Posted on 01/27/2004 9:01:23 AM PST by NormsRevenge
Edited on 04/12/2004 6:04:34 PM PDT by Jim Robinson. [history]
A Sacramento judge ordered Gov. Arnold Schwarzenegger on Monday to stop raising money to repay a $4.5 million bank loan to his recall election campaign account, saying that it's likely the financing maneuver will be ruled illegal.
Sacramento Superior Court Judge Loren McMaster's ruling came in a lawsuit that contends Schwarzenegger violated Proposition 34's campaign finance limits when he secured the loan from a bank and then lent the money to his campaign for governor.
(Excerpt) Read more at sacbee.com ...
Governor broke law, judge rules
Schwarzenegger's $4 million loan made in good faith, campaign treasurer says.
The Orange County Register
SACRAMENTO – Gov. Arnold Schwarzenegger broke state campaign-finance laws when he loaned his recall campaign $4 million last year, a judge ruled Monday.
By taking out a $4.5 million bank loan, then turning most of the money over to his campaign, Schwarzenegger broke a law that forbids candidates from loaning their campaigns more than $100,000.
Critics said the loan, which Schwarzenegger intended to pay back with donations collected after the recall race, constituted a $4 million campaign contribution shielded from public disclosure, since voters would not know until after the election who helped Schwarzenegger pay it off.
A Schwarzenegger campaign treasurer said in a prepared statement that the governor made the loan with the approval of the Fair Political Practices Commission. Sacramento Superior Court Judge Loren E. McMaster, in a preliminary ruling, said the FPPC guidelines cited by the campaign are an erroneous interpretation of Prop. 34, the campaign-finance ballot initiative approved by voters in 2000.
"The court today held that the Fair Political Practices Commission misinterpreted the Prop. 34 loan statute which permitted Gov. Arnold Schwarzenegger to loan his campaign committee $4.5 million. The campaign committee intends to comply with the judge's order. We are gratified that the judge held that the campaign acted in good faith and in reliance on the FPPC's erroneous regulation," said Colleen McAndrews, the campaign treasurer.
FPPC officials could not be reached for comment.
"I think this is a bit of sunlight on the fact that, with all his popularity and brand ID, this governor has engaged in the same type of politics as everyone else," said Jamie Court of the Foundation for Taxpayer and Consumer Rights. "What Schwarzenegger did was basically take a back door and use a kind of institutional money-laundering."
The suit, filed days before the Oct. 7 recall election by a Sacramento labor leader, demands that Schwarzenegger immediately pay back the bank loan. McMaster ordered the governor to halt any repayments to himself but delayed ordering payback to the bank until a final ruling.
After initially promising voters he was rich enough to avoid fundraising altogether, Schwarzenegger raised roughly $22 million in contributions and loans to help himself win. Campaign staff members said none of the nearly $4 million Schwarzenegger has raised since the election has gone to pay back the loan.
Governor broke campaign law, judge rules
By Barry Witt
Mercury News
Gov. Arnold Schwarzenegger broke state law last year when he used a loophole to loan his campaign committee $4 million, a move that prevented voters from knowing before Election Day who would end up paying the governor's campaign bills, a judge ruled late Monday.
Schwarzenegger will probably face no fines as a result of the ruling, but he will be blocked from paying himself back with the more than $3.4 million he has raised since his election and will have to convert the loans into a personal contribution to his campaign.
The millionaire former movie star contributed an additional $4.85 million in cash to his campaign before the Oct. 7 recall election.
Sacramento County Superior Court Judge Loren E. McMaster said Schwarzenegger's use of a loophole to avoid a $100,000 cap that voters imposed in 2000 on candidate loans ``flies in the face of the express purpose of the law.'' He said Schwarzenegger's approach would allow rich candidates to ``evade both the $100,000 loan limitation and the requirement of pre-election disclosure of contributions, while those limitations would apply to candidates of more modest means.''
Schwarzenegger's campaign treasurer, Colleen McAndrews, said in a statement that ``the campaign committee intends to comply with the judge's order.''
Schwarzenegger was sued over the loans five days before the recall vote by Berkeley attorney Lowell Finley on behalf of Sacramento labor leader Bill Camp, who was opposing the recall of then-Gov. Gray Davis.
``The voters adopted a loan limit as part of Proposition 34 to prevent candidates from fronting large amounts of money for the final portion of their campaign and then after the election taking special-interest contributions to repay themselves,'' Finley said.
`Illusion' over donors
While there's no way to know how much Schwarzenegger's use of the loans influenced the outcome of the election, Finley said, ``it did make a difference in how long he was able to maintain the illusion that he was above special-interest politics.''
Schwarzenegger said days before the election that voters should ``trust me'' and shouldn't be concerned whether they knew who his donors were before or after the election. ``I will not take money from special interests, from any of the unions or Indian gaming,'' he said.
He has taken hundreds of thousands of dollars from developers, insurers and dozens of other businesses.
Loophole cited
McAndrews, Schwarzenegger's treasurer, deflected blame to the California Fair Political Practices Commission, which in 2002 adopted a regulation allowing candidates to ignore Proposition 34's $100,000 loan limit, if they used bank loans to provide the money for their campaigns and were personally liable for repayment in the event the campaign didn't pay the money back.
In a footnote to his ruling, McMaster said that Schwarzenegger ``no doubt acted in good faith when the subject loan was obtained since'' he had the FPPC's regulations ``to rely upon.''
But McMaster -- as he did in a September case involving another section of Proposition 34 and Lt. Gov. Cruz Bustamante -- ruled the FPPC wrongly interpreted the ballot measure and created an ``absurdity'' by opening the loan loophole.
Proposition 34 ``prohibits a candidate from personally loaning his or her campaign an amount, the outstanding balance of which exceeds $100,000, regardless of the original source of the monies used by the candidate to fund the personal loan,'' McMaster wrote. ``The provisions are not ambiguous or susceptible of more than one reasonable interpretation.'' In response to McMaster's ruling, the FPPC earlier this month closed that loophole.
Officials with the FPPC were not available for comment on the judge's latest ruling.
The commission also has sued Bustamante for up to $9 million in penalties, saying he raised money in a way that violated even the loophole the commission had opened. But in Schwarzenegger's case, there appears to be little likelihood of an FPPC suit against the governor because there have been no allegations that he violated commission rules.
In addition to the $4 million in loans to his campaign, Schwarzenegger loaned $500,000 to a second committee advocating the recall of Davis, to which he has also donated $650,000. It was unclear Monday whether McMaster's ruling would apply to that loan.
-PJ
You obliquely seem to be saying just ignore anything that may even raise any questions of impropriety.
You're welcome to your opinion and most welcome to just moveon if you so choose, but don't begrudge others because you don't want anyone to examine a popular political official and their methodologies and policies for "effecting change" or setting a new tone. Thanks.
I hate corruption, dishonesty, and theft. Don't you?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.