As I reported the other day, Venice Beach BID proponent and shady illegal hotelier Carl Lambert donated $1400 to Eric Garcetti and $700 to Mike Bonin in 2015. Here is an argument that they ought to give that money back to Lambert immediately.

Not just because it’s the right thing to do. We’re all grownups here, and that’s not so much why things get done. But because it’s probably illegal for them to have accepted the money, or at least for Lambert to have contributed it. To explain why this is the case I have to talk about the campaign finance laws of the City of Los Angeles, which can make anybody’s poor head spin. So forgive me, but perhaps you’ll find it worth the trouble. The whole law is at LAMC Article 9.7, but it’s not necessary to read the whole thing.¹ The section we are interested in today is LAMC 49.7.35, which covers Bidder Contribution and Fundraising Restrictions. This muni code section² implements Section 470 of the City Charter, which covers Limitations on Campaign Contributions in City Elections.³ At Charter Section 470(a) we find this noble statement of the purpose of the whole thing:

The purpose of this section is to encourage a broader participation in the political process and to avoid corruption or the appearance of corruption in city decision making, and protect the integrity of the City’s procurement and contract processes by placing limits on the amount any person may contribute or otherwise cause to be available to candidates for election to the offices of Mayor, City Attorney, Controller and City Council and promote accountability to the public by requiring disclosure of campaign activities and imposing other campaign restrictions.

Now, it is a fundamental principle in the American legal system that actions can only be illegal if there is an explicit statutory statement that they are illegal. Otherwise they’re legal. So while this statement of purpose has some force, mostly as a guide to interpreting the salient laws, it doesn’t in itself make anything illegal. Obviously Carl Lambert’s contributions to Garcetti and Bonin create the appearance of corruption in city decision making, but if that were sufficient to trigger a criminal prosecution then pretty much every donor to every incumbent candidate would have to be locked up.⁴ Thus we have to look to the parts of the law that implement this statement of purpose.

The Charter Section that we are interested in here is 470(c)(12)(B), which states in pertinent part⁵ that:

The following persons shall not make a campaign contribution to the Mayor, the City Attorney, the Controller, a City Council member, a candidate for any of those elected City offices, or a City committee controlled by a person who holds or seeks any of those elected City offices … A person who bids on or submits a proposal or other response to a contract solicitation that has an anticipated value of at least $100,000 and requires approval by the elected City office that is held or sought by the person to whom the contribution would be given…

Let’s run through the elements of the law here to see why it’s highly plausible that it forbids Carl Lambert from making contributions to either Eric Garcetti or Mike Bonin:

…a person who…

Carl Lambert is pretty evidently a person.⁶ Note that the sarcasm may obscure an important issue here.⁷ The word “person” in the law means more than just an individual. It includes any legal entity.⁸ This may be important later or maybe not.

…bids on or submits a proposal or other response to a contract solicitation…

Don’t forget that every BID signs a contract with the City, so there is always a contract associated with a BID. Now, although it may appear that laws are written in ordinary English, it’s best to assume that every word or phrase is a technical term, subject to definition. Most laws have a section full of definitions. This Charter Section does not, but that’s where the implementing ordinances enshrined in the LAMC come in to play. The salient terms for this Charter Section are defined in LAMC 49.7.35(A).

Now, a contract solicitation is defined to be “a request for proposals, request for bids, request for qualifications, or any other request, whether written or verbal, for purposes of entering into a contract.” I don’t yet have any evidence to suggest that the City put out an explicit proposal saying in effect to Venice Beach property owners that they should start a BID, although that may have actually happened depending on how involved CD11 was with this process. However, it’s well-known that the City welcomes the formation of BIDs, and that Miranda Paster and the Clerk’s Neighborhood and Business Improvement District (NABID) Division stand ready at all times to help any group of property owners⁹ form a BID. It’s not implausible that this is “…any other request…for purposes of entering into a contract…”

Finally, we know that Miranda Paster and/or NABID staff met with Venice Beach BID proponents at least during the week of September 30, 2014 and during the week of August 17, 2015. These meetings are surely an “…other response to a contract solicitation…. What I’m missing here is proof that Carl Lambert was among the BID proponents that met with Clerk staff on either of these occasions. I’m sure that he was, but no one will say for sure. That being said, check out this email chain from July 2016 between Becky Dennison and Debbie Dyner-Harris,¹⁰ in which the following fascinating exchange occurs:

Becky Dennison to Debbie Dyner-Harris (July 12, 2016, at 9:48 AM): There is a Board for the Property Owner’s [sic] Association and I think it’s reasonable for the public to know who they are prior to the Council vote on August 23^rd, since the organization and its current Board will be given initial authority over the BID and its resources.

Debbie Dyner-Harris to Tara Devine (July 12, 2016, at 9:57 AM): can i provide her this information? i presume so but not sure if the three board members are okay with that?

Debbie Dyner-Harris to Becky Dennison (July 12, 2016, at 4:39 PM): I believe that the board will be formally elected if the BID is officially approved and formed. Again, I urge you to reach out to Tara Devine with detailed questions as I am not going to be your best source of information.

