Legal Alerts Oct 20, 2014

FPPC Goes on Offense to Identify and Fine Gift Reporting Failures

"Pro-Active" Approach Already Resulted in Fines for Public Officials

FPPC Goes on Offense to Identify and Fine Gift Reporting Failures

The Fair Political Practices Commission has initiated a proactive approach to auditing and investigating gift reporting failures by government officials, focused on local government entities (most prevalently school districts). This project has resulted in scores of officials being fined and publicly reported to date.

The FPPC’s most recent “pro-active gift non-reporting project,” following on the heels of a similar project last year, has been in process for more than eight months. On the FPPC’s most recent agenda, the Enforcement Division proposes $18,000 in fines to be levied against 70 officials from cities, school and water districts, and housing authorities, many of whom received gifts, such as meals from businesses seeking to do business with the officials’ agencies.

Rather than waiting for a violation to be brought to its attention, the FPPC conducts “proactive investigations.” This involves the Enforcement Division contacting entities known to host events that public officials are likely to attend, and receive gifts or meals at, that would be reportable on their Statement of Economic Interests. (SEIs serve a dual purpose of making a filer aware of personal economic interests, including gifts, which might relate to and cause a conflict-of-interest with respect to a government decision, and disclosing interests to the public to promote transparency in government.)

For example, recent reports detail an audit that focused on a single “vendor,” which identified 312 public officials who accepted gifts from the firm over the previous four years. If the value of the meal and/or gifts provided meets or exceeds the reportable amount ($50 from same source in a reporting period), the Enforcement Division then cross-checks the public official’s SEI Form 700 filing for the reporting period to determine if that reportable gift was, in fact, reported.

As reported in the San Diego Union-Tribune on Oct. 7, of the 282 officials required to report these gifts, only 22 did. Two-hundred and sixty public officials will face warnings and will be publicly identified and fined. The FPPC can impose a fine (up to a maximum of $5,000, although normally, first time offenders are fined in the area of $200 per violation) and will publish the name of the public official in its public filings. A “knowing” failure to report can be prosecuted as a misdemeanor offense carrying a $10,000 fine.

The FPPC Enforcement Division’s pro-active program is designed to promote compliance, spelling out current violations, identifying violators, and imposing both warnings and penalties. These failures to report and the ensuing enforcement actions give lie to the notion of “a free lunch.” Some officials protest that the reporting requirements are confusing and difficult to conform to. Such complaints seldom sway the FPPC or buy much in terms of mitigation in treatment by the Commission. The best defense against the FPPC’s offense is knowledge of gift reporting requirements and gift acceptance limits, and attention to on-going proper reporting of economic interests.

Best Best & Krieger LLP’s Public Policy and Ethics Group keeps apprised of any developments in FPPC policy and advises clients in public policy and ethics compliance. The Group offers AB 1234 training in-house and on-site regarding Statement of Economic Interests (Form 700) filings, Conflicts of Interest, the Political Reform Act and more.

For more details and inquiries about the FPPC’s reporting requirements, please contact one of the attorney authors of this legal alert listed at the right in the Public Policy and Ethics Compliance group, or your BB&K attorney.

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