FPPC Scrutinized Supervisor Rexroad in Money Laundering Operation

Rexroad-MattThree Republican central committees have been fined by the Fair Political Practices Commission for admitting to having laundered money during the 2010 election, according to documents released by the FPPC on Monday.

The FPPC has proposed fines of $5000 for the Yolo County Republican Central Committee, as well as the Santa Clara County Republican Central Committee, while proposing a $15,000 fine for the LA County Republican Central Committee for a similar action involving a different candidate and donor.

Implicated in the operations was the Yolo County Republican Central Committee and Yolo County Supervisor Matt Rexroad, acting a political consultant to one of the named parties. Supervisor Rexroad only offered to the Vanguard that he was neither a named party nor fined by the FPPC.

In 2010, Charles and Ann Johnson each wrote a check in the amount of $17,000 to the Yolo County Republican Party. The Yolo County Republican Party accepted the contributions totaling $34,00 and contributed $32,000 to Damon Dunn, the Republican candidate for Secretary of State in 2010, after Ann and Charles Johnson, an owner of the San Francisco Giants, had “maxed out” their contributions, each having contributed $13,000.

These donations are in violation of state laws that regulate the maximum allowable contributions and prohibitions that donations to political parties are not to be earmarked for specific candidates.

The FPPC cites, “The campaign filings of Respondent Yolo County Republican Party reported that they were the true recipients of the Johnsons’ contributions and that they had made a separate contribution to the Dunn committee.”

The respondents, who fully cooperated with the investigation, contend “there is no evidence that the Yolo County Republican Party intended to violate any provisions of the Political Reform Act or FPPC Regulations.”

In April 2011, the FPPC began an investigation of six contributions made by Charles Johnson and his wife Ann to three different county central committees, including Yolo County in 2010.

They stated that they opened the investigation for three reasons. First, they each received $34,000. Second, “soon after receiving the money, the Santa Clara and Yolo central committees appeared to keep a small cut for themselves and forwarded the rest to a committee known as Damon Dunn for Secretary of State 2010—and the Johnsons were maxed out contributors to the Dunn committee.”

Third, a fourth county central committee (the third one involving Dunn), Placer, returned money to the Johnsons.

In 2010, Matt Rexroad, who was elected to the Yolo County Board of Supervisors in 2006, was a partner at Meridian Pacific, which was providing campaign consulting services for Damon Dunn for Secretary of State 2010.

Mr. Rexroad’s role with the Dunn committee was as Senior Strategist or Campaign Manager. Michael Sowers was a political fundraiser for another consulting firm.

The FPPC reports that emails from October 2010 show an attempt to raise substantial sums of money for a TV buy prior to the election, and on October 4, “it appears that the partners of Pacific Fundraising Group potentially were concerned about failing with respect to fundraising.”

The FPPC continues, “Two days later, on October 6, 2010, Mr. Rexroad sent an email to Mr. Sowers with a subject line of ―Dunn Party Money. The body of the email contained the names of two central committees, the Republican Party of Placer County and the Yolo County Republican Party. (These are two of the three central committees described above—each of which ultimately received $34,000 from the Johnsons.) Also, the email contained contact information for the central committees.”

Despite the fact that Charles and Ann Johnson were maxed out as contributors, “emails reflect that in October 2010, Mr. Sowers was trying to raise additional funds from the Johnsons for the Dunn committee.”

Mr. Sowers and Mr. Johnson’s daughter would exchange emails and one indicated, “I know you are extremely busy, but if you have a couple minutes to talk there is another way that you and your Dad can directly help the campaign

One October 13, “a three minute telephone call was placed from a number belonging to Mr. Rexroad’s firm, Meridian Pacific, to a number belonging to Steve Mullen, Chairman of Santa Clara County Republican Party.”

Three minutes later, “Mr. Rexroad emailed Mr. Sowers. The subject of the email was ―Central Committee.”

According to the report, the body of the email listed the name and contact information for the Santa Clara Republican party. They write, “Approximately three minutes later, Mr. Sowers replied to Mr. Rexroad’s email with a question: The max contribution to each entity is $30K correct?”

The FPPC parenthetically notes, “Mr. Rexroad’s email only mentioned the Santa Clara central committee. However, Mr. Sowers’ use of the phrase ‘each entity’ in his immediate reply strongly suggests that Mr. Sowers and Mr. Rexroad were talking not only about the Santa Clara central committee—but also, they were talking about the other two central committees (Placer and Yolo) that were identified in Mr. Rexroad’s… email of October 6.”

On October 14, 2010, Mr. Sowers emailed the Johnson’s daughter, noting, “There are 3 entities that are trying to help Damon raise as much money into his campaign, and they are listed Below [sic]. $32,400 can be Contributed [sic] to each entity per individual. If I can raise another $100,000 to $200,000 it will give us the TV buy we need and give us the best chance of winning.”

