California’s Other Dodgers: Pols Exploiting a Golden Gateway to Murky ‘Behested Payments’

The smoke from fire-ravaged Los Angeles has cleared, but a thick pall clouds the funding for fire recovery efforts. While insurance companies, landowners and taxpayers will surely foot most of the bill, it is likely that money solicited by Mayor Karen Bass through a campaign finance loophole will play a role.

Questions regarding these funds, called behested payments, arose during fierce backlash over Bass’ decision earlier this month to appoint former L.A. Police Commissioner Steve Soboroff as her chief recovery officer. The Los Angeles Times reported that Soboroff was to be paid $500,000 for a mere 90 days of work. His business partner and real estate executive Randy Johnson was also hired to work with Soboroff at a salary of $250,000. 

While fire victims and civic leaders described these salaries as “obscene” and a “money grab,” one anonymous source told the Times that the salaries would  be paid not by the city but by three foundations with which Bass is closely associated: the Mayor’s Fund for Los Angeles, LA4LA Fund and the Getty House Foundation.

The controversy shines a light on a gaping statewide loophole in campaign finance law, although Soboroff eventually announced that he would forgo any compensation and volunteer instead. The loophole allows elected officials to solicit unlimited sums of money from donors. While the money is not sent directly to officeholders, they control the cash indirectly through charities and nonprofits that make the tax-deductible donations at their behest.

This may not be bribery in the classic or even legal sense, but it’s easy to see how, at best, the “quo” in a “quid pro quo” would be enabling a politician’s better performance on the job in the public interest.

Elected officials often cite specific policy goals to justify their solicitation of behested payments. But vague yearly financial disclosures that are filed by the charities themselves serve as the only oversight to ensure the money is used for what it was intended.

The practice has become a prime way for major corporations and foundations to channel unlimited funds to the state’s leaders. Governor Gavin Newsom – who directed more than $226.5 million in behested payments in 2020 when COVID emerged – reportedly raised $13.85 million from the practice in 2024, including $450,000 from Goldman Sachs Philanthropy Fund, $250,000 from Fidelity Investments Charitable Gift Fund and $25,00 from CVS Pharmacy Inc. 

Financial disclosures cite the stated purpose of these donations. For instance, Goldman Sachs Philanthropy fund mentions “working group implementation to achieve [Newsom’s] Master Plan for Career Education.” Last December, Newsom announced that the Master Plan project will create a new statewide planning body for workforce training. But he also said that $100 million in taxpayer money will fund it. 

High Road Training Partnerships recently awarded ten healthcare grants totalling more than $24.17 million, with Transitions-Mental Health Association receiving the largest award of $2.28 million. But the nonprofit’s 2023 audited financial statement provides a closer look at how it utilizes its money. Of the $15 million spent by the organization on program services in fiscal year 2023, more than $9.8 million went toward salaries, wages and related expenses alone. Only $132,457 was allocated toward staff development and training.

In Los Angeles, Mayor Bass has reportedly solicited approximately $20.6 million in behested payments from private donors and monied interests since 2022, when she was elected as Mayor. Financial disclosures indicate that she raised nearly $12.8 million for the Mayor’s Fund for Los Angeles alone. The Fund’s website says it has received grants of more than $1 million from Health Net, L.A. Care Health Plan and the Bob & Dolores Hope Foundation, and grants between $100,001, and $1 million from Amazon, Kaiser Permanente Snap Inc. among others. 

Like other elected leaders in the state, Bass is not allowed to raise more than $1,800 per donor for her personal campaign account, and is required to disclose the names of anyone who contributes $100 or more. The Mayor’s Fund, however, allows her to raise unlimited sums of money and has a higher disclosure threshold of $5,000. 

Behested payments are regulated more loosely than political action committees. For instance, super PACs, which can also receive unlimited donations, are barred from coordinating with the politicians they back during elections. But charitable foundations that receive behested payments can, and do, coordinate closely with officeholders by design. 

Special interests looking to sway municipal officeholders like Newsom and Bass tend to get more bang for their buck when engaging in behested payments. Since The Mayor’s Fund is a registered nonprofit, donors can deduct their contributions when filing state and local taxes. Direct campaign contributions to candidates are not.

Although the funds usually go to what many consider good causes, including education and programs for the homeless, many critics argue the practice reflects a surge of influence peddling, bribery and other corrupt practices in the Golden State. Last October the New York Times reported that, “Over the last 10 years, 576 public officials in California have been convicted on federal corruption charges, according to Justice Department reports, exceeding the number of cases in states better known for public corruption, including New York, New Jersey and Illinois.”

Behested payments have long been a part of California politics, but the state legislature did not officially categorize them until 1997. That first year, the Los Angeles Times reported, “companies donated nearly $244,000 on behalf of lawmakers.” The practice has exploded since then. A 2021 article in Los Angeles Magazine reported that “since 2000, local pols have propelled a staggering $117 million” in such payments. 

While he was LA’s mayor from 2005 to 2013, Antonio Villaraigosa directed more than $25 million in behested payments. His successor, Eric Garcetti took it to the next level. In 2014 he established the Mayor’s Fund, now controlled by Bass, to “create transformative change in the city” according to the press release announcing its launch. Although L.A. is one of the highest taxed cities in the highest taxed state in the country, the revenue the city’s municipal government enjoys just wasn’t enough for Garcetti, whose stated objective for the nonprofit was to raise additional resources from the private sector to pay for public projects.

