WITH DANIELA KIRSHENBAUM

PANTS, POWER, AND POLITICS

SFSOS guilty of behavior its members claim to despise

SFSOS President fails to disclose
personal financial benefit from group

October 15, 2006

Sell a lot of pants and you can control San Francisco's destiny. You can at least throw a pile of money around in the attempt. You might have a trusty knight do it for you, who enriches himself in the process. It's a startling example of how reform needs to begin with the reformers themselves.

Consider the case of Don Fisher, founder of Gap Inc. If you're wearing a pocket t-shirt you probably already know that he and his wife were fortunate to sell enough casual clothing to make quite a few billions of dollars.

Some billionaires fund the curing of global scourges. Others try to win the game of life by dying with the most toys. A few go the salt-of-the-earth route, and give most of the wealth away.

Mr. Fisher falls into none of these categories. He has divvied up most of his cash amongst his heirs, and the sizable remainder is bestowed upon projects that he deems worthy. You can do that when you've sold that many pants: you can deem what is worthy for an entire city, even.

One of Fisher's interests is schools. Fisher serves on California's State Board of Education, and funds various school programs that some people like. He and his family are also involved in Mendocino timber, and some people don't like that at all.

But Fisher seemingly seeks to control the city of San Francisco itself. His instrument of domination is SFSOS, a group he started back in 2001 to "save" the city. At the time, Wells Fargo scion Warren Hellman (originally of Crocker Bank lineage) and Senator Dianne Feinstein were partners in the SOS project. All three had plenty of cash and star power galore.

Gap founder Don Fisher at the most recent SFSOS luncheon.
Photo by Luke Thomas

The kick-off event at Delancey Street was packed with people who were ready to sign on and rub elbows with royalty. That evening, Senator Feinstein spoke of her dismay at what was happening to our city. Chain-link fence, for example, was being installed along medians on Geary Boulevard.

Wade Randlett, President of SFSOS, spoke passionately about what it would take to save San Francisco, and articulated the maxim still listed on the group's web site: they would support issues, not candidates. It all sounded vague, but quite noble.

SFSOS President Wade Randlett.
Photo by Luke Thomas

Scott Hauge certainly thought it sounded worthwhile. He is the founder of the Small Business Advocates, and was a member of the SFSOS community board for its first two years. But then, he says, "They became stinging in their attacks. I broke away when it morphed into more of a candidate thing than an issue thing, and they started supporting candidates."

This is an important distinction, and a critical potential loophole. Endorsing - or attacking - candidates means there are donation limits of $500, or establishing a committee that carefully reports all donors and donations. Plus you have to identify yourself on any mailings or communications. This is true for corporations as well as non-profit organizations. (SFSOS is listed with the state as a corporation.)

But if you are taking a position on an issue, and not a candidate, then you aren't subject to those spending regulations. SFSOS focuses heavily on candidates. So when they say they are only about issues, they are also saying they needn't be held to any campaign finance limits.

Indeed, as Hauge notes, SFSOS was not just about issues. The group regularly sends out thousands of attractive e-mails excoriating what they continually call "the extreme left" of the Board of Supervisors.

Supervisor Aaron Peskin was an early target for SFSOS scorn. Supervisor Jake McGoldrick was told printed attacks on behalf of his campaign opponents were funded by the group. But when SFSOS was tied to a particularly vicious mailing against Supervisor Gerardo Sandoval, complete with swastika, a lot of the group's support faded.

Feinstein and Hellman had walked away by this time, when they realized that the organization was going to be used to launder funds to pay for the attacks, instead of opposition to a ballot measure.

Now only Fisher is left as a mainstay, with Wade Randlett running the operation. That hasn't stopped SFSOS from steaming ahead. And of all the political figures who receive the wrath of Fisher's group, it is District 6 Supervisor Chris Daly who meets with the most continuous onslaught of sheer hatred.

Sarcastic e-mailed screeds from SFSOS regularly load on paragraph after paragraph fuming about Daly, and interpreting his every move in the worst light possible. When he declined to attend a recent forum to debate challengers to his seat, SFSOS claimed it was "because he doesn't think everyone there already agrees with him." The group also routinely lambastes Daly for living in a condo rather than his former Tenderloin apartment.

Most crucially, they aren't shy about exhorting readers to join their bandwagon. "Daly's gotta go," said one of their recent e-mails. "Join the team to oppose him."

Their unabashed support of Rob Black, Daly's best-funded challenger, and their continual attacks on Daly himself, are activities that can only be seen as naked campaigning for and against candidates. It's precisely the kind of behavior that campaign finance laws are meant to address.