Listed at the bottom of the email are the three counties in question: Yolo, Santa Clara, and Placer.

By October 21, 2010, “Mr. Sowers emailed Mr. Rexroad. The subject of the email was: I need you to call me asap. . . . The body of the email stated: I need to get this done before noon today.” This was followed by a three-minute phone conversation between Mr. Rexroad and Mr. Sowers.

Charles Johnson wrote one check to each of the three central committees described above, and Ann Johnson did the same. Each of the six checks was in the amount of $17,000—for a combined total of $102,000 (or $34,000 for each central committee).

On October 22, 2010, at 12:20 p.m., “Mr. Sowers sent an email to Mr. Rexroad, notifying Mr. Rexroad about where to pick up the checks.”

Karim Drissi, a representative of Mr. Rexroad’s firm, Meridian Pacific, acted as a courier, picking up the checks and delivering them to the various central committee officers.  The phone records and text messages show that Mr. Drissi and Mr. Rexroad coordinated to pick up the checks. The FPPC indicates, “During his interview, Mr. Drissi confirmed that he did in fact deliver the checks from the Johnsons to each of the three central committees.”

On October 25, Matt Rexroad “sent an email to all three Chairmen of the central committees discussed above, which contained instructions about how to wire money to the Dunn committee.”

The FPPC reports that, in Placer, the committee voted to use the money to make a contribution to Andy Pugno, a candidate for Assembly and also one of Mr. Rexroad’s clients, “but when Mr. Rexroad found out what Placer intended to do with the Johnsons’ money, Mr. Rexroad communicated with one of the officers of the central committee—and the central committee immediately refunded all of the Johnsons’ money, calling the transaction tainted.”

Both Santa Clara and Yolo County accepted the money and forwarded it to the Dunn campaign.

As the Sacramento Bee summarized the affair on Monday, “The FPPC found that Dunn’s political consultant Matt Rexroad and political fundraiser Michael Sowers played key roles in orchestrating the contributions from the Johnsons to the central committees, and then on to the Dunn campaign.

“The FPPC reviewed emails, text messages and phone records that show how the two men coordinated the plan: Sowers asked the Johnsons’ adult daughter to support Dunn by contributing to the central committees, and Rexroad communicated with the central committees to make sure the money came back to his client. Rexroad sent an employee to pick up the checks from Johnson’s San Mateo office and deliver them to the central committees, an FPPC documents says, and sent an email to the central committees chairmen with instructions on wiring the money to the Dunn campaign.”

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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47 thoughts on “FPPC Scrutinized Supervisor Rexroad in Money Laundering Operation”

  1. Fight Against Injustice

    There is a lot of information about Supervisor Rexroad’s actions relating to this incident. He said he was not named a party or fined. Do we know why?

  2. Frankly

    Supervisor Rexroad only offered to the Vanguard that he was neither a named party nor fined by the FPPC.

    So why is this article seemingly about Mr. Rexroad? It seems a very tenuous connection… and smells a bit like an extension of Democrat political hackery.

      1. Frankly

        No. The headline should have been “Yolo County Republican Central Committee is fined by the FPPC for illegal campaign contributions” Then within the article Mr. Rexroad would be mentioned in context to his connection if any.

        But you are making the article about Matt Rexroad. And that makes it seem like a hack piece.

        1. David Greenwald Post author

          Matt Rexroad along with Sowers were the operatives in the case. Sowers asked the Johnsons’ adult daughter to support Dunn by contributing to the central committees, and Rexroad communicated with the central committees to make sure the money came back to his client. Rexroad sent an employee to pick up the checks from Johnson’s San Mateo office and deliver them to the central committees and sent an email to the central committees chairmen with instructions on wiring the money to the Dunn campaign. The FPPC only has the authority to fine campaign committees, but the story is about Rexroad and Sowers, and Rexroad is an elected official here, so yes, the story is about him.

          1. Frankly

            I think your dislike of Mr. Rexroad is clear and it is showing through, but I think it is irresponsible to direct the article at him personally given the story. This is just my opinion. Of course I am not in the business of journalism, so I just might not get it.

            Testing edit. Awesome!!!

          2. Frankly

            That’s a weird comment. I consider Rexroad a friend.

            Ok, but that is news to me given the level of criticism of him I see in the VG.

            I read your article and that was my thought… that the event might have involved Mr. Rexroad, but that it should not have been a story about him.

          3. David Greenwald Post author

            Find a negative article about Rexroad on the Vanguard, you won’t find many.

          4. Frankly

            Ok. Well then my memory does not serve me well here. I could have sworn there was some demonstrated heat over topics like the surface water project and the Gutierrez shooting. But maybe I am wrong and it was other posters and the VG… or maybe these were just isolated conflicts.

            I still stand by first impression that this came off like a hit piece.

