As the city auditor’s office gets a handle on enforcing Portland’s new campaign finance regulations, City Auditor Mary Hull Caballero has found her name on a mounting number of lawsuits.
One from mayoral candidate Sarah Iannarone’s campaign. One from Portland campaign finance activist Ron Buel. And two from Mayor Ted Wheeler’s campaign.
Wheeler’s re-election campaign has twice appealed Mary Hull Caballero’s decisions, arguing she made “fundamental legal errors” when she levied two hefty fines against his campaign. The auditor fined him $4,200 on August 27 and $4,500 on Sept. 4.
City Attorney Tracy Reeve, who both works under the mayor and advises the city auditor, is now caught in the middle.
Citing a conflict of interest, Reeve declined to defend the auditor’s office in court and asked her to find an outside attorney. But Hull Caballero says the city attorney’s office is home to the clear experts on the complex campaign finance rules and she wants them in her corner.
She asked the City Council to step in.
On Wednesday, the council considered a resolution crafted by Hull Caballero that would have directed the city attorney’s office to represent the auditor in all matters involving campaign finance regulations — that includes litigation brought by the mayor’s campaign.
It did not go over well. Commissioners Amanda Fritz and Jo Ann Hardesty sharply rebuked Hull Caballero for bringing the item to council. Fritz said she was “frankly astonished” the auditor would ask them to direct the city attorney to do something she felt was unethical. Hardesty said she found the auditor’s “method and attitude” to be “reprehensible.”
“This is not how elected officials should act and I would suggest the city auditor take a good hard look at how this played out and consider ways she can work in a more collaborative fashion moving forward,” she said.
Commissioner Dan Ryan, the newest member of the council, was a touch gentler. He thanked the auditor for bringing the matter to council but said he couldn’t support what he framed as a piecemeal approach to a program that needed “a more fundamental restructuring.”
“All parties involved must work together through every step of the policy making process to clearly identify the problems and find the solutions,” he said.
Wheeler and Commissioner Chloe Eudaly, who are both seeking re-election, recused themselves from the discussion.
Before the vote, Hull Caballero told council that she believed the attorney’s decision not to represent the auditor’s office gave the appearance of favoritism and would result in her office receiving uneven representation when it came to campaign finance litigation. She also said she didn’t believe the city’s attorney’s office was faced with a genuine conflict of interest.
“I understand that the city attorney may be uncomfortable defending the city in a lawsuit brought by the mayor’s campaign committee given that the mayor oversees the city attorney’s office. But the mayor’s campaign committee is not the city attorney’s client,” she said. “A private law firm represents his committee. It is the city at this late hour that is without legal representation.”
Reeve told the council she’d started talking about the potential for a conflict of interest with the city auditor months ago and had reviewed what was the “absolute most representation” she felt her office could ethically provide.
“And so where we have ended up drawing the line is we think it’s not appropriate for us .. to represent the auditor in matters involving the campaigns of currently sitting council members,” she told the council. “That’s the line that we think permits us to take the absolute most possible representation for the auditor’s office while at the same time not violating our ethical obligation under both state law and the legal rules of ethics.”
Reeve told council she believed representing the city auditor in this instance would violate the Oregon Rules of Professional Conduct, meaning her law license could be revoked.
While the city attorney’s office seems to have been bracing for a conflict of interest to crop up for some time, it was the mayor’s suits that brought the issue to the forefront.
Throughout the election cycle, the city auditor has regularly dinged Wheeler for campaign finance violations related to the new voter-approved limits. Wheeler’s campaign appealed two of the auditor’s decisions, arguing the office was punishing the mayor for donations he accepted before she officially began enforcing the strict cap on May 4.
“The Auditor impermissibly and retroactively applied the City Contribution Limits to sweep in prior contributions, made before May 4, 2020,” read the two suits. “The Auditor’s decision violates due process, ex post facto protections, and her own announced policy of not retroactively enforcing the City Contribution Limits.”
Wheeler’s attorney says each contribution singled out by the auditor was $500 or less. But the donor who gave that contribution had given additional donations before the city began enforcing campaign finance limits.
Jim Mark, the head of commercial real estate company Melvin Mark, for example, had donated $6,000 in 2018, according to the suit. In June of this year, he donated another $500. Wheeler was fined for taking it.
The new finance regulations say a candidate can’t take more than $500 from an individual donor during an election cycle. The auditor said, for Wheeler, that cycle began on July 6 when the last mayoral election results were certified.
The suit asks the court to reverse Hull Caballero’s decision, make it clear that the way the rules were applied against Wheeler were “illegal and unconstitutional” and pay his attorney fees. Wheeler’s campaign is represented by Markowitz Herbold.
A few days after the first suit was filed, Reeve wrote to the city auditor, saying she had been working closely with Wheeler, particularly this past summer, and didn’t want to represent Hull Caballero in her suit “out of an abundance in caution” She forwarded the name of two other firms, who could be outside counsel and, in a follow up, offered to cover legal expenses up to $20,000.
Hull Caballero pushed for the city attorney’s office to reconsider. She argued it didn’t make sense to change course now after the attorney’s office had already assisted on disputes with Wheeler’s campaign as well as three other lawsuits related to campaign finance violations.
Since Hull Caballero wrote the note, that number has risen to at least four. Two weeks before Wheeler took the auditor to court for enforcing campaign finance limits too aggressively, his opponent, Sarah Iannarone, sued her for not enforcing the limits aggressively enough.
The city auditor has said she won’t enforce the voter-approved $5,000 cap on how much candidates can loan themselves because she believes it won’t hold up in court. After the mayor loaned his own campaign $150,000, Iannarone’s campaign filed a petition in Multnomah County Circuit Court to get her to start enforcing the rule.
Hull Caballero said the auditor’s office is rarely involved with litigation.
“This is wildly unusual,” she said.
