Investigations into two sitting Chula Vista Councilmembers may have been tainted by actions of City officials before outside attorneys have released their own findings in the cases.

Separate complaints were filed last month by Dr. Peter Watry, Jr., a retired Economics professor, raising concerns that Councilman John McCann and Councilwoman Andrea Cardenas may have violated the City’s campaign laws.

According to the City’s Municipal Code, such complaints must be filed with the City Clerk who, in turn, must forward them to outside lawyers pre-selected by the City Board of Ethics to serve as an independent Enforcement Authority so that City staff are not conflicted in reviewing complaints against the City or City officials.

The elected City Attorney is not supposed to have any oversight or control over the investigations until after a determination is made by the Enforcement Authority lawyers as to whether probable cause exists to take further actions with regard to the complaints.

In the case of Watry’s complaint against Councilwoman Cardenas, City Clerk Kerry Bigelow forwarded the complaint to Alena Shamos, a lawyer with the law firm of Colantuono, Highsmith & Whatley. Shamos has 30 days to review the complaint and decide if probable cause exists to believe the violations occurred and to suggest enforcement actions. The 30-day review timeframe started June 14th and is close to being complete.

But the law firm of Colantuono, Highsmith & Whatley is also engaged by the City Attorney’s office to serve as outside counsel on other matters, including a pending lawsuit filed by La Prensa San Diego as it seeks disclosure of videos from the City’s Police drone program. That lawsuit was filed in April before Watry filed his complaints in early June.

Outside counsel have a legal duty to the City, so also asking the same firm to provide an independent review of actions of a sitting Councilmember may present a conflict for the law firm -or at minimum the perception of a conflict- when the same law firm is tasked with representing the City and also investigating one of its own Councilmembers. The outside lawyers may also have a bias to rule in favor of the City in order to secure future legal work from the City.

The City of San Diego last year used a similar process when City officials promised an independent forensic audit would be conducted on the controversial 101 Ash Street building. Although City officials said the audit would be independent, it was later revealed they assigned the work to a law firm that was already serving as litigation counsel on issues related to the same building deal.

The subsequent report, known as the Parker Report, was reviewed and edited by the San Diego City Attorney’s office before it was released to the public, raising concerns that the audit was not independent and was used to publicize a predetermined outcome.

CITY ATTORNEY WEIGHS IN

In addition to the potential conflict with one investigating lawyers, the sitting elected City Attorney may have interfered with the independence of the outside investigations by giving his own interpretation of the complaints to the media while the cases are still under legal review.

In a story published last Friday by the Star-News newspaper, City Attorney Glen Googins gave lengthy responses to questions about the Municipal Code sections that Watry alleges McCann and Cardenas violated. Googins laid out his interpretation of the codes, making his position public so that even the independent Enforcement Authority lawyers could see it, and even raised concerns that the existing restrictions may be unclear.

Several lawyers familiar with ethics complaints say Googins’ comments made during an investigation could signal to the Enforcement Authority lawyers how he believes they should decide the cases. Neither McCann nor Cardenas commented to the Star News while the investigations are pending. Experts say it is uncommon for City officials to comment during investigations.

Googins stated in his media comments that the Municipal Code may have to be amended to clarify the rules if there is confusion among candidates or if it does not provide sufficient guidance for the enforcement authority to decide whether a violation has occurred.

“Because the last thing that I want, and I think that the last thing the public wants, and the last thing that candidates want, are rules that are not clear,” Googins told the Star-News. “If this rule warrants clarification, either by references to state law, explicit or otherwise make it clearer how these rules should be interpreted, or by creating our own local definitions, that would certainly be helpful guidance for both candidates and enforcement authority alike,” Googins added. [StarNews, Complaints filed for election code violations. July 9, 2021]

Municipal Code Section 2.52.050 specifically defines that a “loan or extension of credit shall be considered a contribution from the maker of the loan or extender of credit and shall be subject to the contribution limit of $360 per person.”

Googins maintains that the code is not clear as to the definition of an extension of credit, but state law defines it as “the provision of goods or services for which payment in full is not received. An extension of credit is deemed to begin by the earlier of two dates: (a) 15 days after the date specified on the invoice for payment; or (b) 45 days from the date the goods or services were delivered.

Other cities, including San Diego, Petaluma, Anaheim, and others define extension of credit using the same definition as state law. Most cities allow a timeframe to pay debts before they become contributions, but Chula Vista’s code only allows loans and credit up to the limit of the contribution limit.

But Googins made similar arguments to La Prensa San Diego in 2016 for an article about John McCann’s use of debt during his 2014 election. That article raised the issue that McCann had ended his 2014 campaign with over $55,000 in debt and seemed to violate the Municipal Code’s restriction on extensions of credit.

