Entertaining politicians at home has long been an accepted part of doing business for Sacramento lobbyists.
So Thursday's news that the state's political watchdog agency is cracking down on a prominent lobbyist for throwing fundraisers at his home hit the Capitol with both outrage and confusion. Among the politicians who will receive warning letters after participating in the events are Gov. Jerry Brown and Lt. Gov. Gavin Newsom, a source told The Sacramento Bee.
California law puts strict limits on lobbyists, forbidding them from making any campaign contributions to state officials, and limiting gifts - including meals - to no more than $10 in a month.
But it allows lobbyists to host low-key political fundraisers in their homes, connecting their clients with key lawmakers as they donate to a the legislator's campaign. So while lobbyists may not give a penny to a political campaign, they can offer up their homes for a low-cost campaign fundraiser and invite interest-group clients to mingle and donate.
The key, though, is that the total cost of the event must stay under $500 - and that's how lobbyist Kevin Sloat ran into trouble. Fundraisers at Sloat's house routinely involved catered menus, expensive cigars, flowers, fine wines and top-shelf liquor, according to a lawsuit filed against him in December by a former employee under investigation for embezzlement.
Few lawmakers who heard from the state Fair Political Practices Commission that they attended questionable fundraisers at Sloat's home were willing to speak publicly, but several said privately they were irritated
In interviews, some appeared unfamiliar with the constraints of California law.
Sen. Jerry Hill, D-San Mateo, said he's been to several lobbyists' homes for political fundraisers, and always understood the events to comply with campaign-finance laws as long as the candidate's campaign pays for whatever is served.
"You go to a lobbyist's home, that doesn't mean they are doing (contributing) anything," Hill said. "I don't drink or smoke cigars."
"Usually you are paying for the food, (the home) is just the venue for the location. You are paying for everything - your campaign is paying in one form or another. The venue to me is immaterial."
The FPPC disagrees. Sloat and his firm, Sloat Higgins Jensen & Associates, have reached a settlement with the state's political watchdog agency, acknowledging that the elaborate events he threw for the politicians he lobbies amounted to prohibited campaign contributions. He agreed to pay a six-figure fine for the violations, two sources said. His representatives did not return calls from The Bee.
The FPPC is expected to announce the amount of the fine on Monday, along with a list of roughly 40 current and former politicians who benefited from Sloat's hospitality and will get a letter warning that they received a prohibited nonmonetary contribution.
Tom Willis, a lawyer with Remcho, Johansen & Purcell, said in an emailed statement that it represents state legislators, Gov. Jerry Brown, Lt. Gov. Gavin Newsom, and the Democratic Party, among others.
"What we can say is that our clients properly paid and disclosed all known expenses," Willis wrote. "Of course, they did not disclose expenses that they were not made aware of. For this reason, the FPPC has advised us that they intend to resolve the matter as to our clients by sending them a letter and taking no further action."
Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez also expect to get letters.
Stephen Kaufman, Pérez's lawyer, said in a statement that the speaker held one fundraising event at Kevin Sloat's home in June 2011.
"The speaker's committee paid the full amount of the catering invoice that was submitted," the statement said. "The speaker has no knowledge of any other costs associated with the event. It is our understanding that because legislators were unaware of such expenses and properly reported all known expenses, the FPPC intends to resolve the issue with a warning letter and no further action."
Entertaining officials at home has historically been a big loophole in California's laws that restrict lobbyists' interactions with state officials. Until a few years ago, lobbyists were allowed to entertain officials in their homes for social purposes, and provide food and drink in excess of the $10 gift limit. That meant that a lobbyist could not take a legislator out for an $11 cocktail, but could invite him back to the house for a $100 bottle of wine.
The FPPC tightened the rule in 2011, restricting home hospitality for social purposes to lobbyists who have prior relationships with the officials they entertain. That eliminated lobbyists' ability to invite legislators to the house as a way to get to know one another.
But the watchdog agency left in place a law that allows lobbyists to host political fundraisers that cost up to $500 in their homes that cost up to $500.
Good-government advocates warned that the new restriction on home hospitality for social purposes could create an unintended incentive for lobbyists to host political fundraisers instead.
Today, some members of the lobbying corps say that's exactly what has happened.
"The rules change prohibits you from having someone over to shoot the breeze. So the only way to have someone over now is to have a private fundraising event," said lobbyist Scott Govenar, a partner with Governmental Advocates Inc.
Legislators are increasingly looking to lobbyists, he said, to host fundraising receptions more intimate than the large meet-and-greets that take place in many restaurants around the Capitol.
Like people in many businesses, lobbyists value a friendly working relationship. Hosting lawmakers in the privacy of the home can build trust, allow people to share personal stories and inject some fun into an otherwise demanding grind. It also helps lobbyists become more memorable to the legislators whose votes they'll eventually try to influence.
"It's tough to get someone's full attention when you're in a restaurant with 150 other people," said lobbyist David Quintana, a partner at Gonzalez Quintana Hunter. "If someone has made a commitment to come to your home, it's a lot easier to get their attention and people can talk more openly."