Isn’t it interesting that Debbie Dyner-Harris are in a conspiracy to withhold this information? Debbie Dyner-Harris pretends to Becky Dennison that she doesn’t know when actually it’s clear from her remarks to Tara Devine that she actually does know. She then lies via creating a false impression when she says that she’s not going to be Becky Dennisonn’s best source of information. This creates the impression that she doesn’t know when the truth is that she’s not the best source of information because she’s not going to tell.

Anyway, it’s important to know for sure whether Carl Lambert is on the Board, but it’s not essential to the argument.¹¹ After all, the Venice Beach Property Owners Association wasn’t registered with the State of California until April 6, 2016, which is after the contributions were made.¹² However, he almost certainly was one of the proponents.¹³ For the purpose of the argument I’m making here, Carl Lambert is the person.

…that has an anticipated value of at least $100,000…

It seems obvious that this element is met. After all, according to the Clerk’s report on the proposed BID, the total revenue of the BID is anticipated to be $1,871,119. This is far more than the $100,000 threshold in the law. However, I am told by Russ Strazzella¹⁴ of the Bureau of Contract Administration that thresholds similar to this one¹⁵ have to be met by actual City payments. In the case of BIDs, he told me, the money is assessed by the owners and for the owners, so no City money is involved, which, according to him, makes BIDs exempt from laws about contracts with value-based thresholds. This is known as the “zero valuation theory” of BID funding. That theory remains to be tested in all contexts, and especially in the context of the municipal campaign finance law.

According to City Ethics Commission staff members with whom I discussed the issue, it is not settled at all that the zero valuation theory exempts BIDs and their contracts from this law. It might well do, but it might not exempt them at all. It’s still to be determined.¹⁶ In the case of the Venice Beach BID, the fact that the City is on the hook for over $460,000 of the assessments makes it even more plausible that the zero valuation theory fails to exempt this contract from the ordinance. That is straight-up City money that will go to the BID. Anyway, as I said, it’s not completely obvious that this element is met, but it’s very, very plausible that it is.

…and requires approval by the elected City office that is held or sought by the person to whom the contribution would be given…

Turning back to LAMC 49.7.35(A) we find at subsection (1) that “Approval by an elected City office” is a technical term, and is defined in pertinent part to mean:

…approval of a contract or selection of a pre-qualified list of persons to contract with the City in any of the following circumstances: … The contract requires approval of the elected City officer or the elected City officer’s office pursuant to City law, executive directive, or City Council action.

There’s a lot of stuff in the Section about awarding authorities and so on, but we can ignore it all, because¹⁷ BID contracts require City Council approval. A lot of City Council approval. Furthermore, since these contracts are awarded by ordinance, the Mayor must sign off on them as well. Presumably he even has the power to veto them. Thus BID contracts require both Mike Bonin’s and Eric Garcetti’s approval.

So, assuming that the gaps in the argument can be filled, this puts Eric Garcetti and Mike Bonin squarely on the list of people to whom Carl Lambert is forbidden to make campaign contributions. I will be reporting this whole thing to the City Ethics Commission as soon as I can write it up in a more formal style¹⁸ and they’ll sort out the details that are beyond the reach of my investigative ability. I’m limited to the California Public Records act, which is sadly easy to evade, and the good will of the City agencies of whom I make my requests, which is fairly nonexistent at this point.¹⁹ But the CEC’s investigative powers, granted by the Charter at Section 470(n)(3), are extensive. They can:

subpoena witnesses, compel their attendance and testimony, administer oaths and affirmations, take evidence and require by subpoena the production of any books, papers, records or other items necessary to the audit and investigation of candidates for election to City office.

Now let’s look to the future and discuss what might happen if the CEC adopts my theory and finds that a violation occurred.²⁰ First of all, the Charter at Section 470(0)(1) allows for actual criminal enforcement! However, as with most criminal laws, and rightly so, this requires a knowing and willful violation. That probably didn’t happen here. However, the civil penalties are serious, and do not require any kind of intention. Just negligence is enough, and I don’t think that will be so hard to prove.

The Charter at Section 470(o)(2)(A) allows for penalties of $2,000 per violation. That’s interesting, but not too interesting; if $2,000 were a hardship for any of the people involved in this mishegoss they wouldn’t be allowed to be involved. What is much, much more interesting is the muni code section at LAMC 49.7.35.C.1,2, which allows the Ethics Commission to prohibit persons found to be in violation from contracting with the City at all for specified lengths of time, which is called “debarment.” The minimum debarment period is one year. Wouldn’t that be interesting? If Carl Lambert was found to have given illegal contributions and was debarred from contracting with the City? That would certainly mess up the prospects of the Venice Beach POA.²¹

Finally, let’s turn to the matter of why Eric Garcetti and Mike Bonin ought to refund Carl Lambert’s contributions immediately, whether or not the contributions actually violated the law. Recall the stated purpose of the law, found at Section 470(a):

The purpose of this section is to encourage a broader participation in the political process and to avoid corruption or the appearance of corruption in city decision making, and protect the integrity of the City’s procurement and contract processes by placing limits on the amount any person may contribute or otherwise cause to be available to candidates for election to the offices of Mayor, City Attorney, Controller and City Council and promote accountability to the public by requiring disclosure of campaign activities and imposing other campaign restrictions.

