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San Francisco Ethics Commission Audit Report: Mak 06, FPPC ID #1287595


I. Introduction

This Audit Report summarizes the audit results of the committee, Mak 06, Identification Number 1287595 (“the Committee”), for the period from January 1, 2006 through December 31, 2006.  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 section 1.100, et seq). 

II. 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 along with other relevant documents to determine whether a candidate complied with applicable requirements of State and local laws.  Section 1.150(a) of the CFRO requires the Commission to audit all candidates who receive public financing.

III. 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;
  5. Compliance with all record-keeping requirements;
  6. Compliance with all provisions related to the Commission’s public financing program; and
  7. Any unexpended public funds that must be returned to the City up to the amount of public funds received by the candidate.

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

IV. Committee Information

The Committee was formed in June 2006 to support the election of Jaynry Mak to the Board of Supervisors, District 4 in the November 7, 2006 general election.  Frances Hsieh served as the treasurer.  The Committee received public funds for Mak 06’s Board of Supervisors election campaign.  The Committee was active as of December 31, 2006.

V. Audit Findings

For the period covered by the audit, the Committee received $176,756 in contributions (including $521 of non-monetary contributions) and $43,750 in public financing, and incurred $212,111 of expenditures.  The CFRO provides that any candidate who receives public funds must return unexpended campaign funds to the City (San Francisco Campaign and Government Conduct Code (S.F. C&GC Code) § 1.148(d)).  The Committee had $8,394.88 of adjusted unexpended funds. [1]

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

  1. The Committee did not timely file the required itemized disclosure statements for eight of its nine mass mailings, in violation of S.F. C&GC 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 of the CFRO requires any candidate seeking City elective office who pays for a mass mailing that advocates for or against candidates to include on the mailing statement, “paid for by _____ (insert candidate’s name and 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 Commission two pieces of the mailing and an itemized disclosure statement within five working days after the date of the mailing. 

    The details of the mass mailings are as follows:

  2. Description Total Cost of Mailing Date of Mass Mailing Date of Filing Number of Pieces Mailed
    Introduction $14,353 10/11/06 10/12/06 15,882
    In Her Own Words $12,196 10/20/06 Not filed 15,214
    Signs piece $13,840 10/20/06 Not filed 15,214
    Stand Out $12,037 10/20/06 Not filed 15,214
    Bay Guardian card $5,102 10/22/06 Not filed 5,663
    Sing Tao card $7,039 10/22/06 Not filed 6,074
    City Hall $10,766 10/27/06 Not filed 11,072
    Yee Chinese piece $6,758 10/27/06 Not filed 6,000
    Making San Francisco a Place for Families Unknown Unknown Not filed Unknown
    Total $82,091      
  3. The Committee did not report 12 contributions, each of $100 or more, totaling $4,300 or about two percent of contributions, and did not disclose complete contributor information for one contribution of $100 or more, in violation of California Government Code section 84211(f) and S.F. C&GC Code sections 1.106 and 1.114.  

    Government Code section 84211(f) and S.F C&GC Code section 1.106 provide that if the cumulative amount of contributions 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 committee has the required information.  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 details are as follows:

    Contributor Date of Contribution Reason for Forfeiture Contribution Amount Forfeiture Amount
    Aqua Azul, LLC 7/31/06 Not reported on Form 460 $100 $0.01
    Bacchus Consulting Group, LLC 9/14/06 Not reported on Form 460 $100 $0.01
    Carroll Avenue Properties LLC 6/26/06 Not reported on Form 460 $500 $400.01
    Montana, Christopher E. 9/29/06 Not reported on Form 460 $300 $200.01
    Clemens, Alexander 9/15/06 Not reported on Form 460 $500 $400.01
    Municipal Executives of SF PAC 9/14/06 Not reported on Form 460 $500 $400.01
    Pro and Technical ENG Local 21 10/20/06 Not reported on Form 460 $500 $400.01
    Perry, Robert W. 9/29/06 Not reported on Form 460 $500 $400.01
    SEIU United Healthcare Workers West Political Action 9/28/06 Not reported on Form 460 $500 $400.01
    Alazraie, Tariq 9/29/06 Not reported on Form 460 $500 $400.01
    Tom, Tina 10/19/06 Not reported on Form 460 $100 $0.01
    Wiener, Scott 10/15/06 Not reported on Form 460 $200 $100.01
    Low, Ruihuan 6/20/06 No street address $500 $400.01
    Total     $4,800 $3,500.13
  4. The Committee did not report 14 intermediary transactions totaling $6,750 or about three percent of contributions, in violation of Government Code section 84302, S.F. C&GC Code section 1.114, and FPPC Regulation section 18533.

