Repeat offender
Sutton's failure to disclose a late contribution draws huge fine – but not the findings his critics wanted to see

By Steven T. Jones

High-profile campaign lawyer Jim Sutton has gotten his old law firm slapped with the biggest ethics fine in San Francisco history – nearly a quarter-million dollars – for failing to properly report the $800,000 donation Pacific Gas and Electric Co. made to help defeat a public power initiative in 2002.

San Francisco Ethics Commission director John St. Croix said the large fine reflected the seriousness of the charge. "With that size contribution, voters have a right to know who is influencing the election," he told the Bay Guardian. "You can certainly make an argument that it influenced the outcome of the election."

The stipulated agreement calls for Mill Valley firm Nielsen, Merksamer, Parrinello, Mueller, and Naylor – where Sutton was a partner at the time – to pay $100,000 to San Francisco and $140,000 to the state's Fair Political Practices Commission. Both agencies investigated complaints about Sutton's failure to report the donation until after the election.

Regulators and the firm's partners say the violation wasn't willful but rather just an oversight by a busy lawyer. Yet those close to the case don't believe it was unintentional, noting that San Franciscans Against the Blank Check – the committee formed to defeat the public power measure, Proposition D – was Sutton's biggest client at the time. They also pointed to Sutton's pattern of skirting the limits of campaign finance law (see "The Political Puppeteer," 2/4/04).

"I think what they did was willful and deliberate, and I would have preferred criminal prosecution," Charles Marsteller, the good-government advocate who filed the complaint, told us.

Sutton wouldn't comment for this article, referring questions to firm partner Chip Nielsen, who didn't return our calls, although he did issue a short statement saying, "The firm regrets its inadvertent errors, which were corrected immediately upon discovery. Our client, PG&E, was blameless. The partnership and its former partner, James Sutton, have settled this matter, for which they bear responsibility."

Ross Mirkarimi, who ran the Yes on D campaign and is now running for supervisor in District 5, told us that the claim of innocent error "is not credible because of the trend of his negligent conduct. Sometimes, where there's smoke, there's fire."

Marsteller cites suspicious irregularities in Sutton's work on the No on O campaign (against public financing of candidates) in 2000 and the No on I (against a municipal utility district) and Yes on A (in support of issuing community college bonds) campaigns of 2001. Sutton also did work on behalf of Kamala Harris's district attorney campaign, in which Sutton argued that Harris's violation of a campaign spending-cap pledge was an innocent mistake, even though there was evidence the campaign intended to break that cap from early on (see Campaign Watch, 10/8/03). The Harris campaign was fined $34,000 by the Ethics Commission, which refused to launch a more detailed investigation of the matter.

Sutton's current firm, Sutton and Partners, was also at the center of another ethics scandal earlier this year, having authored what appeared to be a draft plan to illegally funnel unregulated contributions to Mayor Gavin Newsom's inaugural committee to pay off outstanding debts from the Newsom for Mayor committee (see "Newsom's Funny Money," 2/11/04). Sutton denied such a plan existed, although exposure of the document forced the campaign committee to return a $51,309 payment from the inaugural committee (see Trail Mix, 8/25/04). The Ethics Commission investigated document destruction in the case but never Sutton's role in developing the scheme.

Mirkarimi called for reform of the city's ethics laws, which he said encourage consultants to break the law, then make amends after the campaign. "I would treble the fines for repeat offenders," he said.

We've requested records from the PG&E donation investigation to determine if there's any evidence supporting the conclusion that the violation wasn't willful, but as of press time neither the FPPC nor the Ethics Commission had made those documents fully available for review. (Ethics partially complied with our request, making some letters and basic information available but withholding notes from interviews and other substantial documents.)

Despite his tainted track record, Sutton continues to teach an ethics class at Hastings Law School and serve as treasurer for the wealthiest campaigns in town, including those for Newsom and groups that support him (such as the California Urban Issues Project and the Committee to Stop Aggressive Panhandling), the Golden Gate Restaurant Association (which has been funding the nasty hit pieces on Sup. Jake McGoldrick), and Sup. Sean Elsbernd.

Sutton, a Republican, has also been an active player around the state working on campaigns to weaken local campaign finance laws in various cities and counties. He left the Nielsen, Merksamer firm shortly after the PG&E donation incident was exposed, saying in a press release that he wanted to pursue a different "institutional vision."

A.C. Thompson contributed to this report.

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