Metropolitan News-Enterprise


Friday, November 8, 2002


Page 1


Ninth Circuit Sanctions Orange County Lawyer for  Frivolous Appeal in Election Violation Case


By a MetNews Staff Writer


A Santa Ana lawyer who is the former chairman of the Orange County Democratic Party was sanctioned yesterday for filing a frivolous appeal from a $7,500 fine he received for mishandling a political contribution.

Speaking through Judge Alex Kozinski, a Ninth U.S. Circuit Court of Appeals panel ordered James Toledano to pay the Federal Election Commission’s attorney fees on appeal “as a sanction for his bad-faith conduct and abuse of the judicial process.”

Toledano, the judge said, “was given repeated warnings that his arguments are frivolous.”

Toledano said he would ask for an en banc hearing. The appeals court, he said, had attacked him personally and “brushed away the factual question of whether the chairman can accept a contribution and use it to benefit the party [which] chose not to report it.”

The FEC investigated after Michael Schroeder, who is also a Santa Ana lawyer and is prominent in Republican politics, complained about a $10,000 contribution that Toledano received from relatives of James Prince. Prince was a candidate in the 1996 Democratic primary in the 46th Congressional District, which he lost to Loretta Sanchez, who went on to beat GOP incumbent Bob Dornan in the general election.

Schroeder filed his complaint after news reports surfaced. The reports were based on protests by other members of the county Democratic central committee who had learned that a contribution ostensibly made to the party, but of which they had been unaware, was used for a mailer supporting Prince.

Such large contributions were unheard of for the county party, which had not received a donation of more than $400 that year. 

The FEC determined that Prince’s sister and brother-in-law—who had already made the maximum “hard money” donation to his campaign—had donated $10,000 for the pamphlet costs. The check was sent to Toledano and deposited in the account of the “Democratic Party of Orange County II (Federal),” an entity over which Toledano had sole control.

The printing and mailing costs more than exhausted the funds in the account, requiring Toledano to pay nearly $300 out of his own pocket.

The donors told the FEC that they had made the check out to the county party, and that their understanding was that the money would be used by the party—which had endorsed Prince’s candidacy—to promote his nomination. The roman numeral “II,” they said, was added to the check after they sent it to Toledano, without their knowledge.

The donors and the Prince campaign both settled with the FEC and paid fines. Toledano rejected a similar offer, so the FEC filed suit in the U.S. District Court for the Central District of California.

Judge Gary A. Feess found that Toledano had violated a section of the Federal Election Campaigns Act that requires a person receiving a campaign contribution on  behalf of a political committee to transmit it to the committee treasurer “no later than 10 days after receiving such contribution.”

The judge rejected all of Toledano’s arguments, including the contention that as chairman of the party, he should be considered an agent of its treasurer, even though he was not authorized, either by the treasurer or the party by-laws, to act in that capacity.

He didn’t tell the treasurer or other party officials about the donation, he said, because he didn’t trust them and felt they were acting on a “personal agenda” rather than in the interests of the party, and would have, “for no other reason than spite and vindictiveness,” vetoed his plans for the money.

He also claimed that Schroeder, as a Republican, was not a proper complainant; that because violations of the statute can be pursued either criminally or civilly, the suit should have been filed within the three-year criminal statute of limitations, and that the judge should have granted a trial as to the amount of the fine.

Feess called those arguments “facially inadequate,” “specious,” “frivolous,” “spurious,” “far fetched” and “meritless,” and Kozinski agreed.

At oral argument, Toledano—who represented himself throughout the process—was told from the bench that his appeal was frivolous. He rejected an offer that would have allowed him to dismiss the appeal, pay the fine, and avoid sanctions.

In a letter to the court clerk a week later, he claimed that he was unable to pay the fine. But Kozinski noted that the FEC had offered to work out a payment plan, and that Toledano had rejected the offer because the fine had been imposed “without any evidence.”

Toledano’s appeal, the judge said sarcastically, asked the court to “plumb the deep mysteries of [the ‘no later than 10 days’] language to figure out what it could possibly mean.” The law is “mandatory and straightforward,” he said—an intermediary such as Toledano must forward a donation to the treasurer, who under FEC rules may act personally or through an authorized agent, within the 10-day period.

It is well established, the judge went on to say, that the FEC has five years to initiate a civil action, even for a violation that could have been prosecuted criminally. And the internal disorganization of a committee is no excuse for its chairman’s violation of the law, he said.

“Toledano concedes that he violated the explicit requirements of the statute,” Kozinski wrote. “Because none of his finger-pointing and complaining creates a genuine issue of fact material to the application of the law, that should have been the end of the story long ago.”

Senior Judge Ferdinand F. Fernandez and Senior U.S. District Judge Samuel P. King of the District of Hawaii, sitting by designation, joined in the opinion.

The case is Federal Election Commission v. Toledano, 01-56762.


Copyright 2002, Metropolitan News Company