At first glance, Don Perata's sponsorship of a statewide measure that would raise funds for cancer research seems perfectly understandable. After all, the former leader of the California Senate has been battling prostate cancer since May of last year. But in recent months, there have been growing indications that Perata's involvement in the proposed ballot initiative involves a motive beyond finding a cure for cancer — namely, to help him become the next mayor of Oakland. In fact, there is evidence that Perata may be attempting to use the cancer-research initiative to skirt state and local campaign finance laws in ways that could give him an unfair advantage over his mayoral opponents.
Last week, for example, Perata used funds from a political committee that is supposed to support the cancer-research initiative on a glossy mailer that he sent to an unknown number of Oakland residents. Although it's unclear whether he sent the mailer to residents of other cities, it's addressed, "Dear Fellow Oakland Voter," and there is no denying that it serves to help enhance his image as the mayoral campaign season gets underway. The mailer also was sent from his official mayoral campaign headquarters in Oakland.
Perata's use of the cancer-measure committee's funds in this manner makes little sense unless his true aim is to boost his mayoral campaign, experts say. Indeed, the cancer-research initiative, which would raise taxes on cigarettes, hasn't even qualified for the ballot yet. Doug Heller, executive director of the Los Angeles-based nonprofit Consumer Watchdog, which keeps close tabs on the state's initiative process, noted that the proposition will probably face potent opposition from Big Tobacco because it proposes to raise California cigarette taxes by $1 a pack. In other words, it's foolhardy, Heller said, to spend money now on a local mailer when the tobacco industry will spend millions in the summer and fall attempting to kill the initiative. "Every dollar will be precious in this campaign," Heller said.
Campaign finance reports also indicate that Perata is muddying the waters between the cancer-research measure and his mayoral campaign in ways that raise legal and ethical questions. Under California law, it is illegal for a candidate to use funds from a statewide ballot-measure committee with no contribution limits to support a campaign for an office that does have donation limits. Nonetheless, Perata has hired at least three consultants to work on both campaigns, raising questions as to whether they are being paid by the cancer-research committee to work on his mayoral campaign, in violation of state law.
Moreover, interviews with campaign figures and Perata's own finance reports reveal little evidence that the highly paid consultants are doing much work on behalf of the cancer-research initiative. But at least two of the consultants, Tiffany Whiten and Christina Niehaus, have played prominent roles in his mayoral effort.
"He has to be very careful that the ballot measure is not paying for the mayoral campaign," said Bob Stern, president of the Center for Governmental Studies in Los Angeles and former general counsel to the California Fair Political Practices Commission. "That's the problem when you have a candidate campaign and a ballot-measure campaign at the same time."
Perata spokesman Jason Kinney said the former senator has been scrupulous about keeping the two campaigns' expenditures separate, although he acknowledged that the committees share office space and personnel. Kinney said helping the cause to cure cancer has been a "personal passion" for Perata "for a long time."
But campaign finance records raise doubts about whether Perata is really serious about helping the tobacco-tax measure win. The ex-senator seems to be using the cancer-research committee to fund his legendarily lavish lifestyle. Money that could have been saved for the battle against Big Tobacco has been used to dine at posh restaurants and stay at luxury hotels, including the Inn at Spanish Bay in Pebble Beach, campaign finance records show. Perata has labeled these expenditures as "fund-raising" activities, but there is no evidence from his finance reports that he actually raised any money during these events.
Local good government activists also fear that Perata's access to at least $700,000 from a statewide ballot initiative will disadvantage his main competitor in the Oakland mayor's race, Councilwoman Jean Quan, or scare off other potential candidates who might be thinking of jumping in. At the very least, the cancer-research committee seems to provide him with a huge advantage over his opponents.
Perata's glossy mailer uses official-looking letterhead designed to make it appear as if he is still the leader of the state Senate, even though he was termed out more than a year ago. The mailer depicts the senator in a serious pose above a large headline that reads: "In a word: CANCER." The mailer's small print says it was paid for by his ballot-measure committee Hope 2010, "with major funding by Leadership California Committee & Voters Organized for Community Empowerment."
That wording seems designed to make voters believe that the mailer had broad-based support from others. But in reality, all the funds were controlled by Perata. The Leadership California Committee no longer exists, having been renamed last year as Hope 2010. And the funds from Voters Organized for Community Empowerment appear to have come from "Taxpayers for Perata," a committee the senator established several years ago. Perata's committee gave Voters Organized for Community Empowerment $155,000 in July. And then four months later, it donated $152,000 back to him by it giving to Hope 2010.
