PART IV: Tempest in a Teapot?

By Oliver Lukacs
Staff Writer

When the State Greens gave the go-ahead to open a storefront in Santa Monica in 1999, party officials hoped it would be part of a string of offices that would give the organization street presence and bring the Greens a step closer to becoming a viable third party.

Part of “Project 2000,” the offices would be placed in key population and political centers -- San Francisco, Los Angeles, Sacramento, Fresno -- where they would boost voter registration and act as campaign headquarters for statewide elections.

The network of offices would be a major leap forward. Until then, the headquarters of the largest state Green party constituency in the nation was essentially a P.O. box and an answering machine in Sacramento that forwarded information to Councilman Michael Feinstein’s home.

For all practical purposes, Feinstein’s rent-controlled, wood-frame house near the beach in Ocean Park was the state party’s clearinghouse. From 1994 to 1998, the Santa Monica councilman answered all telephone, email, and mail inquires, and distributed state Green party literature, which he helped write and edit.

But instead of becoming one in a string of offices in California, the sleepy storefront on Pico Boulevard is all that’s left of “Project 2000,” which according to party officials “went down in flames” after the only two Green Party storefront offices in the nation were opened.

Within two years, State Green Party officials would move out of the San Francisco office and abandon the Pico storefront after it became the center of a financial controversy that split the party into factions and led to Feinstein’s break with an organization he helped build.

Documents recently obtained by The Lookout paint a picture of a state party grappling with one of its first major crisis and debunks claims that state officials had given Feinstein the go-ahead to open the Pico office with only “a wink and a nod.”

In fact, the minutes and internal emails show that as early as January 2000 state party officials not only authorized the “state office,” they approved of the Green party account Feinstein had opened under his name to raise money and finance the operation.

The Green Party of California (GPCA) has “no legal or financial obligation for the office,” according to the minutes of a January 29, 2000 meeting that took place in the Pico storefront. “But the GPCA has a political responsibility.

“Mike Feinstein has a checking account under Green Party with his personal social security number here at a credit union in Santa Monica,” according to the minutes of the meeting. “He will be responsible for FPPC (Fair Political Practice Commission) filings on this account.”

State party officials not only confirmed the office’s status, but spoke of the party’s plans to “pay rent, staff and supply” the Pico storefront, according to an email State Party coordinator Jo Chamberlain sent state party officials in September 2000.

But after Feinstein was publicly accused at an August 2001 County Council meeting of misappropriating a $10,000 check written by Bill Pietz, state party officials would do an about face and distance themselves from the then mayor of Santa Monica.

State party officials had attended the meeting to “assist the county to come into compliance with monetary issues, (and) to help calm down the situation and move forward as a consensus based political party,” said Michael Borenstein, a state party coordinator, according to a recording of the meeting.

State officials also used the opportunity to distance themselves from the potential scandal. State Party spokesman John Strawn, who had attended the state party meeting in January 2000 where Feinstein was authorized to open the office, now told the County Council that Feinstein had acted on a “wink and nod.”

State Party officials would continue to publicly distance themselves from the Pico office, while keeping some of the top party officials in the dark.

In January 2003, after a year and a half of “secrecy,” state party officials finally spoke out at in an open session, saying, “It’s time to let you all know what’s been going on with this.

“In early 2001 we began to receive info to the effect that the Pico office was still being operated in our name,” said Borenstein, who was also at the January 2000 meeting with Strawn. “We then learned that (Feinstein) had deposited all these moneys into a credit union account in his own name.”

After the January 2003 meeting in Palo Alto, the state party would completely disassociate itself from the Pico office, contending that it “has never been a GPCA office,” according to a letter sent to Green officials at the local, state and national levels.

Without the support of the county and state parties, Feinstein would be left to fend for himself.

“Once a little bit of heat was generated by the media about the confusion over an internal matter in our party,” Feinstein told The Lookout, “certain key individuals who felt they or the party might have something to lose threw all the Green values about humanity out the window and renounced any connection with me as if I were a leper.”

