Thrift and Consequences

How a supervisor with just $42,500 in income services $1 million in mortgages

If one judged from the annual financial disclosure form he files with the city, Supervisor Leland Yee would seem to have a modest, thrifty lifestyle that is almost entirely devoid of frills or financial entanglement. Yee's most recent filing, for instance, shows that he owns an apartment house free and clear, is debt-free, and supplements his public servant's salary with a small teaching stipend.

But other financial records, both public and private, describe a more complex picture. Yee actually owns three homes, not one, and must service approximately $1 million in mortgage loans on them. The annual income the supervisor reports on his economic interest statement -- $42,500 -- could not possibly cover the more than $60,000 in yearly payments due on Yee's mortgages, not to mention property taxes owed on the three buildings.

Although he answered questions about a variety of other financial matters over several weeks, Yee declined to comment directly on his home mortgages, referring inquiries to Jim Stearns, a spokesman for the supervisor's re-election campaign, who insisted last week that the supervisor is repaying his mortgage loans entirely from legitimate funding sources.

Stearns said Yee and his wife, Maxine, are paying the notes from a combination of the supervisor's current income, his wife's long-term savings, and the partial proceeds from a recent equity loan on one of their properties. The campaign spokesman also produced banking records that, he claims, show Maxine has substantial savings and made large payments from those savings toward the loans in question.

Those records, however, relate to only relatively short periods of time, and do not show the source of the savings supposedly amassed by Maxine Yee, who has not worked since 1991. For that matter, key records Stearns provided to SF Weekly, including one page from a savings passbook, are not identified as belonging to either of the Yees.

And when SF Weekly asked for tax returns and other financial documents that would provide fuller information on the Yees' ability to pay their mortgages, Stearns issued a written statement.

"Your inquiry raises a legitimate question. As you know, the Yees have gone above and beyond the standard of disclosure for public officials in this state to answer your inquiry. They have amply demonstrated to your newspaper that their personal financial situation is completely aboveboard and honest," Stearns wrote. "Without any guarantees from you that you will respect their privacy and refrain from printing personal information in your newspaper that can be abused by those who engage in identity theft and other crimes, we cannot release any more documentation."


Like all public officials in California, members of San Francisco's Board of Supervisors are required to publicly disclose financial information about themselves once a year. This disclosure is called a "statement of economic interests." It includes information about the official's investments in the stock market, his real estate holdings, and his income. Information about a spouse's income and property holdings is also required to be disclosed.

Some types of income and assets do not have to be made public; among the assets not required to be reported are loans backed by the official's primary residence, bank savings accounts, mutual fund investments, real estate owned outside city limits, and property held in a blind trust. An economic interest form must be sworn to by the public official filing it; an official who intentionally files a false disclosure statement can be subject to a perjury prosecution.

The disclosure statements required by California law do not show a complete picture of an official's annual income and accumulated wealth. But the statements can be used to compare what is known about an official's income and his expenses, and as a guide to possible conflicts of interest.

It is clear from the public record that Yee is currently spending a great deal more money than he and his wife earn.

As a supervisor, Yee is paid $37,500 each year. He pulls down another $5,000 by teaching psychology at Lincoln University in San Francisco, bringing his annual pay to $42,500. According to the Yees and the supervisor's economic interest statement, Yee's wife, Maxine, has had no income in the last eight years. Two of his four children are in college, and two live at home.

Despite his relatively small family income -- approximately $3,500 a month -- Yee was able to qualify for $900,000 in home loans last year, which he used to buy a new house near Golden Gate Park in the Sunset District.

The Yees now live in their new home, but for decades the family resided in a four-unit apartment building in Noe Valley that Yee says he inherited, debt-free, from his father. The Yees shared the building with Yee's mother, who still lives there. There are no rent-paying tenants in the building; the supervisor plans to fix up two units in the building and, eventually, rent them out to help pay off the debt he recently took on. But Stearns says Yee is very busy governing and running for office, and does not know when the renovation will happen.

The Yees bought their new home, a three-story building with an "in-law" apartment on the ground floor, in July of 1999. They paid $875,000. To finance the purchase, the Yees took out a $400,000 equity loan from Washington Mutual Bank, secured by the Noe Valley apartment building they had been living in. From this loan, they made a $375,000 down payment on the new house. They also got a $500,000 mortgage loan from World Savings Bank, collateralized by the Sunset District building.

Yee did not report either loan on his April 2000 economic disclosure statement.

