Ethics Commission
City and County of San Francisco

San Francisco Ethics Commission Audit Report: Strunsky for Supervisor, FPPC ID #1246077

San Francisco Ethics Commission 
30 Van Ness Avenue, Suite 3900
San Francisco CA   94102
Phone 581-2300 Fax 581-2317

SAN FRANCISCO ETHICS COMMISSION AUDIT REPORT:

STRUNSKY FOR SUPERVISOR

I.          Introduction

This Audit Report summarizes the results of the audit of the committee, Strunsky for Supervisor, Identification Number 1246077 (“the Committee”), for the period from January 1, 2002 through December 31, 2002.  The audit was conducted to determine whether the Committee materially complied with the requirements of the Political Reform Act (“the Act”) (California Government Code Section 81000, et seq.) and San Francisco’s Campaign Finance Reform Ordinance (“CFRO”) and Electronic Filing Ordinance (S.F. Campaign and Governmental Conduct Code (“C&GC Code”) Sections 1.100, et seq., and 1.300, et seq., respectively).

For the period covered by the audit, the Committee received $131,736 in contributions and incurred expenditures of $130,068.  There were five material findings with respect to this Audit:

(1) the Committee failed to file two Late Contribution Reports, in violation of S.F. C&GC Code section 1.106 and Government Code section 84203; (2) the Committee failed to disclose complete contributor information for 10 contributions, in violation of S.F. C&GC Code section 1.114(e); (3) the Committee failed to itemize 49 expenses of $100 or more totaling $55,429.05, in violation of S.F. C&GC Code section 1.106 and Government Code section 84211(k); (4) the Committee failed to timely file the paper and electronic semi-annual campaign statement for the period ending December 31, 2002, in violation of Government Code section 91013 and S.F. C&GC Code sections 1.106 and 1.300; (5) the candidate, who filed a statement accepting the applicable expenditure ceiling under former S.F. C&GC Code section 1.128, spent more than the ceiling before the ceiling was lifted.

II.        Committee Information

The Committee was formed in August 2002 to support the election of Burke Strunsky to Member, Board of Supervisors, District 6, in the November 5, 2002 general election.  The candidate did not participate in the limited public financing program that was available to candidates for the Board of Supervisors.  Marsanne Weese was the Committee’s treasurer.  The Committee filed a Statement of Organization on August 25, 2004 indicating that the Committee was terminated on 12/31/03.

III.       Audit Authority

San Francisco Charter section C3.699-11 authorizes the Ethics Commission to audit campaign statements that are filed with the Commission and other relevant documents to determine whether the Committee complied with applicable requirements of State and local law.  The Ethics Commission, by a random process, selected the Committee for audit.

IV.       Audit Scope and Procedures

This audit was performed in accordance with generally accepted auditing standards.  The audit involved a thorough review of the Committee’s records for the time period covered by the audit.  This review was conducted to determine:

  1. Compliance with all disclosure requirements pertaining to contributions, expenditures, accrued expenditures, and loans, including itemization when required;
  2. Compliance with applicable filing deadlines;
  3. Compliance with restrictions on contributions, loans and expenditures;
  4. Accuracy of total reported receipts, disbursements and cash balances as compared to bank records; and
  5. Compliance with all record-keeping requirements.

V.        Summary of Applicable Law

S.F. Campaign and Governmental Conduct Code Section 1.106 and Government Code Section 84203: Filing of Late Contribution Reports (Form 497)

A “late contribution” is any contribution, including a loan, which totals in the aggregate $1,000 or more that is made or received by a candidate, a controlled committee, or a committee formed or existing primarily to support or oppose a candidate or measure before the date of the election at which the candidate or measure is to be voted on but after the closing date of the last campaign statement required to be filed before the election.  Gov’t Code §82036.  The combined activities of affiliated entities are used to determine whether the $1,000 threshold is met or exceeded.  Cal Code Regs. §18428.

Late contributions must be reported within 24 hours of receipt by facsimile transmission, telegram, guaranteed overnight mail through the United States Postal Service or personal delivery.  C&GC Code §1.106, Gov’t Code §84203(b).  A candidate or committee that receives a late contribution must include on the Late Contribution Report: 1) its full name and street address; 2) the date and amount of the late contribution; and 3) the contributor’s name, street address, occupation, and employer, or if self-employed, the name of the business.  Late Contribution Reports must be filed with each office with which the candidate or committee is regularly required to file campaign statements.  C&GC Code §1.106, Gov’t Code §84203(a).

S. F. Campaign and Governmental Conduct Code Section 1.114(e): Contributor Information Required[1]

S. F. C&GC Code section 1.114(e) states that if the cumulative amount of contributions received from a contributor is $100 or more, the committee treasurer must not deposit the contribution unless the committee treasurer has the following information: the contributor’s full name; the contributor's street address; the contributor’s occupation, and the name of the contributor’s employer or, if the contributor is self-employed, the name of the contributor’s business.  Contributions that are deposited without obtaining the required contributor information must be forfeited to the City.  C&GCC §1.114(f).