* * * * *

While tensions between Feinstein and the party continued to mount, there was still no accounting of the $30,000 -- including the $10,000 from Pietz - that the Santa Monica mayor said he had raised and deposited in the Green party account.

In August 2001, the County Council had given Feinstein 30 days to turn over all the money, as well as the financial records, so the county treasurer could make the necessary filings with the FPPC.

Despite a call by Councilman Kevin McKeown, who, speaking on the county’s behalf, urged his City Council colleague to return the money he “took” and “make the party whole,” Feinstein continued to refuse to open his books.

“The money,” Feinstein told The Lookout, “was not raised for the county to run the office.” In addition, Feinstein said he was already working on a joint filing with the state, which was the proper authority.

But state party officials, who were engaged in behind-the-scenes negotiations with Feinstein, had been distancing themselves from the office.

While state officials refused to acknowledge that Feinstein had been acting at their behest, they asked the mayor to turn over the paperwork in order to file with the FPPC and avoid a potential $30,000 fine faced by the county.

Again, Feinstein refused.

“We gave (Feinstein) a date at which time he was to have all the bank records to us so that we could do the filing,” Borenstein said in a report to state party officials in January 2003. Feinstein “did not give us the records and our final date past.”

The “documentation was not provided,” said State Treasurer Mike Wyman, according to the minutes. “That's where legal negotiations broke down.”

Strawn would later contend that had Feinstein done what state officials asked, “a tempest in a teapot would have stayed a tempest in a teapot.”

Feinstein claims the state party abandoned him and began “rewriting history with lies.”

“The only better fiction than that is the Warren report about the Kennedy assassination,” Feinstein told The Lookout. “The party made no such offer.

“Indeed that was my request -- that the party admit its responsibility for the office and to file the money raised in its name,” Feinstein said. “Indeed, since I was acting on behalf of the party there never should have been an issue about the party filing.”

State party coordinator Ricardo Newbery, who acknowledges he is no “Feinstein supporter,” agrees with the former mayor’s account. In an email sent to top national Green Party members, Newbery, who was present at the closed session negotiations with Feinstein, said that “by this time, battle lines had already been set.”

“Allegations of deceit, incompetence, ulterior motives, and misappropriation of funds started to fly and the level of anxiety and distrust increased precipitously,” wrote Newbery. “I personally attempted to broker a positive resolution… but found my efforts sabotaged and my motives questioned.”

The state party “refused to acknowledge any of the important key facts of the issue as requested by Feinstein,” Newbery wrote. Those facts, he said, were that the Pico storefront was a state office and that it was funded with the county party’s consent.

Instead, Newbery wrote, Feinstein was given “a deadline to hand over all financial records, after which they would officially wash their hands of any responsibility and let Feinstein fend for himself… Reasonable advice offered to the GPCA-CC (Coordinating Council) by Feinstein's lawyer, an expert on FPPC matters, was met with suspicion and summarily ignored.”

“Given the climate under which the request was being made, I would be surprised if Feinstein's lawyer advised him to so expose himself -- even if he was innocent of anything more than sloppy financial record keeping,” Newbery concluded.

Feinstein confirmed this was the reason he never opened his books.

“Any one who is attacked and abandoned in such a manner has to think about self-protection, because this was no longer a debating society, this was my life,” Feinstein told The Lookout.

“I only stopped that (the joint state filing) process when people started making reckless accusations to the press and government agencies, and when people started denying the basic facts about how I was authorized to set up the office in fist place,” Feinstein said.

“As somebody who had helped build the party from ground zero, being treated like that took the energy out of my soul and made me highly doubt that this was a group of people (with whom) I could risk my good work and good name in the real world.”

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By January 2003, diffusing a potentially explosive controversy and avoiding legal liability had become as important for the State Green Party as registering voters and winning elections.