Perata transformed his Leadership California Committee into Hope 2010 last year, with the specific intent of supporting a statewide cancer-research measure that would coincide with his 2010 run for mayor. Hope 2010 began this year with more than $700,000 in the bank, most of which was leftover from Leadership California. Perata originally called this committee "Rebuilding California," and set it up to finance the statewide infrastructure bond measures in 2006.
The official address for Hope 2010, according to the mailer, is 502 Oakland Avenue in Oakland. That's also the official address of Perata's mayoral campaign headquarters. Kinney said that "it's more cost effective" to run both campaigns out of the same headquarters. He said that the mayoral campaign pays for two-thirds of the office, and Hope 2010 pays for one third. During a recent visit to 502 Oakland Avenue, there was a small sign on the door advertising Perata's mayoral campaign, but no mention whatsoever of Hope 2010.
The apparent use of money from one campaign committee to advance the goals of another has prompted state ethics investigations in the past. The Fair Political Practices Commission has examined similar situations involving both Governor Arnold Schwarzenegger and former Lieutenant Governor Cruz Bustamante. Allegations that Schwarzenegger used 2006 ballot-measure committees to help his reelection campaign eventually led to tighter state rules. Meanwhile, the Fair Political Practices Commission sued Bustamante, alleging that he had illegally transferred funds from a committee with no donation limits into his 2002 gubernatorial committee and paid for expenses in his governor's campaign out of committees with no fund-raising or expenditure limits. In 2004, Bustamante agreed to pay a civil fine of $263,000, the largest ever resulting from a commission action.
State law prohibits Perata from using Hope 2010 to fund his mayoral campaign, according to Roman Porter, executive director of the state Fair Political Practices Commission. However, because the mailer doesn't specifically mention his mayoral bid and only talks about the cancer-research initiative, it may not technically violate the law. Still, there's no doubt that the mailer will help his public image.
Setting aside the legal propriety of Perata's actions, the mailer itself appears to be a questionable use of money by one of California's savviest politicians. "Don Perata has run many statewide ballot-measure campaigns," said Consumer Watchdog's Heller. "And so the idea that you would do this now with a mailer makes no sense — unless there is another political purpose for it."
Committees like Hope 2010 typically exist to do two things: raise money and help with campaign advertising. But there is almost no evidence of fund-raising and it's too early for advertising, which raises questions about what Perata's campaign consultants are being employed to do.
Finance records show that the cancer committee received only two outside donations during the last six months of 2009. One $10,000 contribution came from Perata's longtime friend Ed DeSilva, who has been his single-largest campaign contributor over the years and who can be counted on to write a big check anytime he launches a new endeavor. And the other donation, also for $10,000, came from Richard Lee, the founder of Oaksterdam University — right around the same time that Perata announced his endorsement of Lee's statewide pot legalization measure.
Yet the committee has spent more than $200,000 on consultants, including $25,000 to Oakland Councilman Ignacio De La Fuente, who is one of Perata's oldest friends and closest allies. Hope 2010 also spent $100,000 on three consultants who also are on Perata's mayoral campaign payroll.
The primary committee established to fund the cancer-research measure is known as "Californians for a Cure," and was created by the American Cancer Society, the American Lung Association, and the American Heart Association. The leader of Californians for a Cure, American Lung Association of California Vice President Paul Knepprath, said in an interview that Perata's campaign staffers have not played a role in their efforts. And as for Perata himself, Knepprath praised the state senator for coming up with the idea for a 2010 ballot measure and being "a cheerleader for it." But Knepprath said Perata has not played an active role with Californians for a Cure. Hope 2010 was the largest donor to Californians for a Cure, however, contributing $150,000 to the committee last year.
Yet despite having not much to show for their work on the cancer-research initiative, Perata's campaign consultants have been paid well by Hope 2010. For example, Tiffany Whiten, who worked on his senatorial staff, received $16,250 from the committee in the second half of 2009. And Christina Niehaus, who has worked on previous Perata campaign committees, received $11,950. Longtime Perata staffer Chris Lehman was paid nearly $72,000.
Whiten, Niehaus, and Lehman also have been working on the mayor's race, which held numerous fund-raisers and campaign events in 2009, and received $115,000 in donations. Yet even though Whiten and Niehaus appeared to have done more in that campaign, they were paid about the same as what they received from the cancer-research committee, raising questions about whether it has been subsidizing their work on the mayoral race. Perata's mayoral campaign, for example, paid Whiten $13,000, and Niehaus racked up $18,000 in fees in 2009.
