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:
LUCRECIA BERMUDEZ FOR SUPERVISOR
I. Introduction
This Audit Report summarizes the results of the audit of the committee, Lucrecia Bermudez for Supervisor, Identification Number 1268773 (“the Committee”), for the period from January 1, 2004 through December 31, 2005. 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.).
II. Audit Findings
For the period covered by the audit, the Committee received $13,917 in contributions (including in-kind contributions of $572) and $24,904 in public funds, and incurred campaign expenditures of $33,301. 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. The amount that the Committee is required to return the City is $5,042.03.
There were four material findings with respect to this Audit: 1) the Committee failed to retain complete campaign records, in violation of Government Code section 84104 and S.F. C&GC Code section 1.106; 2) the Committee failed to timely file campaign statements, in violation of Government Code sections 84200, 84200.5, and 84200.7 and S.F. C&GC Code sections 1.106 and 1.112; 3) the Committee used campaign funds for improper expenditures, in violation of Government Code sections 85201, 89510, 89512 and 89517 and S.F. C&GC Code sections 1.106 and 1.122; and 4) the Committee failed to file Itemized Disclosure Statements for Mass Mailings, in violation of S.F. Campaign and Governmental Conduct Code section 1.161.
III. Committee Information
The Committee was formed in August 2004 to support the election of Lucrecia Bermudez to Member, Board of Supervisors District 9 in the November 2, 2004 general election. Ms. Bermudez is the Committee’s treasurer. The Committee received public funds for Ms. Bermudez’s 2004 supervisorial election campaign.
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:
- Compliance with all disclosure requirements pertaining to contributions, expenditures, accrued expenditures, and loans, including itemization when required;
- Compliance with applicable filing deadlines;
- Compliance with restrictions on contributions, loans and expenditures;
- Accuracy of total reported receipts, disbursements and cash balances as compared to bank records;
- Compliance with all record-keeping requirements; and
- Compliance with all provisions related to the Commission’s public financing program.
VI. Summary of Applicable Law
Government Code Section 84104 and Campaign and Governmental Conduct Code Section 1.106: Recordkeeping
Government Code Section 84104 provides that it is the duty of each candidate, treasurer and elected officer to maintain detailed accounts, records, bills and receipts that are necessary to prepare campaign statements, and to retain the documents for a period of four years following the date the appropriate campaign statement is filed. Section 84104 is incorporated into the Campaign Finance Reform Ordinance at S.F. C&GC Code section 1.106.
Government Code Sections 84200, 84200.5 and 84200.7 and S.F. Campaign and Governmental Conduct Code Sections 1.106 and 1.112: Requirement to File Campaign Statements
Government Code Section 84200 requires that candidates and committees file semi-annual campaign statements each year no later than July 31 for the period ending June 30, and no later than January 31 for the period ending December 31. Under Government Code Sections 84200.5 and 84200.7 candidate-controlled committees are also required to file pre-election statements during the six-month period in which the candidate is being voted upon. Under S.F. C&GC Code section 1.112 committees are required to file these reports electronically if they receive contributions of at least $5,000 or make independent expenditures of at least $5,000 in a calendar year. Once a committee is subject to the electronic filing requirement, it must continue to file electronic campaign statements, regardless of the amount of contributions or expenditures made during each reporting period, until the committee terminates. Electronic campaign statements are due at the same time that paper statements are due under the PRA.
Government Code Sections 85201, 89510, 89512 and 89517 and S. F. Campaign and Governmental Conduct Code Sections 1.106 and 1.122: Allowable Uses of Campaign Funds
Government Code Section 85201 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. Under Government Code Sections 89510 and 89512 and S.F. C&GC Code Section 1.122, all contributions deposited into the campaign account are deemed to be held in trust for expenses associated with the election of the candidate or for expenses associated with holding office. Candidates may not use campaign funds for personal use or to support or oppose ballot measures or other candidates. Unless campaign funds have become surplus funds, campaign funds may not be used for charitable donations. Government Code Section 89517 does not allow campaign funds to be used for payment or reimbursement for the lease of real property where any part of the legal title involves the candidate, treasurer or anyone with authority to approve expenditure of campaign funds, or member of his or her immediate family.
S.F. Campaign and Governmental Conduct Code Section 1.161: Filing of Itemized Disclosure Statements 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
Government Code Section 84104 and S.F. C&GC Code Section 1.106: Recordkeeping
Under Government Code Section 84104, the Committee was required to maintain detailed documents supporting its contributions and expenditures. The Committee failed to maintain invoices/receipts for 6 payments totaling $7,107, which represents 21 percent of the total amount of payments made by the Committee.