Although a public official is not required to disclose a loan secured by his principal place of residence, only one of Yee's loans could qualify for this exemption. Yee says that he plans to file an amended financial statement with the Ethics Commission to report at least one of the loans.

In a series of interviews, Yee responded to many questions about his personal finances, but referred detailed questions about his mortgage loans to Stearns. Stearns said the Yees hope to be candid, and therefore to be seen as a hard-working, thrifty couple who gradually saved a very large sum of money over many decades while living, rent-free, in their inherited Noe Valley home.

The Yees now are responsible for three loans -- the $400,000 equity loan on their Noe Valley home, the $500,000 loan secured by their new west-side home, and a loan connected to a $143,000 condominium they own in Berkeley. The $900,000 in loans taken out to purchase the new Sunset District home require about $62,000 in debt service each year, Stearns acknowledges. In addition, the Yees appear to owe some $11,000 a year in city property taxes on their two in-town residences, as well as tax payments on their Berkeley condo.

Stearns says Yee has been paying the $5,214 monthly installments for his two newest loans by, among other ways, dipping into his wife's savings account. Maxine Yee, a housewife, has worked sporadically during the Yees' 28-year marriage. According to Stearns, neither of the Yees is independently wealthy.

Stearns says about half of the loan payments to date were covered by $25,000 that was put aside from the principal of the Washington Mutual loan. Yee is, in effect, paying the loans back with proceeds from one of the loans, which, lending experts say, is unusual. Stearns declined to provide records showing the existence of this $25,000 fund, or any payments from it.

The balance of the monthly payments toward the loans that financed the new home are covered by Yee's salary and his wife's savings, Stearns says.

Through Stearns, the Yees provided SF Weekly with a paper trail intended to back up the spokesman's claims about the supervisor's finances. The documents provided, however, are fragmentary and, at times, not identified as belonging to either Leland Yee or his wife.

Stearns provided photocopies of $17,860 in checks the Yees wrote from August 1999 through March 2000 to World Savings Bank, apparently to service the $500,000 loan taken out at that bank. But the campaign spokesman declined to provide bank statements relating to the account on which the checks were drawn, making it impossible to determine the timing of deposits to the account, and the sources of those deposits.

Stearns also provided a photocopy of one page of an unidentified World Savings Bank passbook, which, he contends, shows that Maxine Yee has the savings necessary to cover payments on the Yees' mortgages for many months. This savings account passbook shows withdrawals totaling $17,040 from September 1999 to April 2000, and indicates a current savings balance of $50,999.

The single passbook page provided to SF Weekly is not identified as belonging to Maxine Yee. Stearns declined to show pages from the remainder of the passbook, or to reveal the dates or amounts of any deposits to the account.

Through Stearns, the Yees also provided receipts from Washington Mutual Bank showing $21,289 in payments that Stearns says went toward the $400,000 equity loan. The receipts do not indicate who made the payments. Stearns says the Washington Mutual loan is paid by check, but declined to produce canceled checks that would document payments on the loan.

In the end, the documents provided by Stearns, because they are incomplete, do not prove whether the Yees have sufficient savings to make monthly payments required by the large loans they have recently taken out. Those documents also do not give any indication of how or when such savings might have been accumulated. When SF Weekly requested documents, including tax returns, that would show the sources of the Yees' income and savings, Stearns declined, citing the Yees' concerns about privacy.


Leland and Maxine Yee married in 1972. Maxine worked as a secretary for three years while her husband got his doctorate in developmental psychology at the University of Hawaii. From 1975 to 1980, Leland Yee worked as a child psychologist for the city of San Francisco. Stearns says Yee does not remember his salary at that time. He spent the next decade as a psychologist with the Oakland Unified School District, at a $50,000 salary, followed by six years as a $70,000-a-year administrator for a community-based nonprofit corporation in Santa Clara County.

In 1996, he was elected a San Francisco supervisor, and received an annual salary of $24,000, raised recently to $37,500.

While Yee worked, his wife raised four children and ran the household. From 1984 to 1991, she owned and operated a video store in Daly City. She has not earned any money since, Stearns says.

The Yees declined to reveal how much money Maxine made -- or saved -- while running the video store. They also declined to explain why they chose to put their cash into a bank savings account, which pays very little interest, as opposed to stocks, bonds, certificates of deposit, or the investment vehicles generally used for large amounts of savings.

And so a central question remains unanswered: If the Yees have enough savings to keep paying off debts that their current income clearly cannot cover, where and when did the money originate?

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