          5. David Greenwald Post author

            How does it come off as a hit piece when it came directly from the FPPC report?

    1. Biddlin

      Even “tenuous” is pretty tenuous. David’s adopted the Hearst style, where the thinner the story, the grander the headline.
      I know how you guys hate criticism of style, but the hyperbolic headlines, lately, are over the top, in my opinion,
      And I’m drinkin’ that liberal KoolAid right now.
      ;>)/

      1. David Greenwald Post author

        I find your comment strange. Matt Rexroad was a consultant for a candidate. The candidate needed money to run ads before the election. The campaign identified a source for some of the funds, recognized that they were over the limit, and conspired to circumvent the law. Matt Rexroad played a sizable role in that. He didn’t play a peripheral role in it.

        http://www.fppc.ca.gov/%5C/index.php?id=42

        “The Act gives the Division the authority to investigate and administratively prosecute violations of the Political Reform Act. A violation of the Act may be prosecuted for a penalty fine of up to $5,000 for each violation.”

        1. Biddlin

          So did Rexroad see the error of his ways and turn snitch? Otherwise, if there was any substantive charge to be made, why didn’t they?
          This is a whole lot of mustard for so little pastrami.
          Maybe you’ve got a story here, but forgot to include part of it.
          ;>)/

    2. Themis

      This article is appropriately about Rexroad and the community should be demanding his resignation. What he did was illegal, he knew it was illegal because the same type of money laundering happened in Modesto in 2008. In 2013 there was a trial for Tom and Bill Berryhill who were found guilty. “Ethics enforcers said the brothers conspired with the central committees to illegally fund a television attack ad on Bill Berryhill’s 2008 opponent, Democrat John Eisenhut.” This is exactly the same crime that Rexroad is accused of and he should be held accountable. He needs to step down immediately since he has shown such terrible judgement and a lack for the law.

  3. Rich RifkinWDE 73

    If anyone is curious as to how the election in question turned out, here are the results:

    Debra Bowen: 5,105,307; 53.2% — winner, winner, chicken dinner
    Damon Dunn: 3,666,407; 38.2% — loser, loser, Carlos Boozer
    Merton D. Short: 162,102; 1.6% — loser, loser, Carlos Boozer
    Ann Menasche: 286,694; 3.0% — loser, loser, Carlos Boozer
    Christina Tobin: 214,347; 2.3% — loser, loser, Carlos Boozer
    Marylou Cabral: 164,450; 1.7% — loser, loser, Carlos Boozer

  4. Davis Progressive

    so the bottom line after all is said and done – candidate is in trouble and needs money fast. get him money through unlawful means. fppc investigates and the entities admit to the charges. entities get slapped on the wrist. why would anyone follow the law???

      1. South of Davis

        Themis wrote:

        > when a local politician breaks the law the people need to demand they step down.

        It is not just politicians, it seems like every time anyone that works for the government does something bad (e.g. teacher molesting a student or cop beating someone) the taxpayers pay since the lawsuit is always against the organization not the guy (or gal) that did something bad (did the pepper spray cop pay even a penny of the settlement)?

  5. Rich RifkinWDE 73

    “Charles Johnson wrote one check to each of the three central committees described above, and Ann Johnson did the same. Each of the six checks was in the amount of $17,000—for a combined total of $102,000 (or $34,000 for each central committee).”

    The world in which someone has so much money he can essentially just throw away $102,000 is entirely foreign to me. $102,000 is A LOT OF MONEY in my world. Yet apparently to Mr. Johnson it is chump change. Johnson is not looking to get richer. He’s a multibillionaire, who made his mint running a mutual fund, Franklin Resources.

    I’m far less surprised by those individuals, unions, trade associations and businesses that invest in elections and politics, because they believe the return will be far greater than the expenditure. However, that is really not the case with Johnson. He seems to just want or hope people who are in public office or aspire to be and whose views are the same as his will like and admire him. He played much the same game by pledging $250 million to Yale, his alma mater. I suspect he just wants to be liked there, and expects Yale will name a building after him and probably one of its colleges. I imagine that for $250 million, you also get a statue.

    1. South of Davis

      Rich wrote:

      > The world in which someone has so much money he can essentially
      > just throw away $102,000 is entirely foreign to me.

      If someone in town is “rich” and owns a his average Davis home free and clear and has paid off cars and a few other investments he still has a net worth about ten THOUSAND times less money than Charlie Johnson and when he makes a $10.20 donation to a Davis city council race it is the same as Charlie donating $102K.

      > Johnson is not looking to get richer.

