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San Francisco Ethics Commission Audit Report: Jose Medina for Supervisor, FPPC ID #1266702


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



I.          Introduction

This Audit Report summarizes the results of the audit of the committee, Jose Medina for Supervisor 2004, Identification Number 1266702 (“the Committee”), for the period from January 1, 2004 through December 31, 2004.  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”) (S.F. Campaign and Government Conduct Code Sections 1.100, et seq.).[1]

II.        Audit Findings

For the period covered by the audit, the Committee received $40,743 in contributions, $27,224 in public funds, and incurred expenditures of $66,545.[2]  The CFRO provides that any candidate who receives public funds must return unexpended campaign funds to the City for deposit into the Election Campaign Fund up to the amount of public funds received by the candidate.[3]  The Committee does not have any unexpended funds.

There were three material findings with respect to this Audit: 1) the candidate’s loan of personal funds to the Committee exceeded $15,000, in violation of S.F. Campaign and Governmental Conduct Code section 1.116; 2) the Committee used $1,617 in campaign funds to reimburse the candidate for campaign-related expenditures made from the candidate’s personal funds, in violation of Government Code section 85201 and S.F. C&GC Code section 1.106 and 1.108; and 3) the Committee failed to file Itemized Disclosure Statements for seven mass mailings, in violation of S.F. Campaign and Governmental Conduct Code section 1.161.

III.       Committee Information

The Committee was formed in July 2004 to support the election of Jose Medina to Member, Board of Supervisors District 11 in the November 2, 2004 general election.  Frelon Ngai served as the Committee’s treasurer.  The Committee received public funds for Jose Medina’s 2004 supervisorial election campaign.  The Committee’s filing obligations were completed as of December 31, 2004.

IV.       Audit Authority

San Francisco Charter Section C3.699-11 authorizes the Ethics Commission to audit campaign statements that are filed with the Commission.  Section 1.150(a) of the CFRO requires the Commission to audit all candidates who receive public financing.  Audits of publicly financed candidates include a review of campaign statements and other relevant documents to determine whether the candidate complied with applicable requirements of State and local law.

V.        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 applicable filing deadlines;
  2. Compliance with restrictions on contributions, loans and expenditures;
  3. Accuracy of total reported receipts, disbursements and cash balances as compared to bank records;
  4. Compliance with all record-keeping requirements; and
  5. Compliance with all provisions related to the Commission’s public financing program.

VI.       Summary of Applicable Law

S.F. Campaign and Governmental Conduct Code Section 1.116: Limits on Loans to Candidates

A candidate may use personal funds to make a loan to his or her campaign committee.  The CFRO limits the amount that the candidate may loan.  Under section 1.116 of the S.F. C&GC Code, the amount that a candidate for Board of Supervisors can loan to his or her committee may not exceed at any time $15,000.

Government Code Section 85201 and S.F. Campaign and Governmental Conduct Code section 1.106 and 1.108: Requirement to Deposit Personal Funds in the Campaign Bank Account Prior to Expenditure

Government Code Section 85201 and S.F. Campaign and Governmental Conduct Code section 1.106 and 1.108 requires candidates to deposit personal funds in the campaign bank account and make expenditures from that account instead of spending personal funds on campaign expenses and later seeking reimbursement from campaign funds.  If a candidate makes a payment from personal funds for allowable campaign-related expenditures, the payment is considered to be an in-kind contribution from the candidate to his or her campaign committee. 

S.F. Campaign and Governmental Conduct Code Section 1.161: Filing of Itemized Disclosure Statement for Mass Mailings

The Political Reform Act defines mass mailings as 200 substantially similar pieces of mail sent within a calendar month.  Section 1.161 of the CFRO requires any candidate for City elective office who pays for a mass mailing that advocates for or against candidates for City elective office to include on the mailing the statement “paid for by ______(insert candidate’s name and street address)” in not less than 14-point type and in a color or print which contrasts with the background so as to be easily legible.  The candidate must also file with the Ethics Commission a clearly legible original or copy of the mass mailing and an itemized disclosure statement within five working days after the date of the mailing.

