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Roundtable: Campaign Finance Scandal, PACs In Mayor's Race, Draining Lake Morena

January 24, 2014 1:26 p.m.

HOST:

Alison St. John

GUESTS:

Amita Sharma, KPBS News

Joe Yerardi, inewsource

Claire Trageser, KPBS News

Related Story: Roundtable: Campaign Finance Scandal, PACs In Mayor's Race, Draining Lake Morena

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

ALISON ST. JOHN: I am Alison St. John, KPBS Roundtable starts now. Thank you for joining us. With me today are Amita Sharma, Joe Yerardi, and Claire Trageser. It's increasingly difficult to track money pouring into political campaigns. What is clear is that it's illegal for foreign nationals to contribute to American campaigns at any level. This week three men face charges that they funneled hundreds of thousands of dollars from a wealthy Mexican businessman into a political action committee supporting a number of San Diego candidates for mayor and Congress. Amita Sharma, you're covering this story and it is pretty complex. Give us in a nutshell what these men are charged with.

AMITA SHARMA: These men are accused of funneling nearly half $1 million of the last two years illegally funneling half $1 million over the last two years to San Diego mayoral and congressional candidates through a straw donor and shell companies. It's illegal because it is against the law for a foreign national non-US resident to give money to US campaigns. They believed that the men did this on behalf of this wealthy Mexican businessman.

ALISON ST. JOHN: Tell us who these men are.

AMITA SHARMA: These three men are Ernesto Encinas, and he started his own security Company and he helps support provide security detail and in addition he provides security detail for night clubs and strip clubs and he is believed to be a liaison between the four candidates who are not named in the federal complaints but have all been identified by the resources in town. They are District Attorney Bonnie Dumanis, Juan Vargas, Bob Filner, and Nathan Fletcher. It is leaves that Encinas was not happy with police chief William Lansdowne issuing liquor license and Encinas one of the new mayor to replace Lansdowne resort would be more lax with issuing those licenses.

ALISON ST. JOHN: That is a question, what are the motivations here, what is the motivation of that businessman? Tell us about that.

AMITA SHARMA: Huge mystery all week long, why would this wealthy multibillionaire Mexican businessman want to influence City Hall? The money that was given his chump change compared to his assets. Why would you want to do this? Today in federal court, federal prosecutor Timmy T Parry said without naming Azano, he has not been named to the federal come play, but said that the wealthy businessmen wanted to basically develop the San Diego Bay front and was hoping that through campaign donations and through the political climate that might find, that he could do that. A bit of a bombshell was dropped and he said that for former Mayor Bob Filner said that he did not control the bayfront but that he would see what he could do about holding up the lease on the San Diego Navy Broadway complex. See what well, so there is some evidence that Bob Filner was speaking with them. I have been some investigation into this businessman, Joe Yerardi, tell us what you have learned.

JOE YERARDI: As Amita said, Mr. Azano is very wealthy and we're getting a sense of where some of that money is coming from. It's from many companies that he owns and controls in Mexico, he is involved in everything from construction and affordable housing units to contract for security and surveillance equipment for the Mexican Defense Department. It is estimated that his entire family net worth is may be as much of $30 billion. Some of his business interests are starting to attract scrutiny in Mexico, for example in 2011 his surveillance company had a $370 million contract with a Mexican Defense Department. That deal allegedly was consummated on a no-bid contract, and that started to attract attention. It also well-known for backing a lawsuit against city of energy. The San Diego energy plants.

ALISON ST. JOHN: Tell us a bit more about why that is significant.

AMITA SHARMA: Is a huge issue between Mexico and the United States, and I think in one of the articles it was decided that when President Obama and met with the Mexican Mexican president, the top issue of dispute between the two countries was this man dispute over the liquefied national natural black natural gas plant in California. It's an issue because their people within California that some people believe that the land was taken illegally from the land of the owner. I believe that Azano helped to financially back that landowner.

ALISON ST. JOHN: And apparently federal investigators did go to Azano's house, was that this morning?

AMITA SHARMA: They rated his two residences in Coronado on website on Wednesday, and fifty FBI agents went to the two homes and spent about eighty-eight hours there and went through safe saves, faults, financial records, electronics, financial records, and smartphones. He was not been charged with anything as of yet.

ALISON ST. JOHN: The second bit about the candidates because that is of a question. Did the candidates know that this money was illegal and coming from foreign nationals into their campaigns? Do we have any evidence that they did know?

