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Ethics commission finds Prop J PAC violated campaign finance laws

Tuesday, May 14, 2019 by Jessi Devenyns

After hours of politically caustic testimony, the Ethics Review Commission found at its May 8 meeting that the No on Prop J political action committee had violated city ethics codes by failing to disclose a $10,000 donation in a timely manner.

The case, which came before the commission in March, was filed by Fred Lewis, who alleged that the PAC made the late filing intentionally and thereby deprived thousands of voters of knowledge about the campaign’s funding sources. The $10,000 donation to support No on Prop J came from the Real Estate Council of Austin.

Proposition J was an initiative on the 2018 ballot that would have required any comprehensive change to Austin’s land use rules (i.e., CodeNEXT round two) go to voters for approval.

While the PAC freely admitted at the preliminary meeting that a violation had occurred, members maintained it was unintentional. “I misread the instructions … I don’t want it to be characterized that we didn’t care about the law,” said mayoral aide John-Michael Cortez.

While Fred Lewis acknowledged that he was unable to prove the intentionality behind the action, he argued that ignorance of the law is no excuse. Various court cases in both the Supreme Court of Texas and the United States Supreme Court have ruled in favor of this argument.

With such a precedent, Lewis asked the commission to prosecute as a class C misdemeanor.

“I’m troubled by the fact that the mistake was made on the single largest contribution to the campaign,” said Commissioner Peter Einhorn. Over the two-month campaign, the PAC received a total of $27,182.64, and $10,000 of it came from RECA.

Cary Ferchill, an attorney and chair of the Electric Utility Commission, explained that the PAC was a volunteer campaign and that none of the three witnesses – Cortez, campaign treasurer Angela De Hoyos Hart and political consultant Mark Yznaga – were campaign finance lawyers. He said the misfiling of the donation was a simple mistake. “Just because the other side is not happy and feels aggrieved doesn’t mean that these people are criminals,” he said.

Austin voters rejected the proposition that would have required putting future rewrites of Austin’s land use code up for a public vote.

According to city campaign finance laws adopted in 2016, disclosure of contributions must be made within two business days of a campaign expenditure of $500. The $10,000 donation was first disclosed on a Texas state campaign finance filing eight days after it was received on Oct. 22.

Cortez maintained that the misfiling boiled down to an error in the interpretation of the city’s instructions. “Although it was confusing, I thought I was reporting correctly,” he said. “My reading of the instruction for the ATX1 was … (you’re) supposed to show a link between what you spent and the money that you used to pay for it.”

While this incorrect interpretation was acknowledged by the campaign, they conceded that they never called a more experienced campaign lawyer or the city clerk’s office for clarification on the instructions.

“This is kind of like what they tell you about the trash: When in doubt put it out,” said Commissioner Donna Beth McCormick.

Although the commissioners had serious concerns, they agreed that there was no intentional deception behind the misfiling of the donation. Interim Chair Mary Kahle noted, “I think there was some disregard for the rules and some basic accounting processes.”

With that in mind, the commission voted 7-1 not to prosecute the case criminally but to issue a letter of reprimand to the PAC. Einhorn voted against the motion and commissioners Luis Soberon, Robin Lerner and Brian Thompson were absent.

Ferchill called the case “simply political payback.”

Photo by 2bgr8STOCK, Creative Commons license.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.

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