A Fair Campaign?
Mayor Frank Jordan is the target of a "massive" audit and investigation to determine whether he violated state campaign laws in his 1991 mayoral campaign, according to sources familiar with the probe.
The state Fair Political Practices Commission ordered the audit, which is being conducted by the state Franchise Tax Board, according to these sources.
Jordan has responded by filing papers with the Registrar of Voters on April 13 to reopen his 1991 campaign committee, writing that he was doing so "in order to pay new bills in connection with the 1991 campaign."
Jordan also has reportedly retained Roger Brown, the former chief of enforcement of the Fair Political Practices Commission and now a private attorney in Sonora County.
Jordan's 1991 campaign committee drew the attention of the state agency charged with enforcing campaign laws because Jordan failed to list the occupation of hundreds of his contributors. The law requires occupations to be disclosed, and levies a penalty of up to $2,000 for each violation.
State investigators hone in on an omission of contributor occupation as a sign of potential money-laundering. In money-laundering schemes, a business or individual gives funds to a number of others, who then contribute the money in their own names and hide the true source of the contribution. It is much harder to spot such schemes if contributor occupations are omitted, since a cluster of contributors from the same business provides clues to investigators.
Sources familiar with the state investigation say that the review of Jordan's campaign records has turned up additional irregularities and possible violations of state and local laws.
Following his election, Jordan raised more in new contributions than he owed for his campaign. He handed out lavish bonuses to his campaign workers and, at the same time, suddenly found that he "owed" himself $35,000 for a previously undisclosed loan -- and promptly paid himself back. Records are now being sought to demonstrate that the loan was, in fact, made.
Jordan's 1991 records show he owed about $7,000 to the Plumbers Union but do not record that the debt was paid. The effect of skipping out on the debt would be to convert it into a contribution. But that would be illegal in San Francisco, since no contributions above $750 are allowed in mayoral races. Jordan is being asked to produce evidence to back his claim that the debt was paid, according to investigators.
Jordan may also face new bills if the IRS determines that he improperly claimed that his 1991 campaign staff were independent contractors. Jordan was the only major mayoral candidate who did not pay withholding taxes on his campaign staff, and the IRS takes a severe view of political committees that seek to avoid taxes by claiming campaign workers are contractors.
To pay fines and attorney fees arising from the investigation into his 1991 campaign, Jordan would need to reopen his committee since state law would not allow those expenses to be paid by Jordan's new re-election committee. The 1991 committee closed with a "zero" balance, which means that Jordan will have to fill its coffers before he can pay the "new bills."
Jordan filed to reopen the committee just one day before he went to court in a suit to halt a new campaign reform law. That law would have inhibited Jordan's ability to raise money for his 1991 committee, since it banned contributions from city contractors. Although Jordan lost his court case on contractor contributions, a petition drive against the reform supported by Jordan suspended the law anyway.
Soliciting funds from city contractors may be especially important to Jordan now, since by law he cannot tap more money from his 1991 contributors. Contractors who have not given before to Jordan thus could conceivably give $750 to his 1991 campaign and give again to his 1995 re-election committee.
Investigators say that Jordan has slowed the investigation with claims that his records can't be located, or must be reconstructed. Jordan could well be hoping that he can add months to the investigation, pushing the result past this fall's election.
Jordan 1995 campaign manager Clint Reilly confirms that Jordan's 1991 campaign committee has reopened because of the FPPC probe.
"From what I understand, the reason the account has been reopened is to pay Mr. Brown the fees he is owed for handling the issues that have been open issues with the FPPC surrounding the 1991 campaign report," says Reilly. "That's the extent of what I know."
Kunin wasn't talking about Papa Jordan's political machine but Sonny Boy's ride-aboard steam cleaner bought to scour city sidewalks with soap and high-pressure steaming water.
Still, Kunin might as well have been tipping the wink to the political machinations that went into creating and funding Frank Jr.'s nonprofit foundation.
The group, Neighbors for Neighborhoods, got an IRS OK as a do-gooder group deserving of tax-exempt, tax-deductible status. Overall, its aim was to help organize citizens to fill one of Dad's promises: that litter would be picked up and sidewalks and streets cleaned to give a lift to civic spirits. But while doing good for others, it also did some good for Frank, Frank Jr., and Frank's campaign treasurer, Jack Immendorf.
According to IRS and Registrar of Voters records, here's how it started. During Jordan's first year in office, he put Frank Jr. on the payroll of his "Friends of Frank Jordan" committee. In all, Junior got $22,974.48 that year, with $1,500 still owed at year's end.
Not that much, you say, considering the high rents in San Francisco. But Junior probably didn't pay high rents; his voter registration shows that during this time he lived at Frank and Wendy's Fillmore Street mansion.
But there was a better way to pay Junior's expenses than through political funds. Political contributions aren't tax deductible, but it might be possible to lure big bucks from favor-seekers if a tax write-off is in the offing. Why not set up a foundation, so that contributions could be tax deductible and expenses tax exempt?
Well, that's just what happened in December 1992, when Frank Jr. filed for charitable status for Neighbors for Neighborhoods.
As 1993 began, Junior suddenly dropped off the Friends Committee payroll after the first two "pay periods," and in mid-February Jordan's Friends Committee "donated" $15,000 to the new Neighbors for Neighborhoods foundation. Registrar of Voters records show that Jordan's Friends Committee gave a total of $26,500 to the foundation that year.
