California Oversight Agency Fines Governor's Aide, Campaign

SACRAMENTO - California's political oversight agency has found that a top aide to Gov. Jerry Brown failed to disclose sales of stock holdings and that two of the governor's campaigns did not properly account for nearly $3 million in donations.

The Fair Political Practices Commission announced Monday the governor's executive secretary Nancy McFadden failed to report selling Pacific Gas & Electric stock in 2012, 2013 and 2014. She has agreed to pay a proposed penalty of $300.

The commission also announced Brown's committee to support Proposition 30 failed to report two large donations - one totaling more than $1.5 million - on time. Proposition 30 passed in 2012 and raised income taxes to fund schools. The committee has agreed to pay $1,500 for the violation.

In addition, the agency said Brown's 2014 re-election campaign improperly deposited more than $1.3 million into a campaign savings account. The commission did not fine the committee for the violation, sending a warning letter instead.

The commission discovered the accounting issues while investigating complaints by the nonprofit advocacy organization Consumer Watchdog.

The fines were too small and the penalties insufficiently harsh, said Jamie Court, Consumer Watchdog's president. His organization had said in its complaints that McFadden and the governor's campaigns had conflicts of interest and other more serious problems. The Fair Political Practices Commission said it did not find evidence of those allegations.

"I'm troubled that there appear to be punches that were pulled here," Court said. "It feels like the investigation stopped short of uncovering what seems to me to be a more troubling pattern."

When McFadden, a former PG&E executive, sold her stock holdings in the company, she knew details the public did not about the investigation into the September 2010 pipeline explosion and fire that killed eight people near San Bruno, Consumer Watchdog has alleged.

The Fair Political Practices Commission didn't find that McFadden's failure to disclose the sales was related to a conflict of interest or an intent to conceal information.

All of the stock had pre-established vesting dates and was sold automatically, regardless of the stock price at the time, Evan Westrup, a spokesman for the governor, has said. He attributed the violation to "inadvertent filing errors."

"Contrary to the poppycock some continue to peddle, the FPPC's findings make it clear there's 'no evidence' of any conflict of interest or intent to conceal," Westrup wrote in an email.

Consumer Watchdog alleged in a separate complaint that the governor had improperly "laundered" money from oil companies through the California Democratic Party into his 2014 campaign. The Fair Political Practices Commission did not find evidence of that charge, but it did uncover the accounting violations by the governor's 2014 reelection campaign and his Proposition 30 committee.

It also found the Democratic Party made several accounting violations, including depositing contributions into an incorrect account and incorrectly identifying a committee bank account. The party agreed to pay a proposed $5,000 fine.

The commission announced a number of other campaign finance violations and proposed fines Monday, including a failure by Dan Schnur in 2014 to disclose a $125,000 contribution he made to his own unsuccessful campaign for secretary of state. Schnur, who led the FPPC for less than a year in 2010, agreed to pay a $4,500 fine.

Fines issued by the commission can be seen by officials and candidates as the "cost of doing business," especially if they're not particularly large, said Jessica Levinson, a professor and government ethics expert at Loyola Law School in Los Angeles.

"Then the only real issue is does it harm you to be an officeholder or candidate to have been fined," Levinson said. "For most people, frankly, they know that the voters' memories are short when it comes to these issues."

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