The Los Angeles City Ethics Commission Wednesday sustained all 10 counts of ethics violations and imposed a penalty of $138,124.32 against Councilman John Lee, who allegedly accepted lavish gifts and misused his position in 2016 and 2017 during a trip to Las Vegas and at various Los Angeles restaurants when he was chief of staff to then-Councilman Mitchell Englander.
In a 3-1 vote, the commission voted to uphold a decision made by Administrative Law Judge Ji-Lan Zang, who determined Lee violated the city's ethics rules pertaining to the dollar amount of gifts a city official can receive and disclosing such gifts through what is known as a Statement of Economic Interests, or Form 700.
Commissioner Aryeh Cohen voted against the final outcome while member Terry Kaufmann was absent during the vote.
Commissioners, however, did not agree with Zang's dismissal of additional counts against Lee regarding misuse of his position and for assisting Englander in misusing his position -- ultimately adding those violations to the list.
In a separate 4-0 vote, commissioners agreed to impose a maximum penalty of $138,124.32 for all 10 counts, as recommended by city investigators rather than Zang's suggestion of $43,730 for the first five counts.
Lee denied the allegations in a statement and alluded to appealing the decision in court. The councilman described the process as "wasteful" and "political."
"The Commission rubber-stamped a biased investigation and blatantly ignored all relevant facts, including that the FBI never charged me for backdating any checks or aiding Mitchell Englander's 2017 illegal activities.
"I have cooperated with this process at every step. I voluntarily turned over every document asked of me, cooperated with both federal and commission investigators, and testified numerous times on this matter under oath. The only thing I'm guilty of is being honest and transparent in the face of an utterly dishonest process," Lee said in his statement.
The councilman concluded that he will not be "bullied into settling or admitting to something I didn't do. I'll continue standing up for the truth and the people of Council District 12."
Lee faced two counts for allegedly accepting gifts that exceeded a limit, three counts for allegedly failing to disclose those gifts, four counts for allegedly misusing his position and one count for allegedly helping Englander misuse his position.
"Our determination is made based on the facts of this case," Ethics Commission President Manjusha Kulkarni said. "It's made based on our understanding of the law as it's been presented by both sides. We do not pass judgment whether individuals are good people or bad people. We make determinations based on the facts of whether actions were taken and whether those actions, based on the laws, policies and regulations violated, what was stated in our statute, regulations, etc."
Lee represents the 12th Council District, encompassing the northwest San Fernando Valley.
The case stemmed from alleged violations related to lunches, dinners, a Vegas trip and other gifts connected to Englander. In 2020, Englander pleaded guilty to scheming to obstruct a federal investigation into the 2017 Vegas trip, and his acceptance of $15,000 in cash and gifts from businessman Andy Wang. He was sentenced to 14 months in prison.
Lee was not charged by federal prosecutors nor named during Englander's federal indictment, but referred to as "City Staffer B."
Lee's ethics case involves gifts such as food, wine, hotel stays, transportation and about $1,000 worth of gambling chips, which were provided by Wang, lobbyist Michael Bai, and developer Chris Pak.
Zang heard Lee's case from June 2-6 via video conference, according to city documents. Enforcement Officer Marian Thompson and Director of Enforcement Keith Hardy represented the commission while attorneys Amber Maltbie and Brian Hildreth represented Lee.
"Accordingly, Counts 1 to 5 of the Accusation are sustained, while Counts 6 to 10 are dismissed," according to Zang's 59-page proposed decision. "Considering the severity of respondent's violations, his intentional concealment of his violations, his lack of remorse, and his lack of candor at the hearing, the maximum monetary penalty authorized under Charter section 706, subdivision (c), for each violation of Counts 1 to 5 is warranted."
Lee denied the allegations during those proceedings, explaining he attempted to pay for lodgings and food, or declined to eat during lunch meetings with Wang, Bai and Pak.
On Wednesday, Lee's attorney refuted the allegations and reiterated the councilman's defense. Lee's attorneys argued that investigators incorrectly calculated the value of the gifts, contended the statute of limitations expired on the alleged ethics violations, and contended the issue regarding disclosure of gifts was due to the dollar amount being disputed.
Gifts under $50 do not have to be disclosed. Lee's attorneys argued that since the councilman did not consume or limited his consumption of food and drinks, and attempted to pay back in some cases the expenditures, Lee did not have to file a Form 700.
Lee's attorneys pushed back on the larger fine suggested by city ethics investigators.
"This matter turns on a single issue, and that is the correct method of valuing gifts under the Political Reform Act as it is incorporated into the Los Angeles Municipal Code," said Brian Hildreth, attorney for Lee. "Specifically, the question is whether meals and social outings are to be valued based on what the official actually received and consumed, or whether they may be instead be valued using a pro rata allocation of what others spent and what others consumed."
Commissioners agreed with the arguments presented by City Ethics Director of Enforcement Kenneth Hardy, who emphasized Lee violated the city's gift laws, failed to disclose such gifts, and used his position as then-chief of staff to Englander to secure and maintain a relationship with a businessman and developer with interests in expanding their businesses.
The commissioners also determined that, by not disclosing the gifts in subsequent elections, Lee created an advantage for himself and a disadvantage for other candidates, benefiting from his status as an incumbent.
Commissioner Aryeh Cohen disagreed with the majority on this issue, noting that "it's not clear to me at all that had voters known, and it was in the last election where he won, voters knew, and then he won by a larger margin. I don't think that's a misuse of position for gaining benefit from it."
In response, Commission President Kulkarni noted there was an active effort on Lee's part to conceal by not disclosing the gifts on mandated forms, among other actions the councilman made.
"Those are meant to evade the requirements of a city council member," Kulkarni said. "So I would argue that, again, there's ample evident of concealment and of misusing the office."
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