At the time, Googins, already the City Attorney for over four years, claimed the Municipal Code may have been unclear in its references to the use of debt and extensions of credit, but Googins promised amendments to clarify the code to “address” the issue in his “pending update of the City’s Campaign Contribution ordinance.

“How this Section should apply to unpaid campaign bills is unclear.  There is currently no local provision regulating how long campaign debt can be ‘kept on the books’ and there is a lack of clarity regarding the ‘credit’ aspect of unpaid bills relative to the $320 contribution limit.  This is one of the areas I intend to address in my pending update of the City’s Campaign Contribution ordinance,” Googins wrote in a January 19, 2016 email to La Prensa San Diego.

Googins later presented amendments to the City Council in both 2017 and 2019 that updated provisions of the campaign ordinance, but did not include any changes to the sections relating to debt and extensions of credit.

Had changes been made to the ordinance in 2017 or 2019, candidates running in the 2018 and 2020 elections may have had more clarity in complying with the ordinance.

Googins has served as the City’s first elected City Attorney. First elected in 2010, Googins was re-elected in 2014 and 2018. He will be forced from office in December under the City’s three-term limit.

COMPLAINT AGAINST CARDENAS

Watry’s complaint against Cardenas alleges that she ended her 2020 campaign with more than $38,000 in debt, mainly owed to one company that provided all of her campaign literature. Cardenas had outstanding invoices dating back to February 2020 during the primary election and through October 2020.

“Therefore, it is apparent that Andrea Cardenas violated the Chula Vista Municipal Code in soliciting and accepting contributions from a company, regardless of the amount, and failed to return the prohibited contributions within the 60 day period required by ordinance. She benefited from the use of the prohibited contributions and won an election that she may not otherwise have won,” Watry’s complaint states.

Chula Vista has some of the most restrictive campaign finance rules in California, but is not alone in defining and limiting extension of credits. Other cities allow extensions for credit for limited time periods before any unpaid invoices become contributions, but Chula Vista prohibits any third-party loan or extension of credit above the contribution limit.

Cardenas ended her 2020 campaign with over $38,000 in debt owed to a local printing and mailing services company used by several political candidates. The company, TMC Direct, provided campaign literature to Cardenas through eight invoices sent between February and October 2020.

Although Cardenas paid three outstanding invoices, five remaining invoices were up to 320 days late on Election Day.

“The violations of the Chula Vista Campaign Finance Ordinance are clear and played a direct role in Ms. Cardenas winning her election over an opponent that followed the regulations, raised more actual cash than she did, but did not incur any debt or utilize unpaid goods or services in his campaign,” Watry’s filing details.

Cardenas defeated incumbent Councilman Mike Diaz by 938 votes out of 23,420 cast in that election even though Diaz raised more money that she did. Diaz did not report any outstanding bills at the end of his campaign.

“In fact, Ms. Cardenas owes more money to TMC Direct than her opponent raised in his entire campaign. Nearly two-thirds of the expenditures by Ms. Cardenas’ campaign her unpaid printing and mailing invoices,” Watry’s complaint concluded.

Although other campaigns in San Diego County also used TMC Direct for their campaign mailings, only Cardenas maintained an outstanding balance after the campaign ended.

“Other campaigns and groups that used TMC Direct to mail in campaigns in San Diego in the 2020 election included Famela Ramos for Congress, the San Diego Democratic Party, the California Democratic Party, Brian Jones for Congress, and the San Diego County Deputy Sheriffs Association, and all paid their bills before the election,” Watry’s complaint states.

COMPLAINT AGAINST MCCANN

Watry’s complaint about McCann included allegations that McCann used a legal defense fund to pay expenses related to a lawsuit he filed, not one filed against him.

McCann created the McCann Legal Defense Fund in November 2015 after a judge ruled against him in a defamation case McCann filed against a local labor union. McCann and the union signed a settlement agreement where McCann agreed to reimburse the union $90,000 for its legal fees and costs. McCann loaned $90,250 to the legal defense fund then immediately paid the union for its legal costs in his losing lawsuit.

The McCann Legal Defense Fund statement of organization stated that the fund was for “Defense of civil case for defamation”, but McCann was the plaintiff, not the defendant.

As the name suggests, legal defense funds are restricted for paying legal costs associated with defense cases where someone sues a candidate, or the candidate defends against administrative or criminal proceedings.

In addition to state law restrictions on the use of legal defense funds, the Chula Vista Municipal Code (CVMC) also restricts contributions that that can used for legal defense.

Specifically, CVMC Section 2.52.120, titled “Contributions for legal defense“, specifically states that payments given to a candidate or member of the City Council must meet three requirements for them not to be considered campaign contributions, and therefore, not be subject to the City’s campaign finance rules.

