Sonoma County Supervisor James Gore faces state fine for campaign finance violations

In securing his seat on the Sonoma County Board of Supervisors last year, James Gore violated a basic tenet of California campaign finance law by failing to report on time unpaid bills for work performed by his chief campaign strategist, Rob Muelrath, according to the state’s elections watchdog.

Gore violated California’s Political Reform Act twice, the watchdog agency found - first, for not disclosing what amounted to $15,000 in accrued expenses for Muelrath’s political consulting services on pre-election filings before the June primary, where he advanced to a November runoff with Windsor Councilwoman Deb Fudge.

The second violation stemmed from a separate $15,000 payment to Muelrath for his consulting services in the primary, expenses that should have been reported 27 days after the primary but were not disclosed on reports until Dec. 31, after the runoff, the Fair Political Practices Commission found.

A summary of the agency’s findings notes that the law Gore broke is intended to ensure elections are fair, and that the public is informed about who is both giving money to and working for candidates running for public office.

Gore has formally accepted responsibility for the violations and agreed to pay a $2,000 fine to the state. A settlement he reached with state investigators is set to be voted on Sept. 17 in Sacramento by the Fair Political Practices Commission. He faced a maximum penalty of $5,000.

Gore, a first-time elected office holder, and Muelrath, a seasoned political consultant, at first fought the state action, which stemmed from a separate complaint filed more than a year ago by one of his opponents in the primary election, Pete Foppiano. That initial complaint, which emerged from shared emails between Foppiano and two other Gore rivals, Ken Churchill and Fudge, led to the state investigation of Gore’s campaign.

In an interview this week, Gore, 37, said the violations were the result of an “accounting error.” He voiced regret for what he called a “mistake.”

“I take responsibility for everything that’s in my campaign, every part of it,” he said.

At the same time, in the interview, Gore placed blame for the violation on Muelrath, a Santa Rosa-based consultant, and Rebecca Olson, his attorney and treasurer during the campaign. He echoed those comments, though in less detail, in a Facebook post Thursday morning alerting his supporters to the violations and an anticipated news story about the state action.

He cited his inexperience - his bid for supervisor last year was his first run for public office - as a contributing factor in the reporting failure.

“I was operating under the advice of a paid legal attorney and a paid political consultant, who managed the business of my campaign. They signed their names on treasury forms and advised me on how they should be done,” Gore said. “I’m extremely disappointed, but as a first-time candidate, I put my faith in my team. They’re the experts on these issues.”

A spokesman for the Fair Political Practices Commission said Gore violated a fundamental principle of state election law, which requires campaigns to disclose accrued expenses, or unpaid bills, during campaigns, regardless of when payments for services are made.

“Campaign documents are there to inform the public about who is funding a campaign, and the laws are for a reason - to inform the public before an election, when it matters most,” said Jaycob Bytel, a spokesman for the agency.

Asked to characterize the significance of the violation, Bytel said, “Is someone not reporting what they should on their campaign finance form more serious than conflicts of interest or the host of other things we investigate? It’s really hard to say, because every case is different. All of this stuff is important. It’s for the public to decide.”

To Gore’s former rivals, the violations cast doubt on his ability to run a transparent campaign and act responsibly in a position of leadership in Sonoma County.

“Everyone had questions and concerns about how he was running his campaign,” said Foppiano, a real estate broker and former Healdsburg mayor who was one of four candidates who ran against Gore in the primary for the 4th District seat representing northern Sonoma County.

Foppiano said the accounting irregularities raised a number of questions last year among the other candidates in the race.

“We all looked at the rules and said ‘Something is wrong here,’?” Foppiano said.

Fudge said she felt at the time that Gore was “not playing on a level playing ground.”

“Ultimately, it was James’ responsibility, but I do believe he didn’t understand the laws,” Fudge said. “When you don’t report the consulting fees until after an election, it creates a really unfair advantage, and it has for years, because if you win, you can just raise the money to pay off those consultant fees after the fact.”

