CITY AND COUNTY OF SAN FRANCISCO
Campaign Finance Audit Report
David Lee for Supervisor 2020
FPPC ID #: 1427046
January 1, 2020 – December 31, 2020
Introduction
Public disclosure of election campaign activity is essential to voters making informed decisions. The Political Reform Act (California Government Code [CA Gov Code) Section [Sec.]81000 et seq) and supporting regulations, and the San Francisco Campaign Finance Reform Ordinance (San Francisco Campaign & Government Conduct Code [SFC&GCC] Sec. 1.100 et. seq.) and supporting regulations, were established to impose reasonable disclosure requirements to reveal information about election campaign activity. By requiring proper and timely disclosure of campaign activity pertaining to contributions, loans, expenditures, and accrued expenditures, the laws and regulations are designed to inform voters and deter improper practices.
To promote campaign compliance with laws and regulations, the San Francisco Ethics Commission (hereinafter the “Commission”) engaged Macias Gini & O’Connell LLP (MGO) to assist in assessing election committees’ compliance with applicable requirements. This report summarizes the audit results on the David Lee for Supervisor 2020 #1427046 committee: (hereinafter the “Committee”) covering the period of January 1, 2020 through December 31, 2020.
Authority
The Commission has a duty and responsibility under San Francisco Charter Sec. C3.699-11(4) to audit campaign statements and other relevant documents that are filed with the Commission to ensure compliance with applicable state and campaign finance laws and regulations. Under SFC&GCC Sec. 1.150(a), all candidate committees whose candidates have received public financing must be audited and committee that have not received public financing may be randomly selected for audit at the discretion of the Executive Director of the Commission.
Objectives and Scope
The objective of the audit was to reasonably determine whether the Committee substantially complied with requirements of the Political Reform Act Sec. 81000 et. Seq. and supporting regulations, and the San Franscico Campaign Finance Reform Ordinance Sec 1.100 et. Seq. and supporting regulations. The audit was performed based on a review of the Committee’s filing and records covered by the audit period to determine, among other things:
- Compliance with applicable campaign activity limits, restrictions, and prohibitions.
As a recipient of public financing, the Committee was subject to mandatory audit.
Nothing in this report shall be interpreted to prevent an enforcement action by the Commission or another appropriate agency for conduct in violation of the law, whether or not that conduct is covered in this report.
The report will be forwarded to the Commission’s Enforcement Division for review to determine whether any further action may be warranted.
Committee Information
Background
The Committee’s primary purpose was to support the election of David Lee to the Board of Supervisors of the City and County of San Francisco (“City”) in the November 3, 2020 election. During the period covered by the audit, the Committee’s Treasurer was David Lee. The Committee was established on June 4, 2020, and terminated on January 31, 2021.
Committee Reported Activity
| Total Funds Raised | Total Expenditures Made | |
| Private Contributions | $69,504 | $325,172 |
| Public Funds Received | $255,000 |
The committee activity totals were taken from disclosure statements filed with the Commission covering the period January 1 2020 through December 31, 2020.
Audit Respondent
The Audit Respondent identified below was the primary audit contact during the audit and responded to audit inquiries and requests on behalf of the Committee.
Nancy L. Warren
Assistant Treasurer
454 Las Gallinas Avenue #282
San Rafael, CA 94903
AUDIT FINDINGS
The CA Gov. Code Sec. 81000 et. Seq and supporting regulations, and SFC&GCC Sec. 1.100 et. Sec and supporting regulations, require campaign committees to timely disclose information about election campaign activity and adhere to applicable campaign activity limits, restrictions, and prohibitions.
The following findings were noted during the audit:
Campaign Disclosure Statements
- SFC&GCC Sec 1.152(a)(1) states, “In addition to the campaign disclosure requirements imposed by the California Political Reform Act and other provisions of this Chapter, each candidate committee supporting a candidate for the Board of Supervisors shall file a statement with the Ethics Commission indicating when the committee has received contributions to be deposited into its Campaign Contribution Trust Account, or made expenditures that equal or exceed $10,000 within 24 hours of reaching or exceeding that amount.”
