On Thursday, the Arizona Clean Elections Commission discussed the audit performed on Rep. Jesus Rubacalva’s campaign finances. Auditors told the commissioners that there were “some fairly obvious expenditures” that were not campaign expenditures.
According to auditors, Rubacalva claimed he could “not locate the box containing his campaign documents. Mr. Rubalcava did not provide any documentation other than bank statements to the auditors.”
Rubacalva appeared telephonically, but almost as soon as commissioners began asking auditors about the over $9000 in questionable expenditures, his called was abruptly disconnected. Ultimately he called back.
Among the auditors’ findings were “six disbursements to family members of the candidate, however the campaign finance report did not indicate that the expenditures were made to family members.”
Auditors noted that “approximately forty-one personal transactions consisting of out of state restaurant purchases, travel and other non-Campaign related items on the Campaign bank statement, totaling $3,461.74; three ATM withdrawals, totaling $243.50; five overdraft fees, totaling $175.00; and three transfers from the Campaign bank account to the Candidate’s personal bank account, totaling $223.42. The Candidate indicated that he reimbursed the Campaign for these personal transactions, however deposits for these specific amounts was not provided. We noted eleven possible reimbursements to the Campaign on the bank statements, totaling $2,270.19.”
Rubacalva told commissioners that he accepted the audit findings. Commissioners voted unanimously to accept the findings.
|Jesus Rubacalva||Deposits to Campaign Bank Account|
|$ 0.58||Beginning balance 01/01/16|
|$ 1,869.33||Transfers from separate account|
|$ 38,023.22||Possible campaign deposits|
|$ 3,945.54||Purpose not determined|
|$ 43,838.67||Total period deposits|
|Campaign Finance Report Totals:|
|$ 0.58||Beginning balance 01/01/16|
|$ 37,623.22||Included in campaign finance reports|
|$ 4,852.55||Not included in campaign finance reports|
|Total Election Cycle Withdrawals|
|$ 638.50||ATM withdrawals|
|$ 604.42||Transfers to personal account|
|$ 4,653.41||Non-campaign withdrawals|
|$ 34,261.93||Possible campaign withdrawals|
|$ 3,635.41||Purpose not determined|
|Campaign Finance Report Totals|
|$ 34,628.95||Included in campaign finance reports|
|$ 9,209.72||Not included in campaign finance reports|
Jesus Rubalcava was a participating candidate for State Representative in Legislative District 4 during the 2016 election cycle. Mr. Rubalcava attended the Commission required candidate workshop on January 14, 2016. On June 10, 2016, Mr. Rubalcava was approved for primary election funding in the amount of $16,044. Mr. Rubalcava was not contested during the general election and received $1,415 (the amount of the $5 qualifying contributions he collected) on August 31, 2016.1
On September 15, 2016, Mr. Rubalcava’s 2016 candidate campaign committee was randomly selected for a primary election audit.
On January 19, 2017, the Commission approved a comprehensive audit for Mr. Rubalcava based upon the completion and findings of the primary election audit. Exhibit A – Primary Election Random Audit
Commission staff notified Mr. Rubalcava’s attorneys of the comprehensive audit on February 2, 2017. On February 16, 2017, Fester & Chapman P.C., the independent auditors conducting the audit, requested bank statements and supporting documentation for all campaign finance activity for Mr. Rubalcava’s candidate campaign committee. On March 2, 2017, Mr. Rubalcava’s attorneys withdrew from representation and all further communication was directed to Mr. Rubalcava.
On March 13, 2017, the auditors contacted Mr. Rubalcava for additional information that was initially requested but not provided in first response. On March 15, 2017, Mr. Rubalcava submitted two additional bank statements but ultimately declared that he had “not been able to locate the box” containing his campaign documents. Mr. Rubalcava did not provide any documentation other than bank statements to the auditors.
On April 23, 2017, the auditors presented Mr. Rubalcava with the draft audit for his review. On April 28, 2017, the auditors submitted to the Commission the final comprehensive audit containing a statement to the Commission from Mr. Rubalcava. Exhibit B – Comprehensive Audit
1. Review supporting invoice or other documentation and agree amount to the amount reported in the candidate’s finance report.
Mr. Rubalcava did not provide any supporting documentation for withdrawals made from the campaign bank account.
2. Determine that the name, address, and nature of goods or services provided agree to the information reported in the candidate’s campaign finance report.
The auditors were unable to determine if the supporting documentation matched the information on the candidate’s campaign finance report because Mr. Rubalcava did not provide any supporting documentation for expenditures.
3. Determine whether the expenditure was made for a direct campaign purpose.
The auditors were unable to determine if expenditures were made for direct campaign purposes because Mr. Rubalcava did not provide any supporting documentation for expenditures.
4. If the expenditure is a joint expenditure made in conjunction with other candidates, determine that the amount paid represents the candidate’s proportionate share of the total cost.
The auditors were unable to determine if joint expenditures made in conjunction with other candidates represents the candidate’s proportionate share of the total cost because Mr. Rubalcava did not provide any supporting documentation for expenditures.
5. Determine whether a legal defense fund has been established. Was Clean funding used to pay for legal services? What is the value of legal services being provided for the comprehensive audit and review of finance activity?
Based on information provided, he did not establish a legal defense fund.
Summary of Bank Statements and Campaign Finance Reports
Since Mr. Rubalcava did not provide any documentation for expenditures related to his 2016 candidate campaign committee the independent auditors summarized the information that was available through Mr. Rubalcava’s campaign bank statements and campaign finance reports.