Muelrath, who has overseen numerous campaigns as a political consultant in the county, including those of Supervisors David Rabbitt and Efren Carrillo, said he does not believe he violated the law.

He said he has followed the same practice now being cited by the state in numerous other campaigns, including races for seats on the Board of Supervisors and the Santa Rosa City Council. None of those campaigns have run afoul of the reporting rules enforced by the state in Gore’s case, he said.

At the heart of the issue is the way Muelrath says he arranges contracts with candidates for public office. With Gore and roughly a quarter of the candidates who hire him as chief consultant, he offers to work under terms in which he gets paid only if they win, he said.

“It shows them that the race is equally important to me as it is to them,” he said.

Under such deals, he argued, a candidate is allowed to withhold payment information on campaign finance forms until a successful outcome.

Campaign finance records for two previous elections provide an example of how Muelrath’s contracts with candidates can affect campaign finance reporting.

When Susan Gorin prevailed in 2012 over her longtime Santa Rosa City Council rival John Sawyer for the 1st District supervisorial seat, Sawyer did not pay Muelrath for expenses tied to consulting services in the November runoff, records show. Muelrath said it was because Sawyer didn’t win.

Conversely, when Supervisor David Rabbitt was re-elected in June last year, reports submitted after the election showed Muelrath was paid $15,000 for his consulting services. Muelrath confirmed he was paid after Rabbitt won. Accrued expenses tied to his consulting services were not listed on pre-election filings in that race.

Muelrath insisted he has done nothing wrong in structuring his contracts with candidates or in advising them on campaign finance reporting.

“We were operating a campaign under the auspices of the advice of our attorney, and that our contract being based on a contingency was appropriate and legal,” Muelrath said. “Frankly, I still believe we are correct. All this boils down to a simple accounting error.”

Both Muelrath and Gore brushed off any suggestion that the contract was structured in a way to conceal their business and political relationship through Gore’s campaign.

Gore, like the other members of the Board of Supervisors, is a Democrat. Muelrath, formerly a Republican but now registered as an Independent, has long been a go-to strategist for more conservative local candidates and business interests.

“Everyone knew Rob was my consultant,” Gore said, noting that his campaign finance reports included Muelrath’s name and disclosed expenses related to other work he’d handled for him, including polling. “I’m proud of the work we did, he ran a great campaign.”

“We were not trying to hide anything and we’re not trying to get around any requirement,” Muelrath said.

Muelrath said the only reason Gore and Olson have agreed to pay the fine is to put the issue behind them.

“We’ve spent $10,000 fighting this thing for more than a year,” Muelrath said. “It’s not worth continuing to fight, but again, I still believe that we were doing everything right and disclosing everything appropriately. In no way, shape or form were we trying to deceive the public in any way.”

State campaign finance watchdogs and election experts said it appears to be a clear-cut case.

“It seems to me that if the work was being done, and the consultant is getting paid for that work, it was accruing and therefore it should have been disclosed,” said Bob Stern, a co-author of the Political Reform Act and former FPPC general counsel. “It’s not a major fine, but (the expenses) should have been disclosed anyway. It’s important to know which consultant is being hired to work on a particular campaign.”

Stern said he can understand how Muelrath still believes he hasn’t violated the law if no one has ever questioned him.

“But he and the treasurer should have known the rules,” Stern added.

Olson, Gore’s treasurer during the campaign, who also was named in the FPPC documents summarizing the violations, did not return calls for comment Thursday.

Gore represents a district that extends from northern Santa Rosa to the Mendocino County line, including Windsor, Healdsburg, Geyserville and Cloverdale. He already has filed paperwork stating his intent to run for re-election. He said he does not intend to sever his ties with Muelrath.

In the Facebook post Thursday he sought to reassure his supporters.

“Be confident that this mistake has been corrected,” Gore said in the post. “Your contributions are always utilized efficiently and appreciated.”

You can reach Staff Writer Angela Hart at 526-8503 or angela.hart@pressdemocrat.com. On Twitter @ahartreports.