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High Court Clarifies “Official Act” in Former Gov. Bob McDonnell Decision

28 Jun 2016 00:00:00 -0800

By Gary Schons

This week, the U.S. Supreme Court overturned the federal bribery convictions of former Virginia Gov. Bob McDonnell. While politicians and public officials from Washington, D.C. to Juneau, Alaska might be breathing a sigh of relief, the implications of the opinion for public officials in California are far less reassuring.

First the facts: McDonnell all but solicited and eagerly accepted more than $175,000 in gifts, including a $55,000 loan, a $20,000 shopping spree in Manhattan, lavish meals and $15,000 in cash, from Virginia businessman Jonnie Williams. Williams wanted McDonnell help him push his diet supplement product by convincing Virginia’s public universities to study the product. McDonnell contacted these school officials, although no studies materialized. McDonnell arranged meetings between Williams and state officials and hosted a lunch party at the Governor’s Mansion. At that lunch, McDonnell touted the product and once produced a bottle of the product at a meeting with the head of the state employee health plan and suggested that state employees start taking the supplement.

The receipt of the “quid” — the gifts — was undeniable. But what McDonnell challenged was the existence of the “quo”— whether what he did amounted to “official action” within the ambit of the federal bribery statute (18 U.S.C. §201). In essence, McDonnell argued that even “exchanging” (the “pro”) meetings, promotion and contacts with state university officials for cash, on its own, did not constitute bribery.

The Court overturned McDonnell’s convictions on the basis that the trial court provided erroneous jury instructions on the meaning of what constitutes an “official act” in the federal bribery statute. The Court held that “official act” is a decision or action on a “question, matter, cause, suit, proceeding or controversy.” The Court held those matters must also be something specific and focused, that is “pending” or “may by law be brought” before a public official.

The Court held that the possible state university research, the allocation of state grant money to fund research of the diet supplement, and whether the state health insurance plan would cover the supplement could be “questions” or “matters” arising from the Williams-McDonnell relationship.

To qualify as an “official act,” the Court held, the public official must make a decision or take an action on that “question” or “matter,” or agree to do so. Further, that decision or action may include using his official position to exert pressure on another official to perform an “official act,” or to advise another official, knowing or intending that such advice will form the basis for an “official act” by another official.

So far, so good for the government’s position — as it appears that is precisely what McDonnell did.

But where the Court found fault was that merely “setting up a meeting, talking to another official, or organizing an event [or agreeing to do so]” — a phrase Chief Justice John Roberts repeated like a mantra in his opinion — does not fit that definition of “official act.” Thus, the jury instruction, in suggesting otherwise, was erroneous and the convictions could not stand.

Roberts explained that, if such activity was swept into the federal bribery statute, it would “cast a pall” on “the basic compact underlying representative government” — that is to say, how business gets done in politics and government.

So, why is this decision of lesser import to California public officials? The simple reason is that under California’s Political Reform Act (Government Code section 87100 et seq.) had McDonnell been an official in California, the mere receipt of the lavish gifts from Williams would have been their own crimes because they grossly exceeded the state’s gift limits. Further, under that Act, those gifts would have to be accurately, timely and publicly reported to the FPPC, under the threat of felony prosecution for perjury, even if that report exposed the gift limit violations. It is also possible that McDonnell’s contacts with other state officials on Williams’ behalf could be viewed as acts seeking to influence a governmental decision in which McDonnell had a financial interest (the gifts) under the Act.

Originally published on PublicCEO.com on June 28, 2016. Republished with permission.

Attorneys React to High Court’s Political Bribery Ruling

28 Jun 2016 00:00:00 -0800

Best Best & Krieger LLP Of Counsel Gary Schons was included in a round-up of reactions from lawyers to the U.S. Supreme Court’s decision Monday to overturn former Virginia Gov. Bob McDonnell’s corruption convictions.

“Public officials are breathing a collective sigh of relief in the wake of the Court’s decision that former Gov. Bob McDonnell’s acts did not constitute ‘official acts’ under the federal bribery statute, finding that merely ‘setting up a meeting, talking to another official, or organizing an event’ does not fit the definition of ‘official act.’ Chief Justice Roberts explained that, if such activity was swept into the federal bribery statute, it would ‘cast a pall’ on ‘the basic compact underlying representative government’ — that is to say, how business gets done in politics and government.” – Gary Schons

Read all the reactions, posted June 28, 2016 to Law360, by clicking here (subscription required).