AMITA SHARMA: We don't have anything from the we have from the candidates saying no. Only said that it was the money was given to an independent expenditure campaign which was separate from the main campaign, but the money that was given to me I believe Encinas and his wife each donated $700 to Bonnie Dumanis is reelection campaign in 2013 four DA, and she returned that money. A concise or said that he never met with anyone identified in the complaint and he did not know the source of that money and we have not heard from Bob Filner yet.

ALISON ST. JOHN: And of course the motivation for giving the money was to influence whoever got into office, and influencing their attendant, and it would not be much influence in less the candidate of source. The races questions about how much the candidates really know about this money.

ALISON ST. JOHN:

AMITA SHARMA: Yes we have local analysts are programs that in the least week they said that there is a separation between candidates on campaign fund-raising and this these independent expenditure committees Unless I can anyone, a lot of times and it's really do know what is going on with independent expenditure committees. That is hard to prove.

ALISON ST. JOHN: So there is no one in the current election that we're facing right now?

CLAIRE TRAGESER: Right, when this first broke there a few minutes when we're all wondering if this was going to affect the current election, are we going to have some dropout and have it found out that one of the two male candidates now, because the complaint said that someone in the 2013 special election is now was involved in this guide we now know that it's Nathan Fletcher not David Alvarez.

AMITA SHARMA: And David Alvarez has returned the contribution as well.

ALISON ST. JOHN: And Nathan Fletcher said that he knew nothing about it?

CLAIRE TRAGESER: If it'd been one of the two candidates now, getting that could affect the election or do you think they would've been able to say that they knew nothing about it and move on?

AMITA SHARMA: I think it would taint the election and the question on everyone's mind, is how this is going to affect Bonnie Dumanis and her chances of being reelected? It is a significant amount that has been funneled to her campaign.

ALISON ST. JOHN: And what has Bonnie Dumanis said about this?

AMITA SHARMA: She said that this is a separate into sissy entity and and we did not know about the source and did not control that separate entity. And so, there is deniability there.

CLAIRE TRAGESER: And her opponent Robert poor has also issued a strongly worded statement for denouncing her for being involved in this and also saying that the district attorney should not be politically a involved and should not have run for mayor the first place Because that makes her exclude herself from any kind of investigations.

AMITA SHARMA: We can imagine the headlines over the next couple of months, the District attorney is responsible for law enforcement, in charge of prosecution for corruption cases in this county, this one going on as we want right now, and she is herself as it implicated in a campaign financing probe, the headlines are not good for your reelection prospects.

ALISON ST. JOHN: Sum up for us what you think the significance of this is politically, there said to be two sides to this. Campaign finance laws and politically what is going on here?

AMITA SHARMA: We have to assess out these candidates new, how much did they know about where this money was coming from and the true source of this money? Did they have personal dealings with Azano and did they have personal meetings? We know that Bob Filner did, but did the others? I think that in the upcoming days as we all pieced together this information, the picture will get clearer.

ALISON ST. JOHN: Joe Yerardi, you have been following money and campaigns. Is there anything that you could tell us about how difficult it is to track money and political action committees?

JOE YERARDI: Beside taking illegal contributions from foreign sources, there are so many perfectly legal ways the candidates and individuals looking to support candidates can funnel money into elections, and the disclosure requirements in many cases are quite lax, for example you mentioned clinical action committees Local action committees block to be established by labor unions or business associations. They wish to pull together member dues as well as Larson but donations from individuals unions and companies Have been support various candidates in races to give an example, both political action committees only have to file twice a year and listening listing contributors. Last July it was most opted active in the mayor's race. Have not heard since the election began where these funds are coming from, and we will not know fact until the end of the month.

ALISON ST. JOHN: Let us pivot over to look at the campaign fund-raising in the current election, the election for the mayor, these illegal contributions all going to political action committees. Just clarify again for the difference between those campaign groups and the actual campaigns of the candidates?

JOE YERARDI: Yes, there's a several important legal dissensions between them. The candidates official campaigns are known as candidate controlled committees, the candidate legally supposed to be aware of who is donating too bad and what they're spending the money on, there always fully play. They have two of light by strict disclosure and also contribution limits, they can only accept money from individuals up to $1000 per election, or from the political party of two $20,000 per election, there are two other sorts of groups are very important, one of the so-called independent committees are formed specifically to support or oppose candidates. They can raise unlimited amounts of money from any source. Corporations, unions, but collections communities, and individuals, but not for an sources. Not foreign sources.