Quintana said he has hosted roughly half a dozen small fundraisers for legislative candidates at his house in El Dorado Hills, with the campaigns footing the bill. To keep the events under the $500 limit, he said he has a short guest list, serves Mexican food like fajitas and beans, and pours more soft drinks than hard booze.
"Half of your job when planning one of these events is to keep a constant eye on the budget, because that $500 is a very bright line you can't cross," Quintana said.
Assemblyman Adam Gray, a Democrat from Merced, said there's no special treatment for lobbyists who host legislators at the house.
"I don't find that experience to be a great deal different than attending a wine-and-cheese reception at a restaurant," Gray said. "A fund
Over the years, lobbyists have turned to California's political watchdog for advice on how far they can go in entertaining officials at home.
In 2006, insurance lobbyist Michael Paiva asked the FPPC if he could host a political fundraiser at his house if the total cost of the event exceeded $500 but he only paid for the first $500, with the candidate covering the rest.
The FPPC responded with a letter saying the total cost of the event is what matters - not the amount spent by the lobbyist. An event that costs more than $500 amounts to a prohibited campaign contribution if the candidate is running for an office the lobbyist is registered to lobby, the letter says.
In 2009, lobbyist Stan Van Vleck asked the FPPC if he could host a fundraiser for a gubernatorial candidate at his house that would cost more than $500. If he couldn't host it, Van Vleck wanted to know, could his wife host the event instead?
The FPPC's answer was no.
"Because the cost of the fundraiser will be more than $500, your personal expenditures will be a contribution to the candidate," says the FPPC's advice letter from June 2009. And state law "prohibits a lobbyist from making a contribution ... if the lobbyist is registered to lobby the agency for which the candidate is seeking election."
Van Vleck, now a partner at the Downey Brand law firm, said he decided not to host the event after receiving the FPPC's advice.
Yet hosting politicians at home is such an accepted part of the Capitol culture that descriptions of such events routinely appear in the Capitol Morning Report, a newsletter for Sacramento's political insiders. Last year, for example, the newsletter advertised a fundraiser at the home of lobbyist Robyn Black for Sebastian Ridley-Thomas, a Los Angeles Democrat who was running for the Assembly.
The newsletter has advertised a regular wine club for lawmakers and lobbyists hosted by lobbyist Holly Fraumeni. At a gathering at Fraumeni's house in 2012, the Morning Report wrote, Sen. Bob Huff, R-Diamond Bar, took second place during a contest to pick the best summer wine.
"To go with so many different wines Holly set out a nice variety of meats and cheeses for members to nibble on between tastings," said the July 2012 post in the Morning Report.
A 2009 fundraiser lobbyist couple Amy Brown and Randy Perry hosted at their Clarksburg home featured a bocce ball tournament and a feast of wild game, according to a write-up in the Morning Report. The $3,900-per-person event raised money for then-Assemblymen Tom and Bill Berryhill.
"After everyone stuffed themselves with wild game and lobster either shot by the Berryhills or caught by Tom Berryhill's chief of staff Laura Ortega, Perry brought out the bocce balls," says the article by food writer Hank Shaw, who served as the event's chef.
"First on the lawn were the Brothers Berryhill versus (political consultant) Mike Madrid ... and (lobbyist) Tim Lynch of Platinum Advisors.? Now it might be politic to let the lawmakers win, but Lynch and Madrid seemed not to care: They wiped the floor with the Berryhills, beating them 11-4."
Tom Berryhill, who is now a state senator, said everything about the event was "aboveboard and legal."
"We wanted to do something a little bit different, and that was different," said Berryhill, a Republican from Twain Harte.
Fundraisers at a lobbyist's home tend to be more personal than receptions at a restaurant, he said, but the hosts don't get any special treatment when they visit his office to lobby a bill.
"It's no different than anything else you do building those relationships," Berryhill said. "It's all relationship-building."
EXCEPTION TO THE RULE
California's Political Reform Act prohibits lobbyists from making campaign contributions to candidates running for an office they are registered to lobby. It provides an exception for fundraising events in a lobbyist's home or office that cost up to $500. The rule is explained in this excerpt from an advice letter the Fair Political Practices Commission issued on June 26, 2009:
"The Commission's longstanding advice has been that the total cost of such an event cannot exceed $500 and still come within the exception. This includes goods or services provided by the candidate or any other person attending the event. If the cost of the event exceeds $500, all payments are counted as contributions."
Call Laurel Rosenhall, Bee Capitol Bureau, (916) 321-1083. Follow her on Twitter @LaurelRosenhall. Bee staff writers David Siders, Christopher Cadelago, Jim Miller and Jeremy B. White contributed to this report.
PHOTO: Aji Japanese Bistro in El Dorado Hills offers 17 wines and champagne by the glass on January 21, 2014. The Sacramento Bee/Jose Luis Villegas