Political Notebook

Council candidate accused of breaking fundraising rules says he was paying off a debt

Nelson Esparza is sworn in to his seat on the Fresno County Board of Education in December 2016.
Nelson Esparza is sworn in to his seat on the Fresno County Board of Education in December 2016.

A Fresno County Board of Education member has come under fire for allegedly using thousands of dollars raised through his school board campaign treasury to further his 2018 bid for Fresno City Council – more than six months before city candidates are allowed to raise money.

Nelson Esparza won a seat on the county school board – not to be confused with the Fresno Unified Board of Trustees – in November. In April, he announced his candidacy for District 7 of the Fresno City Council, a seat that will be vacated when Clint Olivier terms out next year.

The Bee has obtained a letter sent to the city and to the state’s campaign watchdog, the California Fair Political Practices Commission, claiming Esparza collected money for his school board campaign account by holding a fundraiser in April and improperly transferring some of those funds into his city council campaign account. The letter also claims money from that fundraiser was used to buy things like consultant work and advertisements for his upcoming election.

The letter was written by Marcelino Valdez Jr., the former Central Valley vice-chair of the state Republican Party. Valdez, who ran against Olivier for the District 7 seat in 2010, said in an interview Tuesday that he no longer lives in the district and is not planning to challenge Esparza. The race is nonpartisan, but Esparza is a Democrat.

When asked about the accusations, Esparza and his financial team said they did nothing to violate the city rules. The April fundraiser was held to cover debt accrued in his school board campaign, Esparza said, and some funds were transferred legally from one account to the other.

Esparza called the letter “character assassination.”

Financial reports filed with the Fresno County clerk by his school board campaign confirm the account ended last year with slightly more than $5,000 in debt. However, that same campaign account raised nearly $15,000 this year and spent nearly all of it on campaign-related items – including a $4,950 donation to Esparza’s city campaign account.

The city’s charter prohibits fundraising for city races before February of the election year, Fresno City Attorney Doug Sloan said Monday. It also does not allow a candidate’s committee formed for another race to raise money and transfer it to the candidate’s city campaign committee.

“This came up last year in the mayoral race,” Sloan said. “There were issues on both sides.”

On Wednesday, Sloan clarified that neither Henry R. Perea or Lee Brand broke this rule in the 2016 mayoral race. His office met with each candidate and assisted them to ensure compliance.

Sloan also clarified on Wednesday that it is illegal to transfer cash from any campaign account into a Fresno city campaign account before February. It would also be illegal to spend any of those funds.

Esparza’s team pointed to a city memo and said it showed that transferring money from account to account was OK, but Sloan said Wednesday that the memo was not saying that. He added that other memos have clarified this issue.

Sloan said the claims against Esparza are being investigated by his office. He declined to speak directly about Esparza’s case, only clarifying city rules in general.

The city limits the fundraising window on local campaigns in part to keep seasoned fundraisers from gaining too large of an advantage over potential candidates who are new to politics.

The Fair Political Practices Commission confirmed it had received a complaint, but it doesn’t disclose whether an investigation is underway.

The school board campaign account breaks down like this:

From Jan. 1 to June 30, the campaign raised about $15,000.

About $5,000 of that was donated before the April fundraiser through large donations from typical local players: $1,000 from Granville Homes, another $1,000 from Granville’s holding company, $1,000 from Henry R. Perea’s mayoral campaign account, $1,000 from a political action committee and two payments of $500 from labor unions.

In April, he raised about $9,000 from various sources – mostly labor unions and small individual contributions.

In June, current Fresno Councilman Paul Caprioglio gave him $500.

The campaign spent about $12,000 during this same period. It paid out $4,950 to Esparza’s city campaign account on May 17. The rest of the charges were for a variety of smaller expenses, including Facebook advertisements, marketing materials, political consulting, accounting services and refreshments for his fundraiser.

When asked why Esparza raised almost three times the amount of debt his campaign owed, campaign treasurer Don Milligan said the extra money was raised with the intent of using it for re-election – not for the City Council bid.

Esparza, who teaches economics at Fresno City College, said he did not know he would be running for City Council in 2018 while campaigning for the school board in 2016. Earlier this year, he added, the option presented itself.

“I found an opportunity to make an even larger impact on our community,” he said. “There’s no tie between the two (campaign races).”

Esparza said he asked a lot of people and groups for money to help pay off his debt, not knowing who would come through. More people gave than he expected, he said.

Nearly all of the donations to the school board account came before Esparza’s council candidacy went public.

The expenditures are not listed by date, and they do not go into detail about what was being paid for. For example, it’s unclear whether the more than $1,000 paid to a political consultant was for the previous election, the upcoming election or both. Milligan refused to go into detail about any of the transactions.

Whether or not Esparza broke city rules, he enters the race with a clear advantage as the only confirmed candidate so far. He has thousands in the bank. He has a professional website with his platforms and accomplishments listed, as well as a section for anyone who wants to volunteer or host a fundraiser for him to share their information. He’s also printed out flyers.

Both the website and the flyers note they were paid for by his City Council campaign account.