Rob Black, candidate for District 6 and SFSOS keynote speaker.
Photo by Luke Thomas

But SFSOS plays dumb on this. "Our structure isn't really relevant," says Ryan Chamberlain, the group's field director. "It's pretty loose. I'm just a guy on a mission. I don't see donors or touch fundraising. If I had to file FPPC or Ethics Commission reports tomorrow, I would be clueless."

As Chamberlain speaks, he gets more inflamed about Chris Daly. Clearly, he believes in the work he is doing. So there is no need for the billionaire's hands-on direction. "I've met [Fisher] I think twice," explains Chamberlain. "He donates money, but so do a lot of people. We want the face to be the face of a crowd. We don't ever want this to be about one guy and his agenda."

Echoing the SFSOS web site, which describes itself as "grass-roots," Chamberlain paints a portrait of SFSOS as a home-spun organization roiling with angry, middle-class, would-be homeowners, all sending in furious e-mails.

But many of those e-mails are form letters from members of Plan C, a group affiliated with SFSOS that is comprised largely of real estate professionals. Plan C is remembered for demanding that Supervisor Bevan Dufty vote to exempt five projects from a temporary moratorium on building in the Showplace Square neighborhood of Potrero Hill a couple of years ago; Dufty complied. Those projects were sponsored specifically by the Residential Builders Association, until recently known more for bullying tactics at City Hall than for any value they added to residential neighborhoods.

Another group under the SOS umbrella is "Citizens for Reform Leadership," an independent expenditure committee formed specifically to oppose Daly. Chamberlain explains: "We're required by Ethics to set up a separate committee for fundraising. That's a technicality of it. There's a fine line between a committee set up to run opposition against Daly and for Rob Black."

But a look at the fundraising reports the committee is required to file with the Ethics Commission reveals only a single donation of a mere $250 from an unknown person named Dandy Wong. That's not enough money to design a flyer, much less to blanket a district repeatedly with glossy mailers. And none of those mailers carry the SF SOS name as required. Something very big is missing from those filings.

Neither Don Fisher nor Wade Randlett responded to requests for an interview.

Paul Melbostad takes a dim view of SFSOS. He is the former chair of the Ethics Commission, and these sorts of activities moved him to sponsor legislation in 2000 for contribution limits to independent expenditure committees. That led to the city's public financing for campaigns, to try to level the playing field for all candidates, wealthy or not.

"SFSOS is going against the concept of one person, one vote," says Melbostad. "Do they believe they can control City Hall because they're wealthy?" A little cursory investigating on his part - calling registered phone numbers, and checking billing statements - revealed that Randlett is acting as front man, calling many of the shots. And it looks like he is spending Fisher's money.

Right now, SFSOS's main efforts and independent expenditure funds are pouring into getting Rob Black to defeat Daly in November. Black states he has "no idea" who is behind the independent expenditure committees that put out the copious mailings supporting him. As for SFSOS, he says "I don't meet with the guys from SOS, I don't talk to them. I know they're out there doing stuff, but it's not related to the campaign."

Melbostad speaks knowingly in response. "People should be skeptical, considering that Rob Black used to work for Jim Sutton himself, who would design scams to get around campaign finance laws." He adds that SF SOS has a history of supporting candidates that they can count on to carry the legislation they like. Supervisor Michela Alioto-Pier is one, he notes, and Rob Black was her aide until recently.

What really annoys Melbostad, though, are the continuous and flagrant campaign ethics violations. He was finally moved to give a campaign donation to their nemesis: Supervisor Chris Daly. Within legal limits, of course.

There's a grand irony here, and it starts with the near-visceral response that so many people have towards Chris Daly. His outbursts and his stubbornness are so provocative that his detractors often can no longer see anything positive in him. Sometimes the response to hearing his name is a roll of the eyes, or shake of the head.

More frequently, though, one can test these reactions. Wasn't there a ripple of guilty excitement amongst those outraged at Willie Brown after they heard about Daly's near-fist-fight with the then-mayor? Wasn't there shock, but then a secret sigh of relief, when Daly appointed a hugely qualified candidate to the PUC instead of the juvenile thug Andrew Lee during Mayor Brown's absence? Is Daly not intelligent and hard-working, with a slavishly loyal constituency?

Even Daly's opponent, Rob Black, admits that Daly has done well by the physical and mental health programs in his district. And Scott Hauge of the Small Business Advocates says that while they might disagree on policy, he genuinely likes Daly because of his forthrightness.

E-mail bulletins from SFSOS have nothing positive whatsoever to say about Daly, and take a rather sand-box approach to their differences. They call him "childish" and demean his supposed inability to be a "grown-up."

What would be the "grown-up" thing to do? Perhaps sit down and discuss divergent approaches? Establish compromises? Has SFSOS tried this approach?