Kinney said Hope 2010 has been heavily involved in legal and policy research for the initiative. He said Niehaus did "administrative work" for Hope 2010 last year, but now is employed exclusively by the mayoral campaign. And he said Whiten splits administrative duties between both committees.
While questionable, Perata's payments to these campaign consultants may be legal under another gray area of campaign finance law. The law does not specify how much work a consultant needs to perform in order to get paid. Thus, there may be nothing to stop Perata from paying these consultants less money from his mayoral campaign, even though they may do more work for it. In addition, there appears to be no legal prohibition preventing the consultants from working on both campaigns at the same time and at the same events, because they can be paid on retainer and not for actual hours worked or for specific tasks accomplished.
In short, Perata's decision to pay his consultants large fees for little apparent work on the cancer-research committee may be giving him another leg up in the Oakland mayor's race.
Perata's use of cancer-research funds to eat at upscale restaurants and stay at expensive hotels also provides more evidence that his committee doesn't appear to be a genuine effort to find a cure for cancer. For example, one of his new favorite haunts appears to be Le Rivage, a hotel and restaurant on the Sacramento River in the state's capital. He charged at least two meals totaling $668 from Le Rivage to the Hope 2010 committee last year, and labeled them "fund-raising."
Typically, when politicians raise funds, they receive campaign donations either at a specific event or shortly thereafter. But none of the many restaurant meals that Perata charged to Hope 2010 last year and called "fund-raising" appear to have actually resulted in donations to the committee. For example, he has charged at least four meals at Adesso in North Oakland, totaling $1,070, and labeled them "fund-raising," even though the committee recorded no donations on the dates of the meals or in the weeks afterward. Same with a $230 meal at Trader Vic's in Emeryville.
Kinney called the meals "legitimate" and said they involved "prospecting" about future fund-raising efforts. But finance records show that Perata also took care of his reading needs using the Hope 2010 committee, charging $222 at Books Inc. in Alameda and $670 at Diesel bookstore in Oakland. Plus, he spent $886 on his subscription to The Economist magazine.
One of the candidate's largest single expenditures was a late-July stay at the Inn at Spanish Bay in Pebble Beach, a posh resort overlooking Monterey Bay and the Pacific Ocean. He spent $663 for the getaway, and again labeled it "fund-raising." Kinney also called this expenditure "legitimate," even though the committee received no outside donations until Lee's contribution, three months later.
Perata can't blame anyone for mislabeling these expenditures, because as the official treasurer of Hope 2010, it is his legal responsibility to make sure they're accurate.
Indeed, the commingling of Perata's two campaigns appears to confuse even the candidate himself at times. At the end of the year, for example, he spent $447 on a "meeting" at Miss Pearl's Jam House in Jack London Square out of Hope 2010 funds. But then he subsequently noted on his campaign finance reports that the mayoral campaign should have paid for the meal.
The most potentially significant ramifications from Perata's use of the cancer-research committee could be on the Oakland mayor's race. As this newspaper reported last week, Perata's main opponent, Councilwoman Quan, had more money in her mayoral campaign account at the end of last year than the former senator had in his. But if Perata continues to use the cancer-research funds to enhance his image and keep his mayoral consultants well paid, then Quan will surely be at a disadvantage.
Some local good government advocates also worry that other potential candidates will be afraid to jump into the race knowing that he has the committee's money literally at his fingertips. "If I were a candidate and I knew that my opponent has control of an account with more than $700,000 in it that he can use to promote his image around town, that would concern me," said Ralph Kanz, former president of the Oakland Public Ethics Commission.
Perata also stands to benefit from a recent recommendation by City Attorney John Russo to raise the total expenditure limit in the mayoral campaign from $379,000 to $758,000 this year. As this newspaper and others noted last week, Russo's proposal would help Perata because his mayoral campaign had already burned through more than $100,000, primarily on consultants. And if the council were ultimately to reject Russo's recommendation, it would hurt Perata because he would be allowed to spend only about $270,000 this year from his mayoral account. By contrast, Quan is running an almost all-volunteer effort and has spent only about $7,000 so far, while raising more than $66,000. That means she and other potential candidates can still spend more than $370,000 before election day under the current rules.
Russo's proposal and the presence of the cancer-research committee also could undermine Oakland's new voting format, which will go into effect this year. One of the primary goals of ranked choice voting is to encourage more candidates to enter the political process. But if they're concerned about having to raise lots of money just to keep up with Perata, then they may choose to stay out of the race, thereby giving him a clearer shot at the mayor's office.
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