Whether or not the Ethics Commission ends up agreeing with my analysis, I think it’s clear that these contributions create “…the appearance of corruption in city decision making.” Carl Lambert stands to be put in charge of almost two million dollars per year, more than 25% of which is coming straight from the City of Los Angeles. In order for that to happen, the Venice Beach BID must be approved by the Council and the Mayor and subsequently a contract must be approved by them. If this were a straight-up contract for something like fixing sidewalks²² there would be no question that Carl Lambert’s contributions would be obviously, clearly forbidden. If they turn out not to be forbidden, it will be because of a technicality. The escape of legal liability on technicalities doesn’t erase the appearance of corruption. In fact, it probably increases it. Whatever the facts of the matter are, I’m sure that neither Mike Bonin nor Eric Garcetti wants to appear corrupt. So they should give back Carl Lambert’s money. Soon.

Technical postscript: Another technical detail of the law that I haven’t discussed are the time limitations. The prohibition of contributions begins when the contract is proposed and, for successful bidders (which includes responders in case, like here, there’s no bidding process) lasts for one year past the date that the contract is signed. This limitation isn’t relevant here since the contract was on the table since at least 2014 and has not yet been signed.

Image of Mike Bonin is a screenshot of the official video of the LA City Council meeting on August 23, 2016, and is therefore a public record. Thanks, Judge Fitzgerald!

1. I mean, unless you want to read it. There is plenty of interesting stuff in there, but most of it’s not relevant to this morning’s point.
2. Cool kids call municipal codes “muni codes.”
3. It is a common feature of laws in Los Angeles to have a more general version in the Charter which also grants the authority to the City Council to pass laws implementing the Charter section. This seems like a reasonable way to maintain flexibility in the City’s laws while limiting the Council’s powers, which is a good thing. However, it makes it pretty hard sometimes to figure out what a statute actually says.
4. I’m not saying that that would be a bad thing. It probably wouldn’t. But it’s not happening, so that must not be what the law means. Or maybe I should be optimistic and say that that’s not what the law means…yet!
5. This is one of my favorites among the zillions of handy semantic gadgets designed by lawyers to help them get their jobs done. All trades have an artisanal component, which gives rise to what Gerard Manley Hopkins called their gear and tackle and trim. I love it. You’ll find no lawyer-bashing on this blog ever.
6. Although we were fooled by Tara Devine over an issue pretty much equally evident, so maybe I should check into this more carefully
7. But I couldn’t resist.
8. Those people who deride the Citizens United decision by assuming it’s prima facie ludicrous to consider corporations to be people are missing the point entirely. Corporations have been people (or persons, as they say) under the law since there have been corporations. Citizens United was certainly a bad and harmful thing in many ways (although not all, I’ll spare you my theories), but that’s not why.
9. Not any, actually. The proponent groups have to be in with the in crowd to get Paster’s help. I know of a case where two proponent groups were vying to create a BID in the same area and Paster played favorites between them even to the point of leaking details of one proposal to partisans of the other proposal so that they could in turn complain to Mike Feuer and successfully lobby him to issue an opinion declaring their opponents’ proposal illegal. I hope to write about this quite soon, but if you can’t wait, email me and I’ll send you details and proof.
10. I’m sorry to have to link directly to the live CD11 website. I usually link to archived versions to prevent link-rot. That’s not possible with CD11, though, because their robots.txt file prevents Archive.Org from archiving their site. This is especially reprehensible because the entire site is a public record. I have a CPRA request in with CD11 to find out why they made this antisocial design choice, and I’ll report here on the results if there are any.
11. And we’re evidently not going to find out from CD11 since evidently Tara Devine told Debbie Dyner-Harris not to tell, or at least didn’t tell her that she could tell, which shouldn’t have been sufficient, but seems to have been.
12. I can’t figure out how to link through to searches on the Secretary of State’s search tool, but here is a screenshot of the result in case you can’t reproduce it.
13. I’m guessing that the other two were Andy Layman and Steve Heumann.
14. Now retired, much-missed.
15. Having to do with other similar laws.
16. A matter of first impression, as our friends at the bar call it. The ambiguity is intentional.
17. As I’m sure everyone reading this is acutely aware.
18. This blog post is my first draft.
19. With some notable exceptions. You know who you are, and I thank you! I won’t compromise you by revealing your names.
20. Don’t hold your breath. At their June 2016 meeting they were still finalizing investigations from the 2011 municipal election. They like to take their time to do it right.
21. There are some technical details that I’m glossing over with respect to Carl Lambert’s relationship to the POA. If he’s on the founding Board, he’s certainly what’s called a “principal” of the corporation, which has significant meaning in the campaign finance ordinance. Given the fragmentary state of my evidence at this point it seems better not to go into this. If it becomes relevant, or turns out to have been relevant, I’ll write it up later.
22. Not that anyone in a hurry to contract for sidewalks to get fixed.