Suddenly, private companies that were barred from direct donations to Garcetti due to their ongoing city contracts were free to contribute as much cash as they wanted – albeit indirectly – through the Mayor’s Fund. The opening for influence peddling was obscured by virtue marketing, with Garcetti announcing that the money would bolster youth programs and revitalize the Los Angeles River. But those seeking to influence elected officials were overt about it. 

“We need to have relationships with government leaders,” said Walter Wang, the CEO of plastic pipe manufacturer JM Eagle, who made an initial donation of $200,000 in late 2014 and committed to another $1 million over the following five years. “We want to influence the government leaders to make the right decisions so that we can be more competitive.”

Wang detailed to the Los Angeles Times how he pitched his company’s plastic pipes while conversing with Garcetti following his generous contribution to the Mayor’s Fund. JM Eagle’s pipes could withstand earthquakes better than the metal pipes used by the Department of Water and Power, Wang recalled telling Garcetti. 

Dozens of other private companies did the same within the first year of the nonprofit’s launch.  Psomas, an engineering firm, contributed $10,000 to the Mayor’s Fund while being contracted with the city. The donation was made at the solicitation of Garcetti’s staff at an event held at the mayor’s home, which raised ethical red flags for a company that might want to have its city contract renewed. 

Garcetti’s close ties to the Mayor’s Fund were further reinforced by his senior aide, Rick Jacobs, stepping down as deputy chief of staff in 2016 to serve as the nonprofit’s treasurer and board member. Between June 2014 and February 2015 – before Jacobs left the mayor’s office – the nonprofit raised more than $5.2 million. By May 2020, that figure rose to $42 million.

Even foreign governments got in on the action. Since the Mayor’s Fund is not legally barred from accepting cash from foreign governments, Qatar donated $5 million through its consulate in Los Angeles in April 2020 on behalf of the mayor’s covid pandemic response. Were the resources put to good use? It’s a tough sell, considering the homeless encampments throughout the city for the entirety of the pandemic and afterward. When all was said and done, Garcetti pulled in more than $60 million for the Mayor’s Fund during his two terms.

By late 2023, amid concerns that the Mayor’s Fund gave the appearance of pay-to-play corruption, Mayor Bass laid out new ethics rules that would bar mayoral staff from raising money for the nonprofit. The mayor, however, is still free to solicit donations. In one reform, the nonprofit’s board of directors voted to ban behested donations from registered lobbyists. Needless to say, monied interests can still find ways to influence officeholders without registering to do so.

Bob Stern, who helped write L.A.’s ethics laws in the 1990s, argued that such reforms didn’t go far enough, and that businesses should be barred from donating to the Mayor’s Fund altogether, especially if they have pending contractual matters before the city. According to Stern, donors who have business before the city are usually seeking to influence officeholders for favorable treatment.

But Stern’s advice fell on deaf ears. In January, L.A. Care Plan made a behested payment of $875,000 to the Mayor’s Fund. A month earlier, both Molina Healthcare of California and Kaiser Permanente also contributed $1 million each, while AltaMed shelled out $200,000. The Los Angeles City Ethics Commission – which Stern now serves on – notes that Kaiser and L.A. Care currently have contracts with the city.

Bass has used the Mayor’s Fund as yet another revenue source for her homeless initiatives, with East West Bank recently providing a $100,000 gift to support Bass’ efforts in response to the ongoing crisis. But Bass’ stated objective for the funds raised questions after City Controller Kenneth Mejia discovered that nearly half of the mayor’s $1.3 billion homelessness budget for fiscal year 2023-2024 went unspent. If Bass is leaving $513 million on the table, why would she need funds from a nonprofit to carry out her vision of combatting homelessness? 

Mejia additionally conducted a December 2024 audit and discovered that a quarter of the city’s shelter beds have been empty and unused despite the tens of thousands of people living outdoors. The vacant beds cost taxpayers $218 million from 2019 to 2023. A month prior to the audit, Angelenos learned that the L.A. County Homeless Services Agency (LAHSA), which had an annual budget of $875 million, misused the money and tracked it poorly. Auditors disclosed that more than half (51%) of LAHSA’s planned contracts did not include ways of monitoring provider compliance with service delivery requirements.

Homelessness has risen 37% in Los Angeles County since 2017. In November, Bass campaigned for  Ballot Measure A, which increases sales taxes in order to raise an additional $1 billion a year for homeless services. 

Ethical concerns surrounding behested payments extend beyond L.A.’s city limits. After the wildfires in L.A., Gov. Gavin Newsom signed an executive order in the interest of speeding up recovery efforts. Tucked away in his order was a provision that weakened financial disclosure requirements related to behested payments, granting a 60-day extension for reports due on or before April 1, 2025.

The few critics who noticed expressed concern over the reduction of transparency at a time when substantial relief funds are being allocated. Last November, a couple of months before the fires, Newsom himself had been slapped with a $13,000 fine over his failure to report donations made on his behalf within 30 days on 18 separate occasions totaling $14 million. A donation of more than $12 million from T-Mobile was one of the behested payments Newsom failed to disclose on time. Another $500,000 contribution came from Amazon. 

Newsom has also solicited behested payments for the California Partners Project, a charity his wife Jennifer Siebel Newsom co-founded in 2020. Public records made available through the state Fair Political Practices Commission (FPPC) show that the now-defunct Silicon Valley Bank donated a total of $100,000 at the Governor’s request in 2021

In 2020, the FPPC reported that Newsom solicited the nearly $226.5 million in behested payments from the tech industry, private healthcare companies and other corporations operating in the Golden State. 

After Newsom, Tony Thurmond, the State Superintendent of Public Schools, came in a distant second for the highest dollar amount raised in behested payments that year: $930,000.

This article was originally published by RealClearInvestigations and made available via RealClearWire.