What follows are excerpts from official minutes of a meeting of top state and local party officials that took place in the First Presbyterian Church in Palo Alto, California on Friday January 10, 2003.

The Winter Plenary of the Coordinating Council of the Green Party of California, the meeting marked the first time the state party spoke to the issue on the record, and there was a clear sense that the party was at a crossroads.

“Everything that we've been doing is precedent setting,” said State Treasurer Wyman. “This is an elected green official who has gotten involved in questionable activities. This isn't supposed to happen to Greens. The question of how we respond will guide future Green Party bodies.”

The meeting began with a dilemma similar to the one the County Council had faced a year and a half earlier -- should the session be kept open to the public?

“If we do (talk on the record), we may be dropping a bomb of sorts,” Wyman argued. “Some people want this, others don't.”

“For over two years we have not been able to talk about it, and that puts us in a very weak position,” said Peggy Lewis, a member of the state coordinating council (CC). “This makes us look silly, prejudiced and slightly illegal.”

“We have been contacted by (the) director of fundraising recommending that we go public and stop losing our major donors,” noted CC member Chamberlain, who is now a national party co-chair.

After the council voted 12 to 1, including McKeown, to keep the session open, the members turned to the cost of Feinstein’s alleged mismanagement of the $30,000 he raised and spent on behalf of the party without reporting it to the proper authorities.

After finding out that “L.A. may be fined upwards of $30,000,” state officials had offered to file with Fair Political Practices Commission on behalf of the LA County party, said Michael Borenstein.

“Could you elaborate the consequences of reporting this to the FPPC?” asked John-Marc Chandonia, who represents San Francisco. “We might be liable for $30,000?”

“The $30k level,” Wyman said, “was a worst-case scenario of how much fines would come to. How much in fines there would be depends on how they calculate it. $10 a day for every filing you miss, but they grow exponentially. Eventually you wind up in the $30k range.”

“If, as a treasurer, you know of funds that were raised in our name that were not accounted for, do you have a legal obligation to bring that forward?” asked Chamberlain. “As County Council members do we have a legal, ethical requirement to bring this forward?”

“To the best of my knowledge,” Wyman said, “no one's under any legal obligation to file a complaint with the FPPC. The fact that none of this money ended up in an account that I was in charge of, I am probably not liable.

“But there were checks made out to GPCA and GP of LA, means that somebody is liable. If they're going to go after anyone besides Feinstein, they're going to go after me. May just be an audit.”

“What exactly would happen to us if we were audited?” asked Forrest Hill, an at-large representative. “If there are counties raising funds, there must be some who don't have treasurers and are not reporting. We're only going to lose if this becomes a big story.”

“How does a political party control fundraising in its name?” he asked.

“In an actual legal showdown,” Wyman said, “the evidence is on our side. He (Feinstein) was acting on his own. And I think he knew that. But he thought that he was slick enough to get away with it. He always had gotten away with it and he's not going to stop.”

Bill Pietz, who had donated the $10,000 that spurred the controversy, said, “It's my understanding from my lawyer that if a check is received by an agent of the GP (Green Party), then the GP has accepted that. It isn't like some stranger stole it.

“Could you clarify that comment?” Chamberlain asked.

“We will probably get an audit anyway so we're preparing for that,” Wyman responded. “To the extent that somebody is acting as an agent of the party, we are responsible to what they do. If they claim to be part of the party and they're not, that's a different issue.”

“But I'm not hearing that we are liable in any way” said Paul Encimer, who represents the northwest part of the state. “It sounds like it's more personality conflicts and we have hurt feelings that Feinstein abandoned us and is doing things on his own.”

“I said we should ignore (Feinstein) but what I meant was just that we shouldn't wage war on him… It's bad politics to go after (Feinstein) with the FPPC.”

In a comment that would soon prove prophetic, Wyman said, “We don't have any control over anyone who would file a complaint.”