Payments made to a candidate or Councilman to be used in “the defense of a criminal or administrative prosecutorial action against said Councilmember“, and “not made or used for the purpose of aiding in the election of said Councilmember“, and “not made within (before or after) 100 days of an election in which the Councilmember, Mayor, or candidate is competing for a seat or office” are exempt from the City’s $350 campaign contribution limit and restriction of having to be from a person, not a company or organization.

After creating the legal defense fund, McCann began soliciting and accepting large contributions from companies and individuals with financial interests before the City Council, including developers, casino owners, the company that contracts with the City for trash collection and operation of the landfill, and the ambulance company that has the exclusive contract with the City. McCann received contributions ranging from $1,000 to $12,000; all of which exceed the contribution limit of $350 allowed in City Council campaigns.

All of the contributions received by the McCann Legal Defense Fund would seem to be prohibited under the CVMC because the defamation lawsuit filed by McCann was not a “criminal or administrative prosecutorial action against” him. His lawsuit seems to fall outside of the requirements of the CVMC and, therefore, contributions to the legal defense fund used to pay legal fees relate to filing his defamation case would be prohibited contributions and each would be in violation of the $350 limit and in violation of the ban on contributions from business and organizations.

Additionally, one of McCann’s contributions was a $5,000 check from the San Diego County Republican Party on December 26, 2018, but because McCann appeared on the November 10, 2018 ballot in his re-election campaign, the contribution would be in violation of the Chula Vista Municipal Code’s restriction on legal defense contributions within 100 days before or after an election.

Unlike political campaign contributions that are spent on election expenses, McCann transferred all of the contributions back to himself to recover the entire amount of his $90,250 personal loan, making him completely whole. None of the contributions were spent on campaign-related expenses.

Since the resolution of that lawsuit, McCann has voted on issues directly related to groups that contributed large checks to his legal defense fund, including two contract extensions for AMR, several development approvals for developers that gave contributions, supported police funding increases, and approved Republic Services’ request to raise its trash fees on all Chula Vista customers.

McCann received 21 contribution between May 2016 until March of this year, ranging from $1,000 to $12,000, including:

$12,000 from Baldwin & Sons, a development company with active projects in Eastern Chula Vista, including parts of the Otay Ranch communities;

$10,000 from Home Fed Corporation, a large land holding company that owns thousands of development acres in Otay Ranch;

$10,000 from Ayres Land Company, owners of the new Ayres Hotel in the Millenia project in Eastlake;

$5,000 from Meridian Communities, a development company building the Millenia project;

$5,000 from Seven Mile Casino, a gambling facility located along the Bayfront that includes a casino, a hotel, and two support buildings on Bay Blvd between E St. and F St.;

$3,500 from Republic Services, the waste company that has the City trash collection contract and also owns the Otay Landfill;

$3,100 from the Chula Vista Police Relief Association, the official non-profit for the Chula Vista Police officers union political action committee;

$2,000 from American Medical Response (AMR), the ambulance company that has an emergency response contract with Chula Vista.

$1,000 from San Diego Associated Builders & Contractors Political Action Committee (ABC PAC), a local trade group representing building contracting companies.

McCann also received three contributions from the San Diego Republican Party: $9,798.67 on November 12, 2016; $5,000 on December 26, 2018; and $4,000 on November 28, 2019.

All of the contributions received into the legal defense fund were for amounts that exceed the City’s $350 campaign contribution limits.

OUTCOME OF INVESTIGATIONS

The two complaints were forwarded to the two Enforcement Authority lawyers on June 14th, and the lawyers have 30 days to complete their review to determine in probable cause “to find that there was a knowing or willful violation of this chapter, the City Attorney shall forward the complaint to the District Attorney for further handling.” If no probable cause exists, the investigations would be dismissed.

The CVMC includes penalties for knowing or willful violations that included prosecution as a misdemeanor which could include penalties of fines up to $1,000 and/or up to six months in jail.

But if the enforcement authority finds that probable cause does exists to uphold a negligent violation of the code, the City Attorney would have to forward the complaint to another one of the special counsel lawyers next in the rotation of panel counsel to act as the Enforcement Authority and “take further investigatory and procedural steps necessary to resolve the matter.”

Violations that are not “knowing or willful” may be handled through civil or administrative actions, including fines of $500 per violation.

If any of the allegation contained in the complaints also violation state law the Enforcement Authority must forward the complaint to the Fair Political Practices Commission (FPPC), a state agency that enforces violations of state elections laws.

Another community member, Maty Adato, filed a complaint against McCann with the FPPC alleging the same violations. That investigations is still pending.

McCann’s use of a legal defense fund for expenses related to a plaintiff case would also seem to violate state law restrictions on the use of such funds.

The 30 days for Enforcement Authority investigations expire on July 14th.