Fine proposed for laundering contributions to Ed Lee’s campaign

California’s Fair Political Practices Commission has recommended a $40,000 fine, the maximum allowed under state law, against a San Francisco property management company and one of its top executives for laundering campaign contributions to Mayor Ed Lee and then-Assessor-Recorder Phil Ting during the 2011 mayor’s race.

Archway Property Services and Andrew Hawkins Cohen, the company’s managing director, have both waived their right to hearings in the matter, documents from the state campaign finance watchdog indicate. That suggests that Archway and Hawkins Cohen are not contesting the penalty, which is expected to be formally imposed at the next Fair Political Practices Commission meeting on Oct. 16.

Calls to Archway’s office were not returned. An attorney who has represented the company and some of its employees in a related lawsuit also could not be reached. Jay Wierenga, an FPPC spokesman, declined to comment on the case, which is still open.

The FPPC investigation, which came after The Chronicle reported the alleged money laundering in 2011, found that Archway and Hawkins Cohen laundered $4,000 in contributions from eight employees or associates. Each donation was for $500, and all were reimbursed by the company.

One of those donations went to Ting’s campaign, but after Lee got into the mayor’s race in August 2011 and vaulted into front-runner status, the remaining seven went to him, the FPPC found.

State law prohibits donating in someone else’s name or being reimbursed for a contribution, obscuring the true source of the money. The donations were also done to circumvent San Francisco’s $500 contribution limit and prohibition on corporate contributions, according to the draft FPPC decision.

Hawkins Cohen, who has used various versions of his last names over the years, is a former bouncer infamous among San Francisco renters for strong-arming tenants out of rent-controlled apartments in the 2000s.

An e-mail obtained by The Chronicle in 2011 that Hawkins Cohen sent to 16 associates directed them to attend an Oct. 18 fundraiser for Lee that an Archway-affiliated company, Veritas Investments, held in a Russian Hill apartment.

“I expect each and every one of you to be at this event tonight,” he wrote in all capital letters. “Bring your check books and write a check for $500.00 for Ed Lee donation. You will be reimbursed right away for you coming.”

Hawkins Cohen then provided reimbursement checks from Archway’s bank account, some with “reimbursement E.L.” written on them, according to the draft FPPC findings.

District Attorney George Gascón opened an investigation into the matter after The Chronicle first reported the money laundering, but his office said in September 2012 that there was insufficient evidence to support criminal charges.

Lee’s campaign has said it knew nothing about the laundering scheme and was a victim of fraud in the matter.

Lee’s political rivals, though, seized on the FPPC’s fine recommendation as evidence that Gascón didn’t aggressively pursue a case where the donations went to a political ally.

“Any criminal prosecutor worth his or her salt would have told you this was a slam-dunk case, and District Attorney Gascón buried it so he wouldn’t upset his political allies. Period,” said former Board of Supervisors President Aaron Peskin.

Gascón, though, prosecuted another money-laundering case involving donations to Lee’s campaign from employees of the Go Lorrie’s airport shuttle company.

“There were different incidents that were brought to our attention during that campaign season. We had sufficient evidence to criminally prosecute some, but not others,” said Alex Bastian, a spokesman for Gascón. “We thoroughly investigated this case but were unable to prosecute due to insufficient evidence.”

Gascón then turned over his evidence to the FPPC, knowing that the standard of proof and evidentiary rules are lower in an administrative proceeding, Bastian said.

“We provided the FPPC our investigative file, knowing that their standard of proof and evidentiary rules are different,” he said.

John Coté is a San Francisco Chronicle

staff writer. E-mail:

jcote@sfchronicle.com Twitter: @johnwcote