State Ethics Commissioners Asked to Compel Witness Interviews In Complaints Against McFadden and Maviglio For Owning Fracking Shares and Stopping Fracking Ban In CA

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SANTA MONICA, CA — Consumer Watchdog today called on the Fair Political Practices Commission (FPPC) to reject staff recommendations for minor fines against the Governor’s top aide Nancy McFadden and the Democratic Party, and to reopen the cases and interview witnesses not contacted. The FPPC meets tomorrow to decide the matters.

The nonprofit public interest group produced correspondence showing enforcement staff declined to interview witnesses with information that McFadden intervened to gut fracking legislation while owning part of an affected company as well as to interview witnesses within the Democratic Party about improper activities.

The group also produced complaints it lodged with the Commission in 2012 showing that like Brown’s executive secretary McFadden, Steve Maviglio, then top communications aide to the former Assembly Speaker (also opposed to a fracking ban), held up to $1 million in the same oil and gas company, Linn Energy, that benefited from weakened legislation. McFadden and Maviglio are friends who vacation together at the latter’s castle in Italy.

“The top aide to the Governor and the former top staffer to the former Assembly Speaker owned up to $1 million dollars in the same oil and gas company that benefited financially when they used their posts to blunt tough regulation of fracking in the legislature,” Consumer Watchdog wrote to the FPPC Chair Jodi Remke, appointed by Brown, and the other commissioners.

“What did the FPPC do about these serious allegations?” the letter continued. “Fail to interview witnesses, ignore evidence of a pattern of conflict of interest indiscretions, and send a message that this type of conduct is okay in the future.”

Read Consumer Watchdog’s letter to FPPC Commissioners here.

“As our communications with the Commission attached show, Consumer Watchdog has repeatedly offered to connect enforcement staff with witnesses in these matters but was rebuffed,” the letter continued. “These are not trivial issues. California has no fracking ban, while the states of New York, Vermont, and Maryland do, because of the positions of Governor Brown and Assembly Speaker John Perez, decisions the subjects of our FPPC complaints influenced while holding in a company that benefited from them.”

Among the evidence produced in the filing with Commissioners was an analysis sent to FPPC staff showing McFadden met the threshold for violating the prohibition on decision making while holding Linn shares, and that amendments to SB 4, which witnesses claimed she was involved in, materially affected Linn’s economic position enough to produce a violation of the law. The exhibits also show staff never responded to Consumer Watchdog’s offer to interview confidential witnesses in this matter or to interview a Democratic Party insider in a related complaint.

Consumer Watchdog took issue with the proposed $300 fine FPCC staff recommended for McFadden based on a failure to disclose her holdings given the fact that other allegations against her would almost certainly have constituted a conflict of interest but for the statute of limitations.

“The FPPC should not condone the highest ranking appointee in the executive branch—expressly tasked with overseeing appointments, legislation, and policy—being involved in such public decisions affecting her portfolio,” Consumer Watchdog president Jamie Court and consumer advocate Liza Tucker wrote to the commissioners. “This is particularly true when that official would have been subject to investigation but for a five-year statute of limitations in a related issue.

“Another of the initial complaint’s allegations against Ms. McFadden was that she intervened in official decisions related to stock holdings in Pacific Gas & Electric. When McFadden began working for Governor Brown, she held up to $1 million in PG&E stock, and in addition had been paid a $1 million bonus by PG&E on her way out the door.

“Strong evidence was conveyed to the FPPC that McFadden interfered in the appointment of a commissioner to the Public Utilities Commission on behalf of Pacific Gas & Electric lobbyist Brian Cherry. (See Exhibit F, emails “You can call her directly if you’d like” and “back door route”) Emails released under the Public Records Act showed Cherry advising then-PUC President Michael Peevey (now under criminal investigation for an under-the-table deal with another major investor-owned utility involving billions of dollars) to feed names of pro-industry candidates for the Public Utilities Commission to Nancy McFadden.

“One of the emails could not have been clearer. ‘Nancy asks if you have any names you would recommend,’ Cherry wrote Peevey in January 2011. ‘You can call her directly if you’d like.’ Elsewhere, Cherry had called McFadden ‘the back door route’ in the Governor’s office on whispering names of appointees into Governor Jerry Brown’s ear. A pro-utility industry investment banker was soon named to the PUC who helped steer decisions benefiting PG&E and other major investor-owned utilities.

“When queried, enforcement staff informed us that the emails may have been strong enough to prompt an investigation but the acts took place five years ago, beyond the statute of limitations.

“Viewed in the context of this troubling pattern, the recommended $300 fine for McFadden’s failure to disclose seven figure holdings looks like a whitewash. This is particularly true because McFadden concealed multiple financial assets for multiple years.”

Consumer Watchdog also shared with commissioners more evidence of the Democratic Party’s malfeasance, including: internal communications suggesting that appointments within the Brown Administration might have been up for sale, an invitation to an illegal Brown fundraiser post-election in which contributions went to the Democratic Party, and an itinerary for Brown’s wife Ann Gust to visit a bevy of Sacramento lobbying firms with Democratic Party officials.

McFadden worked as fundraiser for the California Democratic Party while serving as Brown’s Appointments Secretary. Maviglio was just hired by the California Democratic Party this weekend as a spokesperson, according to news media reports.

In its letter, Consumer Watchdog pointed out that previous allegations against Maviglio and top Assembly staffers who had holdings in fracking companies while working to gut fracking legislation fell into a black hole at the FPPC.

“The fracking legislation interference is the type of case for which the FPPC exists, because no one else has the independence to pursue it,” wrote Consumer Watchdog. “Whether the failure to proceed stemmed from political interference by the Brown Administration, or the belief that campaign finance laws couldn’t sustain a prosecution, at minimum all witnesses should have been interviewed.

“Affirming the proposed slap on the wrist in this matter would show that the Commission is prone to take the path of least resistance and does not understand the import of the decisions affected by these abuses of power,” the letter continued. “The decision about whether the state allows fracking, and if so, whether it will be strictly regulated or not, has major public health implications for the people of California.”


Liza Tucker
Liza Tucker
Liza Tucker is a consumer advocate for Consumer Watchdog, following everything from oil and gas to the regulation of toxic substances in the state of California. She comes to us from Marketplace, the largest U.S. broadcast show on business and economics heard by ten million listeners each week on 400 radio stations. Liza worked at this public radio show for a decade, first as Commentary Editor and then as Senior Editor for both Washington and Sustainability News.

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