Chamberlain scoffs at the idea. "Daly won't sit down with us or with anyone who disagrees with him," he says.

Has Chris Daly rejected overtures? Has he been rude to these titans who presume to save our city at any cost? "No," he responds. "I think I met with Fisher in 2001, after I was elected. I don't believe I've ever had a conversation with Randlett or Chamberlain." How about meeting with them? "I would have early on, before the swastika stuff," he says. And he dismisses SFSOS as being "Astroturf," not "grass-roots."

One could conclude that SFSOS is more comfortable wielding expensive, illegal, and nasty campaigns that run the risk of turning voters off altogether, than of approaching another human with whom they disagree to see where they might forge a slender alliance. Though they repeatedly accuse Daly of being "childish," they too seem guilty of an immature approach. (Divisive politics isn't helpful on the national level, either.)

Worse, as Melbostad points out, is SFSOS's dishonesty. But even he was unaware that Randlett has a personal stake in the homeownership issues that SFSOS takes on. It's not widely reported that Wade Randlett is a founder of the E-Loan, Inc., the world's largest on-line residential mortgage lender. He still serves on their board, and is listed as a 10% owner.

It would be one thing if Randlett pointed to his corporate background as a rationale for his passion on the subject. It's quite another thing to be so secretive about it that even Ryan Chamberlain, his primary coworker, doesn't know. "I don't think he has any business interests like that - outside of his own home," said Chamberlain when he was asked.

Randlett - and SFSOS - push for home ownership and for helping TIC buyers. E-Loan also sells its mortgages to Wells Fargo, Hellman's bank. The whole situation seems to be more than just private altruism, however unpleasant. By being so undercover about his ties to the lending industry, Randlett exposes SFSOS to more accusations of playing the worst kind of politics: personal enrichment, along with illegal campaign practices, on top of camouflaged mud-slinging. Where Fisher stops and Randlett starts is anybody's guess.

What if the billionaire and his team are right, and Daly must "go" in order to "save" San Francisco? Is SFSOS going about it the most effective way? Do the ends justify the vicious means?

Melbostad says no, that SFSOS doesn't get its way very often at the ballot box. "I've thought about calling Don Fisher and letting him know that Randlett and [Attorney Jim] Sutton are pissing his money down the toilet. Fortunately, they don't have a very good track record. San Francisco voters are at least skeptical when they get these mail pieces."

After thinking a bit, Melbostad adds: "Does Fisher just write the check?"

By selling enough pants - and enough loans - the money will keep flowing and San Francisco will pay the price. The city needs the Ethics Commission, the District Attorney, and the City Attorney to put a stop to it.

Kepa Askenasy contributed to this report.

SIDEBAR

Some nitty-gritty on how SFSOS campaign finances work

Originally, SFSOS set up a committee to oppose ballot measures. This committee was set up by Attorney Jim Sutton.

When Feinstein and Hellman learned that this committee was going to fund hit pieces against District 11 candidate Supervisor Gerardo Sandoval, they distanced themselves from the group. This is when Sutton terminated the original committee and set up another committee instead, for which he was treasurer.

Sutton accepted two contributions of $24,500 from Don Fisher, the sole contributor to the committee. Sutton claimed that the purpose of the committee was to defeat a ballot measure. In fact, all the materials the committee produced urged defeat of Sandoval, and supported opposing candidate Myrna Lim.

These materials included images of swastikas and dying AIDS patients. They were sent only to District 11, which is more evidence that simply defeating a city-wide ballot measure was not the group's intent. The mailers did not carry the identity of the sender as required, and had only the return address of a mail house at 4 Dorman Avenue.

The cost for the mailings - and the total of the illegal contributions SFSOS and Sutton laundered - clearly exceeded the voluntary spending limit of $86,000 for candidates for supervisor.

After the election, in which Sandoval was reelected, Fisher donated another $50,000.

What is allowed

Wealthy individuals have the same First Amendment rights as everyone else, and are allowed to spend as much as they like to publicize and express personal views.

What is not allowed

Contributing more than the legal limit of $500 to a committee making independent expenditures to support or oppose a candidate. The Supreme Court has upheld contribution limits as constitutional.

Source: Paul Melbostad, private civil attorney and former chair, Ethics Commission.

More information

SFSOS website: www.sfsos.com

Chris Daly campaign website: www.daly06.com

SFSOS political effort on home ownership, click here.

Wade Randlett, involvement with E-Loan, Inc., click here.

E-Loan's new type of TIC mortgages, click here.

Form letter by SFSOS calling for TICs; supporting legislation carried by Supervisors Dufty and Alioto-Pier; and disparaging Daly for his "assault on homeownership," click here.

Randlett calls for "public disclosure and playing by the rules", click here.

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