Lessons Ethics Should Have Learned
from the Carolyn Knee Case

San Franciscans for Affordable Clean Energy campaign treasurer Carolyn Knee,
flanked by defense attorney David Waggoner (left) and her husband, Richard Knee,
crack smiles when the Ethics Commission finds July 9, 2007,
that minor campaign finance reporting violations were unintentional
and votes unanimously to accept a staff-recommended settlement.
Photo by Luke Thomas

By Joe Lynn

June 25, 2008

If San Francisco Ethics Commissioners and investigators learned anything from the inquisition of former volunteer campaign finance director Carolyn Knee, they’re not letting on.

Fortunately the Commission was able to stop staff’s attempts to impose an unconscionable fine. However, the case still became a national embarrassment. The problem is that few people at Ethics seem interested in exploring the changes they should make to prevent another case like Knee’s from arising.

Ethics’ investigation of Knee was so outrageous that Rupert Murdock’s New York Post accused the Commission of bullying. Knee, retired, was the treasurer of San Franciscans for Affordable Clean Energy, the proponents’ organization in the City’s 2002 public-power initiative. For two years, Ethics staff hounded Knee in an attempt to wring a $26,700 “settlement” for campaign finance reporting errors so trivial that the Commission Fines Officer recommended she not be fined.

Though Knee admitted to filing reports with errors – albeit minor errors – staff failed to reply to her letters of explanation. Finally, she countered with an offer of $500. Ethics then withdrew from negotiations until a public hearing took place that raised serious questions about Ethics staff’s judgment. Staff finally capitulated and proposed to settle for $267, a recommendation the Commission accepted amid a flood of apologies for an investigation gone awry.

Before the settlement, the notoriety of the case prompted the Democratic County Central Committee (DCCC) to resolve to support Knee, questioning whether a disproportionate amount of Ethics’ limited resources were being spent on the prosecution of grassroots campaigns. Vice-Chair (and former Chair) Emi Gusukuma indicated to the Bay Guardian that she wanted to pursue the issue:

“The perception is, all we ever do is go after the small guys, but I don’t know if that’s really true,” Gusukuma said. She’s pushing staff to do more research into past enforcement actions “so we can tell the staff … not who to prosecute but what kinds of cases are important. We haven’t been able to get that analysis yet.”

The Commission did nothing in the last year to seek answers. So in early May, Knee wrote to the Commissioners and the Commission’s Executive Director, John St. Croix, inquiring what lessons had been learned and what steps had been taken to prevent such an out-of-control investigation from recurring. To date, only Commissioner Eileen Hansen has replied.

Some observers surmise that the tears shed during last year’s apologies were of the crocodile variety. That’s sad because the case produced some very important lessons from which constructive reforms could come. Without ever examining what had happened in Knee’s case, the Commission will very likely see the same mistakes repeated.

The Commissioners Never Learned the Facts of the Knee Case

The only public hearing in the Knee case focused on the apparent conflict of interest of the Commission’s deputy executive director, Mabel Ng, who supervised the investigation. Ng had been found guilty of official misconduct by the Sunshine Ordinance Task Force, on which Knee’s husband, Richard, still sits. He voted with the majority on the complaint against Ng. This fact may have been responsible for Ethics’ investigation of Carolyn Knee. The focus on this conflict of interest, though, meant that the Commissioners never had a fact-finding hearing where they could have learned the relevant facts regarding Knee’s filings.

Knee had filed reports prepared by an out-of-city professional accountant. The accountant (since retired) should have realized that Knee was missing important expenditure receipts (which Knee had faxed). Rather than contacting Knee, the accountant prepared an incomplete report. Knee had acted conscientiously throughout, visiting the Ethics office for consultation around two or three times a week. I know, because I was the campaign finance officer for Ethics at the time.

Unfortunately, staff did not interview me, and Ethics Executive Director John St. Croix had assumed that Knee could have corrected the problem if only she had taken more time to learn her obligations. In fact, she had gone to great lengths to understand her obligations. The accountant, not Knee, had made the mistake.

