Former Anaheim Councilman Harry Sidhu and hotel developer Bill O’Connell violated campaign finance law when O’Connell contributed cash to Sidhu's supervisorial campaign under separate business entities, an Orange County district attorney's office investigation has concluded.
Prosecutors found no criminal intent to break the law and therefore deemed the violation a civil matter. In a negotiated settlement, Sidhu has agreed to pay $1,700 – an amount equal to the illegal contribution – to the county general fund, a DA news release states.
The DA's office launched its investigation two years ago, after Voice of OC reported that Sidhu's campaign received $5,100 from three businesses connected to O'Connell in Sidhu's losing bid against Shawn Nelson for a seat of the Orange County Board of Supervisors in 2010.
The county's campaign finance laws make it illegal for any individual, or a business controlled by that individual, to contribute a total of more than the individual contribution limit, which at the time was $1,700. The rules on aggregating contributions are designed to prevent donors from circumventing the limit.
In 2012, Sidhu was among the 3-2 majority on Anaheim Council to approve a highly controversial $158-million subsidy for an O’Connell partnership to build two four-star hotels near the outdoor GardenWalk mall.
The subsidy created a contentious split among Anaheim City Council members and the community at large, with critics calling it a giveaway of taxpayer funds to a politically connected hotel developer. Supporters meanwhile said the subsidy was necessary to kick-start construction of the hotels and generate thousands of jobs.
Shirley Grindle — the local watchdog who authored the county’s campaign finance law known as Time Is Now, Clean Up Politics or TINCUP — had demanded that Sidhu refund $3,400 in contributions after O’Connell told Voice of OC that he personally wrote the checks for all three contributions.
But O’Connell claimed that he had no control over two of the businesses, and Grindle dropped the issue.
Grindle reversed her position and demanded a $1,700 refund after Voice of OC obtained records that showed O’Connell was “managing partner” in one of the entities that made a contribution. Grindle concluded that the managing partner would be the person controlling the campaign contributions.
The DA’s office found that while O’Connell had a minority interest in one of the businesses, it was O’Connell who controlled two of the three campaign contributions, according to Michael Lubinski, senior assistant DA for special projects.
The third $1,700 contribution was attributed to O’Connell’s wife and was therefore not aggregated, Lubinski said. O’Connell, another business partner and O’Connell’s wife all agreed with O’Connell to make the contributions, Lubinski said.
“[O’Connell] got everyone’s permission to do this, except he controlled the distribution,” Lubinski said.
Prosecutors found O’Connell’s illegal $1,700 contribution to be unintentional in part because of a misunderstanding of the law. Lubinsky said O’Connell thought that as long as he had only a minority interest in the businesses, the limit wouldn’t apply. Furthermore, the developer wasn’t aware that contributions he controls are also subject to the limit.
A finding of criminal intent to break the law could have meant misdemeanor convictions, and four-year prohibitions on being a county lobbyist, contractor or candidate for a county office.
This isn’t the first time Sidhu has taken contributions that when aggregated are over the limit.
In 2010, Grindle identified another $3,400 in illegal donations given the previous year by partnerships involving O'Connell and Ajesh Patel, the other partner benefiting from the hotel tax subsidy. Grindle notified Sidhu, warning him that if it happened again she would notify the news media. Sidhu returned those funds.
Sidhu had to refund another $3,400 to companies owned by Narendra and Anita Gupta during Sidhu's campaign for county supervisor.
The DA’s investigation focused mainly on the three contributions reported by Voice of OC in 2012. Lubinsky credited Voice of OC, saying the reporting “pretty much had it spot on.”
O’Connell and Sidhu did not return phone calls seeking comment.