Under SFC&GCC Sec. 1.152(a)(2) and Regulation 1.152(a)-1, candidate committees are required to file Form SFEC-152: Threshold Notice with the Commission disclosing when they have received contributions or made expenditures that in the aggregate equal or exceed $100,000 within 24 hours of reaching or exceeding the threshold. Thereafter, committees are required to file an additional Form SFEC-152 within 24 hours of every time they receive additional contributions or make additional expenditures that in the aggregate equal or exceed $10,000.
Per review of transaction data (i.e., monetary contributions, nonmonetary contributions, public funds received, expenditures) reported by the Committee on disclosure statements, two SFEC 152 Forms were not filed within the required 24-hour time period.
| Threshold Level | Date Reached | Date Filed | Days Late |
| $10,000 | 6/19/2020 | 7/7/2020 | 18 |
| $280,000 | 10/14/2020 | 10/21/2020 | 7 |
Ms. Warren stated that the COVID-19 pandemic put a strain on her small sole proprietor office. She added that the pandemic forced her office to implement new procedures and protocols. Ms. Warren further added that the late filings were not willful or negligent.
- Under SFC&GCC Sec. 1.161(b)(3)(A) and Reg. 1.161(a)-1, each candidate committee that pays for a mass mailing shall, within five working days after the date of the mailing, file a copy of the mailing and an Itemized Disclosure Statement (SFEC-161) with the Commission for that mailing. Information disclosed on SFEC-161 may include the title or description, date, and total cost of the mailing. Information pertaining to vendors used in the creation of the mailing, such as vendor name, services provided, and cost of service provided by vendor, may also be disclosed.
Proverb Strategy Advisors was not initially disclosed as a vendor on five SFEC Form 161s filed during the audit period. This vendor provided consulting and design services. The five SFEC Form 161 were initially filed timely and included other required information, but they were later amended on November 2, 2020 to add the missing vendor, description, and cost of services provided. Although the forms were not initially filed late, they were not complete when filed, and they were only amended after the applicable deadlines.
| Date of Mass Mailing | Due Date for Form 161 | Form161 Amendment Filing Date | Cost of Services Provided | Days Late |
| 08/28/2020 | 09/04/2020 | 11/2/2020 | $5,720.65 | 59 |
| 09/08/2020 | 09/15/2020 | 11/2/2020 | $5,220.65 | 48 |
| 09/16/2020 | 09/23/2020 | 11/2/2020 | $2,773.85 | 40 |
| 09/23/2020 | 09/30/2020 | 11/2/2020 | $5,220.65 | 33 |
| 09/30/2020 | 10/07/2020 | 11/2/2020 | $4,716.15 | 26 |
| Total expenditures disclosed late | $23,651.95 | |||
Ms. Warren contacted Mr. Dixon Li at Proverb Strategy Advisors (PSA) and he stated that “PSA does not charge design per mail piece or for any particular piece”. Mr. Li added that “as part of the retainer agreement, flat fee design charges are included as part of the contract and are not assigned per mail piece.” Regarding the consulting charges, Mr. Li stated that these are professional fees that “are not part of the production of the mailing, rather, they are professional compensation.”
Rebuttal to Audit Respondent’s Statement.
Design and consulting charges are usual components of the total cost of a mailer. Proverb Strategy Advisors invoice #1016 dated October 17, 2020, itemizes “Consultant Charge” for each mass mailer sent. In addition, regardless of how vendors charge for the design of mass mailers, the apportioned design cost of each mailer is required to be disclosed on the SFEC 161 Form filing.
Conclusion
Except as indicated in the Audit Findings section above, and in our opinion, the Committee substantially complied with the requirements of the Political Reform Act Sec. 81000 et seq. and supporting regulations, and the San Francisco Campaign Finance Reform Ordinance Sec. 1.100 et seq. and supporting regulations.