The law, however, fixes liability only on the treasurer of a committee and not paid consultants who are responsible for such errors. Thus, staff could not pursue the real culprit in Knee’s case, the paid accountant. Had staffers understood the case, they would have proposed by now a change in the law to empower them to pursue those culpable for the errors.

What Went Wrong?

The fine staff proposed was concededly inflated. The only explanations to date are that Ng was using Knee as a vehicle to pursue a vendetta against her husband and that the Ethics staff acted unprofessionally. The Commissioners have never held hearings on the former and they allow the latter to go uncorrected.

Evidence abound suggests Ethics enforcement staff is unprofessional. As noted above, enforcement staff had never interviewed the campaign finance staff who had assisted Knee. This failure was repeated in other cases. For example, Ethics recently dismissed a case that the Sunshine Ordinance Task Force referred to the Commission for enforcement. Ethics staff never even interviewed the parties. At the Tony Hall hearing on June 9, a member of the public complained that he had called staff at least twice and was never contacted. Witnesses for Ethics enforcement in the Hall hearing indicated that important documents had not been shown to them until two weeks before the hearing.

Cumulatively, that’s strong evidence that Ethics staff continue to improperly conduct thorough investigations. Neither St. Croix, Ng, nor Chief of Enforcement Richard Mo has any experience in discovery or conducting investigations. It’s understandable that they are unfamiliar with good investigation techniques. Understandable, but not acceptable.

In 2005, the Commission asked St. Croix to ensure more extensive staff training. Nothing has been done, and the Commissioners – with the notable exception of Hansen – don’t seem to care. There is still no mandatory continuing education for staff. From all appearances, staff training is less now than when I was a staff member of the Ethics Commission, and with far less in resources. St. Croix rejected District Attorney Kamala Harris’s offer to provide mentors to the young investigators.

Four of the Commissioners are impressive attorneys who could provide valuable mentorship to the inexperienced staff. They have done nothing. This has set the tone for the staff’s low level of professionalism.

The Decline and Possible Fall of the San Francisco Ethics Commission

In 2005, the Commission proposed a charter amendment to give it greater budget autonomy. This followed a Civil Grand Jury report noting the agency’s budget crisis. For the first time in Ethics’ history, the public voted down an Ethics-originated ballot measure. Observers noted that the political capital at Ethics had developed serious rot. Since then things have gotten worse:

· The existence of the Hall investigation was leaked just as the 2007 mayoral campaign started, effectively ending his candidacy for mayor.

· Matt Gonzalez was fined in 2003 while Gavin Newsom was given a free ride for the same offense. That fine complicated Gonzalez’ decision on whether to declare as a mayoral candidate.

· A campaign finance scandal at the Community College District was, according to St. Croix, “dropped” by Ethics.

· The Knee case vaulted the Commission to national notoriety.

All this formed the background of the DCCC resolution. Someone’s not minding the ship at Ethics.

The Commission’s political capital will continue its steep slide as long as the Commissioners show no interest in the afore-cited problems. Normally, when a political institution fails, those responsible can be held accountable. Elections have a great cathartic effect on incompetence. However, the Commission was designed to be immune from political pressure. It was designed to be a Supreme Court.

Well, little has transpired to justify that designation. The political pressure just may well cause the Commission’s undoing with its responsibilities assigned to elected officials who can be called to account.

Joe Lynn (RIP)

BIO Joe Lynn was the campaign finance and budget officer of the San Francisco Ethics Commission from 1998 to 2003. From 2003 to 2006, he served as one of the five Ethics Commissioners. The Bay Guardian called him “a leading voice for reform,” and the San Francisco Examiner called him “the backbone of the Ethics Commission.” While a staff member on the Ethics Commission, he received numerous awards and has been a speaker at many conferences on Good Government. He maintains an active interest in good government laws.

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