Lt. Gov. Agrees to Pay Hefty Fine

SACRAMENTO —  Lt. Gov. Cruz Bustamante and three of his campaign committees agreed to pay a $263,000 penalty for illegally funneling $4 million into his failed gubernatorial campaign last year, the state’s political watchdog agency announced Tuesday.

The Fair Political Practices Commission described the fine as the largest civil or administrative penalty ever paid by a candidate for violating California’s political reform act. Although the agency has imposed larger fines, they were never collected.

The penalty, which comes in a lawsuit settlement, addresses a fundraising controversy that surfaced while Bustamante campaigned as the only prominent Democrat seeking to replace then-Gov. Gray Davis in the Oct. 7 recall election. Political opponents cried foul when he used millions of dollars from an old campaign fund -- effectively sidestepping current fundraising limits -- to pay for television ads.

In January, FPPC officials filed a $9-million civil suit against Bustamante. The agency usually settles violations administratively, but officials said they felt a lawsuit was warranted because the alleged fundraising and spending violations were so serious.

On Monday, Bustamante admitted in a 21-page stipulation that he and his committees deposited gubernatorial campaign contributions into the lieutenant governor’s 2002 reelection committee, then mischaracterized them in public campaign filings to evade spending limits in the governor’s race.

In a telephone interview Tuesday from Maryland, where he is vacationing with his family, Bustamante said he accepted “full responsibility” for the violations, although he attributed them to aides.

“When you hire people to do the job for you and they make an error, then you’re still in charge, and you take responsibility,” he said. “This is not a way of explaining away anything or giving some excuse. The buck stops with me. We’ve paid the fines. Now we can move on.”

Bustamante said he decided to settle the matter, rather than fight it in court, because “we had made errors and we wanted to stand up and take responsibility.”

Asked whether news about the violations might have harmed his gubernatorial bid last fall, Bustamante said he believed “it created a little bit of a concern that somehow something wasn’t being done properly.”

The lieutenant governor finished a distant second -- with 32% of the vote -- in the election, behind now-Gov. Arnold Schwarzenegger.

State law requires that money collected for a campaign be deposited into a single bank account and spent from that account only. Additionally, Proposition 34, a ballot measure passed by voters in 2000, restricts the amount a candidate may loan himself and bars individual donors from giving gubernatorial candidates more than $21,200.

The stipulated judgment, signed by Superior Court Judge Loren McMaster, said that during August and September Bustamante and his gubernatorial campaign solicited and received several million dollars in contributions but deposited them into the coffers of the 2002 lieutenant governor’s reelection committee, which was not subject to the limits.

The settlement said that Bustamante, his 2002 reelection committee and the Yes on Bustamante gubernatorial campaign committee had to pay the state treasury $183,000 and that Bustamante must pay an additional $80,000. A lawyer for Bustamante said the penalties have already been paid with leftover campaign funds.

Campaign finance experts applauded the commission for suing Bustamante and said the settlement should serve to warn other candidates that their fundraising practices were under close scrutiny.

“This is a large fine, and the fact that they went to court with this case makes it clear that the commission took it very seriously,” said Robert Stern, president of the Center for Governmental Studies in Los Angeles. Stern said he believed the settlement would “send a message to campaigns not to manipulate their” funds.

The settlement comes about six months after a Sacramento Superior Court judge ruled against Bustamante in a similar case, brought during the recall race by state Sen. Ross Johnson (R-Irvine).

Johnson also charged that the lieutenant governor had illegally used his old campaign committee to skirt contribution limits.

The senator won a temporary injunction in September -- two weeks before the recall election -- and a judge ordered Bustamante to return nearly $4 million in contributions.

The lieutenant governor, however, responded that nearly all the money had been spent on television advertising.

Both the size of the fine and the fact that the commission sought a judgment in court show the seriousness of the violations, the FPPC’s chief of enforcement, Steven Russo, said.

He added that on the contribution violations, which he called “the heart of the case,” the commission had obtained the maximum fine allowable -- $5,000 per violation.

The FPPC said 14 contributions alone violated the $21,200 limit by a total of $3.6 million -- including $1.5 million from the Viajas Tribal Government, $600,000 from the Sycuan Band of the Kumeyaay Nation and $500,000 from Professional Engineers in California Government.

Officials hope the case “sends a message that contribution limits will be vigorously enforced,” Russo added.

“The people of California were very clear in imposing contribution limits, and they felt this was integral to the integrity of their political system,” he said. “They wanted them enforced. That’s what we’ve done here.

“We hope the message is therefore out there to other candidates that you must abide by the limits,” he added. “They’re not just there for show.”

Other large fines imposed by the commission and paid by candidates include a $190,000 penalty against Democratic Sen. Dianne Feinstein for reporting violations in her 1990 gubernatorial bid against Pete Wilson. That same year, Wilson, a Republican, agreed to pay a $100,000 fine for reporting violations in the hotly contested campaign that he ultimately won.