Did Chris Essel’s campaign circumvent campaign finance laws in Council District 2?

disclosure: I have leadership positions or membership in multiple organizations affiliated with the Democratic Party that have endorsed Paul Krekorian for City Council.

Forgive me for continuing to write about Los Angeles City politics on a statewide site, but this is too interesting to pass up.  I’ve written previously about the race for Los Angeles City Council District 2 here because it has statewide implications: if Paul Krekorian wins, we will have a vacancy in AD-43.  So it does matter, and since it is my hometown and I’m somewhat enmeshed here, I’ve been following the race.  And there’s something very interesting afoot.

For any of this to be interesting or relevant, I want you to review two brief snippets of election-related ordinances from the Los Angeles Campaign Finance Ordinance:

No candidate for City Council who files a statement of acceptance of matching

funds, nor any controlled committee of such candidate, shall make qualified

campaign expenditures above the following amounts: $330,000 per primary

election and $275,000 per general election.

And even more importantly:

If a candidate who declines to accept matching funds makes qualified campaign expenditures in excess of the expenditure ceiling, or if an independent expenditure committee or committees in the aggregate spend more than $50,000 in the case of a City

Council race, $100,000 in the case of an election for City Attorney or Controller, or

$200,000 in the case of an election for Mayor, in support of or in opposition to any such candidate, the applicable expenditure ceiling shall no longer be binding on any candidate running for the same office.

That’s the applicable law.  There’s a $330,000 spending cap for City Council races–unless one or more IE’s comes in and busts it by spending a total of at least $50,000 on the race–either for or against any candidate.  So that basically means that if a candidate is up against the spending limit, all that candidate needs to do is quietly arrange for an independent expenditure of a certain amount, and then…voila!  Spend away.

Which is exactly what it seems Chris Essel’s campaign has done.  It seems intentional and coordinated, too.  True, the evidence is entirely circumstantial–but when you add the evidence all up, there’s only one logical conclusion.  Follow me below the fold for more.

Let me begin by stating that Chris Essel’s campaign accepted matching taxpayer funds from the City, subjecting her campaign to the $330,000 spending limit.  There are a couple of other things to know too–first, that the special primary election was September 22nd; and second, the spending limit in the special general election goes down to $275,000 for those with matching funds who make it to the runoff.  Why am I telling you this?  Well, you’ll find out soon enough.

So now that you’re familiar with all this, I’d like you to take a look Chris Essel’s next-to-last campaign spending report of the general election.  The end-of-period for the filing is September 16–six days before the general election–and look at how much the report show her campaign as having spent to-date: $321,464.57.  Now, I can do arithmetic.  That means that legally, the Essel campaign would, under normal circumstances, have only been able to spend a paltry $8,433.43 the entire last week of the campaign–which is basically when you need the money most.

Essel’s only hope at being able to finance the campaign for the last week of the election? Hoping that someone did an independent expenditure campaign that made the total IE expenses for the election total $50,000, which would bust the cap for all candidates.  But what would be the chances of that happening?

Very good, apparently, if you’re Chris Essel.  Now take a look at this: it’s the spending report of independent expenditures for Chris Essel’s campaign.  And miraculously, on the 16th of September, there is an IE of $32,500 from the International Union of Painters and Allied Trades, based in DC.  Even more miraculously, this IE–spent on a cable buy (and much more on this later)–just so happens to be just enough to push the Essel campaign over the $50,000 threshold required to bust the salary cap and allow it to spend an unlimited amount of money through election day on the 22nd.  (Technically, the $12,000 or so of IE’s spent on behalf of Tamar Galatzan’s campaign also counts toward the $50,000 threshold, but because of the circumstances behind the reporting deadlines, there would have been no way to know how much had been spent.)

Now, one might think that it’s no surprise that a union–even if it’s a DC one and not a Los Angeles local–would go to bat for its endorsed candidate.  Until, of course, you take a look at the FEC data for exactly what the Allied Painters have contributed to.  Follow that link through, and you’ll see that the union’s IE’s have been on behalf of mostly Presidential candidates, as well as Kendrick Meek and Ciro Rodriguez–both federal candidates–and that you can scroll through that entire list without finding a single IE or cash contribution to a municipal candidate.

So, as things stand right now given all the unusual circumstances and convenient coincidences, I’d have to be born yesterday to even get started believing that this expenditure wasn’t knowingly done to bust the cap and allow the Essel campaign to receive taxpayer campaign cash and not be subject to the limits anyway.  But it gets even worse.

