San Francisco Chronicle

Ethics panel looking into Breed campaign

Complaint leads to investigat­ion of small donations

- By Dominic Fracassa

San Francisco Ethics Commission investigat­ors are probing London Breed’s 2018 mayoral bid for possible campaign finance violations, according to documents obtained by The Chronicle.

The alleged violations are tied to a cluster of small campaign donations made by nine people from January to May 2018. Each of the donors was employed by — and had varying degrees of leadership at — companies that secured city contracts that Breed had a role in approving months earlier, in some cases as president of the Board of Supervisor­s and in others as acting mayor, after the death of Ed Lee.

To prevent “paytoplay” politics, San Francisco officials are not allowed to accept donations from highrankin­g people doing business with the city for a year, even if the official had a perfunctor­y role in approving

the contract. The oneyear ban, however, took effect this year. The blackout period was shorter — just six months — when Breed was running for mayor last year, the standard her 2018 campaign had to follow.

Jesse Mainardi, Breed’s campaign attorney and a former Ethics Commission deputy director, said her campaign had not heard from the commission about the investigat­ion.

“Our campaign is scrupulous about complying with all campaign finance rules,” Mainardi said. “We have heard nothing from the Ethics Commission on this matter, but if and when we do, we will be happy to work with them. If there’s anything we need to correct, we will correct it immediatel­y.”

Donors also have to comply with that law and could face penalties if the investigat­ion determines that they broke the rules. For Breed and the donors, each violation carries a maximum penalty of $5,000, but investigat­ors can reduce the penalty if the violations, depending on the circumstan­ces, are found to be accidental.

Elected officials are required to notify the Ethics Commission anytime they approve a contract. Those notices are publicly available, and both contributo­rs and candidates are supposed to check them to root out any prohibited donations.

The donation form from Breed’s 2018 campaign asks contributo­rs to certify that they are “not an owner, director, officer, or named subcontrac­tor of any entity that is currently negotiatin­g a contract with the city,” and that they hadn’t received a contract from the city in the past six months.

The investigat­ion stems from a complaint filed in September and could take years to conclude. The Ethics Commission protects the identity of people who file complaints.

Partially redacted documents reviewed by The Chronicle show the probe began at some point this year. Opening an investigat­ion doesn’t automatica­lly suggest violations occurred, but it does indicate that the Ethics Commission’s enforcemen­t division conducted a preliminar­y review and decided to push ahead with a formal inquiry. The commission declined to comment on an open investigat­ion.

The contractor donation ban applies to a company’s top brass and major investors, like a CEO or chief financial officer, a member of the board of directors and other “principal officers.” How the law applies to contributi­ons made by subcontrac­tors is less clear: Whether the ban applies to the company itself, or the topranking people within it, will probably be a key point of the investigat­ion. Four of the nine donors at issue in the probe were subcontrac­tors on a complex, nearly $40 million contract for engineerin­g and planning services tied to the longrunnin­g effort to bolster the aging seawall along the city’s northern waterfront.

Five donors made contributi­ons of $100 to $500 — the maximum amount — after their contracts were approved by the Board of Supervisor­s and finally signed by Breed as acting mayor in late December 2017. Some of the donors don’t appear to fit the bill of a top officer expressly prohibited from donating.

A few weeks after Breed signed a resolution approving $15 million in financing for Bridge Housing to build lowincome apartments at 1950 Mission St., Douglas Jones, who identified himself as a director of Bridge Housing from Gardena (Los Angeles County), donated $100. A spokeswoma­n for Bridge Housing said the organizati­on “has no record of any board member or employee by the name of Douglas Jones.”

Several contractor­s who made donations said they didn’t recall making the contributi­ons. Some said they were not aware of the thensixmon­th ban on contractor donations and were incredulou­s that Breed’s pro forma role in signing the deals could be problemati­c.

Theotis Oliphant and Muhammad Nadhiri, managing partners at Axis Developmen­t Group, a real estate developmen­t firm, donated a combined $1,000 to Breed’s campaign over the course of four months after she signed a resolution approving up to $110 million in bond financing for a 117unit apartment building at 2675 Folsom St., an Axis project.

Oliphant denied any connection between his and Nadhiri’s donations and the contract. Ordinarily, neither tends to scrutinize the officials and candidates he’s asked to donate to, Oliphant said.

“We were probably contacted by some business associate we have, a law firm or a consulting firm that was hosting a fundraiser, and they asked us to write a check, so we did. That’s usually how it plays out,” he said. “There wasn’t this global conspiracy to work with London Breed. She had nothing to do with it.”

Susan Sangiacomo, a real estate investor with Trinity Properties, donated $500 weeks after Breed signed a resolution extending Trinity’s lease of the law library at 1145 Market St. through 2023. Sangiacomo did not respond to requests for comment.

Michael Thiel, a member of the board of directors at nonprofit Swords to Plowshares, also donated $500 less than six months after the approval of a $51 million bond sale to finance a 119unit apartment building for veterans and lowincome families. Swords to Plowshares is one of two organizati­ons operating the joint venture that is developing the project. Thiel could not be reached for comment.

The ethics complaint also details donations of $250 to $500 made by four subcontrac­tors involved in a $39 million contract for engineerin­g and design services tied to the seawall project. Breed voted to approve that contract in September 2017, while she was president of the Board of Supervisor­s. All of the donations were made less than six months after Breed voted on the contract.

Some of the subcontrac­tors said the law allowed them to contribute within the sixmonth window because the donations came from them personally, not from their companies. The law appears to be unclear on the distinctio­n between a personal donation from a subcontrac­tor and a contributi­on from the subcontrac­ting company itself.

“It wasn’t a company donation, it was my donation,” said Dwayne Jones, founder and president of RDJ Enterprise­s, one of the subcontrac­tors on the seawall deal. “I’ve known London Breed for well over 20 years.” His $500 donation, he said, “had nothing to do as a business or politics. It was me supporting someone who I thought would do a good job.”

Rosemary Dilger, then a senior manager at RDJ and a former legislativ­e aide to Breed, donated $250. Dilger, now director of government affairs at Civic Edge Consulting, did not respond to a request for comment.

Kevin Conger, a founding partner of CMG Landscape Architectu­re, said he didn’t remember making the $250 contributi­on to Breed but also believed subcontrac­tors were immune from the sixmonth ban on contributi­ons to city officials.

“Obviously I wasn’t aware of the rule,” said Guy Hollins of Hollins Consulting, who donated $500. “I take the law very seriously. If there’s any sort of problem or anything I need to do to correct it, I’ll move forward with that.”

Larry Bush, a cofounder of Friends of Ethics, a watchdog group, said incidents like this one corrode the public’s trust in city government.

“There are some campaigns that let things slip up, but taking money from people who have business before you isn’t just a slipup, it’s a violation,” he said.

“Our campaign is scrupulous about complying with all campaign finance rules. We have heard nothing from the Ethics Commission on this matter, but if and when we do, we will be happy to work with them. If there’s anything we need to correct, we will correct it immediatel­y.” Jesse Mainardi, London Breed’s campaign attorney

 ?? Jessica Christian / The Chronicle ?? The Ethics Commission is reviewing donations to London Breed by five people tied to firms with business with the city.
Jessica Christian / The Chronicle The Ethics Commission is reviewing donations to London Breed by five people tied to firms with business with the city.

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