The Scottsdale City Attorney has determined that No DDC – an organization supporting Proposition 420 – violated state campaign finance laws by failing to register as a political action committee.
On Sept. 17, Phoenix-based law firm Statecraft filed a complaint with City Clerk Carolyn Jagger on behalf of resident Paula Sturgeon-Mortensen that alleged No DDC and two other pro-Prop 420 groups had violated numerous campaign finance laws in the lead up to the Nov. 6 election.
Jagger investigated the claims and found enough evidence to refer three issues involving No DDC to the City Attorney’s office for further investigation.
She did not refer claims against the other two groups, citing either insufficient evidence or lack of jurisdiction.
After reviewing Jagger’s report, City Attorney Bruce Washburn notified an attorney for No DDC that he agreed with her findings on all three violations.
Washburn wrote that No DDC violated multiple state campaign finance laws because its organizers failed to register as a political action committee and used corporate money to make campaign expenditures in support of or against specific candidates in the upcoming election.
In her initial report, Jagger cited multiple posts on the No DDC Facebook page and website that included support for specific candidates in the upcoming City Council election.
Washburn also stated that No DDC failed to provide state-mandated disclosures on its website and fundraising petitions identifying which organization, candidate or individual paid for the materials.
No DDC’s Jason Alexander said he was disappointed with the City Attorney’s decision over what he referred to as “a rookie grassroots mistake.”
No DDC is now required by law to come into compliance with laws regulating political action committees within 20 days of the notice, which was sent by Washburn on Oct. 15.
No DDC must also pay a civil penalty in an amount equal to what it “received, spent or promised in connection with any of these violations,” according to Washburn’s letter.
Washburn requested that No DDC provide his office with all necessary documents, including bank and accounting records, it will need to determine the exact amount of the penalty.
He indicated that he will use his subpoena powers to obtain those documents if the organization does not comply.
“We are working diligently with the City Attorney to come into compliance, correct any filing errors and ensure that it doesn’t happen again,” Alexander said.
Since that decision, Sturgeon-Mortensen has lodged another complaint with the city asking the City Clerk to investigate whether or not Protect Our Preserve PAC has spent money to promote or oppose specific candidates for City Council.
She pointed out that Protect Our Preserve PAC’s most recent campaign filing does not indicate the organization spent any funds in support of specific candidates – which would be a violation if it did spend any money for or against specific candidates.
Those same filings have given some ammunition to Alexander and other Prop 420 supporters who claim that the anti-420 campaign is being propped up by land developers and real estate companies from inside and outside of Scottsdale.
The most recent campaign filings for Protect Your Preserve PAC, an anti-Prop 420 group, indicate it received a significant portion of its funding from land developers and others in the industry.
Of the $57,800 in contributions Protect Your Preserve took in between Aug. 12 and Sept. 30, over $19,000 came from individuals with ties to land development companies, including DMB and Meritage Homes.
Those contributions also include $10,000 from David Arastoozad, CEO of Los Angeles-based Strategic Legacy Investment Group, a private equity firm specializing in commercial real estate.
Protect Your Preserve’s total contributions also include significant donations from corporations including Meritage Homes ($5,000), Building Art LLC ($4,000), National Western Capital Corporation ($2,000), and DSKS1 LLC ($2,500) – which is owned by David Sellers of DBM Ventures.
Building Art LLC owner William Peifer had been a staff member and project manager with Desert Discovery Center, the organization behind the proposed Desert Edge project on McDowell Sonoran Preserve that ignited the campaign to get Prop 420 on the ballot.
Protect Our Preserve PAC, the pro-Prop 420 group, also recently filed its campaign finance report for the third quarter.
The report showed that the PAC received $32,000 of its $36,748.67 in contributions this quarter from the Protect Our Preserve nonprofit corporation.
The relationship between the groups was the subject of Sturgeon-Mortensen’s original complaint, though Jagger, the city clerk, found no reasonable cause to advance those allegations to the City Attorney for investigation.