California Legislators Seek to Mandate More Transparency and Accountability in Government

15 Apr 2015 00:00:00 -0800

By Deborah J. Kollars

In the wake of various investigative reports and public scandals, three California lawmakers have proposed reform legislation aimed at providing greater transparency and accountability in government. Three separate bills, now making their way through the Legislature, aim to strengthen the Government Code and Political Reform Act, and have implications for local government agencies.

Financial Disclosures

Assemblyman Mike Gatto (D-Glendale) introduced AB 10 in December 2014. According to Gatto, the bill “Provides much needed reform of the reporting requirements of the state’s elected officials.”

Under the bill, as introduced, elected officials would be required to more fully disclose information about business ventures and business partners, and disclose when they excuse themselves from voting based on a conflict of interest. The bill would increase thresholds for triggering a disqualifying financial interest and expand reporting requirements to provide more detail about officials’ income, property and investments.

Specifically, AB 10 proposes changes in four main components of disclosure:

1.Modernize the financial interest thresholds that necessitate a public official excusing him or herself from a governmental decision. These numbers have been updated only once since 1974. Under the bill the new threshold at which a public official has a disqualifying financial interest in sources of income changes from $500 to $1,000; in investments in business entities from $2,000 to $5,000; and in interests in real property from $2,000 to $10,000.

2.Include additional middle tiers and upper tiers in the financial disclosures on the FPPC’s Form 700.

3.Require a more detailed disclosure of holdings, specifically a more thorough description of any businesses and the names of any business partners.

4.Add an additional disclosure to the Form 700 that requires public officials to specify any instances in the previous year where a financial interest has been cause for a recusal from being involved with or making a governmental decision.

5.On April 7, the bill was amended to amend Government Code section 82105, which defines political “contributions,” and excludes from the definition “behested” payments for legislative, governmental or charitable purposes. As amended, the bill would now require candidates and elected officials — for one year after they leave elective office — to report within 30 days following the receipt of a behested payment in excess of $5,000.

Gifts of Travel

SB 21 by Sen. Jerry Hill (D-San Mateo), also introduced in December, is a reintroduction of a portion of SB 831 from the 2014 legislative session, which was vetoed by Gov. Jerry Brown. The legislation would provide for greater transparency about public officials’ travel by requiring both state and local elected officials to disclose to the Fair Political Practices Commission the destination of travel paid for by special interests. The legislation also would require nonprofits that pay for travel by public officials to disclose the name of the donors responsible for funding the travel. While the bill establishes a state-mandated local program, it does not provide reimbursement to local agencies.

According to Hill, “under current law, the public has no way of knowing who is paying for legislator travel or where they are going. Donors hide behind nonprofits, preventing the public from knowing who was behind the gift to the elected official.”

Conflicts of Interest

SB 330 by Sen. Tony Mendoza (D-Artesia) is aimed at preventing elected and government officials from voting on public contracts when a family member has a financial interest or may benefit in the outcome of the contracting decision. Mendoza seeks to align California’s conflict of interest laws with those of other states, as well as private corporations.

Specifically, SB 330 would amend the Government Code to define when a public official is deemed to have a financial interest in a public contract to include situations where the public officer’s spouse, child, parent, sibling or the spouse of the child, parent or sibling has a financial interest in any contract under consideration in his or her official capacity. Under current law, any public official who has a direct or indirect financial conflict of interest must disqualify themselves from voting or participating in decisions related to that contract.

As it is currently proposed, a violation of the law will result in disqualification from ever holding any office in California, prison time and/or a fine of not more than $1,000. A local district attorney or the California Attorney General would have the authority to investigate alleged violations of the law and the discretion to pursue criminal prosecution. If they decide not to pursue a criminal prosecution, officials can turn the case over to the FPPC for an administrative or civil action.

Each of these bills is currently making its way through the legislative process and would not take effect until 2017. However, public officials should take note of the proposed changes afoot and be prepared to be more transparent and accountable in the years ahead.

This article first appeared on PublicCEO.com on April 15, 2015. Republished with permission.

School District Case Clarifies PRA Copying Charges

29 Dec 2014 00:00:00 -0800

A judge has ruled that a California school district’s charging policy for viewing public documents violates the Public Records Act. At issue was Redlands Unified School District’s practice of charging 25 cents a page to copy documents that required redaction before allowing a member of the public to inspect them.

San Bernardino Superior Court Judge Bryan Foster said members of the public should be allowed to inspect the documents for free, but that, if copying is required, the District overcharged for the duplication. If it is necessary to make copies before producing documents under the PRA, Foster said a public agency can charge only for the costs of direct duplication — not the costs associated with reviewing the request or redacting the documents. Foster ordered the District to reduce its copying fee from 25 cents per copy to 10 cents per copy to comply with state law requirements that government agencies charge only for “direct duplication” costs.

