Funny Money Fallout

California Secretary of State Kevin ShelleyKevin Shelley still has his job – do you have yours? It’s time for a SunsetGate update! In the week since SFist’s hard-hitting book report about the strange fundraising transactions between Shelley and one of his top donors, Julie Lee, the dominoes continue to fall. Last Tuesday, the feds seized the remainder of the $500,000 grant given to Julie Lee’s "community" group, the San Francisco Neighbors Resource Center, for failure to comply with their request to provide documentation showing how they used the money. The San Francisco real estate division has also begun an audit of the Neighbors Resource Center to see if they’re complying with the terms of their city lease. If not, the lease could be terminated.

Mayor Newsom, for his part, returned $2000 that Julie Lee donated to his campaign and has contacted all 120 donors who attended a party thrown by Julie Lee in 2003 to ask if they were the true source of the funds donated at that time. Curiously, the person announcing this on behalf of Newsom, Eric Jaye, was also Shelley’s campaign manager for his secretary of state race (though he had left the campaign by the time these odd contributions started rolling in – scroll down on the link for more info on that).

The California real estate licensing board has also announced that it has opened an inquiry into Lee’s, um, unconventional business practices, to the extent they involve laundering money through third party down payments and other property transactions.

So far, there doesn’t appear to be much tying Shelley personally to these transactions – though the Chron also reported that Shelley handled most of the fundraising done by Julie Lee himself. According to sources, Shelley and Lee spoke often, and Shelley was the person who physically accepted the checks proffered by Lee at the office. Now, it’s actually quite plausible (really!) that Shelley just took the checks and didn’t ask Lee how she’d gotten the money – but reporters have been unable to find this out because Shelley has refused all interview requests, issuing only a prepared statement through his spokesperson that he has no idea what’s going on.

And hey, kick the guy while he’s down – unhappy staffers spoke with the Sacramento Bee to report that Shelley is a verbally abusive boss, reporting incidents like the time Shelley screamed at everyone on staff, stormed out of the office "looking like the Incredible Hulk," and came back, looking disheveled, and carrying a toothbrush, toothpaste, and mouthwash (what, no floss?). Another former staffer reports that when Shelley went to the abortion rights march in DC, he refused to walk to the parade, insisted on being driven, and then blew a gasket when he got there earlier than everyone else. "Why the [expletive deleted in original] am I here?" Shelley screamed. After the aides explained to him that it was because he had driven ahead of the crowds, he uttered "a string of expletives," and the staffer said, "I told him if I screw up or do something wrong, tell me. It’s not necessary to scream at me like that." The aide was fired a few weeks later.

And now, reaching the pure gossip level, Julie Lee's son Andrew, a once-aspiring rapper/city supervisor and a former Shelley staffer himelf, was scheduled to start law school last week at Howard University in DC, but as of last Tuesday, had not yet shown up. Hey, didn't you see the Paper Chase, Andrew? It’s very important to be there for the first day of class!

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