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Donors to Los Angeles political campaigns can sometime push contribution limits too far

Los Angeles Mayor

AP

L.A. mayoral candidates Eric Garcetti (l) and Wendy Greuel.

Los Angeles Mayor race 2013

Eric Garcetti and Wendy Greuel have raised millions of dollars for their mayoral campaigns. But to get that kind of money, they can't just ask a few wealthy people to write big checks.  
 
Los Angeles limits donations to $1,300 per person or company, so they must get thousands of people to write checks to their campaigns. That seems simple enough, but the law's fine print can get complicated, and that's where some donors look for legal ways around that $1,300 limit. 

A search of public campaign records turned up at least one example: Brothers Lenny, Michael and Joseph Schrage jointly own Universal City Nissan and seven other companies. Each company gave $1,300 to Garcetti's campaign during the primary, for a total contribution of $10,4o0.

Here's the problem: If a person or partnership owns a string of businesses, the city law treats them as if they were just one person – they may give only a total of $1,300.

Bob Stern helped write the campaign finance law in 1990, following a money laundering scandal at City Hall. That law bolstered contribution limits that had been in place since 1984.

"The Los Angeles law limits contributions from interest groups and it appears from the paperwork that the eight companies are linked together and thus should not have been giving more than $1,300," Stern said.

Lenny Shrage said he thought that the combined $10,400 in donations were legal because none of the three brothers owns a majority of the eight donor companies. 

$1,300 donations to Garcetti campaign from Shrage-owned firms

  • 7/24/12   Sage Management Co.
  • 9/24/12   West Covina Nissan
  • 9/24/12   Glendale Nissan
  • 9/26/12   Sage Holding Company
  • 9/26/12   Universal City Nissan Inc.
  • 9/27/12   Sage MJL Properties, LLC
  • 9/27/12   UCN Partners
  • 9/27/12   UCNP II LLC

The city sued Sage MJL Properties in 2011 over supergraphic billboards erected in prior years without permits by ad company Van Wagner Communications on a five-story parking structure at Universal City Nissan overlooking the 101 Freeway.

Chief Deputy City Attorney Bill Carter said the lawsuit remains unresolved, and that similar lawsuits against two other outdoor ad companies have resulted in penalties for unfair business practices totaling  $5.8 million.

Schrage said the brothers' companies' donations to the Garcetti campaign were unrelated to the lawsuit, because co-defendant Van Wagner Communications was handling the defense.

When KPCC first contacted him, Garcetti campaign spokesman Jeffrey Millman said that he wasn't familiar with the Shrage donations. Two days later, he said the campaign had refunded the money.

Millman said his and other campaigns spend a lot of time and money reviewing thousands of donations. Still, he said, it's hard to catch every violation.
 
"When you have somewhat smaller organizations, smaller companies, you have to figure out [if] that smaller company [is] really representing a handful of people that have control," said Millman. "You have to look at the ownership and make a judgment call."

Millman said both the Garcetti and Gruel campaigns have refunded tens of thousands of dollars to donors who gave more than the legal limit, or whose donations were not accepted for some other reason.

"In every campaign there are donations that are returned because the information can't be verified, it can't be properly reported, or perhaps there is an excess contribution," Millman said. "This is very routine."

Millman pointed out that there are different laws for city, county, state and federal elections, and that might confuse some donors into thinking they can give more than is allowed.
 
The Los Angeles City Ethics Commission declined to comment on the Schrage donations. A spokeswoman said the commission's investigators look into complaints it receives from the public. And  the commission fines donors who are found to be intentionally gaming the system.

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