Redlands Unified School District has not filed a notice of appeal within the required 60-day period of Foster’s Sept. 29 order that its public records policies violate state law and must be changed. The case does not set precedent, but was closely watched because of the issues it raised.

The lawsuit began when Maia Pawooskar, the mother of a special education student, filed a public records request seeking billing records for an attorney hired to represent the District in an administrative hearing against Powooskar’s son. The District claimed not to have the records she was looking for, so Powooskar expanded her search, and the District produced 11,180 pages of documents.

The District claimed that, because the records contained personal information, they needed to be redacted before Pawooskar could inspect them, and that redacting the documents would require copies to be made. The District did not allow Pawooskar to inspect the documents to decide which documents she wanted to copy. Instead, the District indicated it would charge 25 cents to copy each page — meaning Pawooskar could have paid $2,795 to view the documents.

State law provides that members of the public can inspect documents at no cost; however, if copies must be made, government agencies can charge only for the direct duplication costs and not the “ancillary” costs associated with retrieving, inspecting and handling the documents.

The District stated that its 25 cent rate was based on the fact that senior staff members process the records, and their salaries are higher than those of the employees who operate the copy machine. Foster ruled that this approach is out of line with state law, and ordered the District to reduce the rate to 10 cents per copy.

If you have questions about this ruling, how it will affect your municipality or agency, or the PRA in general, please contact the attorney author of this legal alert listed at right in the firm’s Municipal Law practice group, or your BB&K attorney.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

It Is Now a Crime to Help a Public Official Make a Contract that Holds Personal Financial Interest

20 Nov 2014 00:00:00 -0800

An amendment to Government Code section 1090 now makes it a felony for any person to aid and abet a government official in violating the conflict of interest provisions of the Code. This amendment, made possible with the passage of SB 952, advances the ability of prosecutors to charge all persons, government officials and others who are knowingly involved in aiding and abetting, or directly participating in the making of a contract in which a government official is financially interested.

During the past session, the Legislature passed SB 952, which Gov. Jerry Brown signed into law, amending the powerful and far reaching statute that prohibits a government official from being financially interested in a contract made in the official’s capacity, or by the agency of which he or she is a member. Section 1090 provides felony criminal penalties, including state prison sentences, fines and a lifetime ban from holding office. Any contract made in violation of this law is void and the government retains all the benefits of the contract while recovering any payments or consideration provided pursuant to the contract.

An earlier appellate decision, D’Amato v. Superior Court, had cast some doubt on whether section 1090 criminal liability could be applied to someone other than a government official under an aiding and abetting theory. In D’Amato, the Court of Appeal held that the Legislature intended that section 1090’s liability extend only to an official having an interest in a contract approved by the body or board upon which he or she sits. This amendment to the statute now supersedes that conclusion.

Now with aider and abettor liability explicitly provided for in section 1090, any person who knowingly engages in activity that aids and abets a public official in participating in the making a contract in which the official is financially interested will have shared criminal liability. This will sweep within the statute those who offer inducements or bribes for legislative action, as the inducement or bribe creates a financial interest in the contract for the public official.

How might this new law apply in the real world? Imagine this scenario based on an actual case: Hub City Solid Waste Services, Inc. v. City of Compton. In this case, the principal of a company seeking to do business with the city provided campaign contributions and hired members of council members’ families with the understanding that the council members will vote in favor of a contract with the company. The council members then voted to approve a contract with the company. Under this scenario, not only the council members, but also the company principal, would be criminally liable under Government Code section 1090.

The new law takes effect Jan. 1.

For more information on this amendment or how it may affect your agency, please contact the attorney author of this legal alert listed at right in the firm’s Public Policy & Ethics Compliance practice group or your BB&K attorney.

FPPC Continues Regulation Revision Project

01 May 2013 00:00:00 -0800

The Fair Political Practices Commission last week amended California Code of Regulations section 18700. This amendment restructured the conflict of interest analysis by providing definitions and consolidating the analysis down to four core questions rather than the common eight-step process. It is the FPPC's goal to make the regulations more easily understood by the regulated community and the public. As with some previous amendments, the FPPC is delaying the publishing of Regulation 18700 until other regulations are amended, which will also delay the effective date of the amendment until 30 days after being published.

Below is a complete list of regulations the FPPC has recently adopted but delayed as it continues with its project to revise the conflict of interest regulations.

