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Tuesday, May 25, 2010

Kamala Harris Complaint: Chris Kelly Illegally Financed Campaign with Facebook Stock

Posted By on Tue, May 25, 2010 at 2:15 PM

click to enlarge Shady financier?
  • Shady financier?
San Francisco District Attorney Kamala Harris has filed a complaint with state regulators, crying foul over the method former Facebook honcho Chris Kelly is using to direct millions into his campaign for state Attorney General.

In a letter sent today to the state's Fair Political Practices Commission, Harris' attorney, James Sutton, asserts Kelly has illegally concealed the sources of the $9.6 million he has contributed to his own campaign. On Saturday, the Los Angeles Times ran a story questioning the transparency surrounding the investments of Kelly and other rich candidates for statewide office, such as fabulously wealthy Republican gubernatorial hopefuls Meg Whitman and Steve Poizner.

AG candidate Harris' complaint alleges that Kelly borrowed money from

private investors, bought Facebook stock options, and then sold the

options, allowing himself to pour more money into his own campaign. The

Harris campaign argues that these loans were campaign contributions,

and thus should have been subject to the state's $6,500 donation limit.

The complaint also argues that Kelly should have fully listed the

buyers for the stock on his mandatory income-disclosure forms.

"Though short-term loans from shady private equity firms to exercise stock options in private companies may be the way business is done at Facebook, statewide campaigns operate under a very different set of rules," Sutton writes in the Harris complaint.

Robin Swanson, spokeswoman for the Kelly campaign, said Kelly hadn't broken any laws, and that the transactions cited by the Harris campaign are simply personal financial dealings. "It's his own private money," she said. "It's his own private financing."

Swanson said the complaint -- filed just two weeks before the June Democratic primary -- was a "publicity stunt" to draw voters' attention away from the fallout over Harris' own handling of recent scandals involving the San Francisco crime lab. Last week, a San Francisco Superior Court judge assailed Harris' failure to disclose problems at the lab to criminal-defense attorneys. "I think she's clearly trying to deflect attention from the fact that a judge said she violated the civil liberties of defendants," Swanson said.

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