ALISON ST. JOHN: The interesting thing is really what you follow how much each campaign has raised That maybe the least of it. Tell us how big of a role these packs and independent committees are playing in the mayor's race?

JOE YERARDI: Patriotism was as if you have three different levels, you have the official candidate committees with strict disclosure requirements and strict limits The next level of our independent committees that explicitly support or suppose a candidate, they have now campaign contribution limits but they also must disclose the donors within twenty-four hours. If it's a donation of a head of $1000 or more. Final level of general-purpose political action committees and these often go six months at a time without reporting any of the donors. They're pulling money from these donors and making 5 to 6 figure contributions to the committees. Even though these independent committees may list their contributors, and for example the San Diego Chamber of Commerce general PAC fund, you do not know where any of that money is coming from. It just says it's $100,000.

ALISON ST. JOHN: You have been following the amount that these packs at been collected for the candidates, what numbers are we looking at?

JOE YERARDI: As above but of late week ago we found that all political action committees in that special mayoral election had donated by $1.6 million to various independent committees supporting each of the candidates. We don't know where the money is coming from for the most part, since the election again. We should note the end of the month when all of them do have to file their reports.

ALISON ST. JOHN: To think the mind with the six-month gap fosters abuse? This is an unusual election incidents but what do you think of this?

JOE YERARDI: This is an unusual election, finance experts that I've spoken with say that no one saw this election coming back in July, and no one thought that we'd have to have the special election, so it's tough to plan ahead for these committees of about their disclosure deadlines and when you can even figure out when the election was going to be, as far as abuse that is sort of subjective.

CLAIRE TRAGESER: And you find that the committees themselves were not necessarily prevent for the election like the Chamber of Commerce pack was listed as supporting the pension plan on turn and supported Kevin Faulconer for mayor and they've recently listed their purpose for proposition A and B.

JOE YERARDI: And to break that down, officially declared maybe eighteen or twenty months ago that the committee's primary purpose was going to be to support the passage of propositions A and B under the 22 June 2012 ballot, on the pension reform the project labor agreements, they supported those and filed exposure reports and never ended up changing their actual statement organization until a couple of weeks ago, and meanwhile months ago back in October they started spending a lot of money to support one of the independent committees supporting Kevin Faulconer for mayor, all the while saying that the are officially the main purpose was to support the pellet ballot measures that are now aging history.

ALISON ST. JOHN: It's so hard to track this money. Is there any sign that the the Secretary of State or anyone could be in position to change the rules to check up on frequently?

JOE YERARDI: The goals are determined by the FPPC. This all goes back ultimately to the fair political practices act which was created in the 1970s, so a lot of people have been seeing saying that it's time to take a look at renewing that act and updating it now that we are dealing with super PACs and unlimited money and all of those and so far there have now been been no active efforts to cover that.

ALISON ST. JOHN: Many maybe money will be more important than turnout.

CLAIRE TRAGESER: Money often leads to turnout in most cases.

ALISON ST. JOHN: Will thank you for following the money of this is you can Would only find out who is contributing to these packs?

JOE YERARDI: The date that all of these packs are supposed to file the reports we should bring us the donor information, that is next Thursday.

ALISON ST. JOHN: All right, will be like watching. While we're all enjoyed the record warm temperatures here there is an uncomfortable feeling that the such and has a dark side. We are in the midst of the driest year in 100 years of recorded California rainfall. Claire Trageser covered a story this week that is a glimpse into the kinds of choices we will be facing Tell us what is going on at Lake Morena?

CLAIRE TRAGESER: Lake Morena is a reservoir owned by the city of San Diego and is about 50 miles outside of the city, which you might think is interesting although a lot of reservoirs and by the city are not actually within city limits. The interesting thing here, is that this County of San Diego leases the lake and the land around it from the city to use for boating and fishing and they have a campground there.

ALISON ST. JOHN: And the city, what rights does the city have no?

CLAIRE TRAGESER: The city has a lease agreement that says that the city can take the water whenever it wants to.

ALISON ST. JOHN: So it is only 3% of the city's water supply, is that 3% so important?

CLAIRE TRAGESER: There are nine reservoirs and by the city and they in total make up about 15% of the water that the city of San Diego ratepayers use. The other 8085% we buy from the San Diego County water for Ford authority cop the San Diego city of coquette water authority isometric palate and water district. Even though this is the small amount that comes from the Lake Morena purpose reservoir, the city says that reservoir water is a lot cheaper than water that we would buy for the Metropolitan water District, said to make up for the amount of water, it cost about $5.1 million of it and I use the reservoir water. That would be passed on to the rate players and that of the residents of San Diego want that.

