Newport resident seeks special counsel to investigate potential campaign finance violations by 2 council members

A Newport Beach resident alleges that City Councilman Scott Peotter and Mayor Marshall “Duffy” Duffield have committed campaign finance violations related to Peotter’s bid for reelection this year, and she wants a court-appointed special counsel to look into it.

In a complaint filed Thursday in Orange County Superior Court, Martha Peyton claims Peotter broke several state and local campaign finance rules by accepting non-cash donations from Duffield, local activist Bob McCaffery and Balboa Peninsula restaurateur Greg Pappas that either pushed the donors over the contribution limit or were misreported, if they were reported at all.

The alleged violations would be misdemeanors under Newport Beach city code, and the city attorney has the power to enforce the code, according to Peyton’s lawyer, Phil Greer. However, the complaint argues that a local investigation of the allegations would require outside counsel because City Attorney Aaron Harp is “beholden” to the City Council majority that ensures his continued employment. Peotter and Duffield are considered part of that majority.

The council could appoint a special prosecutor, but the complaint claims that is unlikely because of the “close, almost incestuous political ties” that most of the rest of the council shares with Duffield and Peotter.

That leaves a court-appointed prosecutor to act in Harp’s place, the complaint argues.

“It is obvious that respondent Harp is beholden to the ‘Team Newport’ majority if he is to maintain his position as city attorney,” the complaint states. “As such, due to self-interest and self-preservation, respondent Harp is unable to exercise the discretion necessary to proceed against … Duffield and Peotter for fear of being terminated by the council majority and thus has failed to take any action, despite his fiduciary and legal obligation to monitor campaign activities, notify the City Council of violations and take appropriate action.”

Harp said Tuesday that the city had not been served with Peyton’s complaint. He had no further comment.

Greer said he also filed a complaint on Peyton’s behalf with the California Fair Political Practices Commission laying out the same allegations. An FPPC spokesman said Tuesday that the agency had not received the complaint.

The complaints allege three violations against Peotter:

On Dec. 6, they say, Duffield hosted an unreported campaign gathering for Peotter aboard his private yacht. Because Duffield had already given Peotter $1,100, the maximum total contribution allowed under state and local law, the value of the hour-and-a-half harbor cruise tipped Duffield into excess-contribution territory, the complaint claims.

A reception beforehand at Woody’s Wharf also put restaurant co-owner and previous donor Pappas past the maximum, the complaint alleges. And in June, Peotter held an unreported fundraiser at McCaffery’s home, according to the complaint.

Peotter reported the $1,800 value of the Woody’s Wharf reception but said it was for a committee he established to fight a campaign to recall him (the recall effortfailed to collect enough valid petition signatures). Greer said it should have been designated for the committee supporting his regular reelection campaign.

Peotter said Tuesday that the reception was properly reported as being for the anti-recall committee, which did not have a contribution limit.

He said the events at McCaffery’s home and aboard Duffield’s yacht were valued at less than the $500 threshold for reporting a contribution of a hosted private event.

Peotter said there were “no violations’ and called the complaints “harassment and sour grapes.” He was referring to Greer, who ran unsuccessfully for City Council in 2016 and was involved in the recall movement as a lawyer for the recall committee, the petition circulator and a campaign reporting compliance group.

In February, the City Council decided to probe possible fraud related to the recall petitions. Greer said Peyton’s complaints are unrelated to that decision.

“Mr. Peotter wants to hold everyone to a high standard but doesn’t seem to want to be held up to the same,” Greer said.

The city’s investigation of the recall petitions is parallel with one by the Orange County district attorney’s office.

Recall supporters have criticized the city for launching a parallel investigation, though Greer acknowledged that the investigation Peyton is calling for would parallel any FPPC investigation.

But he said it would be different because a court-appointed prosecutor would stand in the place of the city attorney.

Greer said he is seeking relief from the county court as well as the FPPC because the commission is “notoriously slow” and doesn’t take allegations as seriously as it should.

Jay Wierenga, communications director for the FPPC, declined to comment.

hillary.davis@latimes.com

Twitter: @Daily_PilotHD