Stephen Herman, 64, who pleaded guilty last year to two charges of spending college funds on political donations, hosted a June 26 fundraising party for Natalie Berg, a veteran trustee of the financially troubled college.
The event, held in Herman’s home near Golden Gate Park, also was attended by two other candidates for the college’s board, according to a copy of an invitation. Donors at the event included 13 people affiliated with the college, including four deans and a trustee of the college’s foundation, city records show.
For years, Herman was an aide to former City College Chancellor Philip Day. In 2009, Day, Herman and another college official were arrested on charges of spending $108,000 in college funds on political donations to college bond campaigns.
Then-District Attorney Kamala Harris investigated the case after the San Francisco Chronicle reported on financial improprieties in a 2005 bond election.
Although no campaign rules would preclude fundraising such as this, it has drawn attention from political ethicists.
Oliver Luby, a former city ethics officer who investigated the donations, contended some college officials had downplayed the significance of the scandal, even after Herman, Day and a third educator, Associate Vice Chancellor James Blomquist, entered their guilty pleas. The fundraiser was more of the same, he said.
“It tells you something about the state of electoral politics,” Luby said, “when going to a fundraiser hosted by somebody who was convicted of money laundering seems like a good idea.”
The event was held at a difficult time for City College. On July 2, the Accrediting Commission for Community and Junior Colleges announced that the 90,000-student college faces loss of its accreditation and possible closure. Years of deficit spending and lax fiscal controls had brought the college to the “financial breaking point,” wrote Barbara Beno, accrediting commission president.
A new system of financial controls created in response to the political scandal had done little to improve oversight, according to the accrediting team’s report.
In a phone interview, Herman, who retired in 2010, said he wanted to help Berg’s campaign because “there’s tremendous crisis going on at the college, and I believe she is an important asset to the college.” He declined further comment.
Berg, first elected to the college’s board in 1996, saw nothing wrong with having Herman host the fundraiser, calling him, “completely honest and honorable.”
Of the criminal charges, she said: “The whole thing was trumped up. Nobody benefited from that, and it ruined people’s careers.”
According to court records filed by the San Francisco district attorney’s office, Day and Herman began tapping taxpayers’ funds for political spending in 2001. The college was promoting a $195 million city education bond and needed money for electioneering. Meanwhile, the PepsiCo beverage company owed the college $50,000 on a contract to sell soft drinks on campus. Day told Herman to instruct PepsiCo to pay the money not to the college but to the bond’s political committee, records show.
In 2005, the college put a $246.3 million bond measure on the city ballot. This time Day and Herman took $20,000 owed to the college by the proprietor of a campus coffee bar and diverted it into the political campaign, the court records show. Separately, Blomquist tapped $10,000 owed to the college by a motorcycle driving school that rented a campus parking lot on weekends. Blomquist told the school director to pay the money to the bond campaign, according to the records.
Yet another diversion of money came in 2007 during the campaign for a $10.4 billion state education bond. Day took $28,000 owed to the college by PepsiCo and funneled it to the college foundation. Then he directed the foundation to contribute the money to the state bond’s political campaign, according to the records.
State election law prohibits the use of public funds for electioneering. The law also prohibits “laundering” of donations by failing to report their true source.
In 2009, the three educators were charged with multiple felonies. They had violated the public trust by misusing taxpayers’ funds, said Harris, who now is the state’s attorney general.
In 2011, Day, who by then had left the college, pleaded guilty to three felony charges of using public funds for political campaigns. The judge reduced the convictions to misdemeanors and fined Day $30,000. Herman pleaded guilty to two felony charges, which also were reduced to misdemeanors at sentencing. He was fined $20,000. Blomquist was convicted of two misdemeanors.
The fundraiser at Herman’s house netted about $7,500 in contributions, city records show. Herman donated $833.
Also at the event were two candidates who are running for the college’s board in the November election, Hanna Leung and Rodrigo Santos.
Leung was invited to the event by Berg and knew little about Herman’s case, said campaign manager David Looman. Santos didn’t return a call seeking comment. On Tuesday, Mayor Ed Lee appointed Santos to the seat on the college's board left vacant by the death of trustee Milton Marks III.
California Watch reporter Anika Anand contributed to this story.
This story was produced by The Bay Citizen, a nonprofit, investigative news sources in the Bay Area and a part of the Center for Investigative Reporting. Learn more at www.baycitizen.org.