Potential Clean Elections Act and Commission Rule Violations
Single campaign account
A.R.S. §16-941(A)(5) requires participating candidates to comply with A.R.S. §16-948; Subsection A of that statute requires candidates to conduct all financial activity through a single campaign account of the candidate’s campaign committee and to not make any deposits into the campaign account other than limited early contributions and qualifying contributions. A.A.C. R2-20-114(A) also requires participating candidates to conduct all campaign finance activity through a single designated campaign bank account.
On June 15, 2016, Mr. Rubalcava physically received his primary election funding check.
On June 17, 2016, Mr. Rubalcava transferred $13,280.22 from a personal bank account to the campaign bank account. The primary election funding check was never deposited into the campaign bank account, rather the transfer on June 17, 2016 was a portion of the primary funding that had been originally deposited into the candidate’s personal bank account. The difference of $2,763.78 was not transferred to the campaign bank account. The independent auditors note additional transfers from a separate account total $1,869.33 and deposits with undeterminable purposes total $3,945.54. Mr. Rubalcava comingled personal funds and campaign funds in both his personal and candidate campaign bank account. None of the deposits
can be verified with the candidates campaign finance reports because Mr. Rubalcava failed to provide any supporting documentation.
Petty cash account
A.R.S. §16-948(C) requires participating candidates who choose to establish a petty cash account to adhere to an aggregate petty cash account limit of $1,420 and each petty cash expenditure cannot exceed $160. A.A.C. R2-20-115 requires candidates who choose to utilize a petty cash account to include detailed information as required by A.R.S. §16-948(C) on campaign finance reports for each petty cash expenditure.
Mr. Rubalcava failed to establish a petty cash account and provide detailed information for petty cash expenditures on his campaign finance reports. ATM withdrawals from the campaign bank account total $683.50 and these withdrawals were not reported on Mr. Rubalcava’s campaign finance reports. We cannot corroborate these expenditures because Mr. Rubalcava failed to provide any supporting documentation.
Failure to return primary election funds and using campaign funds for personal use A.R.S. §16-953(A) requires participating candidates to return to the Clean Elections Fund all monies in the candidate’s campaign account above an amount sufficient to pay any unpaid bills for expenditures made during the primary election period and for goods or services directed to the primary election.
A.A.C. R2-20-702 requires that participating candidates use Clean Elections funding to pay for goods and services for direct campaign purposes only.
The independent auditors found that Mr. Rubalcava transferred a total of $604.42 to his personal campaign account from the campaign bank account. They also found that Mr. Rubalcava made $4,653.41 in non-campaign withdrawals from the campaign bank account. An additional $3,635.41 in withdrawals did not have a determinable purpose. The non-campaign withdrawals include but are not limited to:
1. Western Union (1/11/16, 3/18/16, 4/4/16, 4/18/16, 7/18/16),
2. Southwest Inflight Service (3/18/16),
3. Starbucks in Los Angeles (4/25/16),
4. Overdraft fees (numerous),
5. AT&T Bill payments ($439.19 on 6/22/16 and $378.84 on 8/9/16),
6. Southwest Title Loan ($200 on 6/27/16)
7. Omni Shoreham Washington DC ($25.17 and $149.64 on 6/28/16)
8. Main Event/ Mountain Air California ($110 on 7/13/16)
9. Southwest Airlines ($186.96, $15, $15 on 7/14/16)
10. Hilton Advance Purchase Memphis TN ($430.87 on 7/18/16)
11. Hilton Garden Inn San Diego, CA ($54 on 7/19/16)
12. Coaster Saloon San Diego, CA ($86 on 7/19/16)
13. Ticketmaster ($197.10 on 9/13/16),
14. My Ticket Tracker ($142.37 on 9/19/16),
15. American Air ($25 on 6/24/16, $44.54 on 8/29/16, $11.20 and $75 on 9/19/16)
16. Marriott San Jose ($520.08 on 10/18/16)
Mr. Rubalcava was obligated to return any Clean Elections funding that was not utilized for direct campaign expenditures. Additionally, A.A.C. R2-20-702(C) specifically prohibits such expenditures for personal use.
Failure to report expenditures and receipts
A.R.S. § 16-948(C) requires candidates to report expenditures made directly from the candidate’s campaign bank account. Candidates are required to identify the full name and street address of the person receiving the payment and indicate the nature of the goods or services being provided and identify the compensation being made. Additionally A.A.C. R2-20-110 requires candidates to file campaign finance reports that include all receipts and disbursements from the campaign bank account.
The independent auditors found that Mr. Rubalcava failed to report an aggregate of $9,209.72 in expenditures on his campaign finance reports. Mr. Rubalcava also failed to report $4,852.55 in deposits into the campaign bank account. Additionally, the independent auditors were unable to determine if $1,362.32 was reported.
Failure to produce documentation for direct campaign expenditures
A.A.C. R2-20-703 clearly states that participating candidates have the burden of proving that any and all expenditures made by the candidate are for direct campaign purposes and that candidates must retain records for expenditures.
Mr. Rubalcava failed to provide any supporting documentation for campaign expenditures including those that were reported on the candidates campaign finance reports, so we are unable to verify if any expenditure made during the campaign election cycle is for a direct campaign purposes.
1 On August 31, 2016, Mr. Rubalcava received general election funding in the amount of $24,066. On September 1, 2016, it was determined that he was unopposed in the general election Mr. Rubalcava was directed to return $22,651 of general election funding to which he was not entitled. Mr. Rubalcava returned $22,651 on September 28, 2016.