VII.     Material Findings

S.F. Campaign and Governmental Conduct Code Section 1.116: Limits on Loans to Candidates

On the campaign statements covering January 1 through September 30, 2004, the Committee reported that it received $25,000 in loans from the candidate.  Thereafter, the Committee amended this campaign statement to reflect that the candidate intended to make a $15,000 personal loan and a $10,000 contribution to his campaign committee, thus complying with the loan amount limitation of section 1.116.[4] 

Government Code Section 85201 and S.F. Campaign and Governmental Conduct Code section 1.106 and 1.108: Requirement to Deposit Personal Funds in the Campaign Bank Account Prior to Expenditure

The Committee reimbursed the candidate $1,617 for campaign-related expenses that the candidate made from personal funds.  As explained above, if the candidate wanted to use his personal funds to pay for campaign expenditures, he was required to deposit his personal funds into the campaign bank account first.  In other words the candidate was not permitted to receive reimbursement from the campaign bank account.

S.F. Campaign and Governmental Conduct Code Section 1.161: Failure to File Itemized Disclosure Statements for Mass Mailings

The Committee did not file any Itemized Disclosure Statements for Mass Mailings.  There were seven mass mailings for which Itemized Disclosure Statements were not filed, as follows:

Date of Mailing

Description of Mailing

Total Cost of Mailing

Number Mailed


Biographic Drop 1

combined below with Biographic Drop 2



Chinese Voters




Latino Voters




Filipino Voters




Flood Voters




Democratic Piece




Biographic Drop 2

$12,452.60 (including cost of Biographic Drop 1)


VIII.    Committee’s Response to Findings

The Committee was provided with an opportunity to comment on this audit report. 

The candidate explained that the size of the campaign budget did not allow the Committee to hire professional staff and instead the Committee had to rely on neighborhood volunteers.  The candidate stated that the Committee focused its attention on not spending in excess of the expenditure ceiling, and on complying with the rules governing the use of public moneys and on providing the necessary documentation to the Commission when requesting public funds, which resulted in less attention given to other areas.  The candidate stated that any violation committed were not willful nor deliberate.  He provided the following responses to the above-referenced findings:

  • I made a $2,500 loan to the campaign on July 1, 2004 and a loan of $21,500 on October 5, 2004 .  Candidate was informed of the violation that same month, converted $15,000 to a loan and $10,000 to a contribution and promptly filed an amended campaign statement. I signed a stipulated, decision and order for a settlement amount of $100 dollars which the Commission increased to $1,000. The $1000 has been paid.
  • The Committee used $1,617 in campaign funds to reimburse the candidate for campaign-related expenditures made from the candidate’s personal funds. Of that amount, $1,148 was paid to Victory Store for automated telephone calls.  They would not take a campaign check so candidate paid with a credit card not knowing that to do so would result in violation of  section 85201.  The remaining amount of $469 was used to pay for items that would have been paid out of a petty cash fund if one had been set up.
  • The Committee failed to file Itemized Disclosure Statements for seven mass mailings. Campaign volunteer staff mistakenly believed that the mail house would do the necessary filings.  Candidate was not aware until notified that Itemized Disclosure Statements had not been made and is taking immediate Corrective action by making the filings.

IX.       Disclosure

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

_________________________________                                          __________________

            Grace Chau                                                                                         Date

            Campaign Finance Auditor

______________________________________                                __________________

            John St. Croix                                                                                      Date

Executive Director                          

S:\AUDIT\2004 Public Finance Candidates\Jose Medina\Report-Jose Medina.doc


[1] During the period covering by the audit, Article 1, Chapter 3 of the S.F. Campaign and Governmental Conduct Code codified the Electronic Filing Ordinance.  As a result of recent amendments to the CFRO, the provisions of the Electronic Filing Ordinance are now contained in S.F. C&GC Code section 1.112.

[2] The expenditure amount of $66,545 includes $1,617 that was reimbursed to the candidate for campaign expenditures (see the section regarding material findings).

[3] Unexpended funds are calculated by subtracting any unpaid bills, on-going qualified campaign expenditures and forfeitures from the amount of cash that the Committee had on hand on the 30th day following the election in which the candidate was elected or defeated.

[4] The Ethics Commission and the candidate have entered into a stipulation whereby the candidate agreed to pay the Ethics Commission a settlement of $1,000 for this violation.

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