    The Political Reform Act stipulates, “no person shall make a contribution on behalf of another, or while acting as the intermediary or agent of another, without disclosing to the recipient of the contribution both his own full name and street address, occupation, and the name of his employer, if any, or his principal place of business if he is self-employed, and the full name and street address, occupation, and the name of employer, if any, or principal place of business if self-employed, of the other person.  The recipient of the contribution shall include in his campaign statement the full name and street address, occupation, and the name of the employer, if any, or both the intermediary and the contributor.”

    S.F C&GC Code section 1.114 stipulates, “no person other than a candidate shall make, and no candidate campaign treasurer shall solicit or accept, any contribution which will cause the total amount contributed by such person to such candidate in an election to exceed $500.” 

    Fair Political Practice Commission Regulations (FPPC), Title 2, Division 6, section 18533 stipulates, “a contribution made from a checking account by a check bearing the printed name of more than one individual shall be attributed to the individual whose name is printed on the check and who signs the check, unless an accompanying document directs otherwise.  The document shall indicate the amount to be attributed to each contributing individual and shall be signed by each contributing individual whose name is printed on the check.  If each individual whose name is printed on the check signs the check, the contribution shall be attributed equally to each individual, unless an accompanying document signed by each individual directs otherwise.”

    The Committee did not report the following contributions as intermediary transactions:

    Contributor Contribution Date Contribution Amount Intermediary
    Chin, Paul 8/26/06 $250 Chin, Cynthia
    Ghanem, Joe 9/29/06 $500 Liberty, Louis
    Liberty, Betsy 9/29/06 $500 Liberty, Louis
    Mei, Da-an 6/17/06 $500 Mei, Li Yun “Judy”
    Mei, Da Cheng 6/20/06 $500 Mei, Li Yun “Judy”
    Togual, Martha 6/28/06 $500 Togual, Juan
    Kay, Tina 6/20/06 $500 Kay, David
    Phung, Helen 6/20/06 $500 Phung, Andy
    Babbs, Joel 6/15/06 $500 Huang, Christine
    Yuen, Linda H. 6/15/06 $500 Leung, Wilfred
    Au, Raymond 6/28/06 $500 Chung, Eric
    Tang, Twiggy 6/29/06 $500 Chung, Eric
    Contreras, Leonar 6/28/06 $500 Guiterez, Jose Luis
    Mak, Dick 6/28/06 $500 Mak, Jesamine Wai
    Total   $6,750  
  5. The Committee did not properly maintain all of its campaign records, in violation of Government Code section 84104.  The Committee did not provide copies of all of its campaign records and did not properly report some of its contributions and expenditures.

    Government Code Section 84104, incorporated into S.F. C&GC Code section 1.106, 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.

    The Committee did not properly report all of its contributions.  The Committee received five contributions, drawn on business accounts, but reported as individual contributions.  The details are as follows:

    Contributor Reported As Date Amount
    Eric Tao, Attorney at Law Tao, Eric 8/25/06 $500
    The Back Doctor Cheng, Patrick 8/28/06 $250
    Miss Asian America, Inc. Chung, Rose 7/25/06 $500
    Novelact (USA) LTD. Hsu, Wilfred 6/28/06 $500
    California Financial Mortgage Kwong, Stan 6/30/06 $250
    Total     $2,000

    For two expenditures, the invoice amount was different from the amount paid.  The details are as follows:

    Invoice Date Payee Invoice Amount Amount Paid
    7/28/06 Far East Café $3,400 $2,400
    10/20/06 Sierra Club $4,000 $3,000

    The Committee did not maintain two invoices of $6,746 and $7,466 paid to the 12th AD Chinese American Democratic Club or about seven percent of expenditures.

    Eight expenditures that were reported on the campaign statements did not clear the bank.  The details are as follows:

    Payee Amount
    Ben Fong $1,200
    Aqua Azul, LLC $100
    Fung Lum Concessions Corporation $100
    America Asia Investments $350
    MJH Associates $500
    United Associates Investment $100
    Department of Elections $111
    Stearns Consulting $11,937
    Total $14,398

    The Committee did not provide all of its 2007 bank statements.  Therefore, it was not possible to determine if the checks cleared after the audit period.

    Two expenditures totaling $12,306 were not reported on the campaign statements.  The details are as follows:

    Payee Amount
    Stearns Consulting $12,196
    Tyrone Jue $111
    Total $12,306
  6. VI. Committee’s Response to Finding:

    The Committee was provided with an opportunity to comment on this audit report.  The Committee did not provide any comments.

    [1] 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.

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