As I reported in July 2020, California Governor Gavin Newsom and his wife Received a discount on a $3.7 million California Fair Oaks propertyNewsom’s cousin and PlumpJack’s business partner, Jeremy Scherer, acquired the house through a limited liability company in an all-cash transaction in December 2018, and then transferred the unsecured deed to Newsoms in October 2019. Just two months later, Newsoms received a cash refi loan and netted them $2.7 million, tax-free.
The Newsoms claimed to be members of the LLC, and Scherer did use their money to purchase the estate, so there were no ethical or legal issues with this transaction (according to California election laws). However, both the Newsoms must report any entity in which they have more than 10% interest on the financial disclosure form, and list any real estate owned by that entity on Form 700, which must be filed annually. The LLC was never listed on the Newsoms form and was not listed during the period when it was not the primary residence of Newsoms (no need to disclose the primary residence of the elected official).
This attracted the attention of many people-and raised many questions-but apparently no one was under investigation.
The California Fair Political Practice Committee (FPPC) seems to be right Investigating whether governor candidate Larry Elder has not disclosed part of his income Instead of investigating a multi-million dollar issue on his original 700 form-which he had never been required to submit before-and then before submitting an amendment a few weeks later.
California Republican Party File a sworn complaint with FPPC Regarding the transaction and non-disclosure, a full investigation is required.By the end of business Sacramento Bee reported that FPPC has rejected the complaint:
“The Fair Political Practice Committee issued a letter Thursday afternoon dismissing the complaint and stating that the governor complied with the law.”
At the time of writing, the letter was not yet available on the FPPC website, and CAGOP officials stated that they did not have a copy of the letter. I asked the Sacramento Bees where they got this letter, because there was no such letter on the FPPC website. A few hours later, their article was secretly edited as:
According to a copy of the letter provided by the Newsom campaign team, the Fair Political Practices Committee issued a letter on Thursday afternoon dismissing the complaint and stating that the governor complied with the law. FPPC also provided The Bee with a copy of this letter.
Since I do not have a copy of this letter, I must rely on the content of the Bee report:
In the letter, Christopher Burton, assistant director of the commission’s law enforcement department, referred to the decision made by the FPPC last month after investigating similar complaints submitted anonymously.
The committee “determined that the underlying real estate transaction did not generate any reportable benefits.”
It turns out that I recently learned Letter of July 14, 2021 I planned to write it down on Thursday, but later learned of CAGOP’s complaint. Since the Sacramento Bee will not link to this letter (which is stupid because it is publicly available), so here it is.
This letter is addressed to Newsom’s lawyers (emphasis added):
This letter is in response to several unsworn complaints alleging that California’s current Governor Gavin Newsom (“Newsom”) failed to properly report certain economic interests in his statement of economic interest (“SEI”) related to purchases and subsequent transfers Benefit certain real estate in 2018 and 2019. After investigating and reviewing this matter, we determined that the underlying real estate transaction did not generate any reportable rights and interestsTherefore, since the allegations have been falsified, we will end the matter without further action.
What investigations and reviews has FPPC conducted? They did not list any documents reviewed or people interviewed.
The letter continued:
Section 87200 of the Act requires elected state officials, including the governor, to report on investments, business positions, and sources of income, including gifts, loans, and travel expenses received from sources located within or conducting business within the jurisdiction of their institution . Their SEI. According to the Act, “investment” includes any investment interest in a business entity. Article 82005 of the Act defines “business entity” as “any organization or enterprise for profit-making purposes”. Our investigation found that although an entity wholly owned by Newsom and his spouse was created to realize the underlying real estate transaction, it is not operated for profit and therefore does not generate reportable investment rights.
That is a new one. California’s election monitoring agency is now able to determine the purpose of creating a limited liability company, and for-profit entities (like all limited liability companies) do not operate for profit and therefore are not assets that elected officials need to disclose. Moreover, if he does not need to disclose his ownership in the LLC, he does not need to list the real estate he owns.
So it is very convenient. Moreover, it is too vague. I checked some of the FPPC’s “No Action Letter of Closing”, and Newsom was the only letter that did not list transaction details—not even the transaction details—not even about the house or the limited liability company or involving the third party. A cousin’s.
In addition, the agency did not explain how they knew that the Newsoms were the sole owners of the limited liability company. The fact remains that the California Secretary of State did not have any document listing the Newsoms as members of the limited liability company. Its management structure is a “single manager” limited liability company, so Scherer may only act as a manager rather than a member. However, Newsom is not a member of LLCs Form LLC-12 or Form LLC-12A. Of course, if someone raises this question to the FPPC, they are likely to publish their own explanations regarding the demands of another state agency on the Newsoms.
The letter continued:
In addition, Sections 82028 and 82030 of the Act stipulate that “gifts” or “income” that should be reported do not include personal spouses, children, parents, grandparents, grandchildren, brothers, sisters, parents-in-law, brother-in-law, sister-in-law, nephew, A niece, aunt, uncle, or cousin, or the spouse of any such person.Our investigation It was discovered that all payments related to the purchase of the subject property came from Newsom himself or an exempted family member; Therefore, these payments did not generate any reportable gift or income interest.
So, who are exempt family members? Is it his spouse, his cousin, or both? Is it a gift or a loan? If it is a loan, does Scherer provide a loan to the LLC and receive repayment through the LLC? Has the FPPC determined that Scherer has $3.7 million in cash on hand, and that this is not just a sum of dollars from groups such as Gettys or groups such as PG&E? If Scherer does not provide all the funds in person, and he acts as an intermediary, the gift/loan exemption does not apply. FPPC is responsible for investigating and determining this. If all this is fair, just to keep the addresses of the Newsoms secret, then all appropriate income tax documents can be reviewed by state regulators. Are they free? Are they checked?
We need to explain in more detail what this investigation looks like, especially because Newsom has a history of failing to report gifts and loans correctly, and given his Problems with PG&E and his wife’s companyWe need to know exactly which documents have been reviewed and obtain a copy of the edited tax return. All candidates in this recall election are forced to submit five-year tax returns for public inspection; Gavin Newsom should also.