18700 Basic Rule; Application - Definitions; Guide to Conflict of Interest Regulations (amended); adopted on April 25, 2013.
18706 Determining Whether a Financial Effect is Reasonably Foreseeable (amended); adopted in September 2012.
18706.1 Real Estate or Professional License (adopted); adopted in September 2012.

In addition, this year the FPPC intends to focus on:

developing new materiality standards for business interests, sources of income and personal financial effect;
reexamining the rules for what is “distinguishable from the public generally” while attempting to simplify this calculation, especially with respect to real property;
determining an appropriate interpretation of when someone is “participating in” a governmental decision;
providing usable and workable definitions, including the definition of “consultant” and “otherwise related business entities;” and
providing a regulation that will serve as a guide to determine when an organization is acting as a government agency.

For more information on this FPPC project and how it may affect your agency, please contact Dianna Valdez or Grover Trask in BB&K’s Public Policy & Ethics Group, or your BB&K attorney.

Former DA Now Polices Public Officials As BB&K Ethics Attorney

08 Mar 2010 00:00:00 -0800

RIVERSIDE _ Grover Trask got his first big ethics lesson as a newbie prosecutor with the Riverside County District Attorney's office.

It was a theft case in which an informant was the main witness against the defendant. But Trask said when the defendant testified, he seemed more honest than the informant.

The jury convicted the man, but Trask couldn't sleep afterward. At Trask's request, the
defendant took and passed a polygraph. A judge granted his office's motion for a mistrial and dismissed the case.

Thirty-five years later, ethics are still front and center for Trask, who retired at the beginning of 2007 after nearly a quarter-century as the county's top prosecutor to become special counsel for Best Best & Krieger in Riverside. As head of the firm's Public Policy and Ethics Group - one of only a handful of such legal niches at law firms statewide - the 62-year-old Trask is becoming one of the state's go-to independent investigators on public officials' ethics compliance.

From Riverside to Sacramento, he's launched probes on behalf of dozens of school and utility districts, cities, counties and private companies on issues including whether employees or elected officials ran afoul of federal, state or local policies. His findings have triggered major administrative changes, and in some instances, civil or criminal filings.

Click here to read the entire story. (Subscriber-only Web site)

Former FBI Agent and Former DA Pair Up to Solve Crime

01 Nov 2009 00:00:00 -0800

Bulletin of The San Bernardino County Bar Association
November 2009

Investigating and confirming the existence of a significant financial fraud, forensic accountant investigators and attorneys partnered to address a local fraud case in early 2009 that began with the suspicions of an astute manager.

VLS Fraud Solutions, a fraud investigation unit under the umbrella of accounting firm Vicenti, Lloyd & Stutzman LLP in Glendora, joined forces wit the law firm of Best Best & Krieger LLP to investigate the case to the fullest, delivering a full report to a local Southern California District Attorney’s office within 90 days.

...

Though VLS Fraud Solutions works with several law firms, it was Grover Trask of Best Best & Krieger LLP that got the call. Trask served for nearly a quarter century as Riverside County District Attorney and 32 years as a prosecutor.

Trask co-chairs his firm's Public Policy and Ethics Group that assists both their private and public clients on internal investigations dealing with potential violations of law and issues dealing with conflicts of interest and other California ethics compliance laws.

With Trask's expertise in analyzing a case for potential criminal activity, Cooper felt confident that the First American case would be handled properly.

Click here to read the entire article.

Dean Derleth Presented at Special District & Local Government Administration Seminar

20 Jun 2009 00:00:00 -0800

BB&K partner Dean Derleth presented a special workshop on "The Brown Act, Public Records Act and Conflict of Interest Laws" at the Special District & Local Government Institute's Administration seminar.

The workshop covered:

Adjourned, committee and special meetings
Rules for closed sessions, recording meetings and agendas
Your liability as a public official
How to live within current laws

For more information on the seminar, visit the Special District & Local Government Institute website.

Voter-Advocacy Group Praises Special Election in Riverside County

21 May 2009 00:00:00 -0800

A watchdog group critical of how Riverside County has handled past elections said Wednesday that Tuesday's special election vote went smoothly with added accountability.

Temecula-based Save R Vote monitored Tuesday's election and praised Registrar Barbara Dunmore for putting a series of safeguards in place to maintain the integrity of cast ballots.

"This was the most improved, smoothest election that I have seen in seven elections," said Tom Courbat, the group's founder.

The safeguards came from an audit led by former district attorney Grover Trask.

Click here to read the entire story.