      In 2011 Johnson was #72 on the Forbes 400 with a net worth of $4.4 Billion, this year he is still #72 (tied with David Geffen) but he has a net worth of $6.7 Billion. It is hard to believe that a guy “not looking to get richer” increased his new worth by an average of MORE than $63 MILLION each and every MONTH for the past three years…

      http://www.forbes.com/sites/afontevecchia/2014/09/29/forbes-400-full-list-of-americas-richest-people/

    2. South of Davis

      Rich wrote:

      > by pledging $250 million to Yale, his alma mater. I suspect he just wants to be liked there,
      > and expects Yale will name a building after him and probably one of its colleges. I imagine
      > that for $250 million, you also get a statue.

      He is not doing it to get a statue he is doing is so he (his company/his heirs) can make leveraged bets with some of the ~$20 BILLION Yale endowment (that is how big Dem supporter and fellow Yale alum Tom Steyer made his Billions). The super rich don’t care about a political party and just pick a “team” to work with as they use the government to help them get even richer. It is interesting that the list below of the “top 5” politically connected Billionaires has two Republicans two Democrats and a moderate Republican that supports Democrats (and other lefty stuff)…

      http://www.oneworldofnations.com/2014/09/top-five-us-billionaires-with-most.html

  6. Fight Against Injustice

    Doesn’t Supervisor Rexroad have a blog. What is his response to the articles posted here and on the Davis Enterprise about this incident? Does anyone have the link to his blog? I would like to read it.

  7. TrueBlueDevil

    Has the Vanguard ever covered the numerous politicos from Sacramento, who happen to be Democrats, who have stepped in it? Leland Lee is a big one, and there were numerous Democrats who attended illegal events hosted by a wealthy Sacramento lobbyist.

    This supervisor is lucky he didn’t get the over-the-top witch hunt which Obama critic Dinesh Desouza (sp?) received for his one instance of an improper campaign donation. Democrats tried to lock him up for years

  8. Fight Against Injustice

    The Sac Bee covered this story too. http://www.sacbee.com/2014/10/07/6765453/california-fppc-suggests-money.html

    It is not just David Greenwald reporting this incident. See what the Sac Bee says, “the FPPC found that Dunn’s political consultant Matt Rexroad and political fundraiser Michael Sowers played key roles in orchestrating the contributions from the Johnsons to the central committees, and then on to the Dunn campaign.

    Read more here: http://www.sacbee.com/2014/10/07/6765453/california-fppc-suggests-money.html#storylink=cpy

  9. Biddlin

    Politicians take money. They try to find ways to take more. The FPPC attempts to catch them. Here, they did and levied fines. It equates to you or I getting a ticket for parking in a red zone. A story would be, “Everyone Agrees to Publicly Financed Campaigns with Sane Spending Limits.” But as long as contributions=speech, you might as well complain about sturgeon feeding on molluscs.
    ;>)/

    1. Themis

      Biddlin,

      When a local politician breaks the law and people come to his defense because “everyone is doing it, so big deal” what does that say to everyone else in the community accused of a crime. As it is, since politicians create the laws they never suffer as much as anyone else does. Rexroad knew he was breaking the law-he needs to resign. he cannot be trusted to make unbiased decisions.

        1. Fight Against Injustice

          So that’s o.k.?

          People need to speak up when wrong doing happens, not try to cover it up. Maybe then things would get better. That is why we have an oversight commission like the FPPC.

          I am sure if it was the average “joe” was caught breaking the law, he/she would be prosecuted or fined.

          1. Frankly

            Over-contributing to campaigns by a few thousand dollars is not worth so much animus. Who was harmed?

            Now, a certain political party with a track record of busing in illegal voters… now that is a crime worthy of some very stiff punishment.

          2. South of Davis

            Frankly wrote:

            > Now, a certain political party with a track record of busing in illegal voters…
            > now that is a crime worthy of some very stiff punishment.

            Sure they check photo ID before they let anyone get on a plane or train (or go in to the Democratic National Convention), but we can’t check photo ID to vote since it would be racist (and would give the party with more rich guys who own pro sports teams an advantage if the party with less rich guys who own pro sports teams couldn’t bus in some “undocumented” folks who just want to keep their EBT card and Obamaphone working)…

    2. South of Davis

      Biddin wrote:

      > Politicians take money. They try to find ways to take more. The FPPC attempts
      > to catch them. Here, they did and levied fines

      I would say “Politicians take bribes/protection money and find ways to extort even more bribes and extortion money (no one wants an IRS audit or the EPA to show up at their factory). The FPPC pretends to try and catch them and to make people think they are not totally controlled by the politicians they occasionally level a trivial fine but have written the rules to state that they can not hold anyone “personally” responsible.

      Both teams like this system and just like the gangs with blue and red bandanas take bribes/protection money from their specific neighborhoods politicians from blue and red states focus their fundraising in the neighborhoods/states they control…

  10. Biddlin

    I paid a ticket not too many years back, for an unsafe lane change. I was guilty of failing to signal. Should I have surrendered my drivers license? Get over it. This is grown-up rules, lol.
    ;>)/

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