S.F. C&GC Code Section 1.106 and Government Code Section 84211(k): Requirement to Disclose Each Expenditure of $100 or More

S.F. C&GC Code section 1.106 and Government Code section 84211(k) state that for each person to whom an expenditure of $100 or more has been made during the period covered by the campaign statement, all of the following information must be obtained and reported on the campaign statement: (1) his or her full name; (2) his or her street address; (3) the amount of each expenditure; and (4) a brief description of the consideration for which each expenditure was made.

Government Code Section 91013 and S.F. Campaign and Governmental Conduct Code Sections 1.106 and 1.300: Fines for Late Filing of Campaign Statements

Government Code section 91013 imposes a fine of $10 per day for campaign statements received after the filing deadline.  The liability for late filing of the paper statement is limited to the cumulative amount of contributions or expenditures for the period covered by the late statement or $100, whichever is greater.  San Francisco ’s Electronic Filing Ordinance (S.F. C&GC Code section, 1.300 et seq.) imposes an additional fine of $25 per day for electronic filings received after the filing deadline.[2]  In addition, under S.F. C&GC Code section 1.170(c), any person who intentionally or negligently violates any of the provisions of the Campaign Finance Reform Ordinance is liable for an amount up to $5,000 for each violation, or three times the amount not reported.

S.F. Campaign and Governmental Conduct Code Sections 1.128 and 1.130(d): Acceptance of Voluntary Expenditure Ceilings

In 2002, candidates running for the Board of Supervisors who did not participate in the public financing program were required to notify the Ethics Commission if they received contributions, made expenditures or had funds in their campaign trust account that exceeded 75 percent of the applicable expenditure ceiling, which was $75,000.[3]  In addition, candidates were also required to notify the Ethics Commission if they received contributions, made expenditures or had funds that equaled or exceeded 100 percent of the expenditure ceiling.  These notices were required to be made within 24 hours of meeting the applicable thresholds.  See former C&GC Code section 1.152(a)(3).  The form that was used in 2002 to provide these notices to the Ethics Commission was called the Reporting Notice B.

Former sections 1.128 and 1.130 of the Campaign and Governmental Conduct Code required candidates, who filed a statement with the Department of Elections indicating that they agreed to abide by the applicable expenditure ceiling, to limit their qualified campaign expenditures to $75,000 in the general election.[4]

VI.       Material Findings

S.F. Campaign and Governmental Conduct Code Section 1.106 and Government Code Section 84203: Failure to Report Late Contributions for the General Election

During the late reporting period for the November 5, 2002 election, the Committee received two contributions totaling $40,000 from the candidate, thus triggering the obligation to file two Form 497 Late Contribution Reports (LCR), which the Committee failed to file.  Please refer to Attachment 1 for a list of the two late contributions.  After the auditor brought the non-filing to its attention during the audit, the Committee then filed the Late Contribution Reports on August 18, 2004, 659 days late for the LCR due 10/29/02 and 656 days late for the LCR due 11/1/02.  The Committee is subject to a late filing fine of $13,150 ($10 x 659 days + $10 x 656 days) in addition to other penalties.

S. F. Campaign and Governmental Conduct Code Section 1.114(e): Failure to Obtain and Disclose Contributor Information

A review of the Committee’s campaign statements indicated that the Committee itemized 123 contributions.  Of the 123 itemized contribution entries, contributor information was not fully or properly disclosed for 10 contributions.  The missing information related to contributors’ street addresses and occupation and employer information. 

As explained above, under S.F. C&GCC sections 1.114(e) and 1.114(f), contributions that are deposited without the required contributor information must be forfeited to the City, in addition to any other penalties.  The amount that is subject to forfeiture is the amount that exceeds the first $99.99 of a contributor’s contribution; i.e., on a $100 contribution that lacks the required contributor information, the amount subject to forfeiture is one cent.  The Committee is required to forfeit $1,700.10 in contributions, in addition to any other penalties. 

S.F. Campaign and Governmental Conduct Code Section 1.106 and Government Code Section 84211(k): Requirement to Disclose Each Expense of $100 or More

The campaign statement covering 10/20-11/4/02 provided only a lump sum amount of $48,000 in total expenses.  No detailed itemization of the expenses was listed on the campaign statement.  The review of the Committee’s records indicated that 49 expenditures of $100 or more totaling $55,429.05 were incurred during this reporting period.  The Committee was required to provide an itemized listing of these expenses on its campaign statement and failed to do so in violation of Section 84211(k) and C&GCC §1.106. 

