Fair Political Practices Commission Sues Bustamante Over Election Funds Used in Anti-Proposition 54 Campaign

The Fair Political Practices Commission on Wednesday filed a lawsuit in Sacramento Superior Court against Lt. Gov. Cruz Bustamante (D) for exceeding campaign donation limits, mischaracterizing 16 contributions, failing to report $3.8 million in gubernatorial campaign funds and violating campaign spending laws during his gubernatorial bid and campaign against Proposition 54, the AP/San Diego Union-Tribune reports (Coleman, AP/San Diego Union-Tribune, 1/8). Proposition 54 was defeated on the Oct. 7 recall ballot (California Healthline, 10/8/03). Bustamante acquired $3.8 million in funds through six- and seven-figure donations from American Indian tribes and labor unions. While current campaign finance law limits campaign contributions to $21,200, Bustamante was able to receive the funds through his old lieutenant governor campaign committee because it was set up before the law's implementation. However, when Sen. Ross Johnson (R-Irvine) sued Bustamante to challenge the legality of the donations, Bustamante transferred the $3.8 million to a campaign to defeat Proposition 54, also known as the Racial Privacy Initiative, which would have prevented California government agencies and schools from collecting racial and ethnic data but would have allowed some exemptions, including cases involving some medical research data. Republicans and other critics alleged that the transfer of funds violated an untested state campaign finance rule (California Healthline, 9/10/03). Sacramento County Superior Court Judge Loren McMaster on Sept. 22 ordered Bustamante to return to donors the remaining funds obtained through the old campaign account, finding that they exceeded new state limits. However, Bustamante responded by returning only $177,035 of the $3.8 million to donors and withdrawing some of his anti-Proposition 54 television advertisements, which were paid for with the funds, because he said all other funds had been exhausted in ad purchases made by the Cruz Bustamante Committee Against Proposition 54 (California Healthline, 9/30/03). Bustamante appealed McMaster's ruling in December, and that case is pending before the 3rd District Court of Appeal in Sacramento (Vogel, Los Angeles Times, 1/8).

Johnson and consumer groups requested that the FPPC take action against Bustamante before the Oct. 7 recall election; the commission responded by conducting a "thorough investigation," which was only recently completed, according to Steven Russo, chief of FPPC enforcement (Bluth, Sacramento Bee, 1/8). The commission found that "not only did the lieutenant governor improperly use his old, unlimited (2002) committee to raise funds for the governor's race, he also made several expenditures for fund raising and other expenses for his gubernatorial campaign out of the unlimited (2002) committee, in violation of the law," FPPC Chair Liane Randolph said (Simon, San Francisco Chronicle, 1/8). While the FPPC typically settles campaign law violations administratively, it decided to file a civil lawsuit against Bustamante because officials said the alleged violations are "egregious and deserving of tougher penalties that could be obtained only in court," the Times reports (Los Angeles Times, 1/8). Bustamante could face a maximum fine of $9 million for the charges, according to Russo (Sacramento Bee, 1/8).