that its enforcement division also uncovered "multiple illegal transfers" of approximately $1 million of surplus campaign funds that occurred over several years and were funneled through multiple committee accounts controlled by Migden. Additionally, the FPPC said this week that its investigation found the filing of untrue campaign statements and a pattern of concealment through consistent misreporting of campaign information.
"Nothing absolves Senator Migden from her legal requirements to accurately report all of her transactions," stated Johnson.
Last summer Leno filed his own complaint with the FPPC alleging problems with Migden's campaign accounting. Migden has contended that last spring she hired professional accountants to audit her campaign accounts and notified the FPPC of possible problems. She had previously been fined $110,600 by the FPPC for violations in the past.
During a debate last week, Migden reiterated that she has worked proactively with the FPPC to determine if there were additional problems with her campaign finance reporting.
"There were mistakes. They were inadvertent. I am paying for it personally and not using campaign funds," said Migden. "At the time of my illness things were not handled as properly as they should have been. I stepped up and took responsibility."
In a declaration she filed with the court, Migden argued that under the state's Proposition 34, which voters passed in 2000, she is allowed to use any money she had raised prior to December 2000 for a future election. In January 2001, she said she instructed Sanders to set aside $900,000 of her Assembly committee's funds into an interest-bearing account in case she ever faced a contested election.
"For purposes of public disclosure, we initially continued to report those funds on my Assembly committee campaign reports, although I did not intend to use them in any way for that committee," Migden is quoted as saying in the court document.
As for the money she already spent, Migden transferred roughly $350,000 of it into her Senate 2008 Committee checking account in October 2006. She claims in her declaration that, "at the time I did not know that there was any legal impediment to transferring the funds because I did not know or suspect that the FPPC would consider those funds surplus."
Migden also makes clear why it is so important for her to be able to use the remaining $647,000 toward her re-election effort his year. Migden has told the court that she only has roughly $150,000 to spend on her primary campaign and would nearly quadruple that amount should the court free up the surplus money. She states in the court document that the funds would go toward cable television and radio advertisements and get-out-the-vote activities that need to occur by early April, before absentee ballots are mailed out to voters.
"These funds would make a tremendous difference in how I conduct my campaign," she is quoted as saying.
Due to the heated Democratic presidential race and the "contested nature" of her own race, Migden told the court that "I can say with confidence that I will not be able to make up in fundraising over the next two months anywhere near the $647,000 that I already accumulated but cannot use."
Nation reported Monday, March 24 that he raised $241,494 in just 37 days since entering the race in February and has $203,280 in the bank. Migden reported raising $133,491 and Leno reported $142,737 in donations between January 1 and March 17 of this year.
The fundraising reports led Nation to brag in a press release that he raised "nearly twice as much in almost half the time" and that his "financial support shows that constituents are hungry for a state senator who will focus on their concerns, not partisan bickering or pet issues."
Leno's campaign noted this week that it already is airing advertisements on cable television in Marin and Sonoma counties and has advertising on public transit in both counties. Spokesman Charles Sheehan said he was not concerned about Nation's fundraising success.
He argued that with Migden hamstrung by the FPPC, the race is now between Leno and Nation.
"We feel good about our donations and spending on media and getting Mark's message out," he said. "[Nation] was bound to have the best quarter but it probably won't happen again because he got all the low-hanging fruit he could get. All these events do show it is a two-person race."