Government Code Section 91013 and S.F. Campaign and Governmental Conduct Code Sections 1.106 and 1.300: Fines for Late Filing of Campaign Statements

The post election campaign statement covering October 20, 2002 through December 31, 2002 was required to be filed by January 31, 2003.  The Committee filed two separate campaign statements for the filing period: a campaign statement covering 10/20-11/4/02 was filed on November 5, 2002; and a campaign statement covering 11/5-12/31/02 was filed by paper on August 25, 2004 and by electronic file on November 6, 2003. 

The Committee filed the campaign statement for the latter reporting period late, as follows:

Reporting Period Covered  Due Date   Date submitted    Note  E-file/Paper
11/5-12/31/02     1/31/03  11/6/03  279 days late  E-file
11/5-12/31/02    1/31/03  8/25/04  572 days late  Paper

The Committee is subject to fines of $9,620 ($3,900[5] + $5,720) for these late filings, in addition to any other penalties.

S.F. Campaign and Governmental Conduct Code Section 1.128(b): Acceptance of Voluntary Expenditure Ceilings[6]

On August 9, 2002, the candidate filed the Voluntary Expenditure Ceiling Statement with the Department of Elections stating that he agreed to adopt the voluntary expenditure ceiling.  On October 28, 2002 he notified the Ethics Commission that he had received contributions, made expenditures or had funds in his campaign trust account that exceeded 100 percent of the expenditure ceiling.  As a result the Ethics Commission lifted the expenditure ceiling in district 6 on October 29, 2002.

A review of the Committee’s records showed that as of October 25, at a time when the ceiling had not yet been lifted, the Committee had incurred expenses exceeding $75,000.  In addition, the candidate should have notified the Ethics Commission two days earlier on October 26, 2002 instead of on October 28, 2002, when he notified the Commission that his contributions exceeded 100 percent of the expenditure limit.  Finally, the candidate did not provide notice to the Ethics Commission when his contributions or expenditures exceeded 75 percent of the expenditure ceiling in violation of former C&GCC section 1.152.

VII.     Committee’s Response to Findings

The Committee was provided with an opportunity to review and comment on this audit report.  The Committee stated that it filed Late Contribution Reports and amended the campaign statements that were not adequately filed when it was notified of the filing requirements by the Ethics Commission during the audit.  The Committee also stated that it properly filed Reporting Notice B on October 26, 2004 to indicate that the Committee had received contributions or made expenditures in excess of the expenditure ceiling of $75,000.

VIII.    Conclusion

Through the examination of the Committee’s records and campaign disclosure statements, the Auditor found that (1) the Committee failed to file two Late Contribution Reports, in violation of S.F. C&GC Code section 1.106 and Government Code section 84203; (2) the Committee failed to disclose complete contributor information for 10 contributions, in violation of S.F. C&GC Code section 1.114(e); (3) the Committee failed to itemize 49 expenses of $100 or more totaling $55,429.05, in violation of S.F. C&GC Code section 1.106 and Government Code section 84211(k); (4) the Committee failed to timely file the paper and electronic semi-annual campaign statement for the period ending December 31, 2002, in violation of Government Code section 91013 and S.F. C&GC Code sections 1.106 and 1.300; (5) the candidate, who filed a statement accepting the applicable expenditure ceiling under former S.F. C&GC Code section 1.128, spent more than the ceiling before the ceiling was lifted.

Audit reports are posted to the Commission’s web site and are forwarded, in cases of apparent violations of law, to the appropriate enforcement agency.

Date:  February 10, 2005

Attachment 1

List of the late contributions that the Committee received for which a Late Contribution Report was not filed for the November 5, 2002 election:

Contributor   Amount  Date of Contribution Received LCR due
Burke Strunsky $20,000  10/28/02  10/29/02
Burke Strunsky $20,000 10/31/05 11/1/02
Aggregated Total $40,000 10/30/02  11/01/02

[1] During the period covered by the audit, current section 1.114(e) was codified as section 1.114(d).

[2] Prior to August 25, 2003, the fine for late electronic filings was $10/per day.

[3] The spending limit increased to $83,000 as of January 2003.

[4] Former Section 1.128 provided: “All candidates for City elective office who adopt campaign expenditure ceilings as defined below must file a statement with the Department of Elections indicating acceptance of the expenditure ceiling.  Said statement shall be filed no later than the deadline for filing nomination papers with the Department of Elections, and once filed may no be withdrawn.  This statement is a public document.”  As of July 2003, all candidates for City elective office must file a statement with the Ethics Commission indicating whether they accept or decline to accept the applicable expenditure ceiling.  (S.F. C&GC §1.128, app. 6/27/2003 ).

[5] Effective August 25, 2003, the fine for late electronic reports is $25 per day.

[6] The requirements of former section 1.152(a)(3) were superseded; such reporting requirements are now set forth in section 1.134(b).

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