When asked for the foundation's records, Kunin made IRS filings for Neighbors available. The 1993 records show $22,479 in salaries -- which was paid to Frank Jr. (who is also the president of the foundation).
Frank Jr. drew another $4,250 from yet another Jordan committee, "Yes on Proposition V," a November 1993 ballot measure campaign committee seeking to mandate fingerprinting of welfare recipients.
Jordan's Friends Committee wasn't the only big donor to his son's foundation.
An equally large donor was Wells Fargo Bank, which contributed $27,000 in 1993. Moreover, the contribution didn't go through the bank's usual foundation channels, but was arranged by tapping funds from various Wells branches in the city usually devoted to neighborhood public relations efforts.
And who do we know at Wells Fargo? None other than Ms. Wendy Paskin Jordan, a Wells vice president at the time. So did Ms. Paskin Jordan have a hand in shaking the Wells money tree?
Oh noooo, says Wells spokesman Craig Wolfson. "As you're probably aware, Wendy stayed well clear in her capacity as a Wells Fargo employee of anything to do with politics and local government," says Wolfson. Right-o.
Who besides Frank Jr. got the cash? Remember Jack Immendorf, Hizzoner's treasurer and writer-of-checks to the Neighbors foundation? Kunin's IRS records show Immendorf got back $12,250 in rent payments for the use of an office by the foundation at the same address where Immendorf hangs his hat.
As this is written, Neighbors for Neighborhoods is in the process of being dissolved, swept from existence like a rude stain sudsed away from the city's concrete. Frank Jr. has found a new berth as a plumber's apprentice through Local 38, one of his dad's biggest political backers. Kunin is making movies, but is nostalgic for the time he spent astraddle the Big Bertha of steam cleaners. "That was one of my favorite things to do," says Kunin. "I think it was a little short-lived. It could have gone on longer. You can only do what you can do. But I'm proud of what we did."
So where is the clean machine now? It was put into service at the Recreation and Parks Commission, where it does weekly chores hosing down the sidewalks around Civic Center.
And just who do we know at Rec and Park able to take this situation in hand? Well, Jack Immendorf just happens to also be the president of the Recreation and Parks Commission. But did Immie have anything to do with the handoff?
Oh noooo, say Rec and Park officials. "Apparently this was something that had been donated," says Rec/Park official Mike Moreland. "I don't know who the organization was."
They Have Answers
We Have Questions
What's in a name? If the name is the Committee on Jobs, a lot -- and not all of it is good. That may be the reason why Jobs honchos and consultant Don Solem have formed a new (front) group called San Franciscans for Sensible Government. Its Jobs-like aim? "Common sense solutions to solving San Francisco's budget crisis," followed by seven bulleted points. Not included: Supervisor Tom Ammiano's increased tax package (or any new taxes, for that matter). Son-of-Jobs, which can be reached at Jobs consultant Solem's office phone, hopes to line up unaffiliated business/neighborhood types as accessories to tart up the old garb. Cost: "Several hundred thousand" in the next two months, according to one Jobs source .... Roberta Achtenberg is the first of the mayoral candidates to agree to the request Paper Trails has made to all the hopefuls that they disclose their 1994 federal income tax filing. "It is an issue in this campaign," says Achtenberg campaign manager Eric Jaye. "She will challenge other candidates to abide by the same openness." ... Willie Brown may already have tapped someone to serve as his mayoral chief of staff, even though he has yet to formally announce as a candidate (not to mention win the election). City Hall sources say Brown has asked former Chief Administrative Officer (and ex-Brown Sacramento chief of staff) Rudy Nothenberg to lead a Brown City Hall. This same account has Nothenberg asking City Attorney Louise Renne for an opinion on how many hours a week he can work without jeopardizing his city pension. Nothenberg didn't return calls .... Does S.F. GOP chair Arthur Bruzzone think his band can defeat Willie Brown twice? Bruzzone was among those bussed to Orange County to aid in the recall of Assemblyman Paul Horcher. Horcher's defeat has been widely viewed as a key domino pushing Brown toward the S.F. mayor's race, and the S.F. GOP tend to the Jordan side. But Bruzzone's not worried: He thinks Brown isn't running for mayor. "He already is the mayor," Bruzzone says. "He's gone to social events as mayor, and he's bored with it already." Further, Bruzzone's finger-on-the-GOP-pulse tells him Brown "has Republican support anyway -- as many as 10 -- to allow him to stay in power" in Sacramento .... More ballot measures? Papers were submitted at the Registrar of Voters Office last week for a petition to put a moratorium on all Social Service programs in the neighborhoods until a master plan is developed. A second initiative was filed to reduce the number of top and midlevel managers .... Plans for a $70 million to $100 million bond to continue building affordable housing are falling apart. Jordan promised Calvin Welch and other housing advocates that he would replenish the city funding via a November bond, but the Mayor's Office plans were considered ill-defined by a bond review committee, which then voted by a 2-to-1 margin to oppose them. Efforts by the Board of Supervisors to revive the plan for the November ballot were deemed "a waste of time" even by a proponent of the housing, because the negative spin from the bond review committee would doom any chance of winning the necessary two-thirds voter approval .... City Attorney Louise Renne confirmed that she is undertaking an investigation into allegations of campaign wrongdoing behind last year's Proposition G, which created the new Building Inspection Commission. Under the law, Renne has until mid-June to actually bring a formal charge; after that, a citizen's group is authorized to go into court on its own behalf. Meanwhile, a commissioner has filed a complaint against the citizen's group for complaining about the commission, hoping to pull the whistle from the whistle-blower.
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