I linked to the script of the ad earlier.  Here’s the video on Youtube.  Now, I decided to go a step further here.  I got a contact in the cable industry to tell me where the ad money went.  Here’s something fascinating: the ads were placed, as you’d expect, in the cable regions encompassing Council District 2: the East San Fernando Valley and South San Fernando Valley regions.  Now, as it is, that’s horribly inefficient, especially for the South San Fernando region, which stretches for a couple dozen miles outside CD2 all the way to Calabasas on its Western boundary.  But even worse?  The ad was also placed in two regions entirely outside Los Angeles:  The regions encompassing the cities of Glendale (a Charter cable zone) and Santa Clarita (Time Warner, like the SFV regions).  For those of you that really care, you can see the map of the cable zones.  I want to repeat something here: there is no overlap between those two regions and the Council District in question.  So if they decided to put the ad there, it was because they were intentionally wasting money just to achieve a certain target amount.  And then, of course, there’s the issue of what stations they put them on.  Normally, you put political ads on political/news stations.  You don’t do what these guys did and put them on Court TV and Lifetime, which is where these apparently went.

So…we’ve already got a lot of evidence that the entire reason for this IE was just to bust the cap and allow the Essel campaign to spend unlimited cash.  Now, I don’t know what the City’s ethics division would think about that.  But I do think that they’d look very askance at it if they knew that it was being done with prior knowledge of the campaign.  And there’s plenty of evidence for that too.

First, let’s take into account the fact that Chris Essel was still raising money at maximum contribution fundraisers during this critical time.  All you need to do is look through the full list of communications reports provided by the City Ethics commission to see that there were fundraising events that had to have been in the planning stages before the Painters’ union dropped their IE, even though at that time, there would have been no legal way for the Essel campaign to spend all the money they were raising–unless they knew that the Painters were about to make their play.  After all, if you’re distributing invites for fundraisers where the asking price is $500 (maximum contribution for City Council candidates), and as of the 16th you’ve only got $8,500 you can legally spend…you’re doing something wrong.

So at this point, you’re stuck with two options.  Either the Essel campaign was unknowingly raising gobs money they couldn’t legally spend and got miraculously bailed out at exactly the right time by a union that has absolutely no history playing in Los Angeles politics that put up exactly the right amount of money on a completely ineffective cable buy with an ad produced by a company that has no reputation for political ads…or there’s something fishy going on here.

Something I haven’t mentioned–but it’s particularly ironic in this context–is that the ad in question prominently features City Controller Wendy Greuel, who is responsible for ensuring that the City’s taxpayers are treated fairly, doing a voiceover discussing Chris Essel’s ethics.  It would indeed have a certain ironic twist if Controller Greuel were being used to basically defraud taxpayers out of the $100,000 in matching funds that they contributed to Essel’s campaign.

But now comes a piece of evidence that–at least in my mind–proves the case.  Per the independent expenditure reports, the $32,500 cable buy that busted the cap was made on 9/16.  Disclosure was made about the buy on 9/17.  So that means that the campaign would have been informed only on 9/17 that the cap had been busted and they would be allowed to spend more money.  And now let’s look at the Essel campaign’s spending report for that time period.

Quite coincidentally, a payment was made on 9/17 to Burnside and Associates, Chris Essel’s paid field ops consulting firm, followed the next day by $50,000 to Shallman (Essel’s mail consultant) and another $8,000 to Burnside.  Now, while the $50,000 the very next day to Shallman may stand out, it’s actually the most within the realm of plausible deniability because once the cap had been busted, the Essel campaign may well have put out money in a hurry to fund a last-minute mail piece.  It’s the payments to Burnside, by contrast, that are problematic.

Burnside is a field consultant.  Unlike her chief opponents in the primary, Essel had to rely on paid field for canvassing operations.  Keep in mind how much money the Essel campaign would have been legally allowed to spend from 9/16 to 9/22 without the cap being busted: a shade under $8,500.  Meanwhile, based on the payments made on 9/17 and 9/18 referenced above, the Essel campaign apparently owed Burnside $21,250.  So again, you’re left with two options here: either the Essel campaign knew not only that the cap was going to be busted, but knew exactly when it was going to be busted, OR the Essel campaign had–whoops!–spent so much money that it would have been unable to pay the bills for the paid field operation it was depending on in the last week of the campaign.  Keep in mind, of course, that all of these financial reports are public–which makes you wonder if Burnside was concerned at all that the Essel campaign was spending the type of money that would leave it unable to actually pay their field consultant.

And speaking of Burnside, there’s something else odd going on here that’s tangentially related.  I sorted the Essel campaign’s expenditure list to reflect all the payments to her consulting firm.  Let’s add them up, shall we?