ALISON ST. JOHN: The one higher water rates, that is part of the reason why interim Mayor Todd Gloria has said that we will take the water. Can't he send surveys are Diane Jacob managed to convince Bob Filner out to take the water, what are her arguments?

CLAIRE TRAGESER: It's interesting because the city has taken this water multiple times, over the past thirty years and every time Diane Jacob the county supervisor leads a fight against it, and I think we have a clip.

ALISON ST. JOHN: Yes, we have a clip. Let us hear what she has to say.

[ [ AUDIO FILE PLAYING ] ]

DIANE JACOB: We have public safety issues, we need the water for firefighting purposes, the abyss fires out while their small in our backcountry, so they don't spit into the city, and also it's a great emergency backup supply.

[ [ AUDIO FILE PLAYING ] ]

ALISON ST. JOHN: So fire is obviously one of the big issues. You looked into some of her arguments, what did you find?

CLAIRE TRAGESER: She has a long list of reasons, some of which seem to hold ground and some don't. She said that is used for wall fight wildfires, talk to hellfire they said maybe but there are plenty of other water sources nearby that the can use it as a fire, said one of the deal. She said that it will cause these masses fish to die off, someone from the estate Department of Fish and wildlife said that maybe some fish will die but that will have a big impact If you think her biggest argument that they should be used as acting as a research uses emergencies In the city says that the bank will make will be whiplash by rainfall, she said that it's been incredibly dry and it's been incredibly dry. And environment seemed to agree with her that we should be saving this water.

ALISON ST. JOHN: Yes, the bigger contrast is back government governor Jerry Brown has just declared a state of emergency and suggested that all California's to save 20% more water. What does the local San Diego Water Authority think of that?

CLAIRE TRAGESER: Right, the governor declared the state of emergency and said that we should all conserve water by 20% The local San Diego County one authority said that we don't need to do that, if I cut back our water use by 27% of the last five years, and so we don't need to conservatives and an additional 20% on top of that, there's an interesting thing going on where they're the ones who sell this for water costs of don't necessarily want people to conserve water because then they lose money. At the same time they cannot say to go nuts. If we ran out of water it will be a big problem, they say that we bought our water from the Metropolitan water District, they say they have plenty of water coming out for the next year, so we're going to have a problem here, environmental groups like San Diego Coast Keepers say that we really should be cutting back letting looking back into alternative water sources.

AMITA SHARMA: There is a disconnect between what Governor Brown is saying and what these water agencies are saying, is there any efforts the right of the government's part to say look, I have told water Californians that they need to conserve water and I need them message to be consistent.

CLAIRE TRAGESER: Yes he is telling the individual water agencies that everyone should come back by 20% and the San Diego County one authority is saying that they don't need to do that we are to have them back by 27% in the last five years and there's an argument to be made That if we are cutting back to add another 20% on top of that may be hard to do.

JOE YERARDI: I'm curious, this that the first time that this lake is been drained, how well has it recovered from previous years of being drained?

CLAIRE TRAGESER: Yes, they only to a significant drawdown every ten years or so, so the lake is able to come back to normal levels. I was there in January and it looked like the lake had already been drained, but it was only down by about a foot. You can see that the used be higher than it has gone down, that is just actually due to the fact that this has been draining for the past couple years. It does come back up and I do not know if it will go back up this coming year or if it will stay yet stay low.

ALISON ST. JOHN: But Diane Jacob has consistently defended the lake and sometimes she has succeeded is about.comy, why she still fighting this war so hard? Before

CLAIRE TRAGESER: The people who live nearby the lake have businesses that rely on people going to the campground and going boating, they get very upset every time the city takes his wake up banquet of the story that a woman who lived nearby road a protest song in 1989 to the tune of summertime blues to say that the city of San Diego don't take our water, I think that part of it that Diane Jacob is going out fighting the fight for them to show that that she has their back and they are her constituents of the county supervisor The Citadel tied up at the city every time that I do this, even though the city can really just take the water whenever it wants.

ALISON ST. JOHN: Okay, thank you very much and thank you so much for watching the Roundtable, I would like to thank Amita Sharma, Joe Yerardi, and Claire Trageser.

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