City and County of San Francisco
Ethics Commission

English

1. Introduction

   This Audit Report summarizes the audit results of the committee, Committee to Elect Larry Kane, Identification Number 1267312 (“the Committee”), from January 1, 2004 through June 30, 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”) (San Francisco Campaign and Governmental Conduct Code § 1.100, et seq).1

2. Audit Authority

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

3. Audit Scope and Procedures

   This audit was performed in accordance with generally accepted auditing standards.  The audit involved a review of the Committee’s records for the 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.

   The Commission posts audit reports to its web site and, in cases of violations of law, forwards them to the appropriate enforcement agency.

4. Committee Information

   The Committee was formed in July 2004 to support the election of Larry Kane to the Board of Education in the November 2, 2004 general election.  The Committee’s treasurer was Paul Gallagher.  The Committee’s filing obligations were completed on June 30, 2005.

5. Audit Findings

   For the period covered by the audit, the Committee received $92,613 in contributions and incurred expenditures of $92,620. 

   The Commission determined that there were two material findings with respect to the audit of the Committee, as follows:

   1. The Committee failed to disclose full contributor information for 18 contributions of $100 or more each, totaling $5,700, and failed to itemize two contributions of $100 or more each, totaling $300, in violation of Government Code section 84211(f) and S. F. C&GC Code sections 1.106, 1.114(e) and 1.114(f).

   Government Code section 84211(f) and S.F. C&GC Code section 1.106 provide that if the cumulative amount of contributions (including loans) received from a person is $100 or more, the recipient’s campaign statements must provide the contributor’s full name, street address, occupation, and the name of his/her employer (name of business if self-employed); the date and amount of each contribution received from the contributor during the reporting period; and the cumulative amount of contributions received from the contributor during the calendar year.  S.F. C&GC Code section 1.114(e) prohibits the deposit of any contribution of $100 or more unless the contribution has the required information, i.e., the contributor’s full name, street address, occupation and employer.  A committee will be deemed not to have had the required contributor information at the time the contribution was deposited if the required contributor information is not reported on the first campaign statement on which the contribution is required to be reported.  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.  S.F. C&GC Code § 1.114(f).

   The Committee received 370 contributions that required detailed disclosure.  Of the 370 contributions, contributor information was not fully or properly disclosed for 18 contributions.  The Committee also failed to itemize two contributions of $100 or more each. 

   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 Committee is required to forfeit $4,000.20 in contributions.  Please refer to attachment 1 for a list of contributions that are subject to forfeiture.

   1. The Committee failed to file Itemized Disclosure Statements for two mass mailings, in violation of S.F. Campaign and Governmental Conduct Code section 1.161.
      

   The Political Reform Act defines mass mailings as 200 substantially similar pieces of mail sent within a calendar month.  Section 1.161(a) 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.  Section 1.161(b) also requires candidates to 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.

   The Committee did not file Itemized Disclosure Statements for its mass mailings.  There were two mailings of one piece for which Itemized Disclosure Statements were required but not filed, as follows:

   Date of Mailing	Description of Mailing	Total Cost of Mailing	Number mailed	Disclosure Statement Due
   10/8/2004	Coach Kane Changed My Life	$15,304.15	39,631	10/17/2004
   10/22/2004	Coach Kane Changed My Life	$15,564.55	40,072	10/29/2004

6. Committee’s Response to Findings
   The Committee was provided with an opportunity to comment on this audit report.

   The candidate, Larry Kane, stated that the Committee in good faith and with best efforts tried to follow all the campaign finance rules; that any violation of law was completely unintentional.  Mr. Kane noted that he was a first-time candidate who was a novice at running for office, and the treasurer was also a first time volunteer treasurer of a campaign for public office.  He pointed out that the treasurer attended an Ethics Commission training session and routinely contacted the Ethics Commission for issues and questions regarding the requirements and various filings.

   Mr. Kane noted that during the second filing period covering October 1 through October 16, 2004, his volunteer treasurer experienced significant difficulty with the City’s On-Line Filing System, such as, the treasurer could not log on when the system was unavailable and the system failed to save data and failed to generate reports.  Mr. Kane believes that information that was on-hand was improperly recorded or not saved by the system.  He further noted that the treasurer conferred with the Commission staff many times for this filing and was encouraged by the staff to make the filing as is rather than be late in filing the campaign statement.

   With respect to the filing of Itemized Disclosure Statements for Mass Mailings, Mr. Kane noted that one flyer that was mass-mailed twice complied with other requirements (i.e., disclosure notation on the flyer).  He explained that the Committee believed that its professional consultant who coordinated the mailing of the flyer was going to file the related Itemized Disclosure Statements.

Click here to view the Committee’s full response.

Attachment 1  List of Contributions Subject to Forfeitures