$58,855.90.  For a field operation in a City Council district.  Now, my evidence for this is entirely circumstantial, but I know people who were active in the primary campaigns of both of Essel’s main opponents (Tamar Galatzan and Paul Krekorian).  They all told me that Essel’s field campaign was only active in the last 7-10 days of the campaign.  So either the Essel team paid for what has to be the most paid field week I’ve ever seen, or they’re paying for something else too in that total.  Not sure what.

I’ve contacted the City Ethics Commission–not about this specific case, but about the applicable law in general.  And I’ve been told that if indeed the supposed independent expenditure was coordinated with the campaign–and all the evidence suggests exactly that–then it would no longer be considered independent, and penalties could certainly apply.

I have a call in to the Essel campaign requesting to talk to somebody on the financial end of things about this, but haven’t heard back.  I did, however, get through to the Krekorian campaign to give them a brief overview of my findings.  A short time later, Eric Hacopian with the Krekorian campaign gave me this quote:

“Throughout this campaign, Chris Essel has shown a consistent disregard for the truth and now it is becoming clear that she also has no respect for the law.

“Apparently her lust for campaign funds is so great that she’s even willing to manipulate the system to rip off taxpayers to pay for her attack mailers.”

Now, maybe I’m entirely wrong and I’ve read all of this wrong, and this is standard practice for LA politics.  But the whole thing does seem kind of suspicious, no?  I’ll be doing my best to follow up on this to see what, if any, connections exist between the Allied Painters and Chris Essel’s campaign to see if there are further connections to be fleshed out here.  Be expecting more in the coming days about this issue.

3 thoughts on “Did Chris Essel’s campaign circumvent campaign finance laws in Council District 2?”

  1.     Thank you for reporting on this. I was not especially impressed with Essel when I saw her among the candidates at a forum at the Sherman Oaks Elementary School before the primary. Basically she came off as one of those “I’ve succeeded in business so I know how to get things done” type candidates. She might know too well how to get things done while working around the rules. It would be one thing if she weren’t taking the public financing, but she may have been trying to have it both ways. Yikes!

       I also was surprised about the story you wrote last week about her fundraiser with the genocide deniers (some Turkish-American groups.) It said a lot about either her arrogance or at least tin ear for the politics of the area. Maybe she just likes raising money because that is what she is good at doing but it is wicked stupid to get your opponents strongest supporters more motivated to work against you. I have never quite understood why the Turks have been so strongly stubborn in denying the reality of the genocide; reconciliation and healing comes from facing the truth and moving forward. I have a mixture of feelings about it because I know that I lost some relatives  in that genocide and the massacres were a lot of the reason why my grandfather ended up in this country rather than staying in the Middle East. (I am half-Armenian on my mother’s side, though with my dad’s Anglo name everyone assumes I am Jewish…) I feel like we need to learn from history but not be trapped in it.

        In more recent history it is amazing to me how my Anglo Dad’s hometown of Glendale has become New Yerevan (the Armenian capital city) and the changes in the politics of the CA Armenian community. The earlier Armenian-American community (though not my family) tended towards the GOP; former Governor George Deukmejian is still the most famous Armenian politician in CA history. More recently there was Charles Poochigian from Fresno, a state legislator who lost the race for AG to Jerry Brown in 2006. The newer waves of Armenian immigrants are less Republican than the earlier generations; they vote more like other recent immigrant groups and are trending Democratic. Currently the only Armenians in the Legislature are both Democrats, Sen. Joe Simitian and Assm. Paul Krekorian. Also IIRC Representative Jackie Speier is half-Armenian.

        There have been some ethnic tensions accompanying the rise of Armenians in politics. Krekorian first ran for the Assembly in 2000 and lost in the primary to Dario Frommer. In that race the Latinos mostly voted for Dario and the Armenians for Paul. Six years later when Frommer was termed out Paul was able to put together the winning campaign. It was pretty cool to see so many young people (high school and college age) getting involved with campaigns. They walk precincts and make phone calls; motivated volunteers are generally better than hired guns.

       I have gone on long here but considering the support of the Armenian community and the local Democratic organizations I expect Paul Krekorian to be the next councilmember from CD-2. Your articles reminded me that I need to get my lazy butt out and walk some precincts for Paul’s campaign. I had always liked him as he seems like an honest, progressive and hardworking guy, but I also want to see his opponent lose the race, however much money she may raise.                  Zack Webber

  2. If this is a violation of ethics rules, then didn’t Shallman do the same for his last client Carmen Trutanich, who was reported to have gotten almost a half million in matching funds but raised millions more and got another almost million from a union?  (Weiss didn’t accept matching funds.)  I know nothing about campaign financing rules, am just following your lead here, but it just seems to me that this would be the tip of the iceberg if true – and I wouldn’t blame Essel herself but her campaign manager who just might be engaging in creative fundraising?  What other campaigns has Shallman run like this?

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