Government Code Sections 84200, 84200.5, and 84200.7: Requirement to File Campaign Statements
The Committee was required to file paper and electronic campaign statements (FPPC Form 460) for the reporting periods ending: 9/30/04; 10/16/04; 12/31/04; 6/30/05; and 12/31/05. Every campaign statement that the Committee filed in connection with the candidate’s involvement in the November 2004 supervisorial election was filed late, as follows:
Reporting Period # of days paper statement late # of days electronic statement late
1/1-9/30/04 1 day late 1 day late
10/1-10/16/04 4 days late 4 days late
10/17-12/31/04 260 days late 22 days late
1/1-6/30/05 78 days late 78 days late
7/1-12/31/05 41 days late 41 days late
Government Code Sections 85201, 89510, 89512 and 89517 and S.F. Campaign and Governmental Conduct Code Sections 1.106 and 1.122: Allowable Uses of Campaign Funds
The Committee paid for some expenditures from the campaign bank account that were improper, i.e., the expenditures were not campaign-related or they involved a reimbursement to the candidate for allowable expenditures. As explained above, if the candidate wanted to use her personal funds to pay for campaign expenditures, she was required to deposit her personal funds into the campaign bank account first. In other words, the candidate was not permitted to receive reimbursement from the campaign bank account. See Table 1 below for a list of improper expenditures that were paid for from the campaign bank account.
Table 1: Improper expenditures paid from campaign bank account
|
Payment Date |
Payee |
Description |
Amount |
Why Payment from Campaign Bank Account was Unallowable |
|
|
9/27/2004 |
Parents for Education |
Contribution made to Prop F Committee for Nov. 2004 campaign |
$200 |
Yes |
S.F. C&GC Code Section 1.122 prohibits a candidate for City elective office from using his or her campaign funds to support or oppose a ballot measure. |
|
10/27/2004 |
Movimiento por los Derechos de los Immigrantes |
Donation to Immigrant Rights Movement for Immigrant Pride Day Celebration |
$1,000 |
Yes |
S.F. C&GC Code Section requires candidates for City elective office to use campaign funds only on behalf of the stated candidacy. Charitable contributions may only be made once campaign funds have become surplus funds. |
|
1/7/2005 |
Lucrecia Bermudez |
Payment of rent for 5 months’ use of candidate’s home for campaign office space |
$2,500 |
Yes |
Government Conduct Code Section 89517 prohibits the use of campaign funds to pay the candidate for the use of his/her home for campaign office space. |
|
10/1/2004 |
Lucrecia Bermudez |
Reimbursement to candidate for phone service |
$95 |
Not reported |
Government Code Section 85201 requires candidates to deposit their personal funds into the campaign bank account prior to expenditure. If the expenditure had been paid directly from the campaign bank account, it would have been considered permissible. |
|
This item should have been reported on the campaign statement covering 1/1-9/30/04 as an in-kind contribution from the candidate. |
|||||
|
1/15/2005 |
Lucrecia Bermudez |
Reimbursement to candidate for payment to 20 precinct workers paid @125 each |
$2,500 |
Not reported |
Government Code Section 85201 requires candidates to deposit their personal funds into the campaign bank account prior to expenditure. If the expenditure had been paid directly from the campaign bank account, it would have been considered permissible. |
|
This item should have been reported on the campaign statement covering 10/17-12/31/04 as an in-kind contribution from the candidate. |
|||||
|
Total |
$6,295 |
||||
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. A review of the Committee’s invoices and receipts showed that the Committee produced two mass mailings for which it was required to file itemized disclosure statements, as follows:
|
Date of Mailing |
Total Cost of Mailing |
Number of Pieces Mailed |
Date by which Itemized Disclosure Statement should have been filed |
|
10/9/04 |
$6,279 |
19,000 |
10/18/04 |
|
11/2/04 |
$4,857 |
19,000 |
11/9/04 |
VIII. Committee’s Response to Findings
The Committee did not provide comment on this audit report.
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\Lucrecia Bermudez\Report-Bermudez.doc
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.
The Committee also had a miscellaneous increase to cash of $0.46. The expenditure amount of $33,301 includes improper expenditures that total $6,295 (see Table 1 under the section regarding material findings).
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.
Under Section 1.150(b) of the S.F. C&GC Code, candidates who receive public funding are required to return any portion of public funds that exceeded the amount that the candidate was entitled to receive. The $5,042.03 amount stated above includes two contributions totaling $199 that were matched with public funds but were subsequently returned by the bank because the checks bounced.
The Ethics Commission and the candidate have entered into a stipulation whereby the candidate has agreed to pay the Ethics Commission a penalty and late filing fee of $3,650 for the campaign statements covering 10/17-12/31/04.
Schedule E of the FPPC Form 460 is the schedule on which committees report the expenditures that they have paid.