Milpitas businessman faces $20,000 penalty for laundering campaign contributions


The state’s political watchdog agency says the owner of a Milpitas-based general engineering contractor company will face a $20,000 fine for laundering campaign contributions in connection to prior campaigns of two former Milpitas City Council members.

On May 25, the California Fair Political Practices Commission is expected to vote on the proposed fine for Michael Preston, president and owner of Preston Pipelines, for using his employees to multiply his political contributions toward the election bids of Debbie Indihar Giordano, who was running for council in 2012 and Armando Gomez, who was running for state Assembly in 2014.

The FPPC asserts Preston made illegal contributions to both campaigns because he owned a piece of property that he wanted to have zoned from industrial to residential.

“He needed approval from the Milpitas City Council to change the zoning. According to Preston, a consultant told him that Debbie Giordano and Armando Gomez were both pro-growth, pro-real-estate and pro-development and supporting these candidates may help him obtain the zoning change,” the FPPC’s investigation states.

In March 2013, Preston is alleged to have asked several of his workers at Preston Pipelines to make the maximum contribution of $250 to former councilwoman Indihar Giordano’s 2012 council campaign. At the time, 10 employees including Preston donated and he reimbursed six of these employees from his personal bank account, the FPPC states. In October 2013, Preston allegedly asked his son and employees to contribute $4,000 to the campaign, Armando Gomez for Assembly 2014.

At that time, Preston’s son and two employees donated $4,000 and Preston donated $4,100, and Preston then reimbursed one employee from his personal bank account, the FPPC states.

Through that arrangement, Indihar Giordano received a total of $2,500 and Gomez received $16,100. Both Indihar Giordano and Gomez served on the council in 2013, Gomez was an unsuccessful candidate for state Assembly.

Campaign law prevents someone from acting as a straw donor, FPPC states.

Gomez and Indihar Giordano both reported the laundered campaign contributions on campaign filings, but listed the individual contributors instead of Preston, according to the FPPC investigation. Preston told investigators he and his employees were not aware of the requirements of the act and investigators said there was no evidence found that Indihar Giordano and Gomez knew the true source of the funds they received.

Gomez, Indihar Giordano and former mayor Jose Esteves had previously disclosed donations from Preston Pipelines at a Nov. 5, 2013 meeting, during which the council had considered a KB Home development project on Preston Pipelines property, near Main Street in Milpitas.

“I think there was a misunderstanding of the rules so when I found out there was an investigation that there was an issue I just wanted it resolved quickly,” said Preston in an interview with the Post on Tuesday.

Preston said it was not his intention to pay back his employees for their contributions to the two campaigns initially.

“I didn’t think about the regulation part of it, I wasn’t trying to circumvent it, it wasn’t a lot of money,” Preston said.

He said of the consultant who told him to donate to the political campaigns of Indihar Giordano and Gomez because they are pro-growth “I think it’s self explanatory, it wasn’t a big deal, ‘these are pro-growth people do you want to support them?’”

He added his employees also “offered” to donate to the two council members in order to “support” him.

“I thought it was very nice and they said they wanted to contribute, they wanted to support me, I have a very close group there. I felt bad they had spent their money so I just wanted to reimburse them,” Preston said, but added in hindsight his decision was was not thought through. “It was a lack of understanding of the rules; you can’t just reimburse someone even if they do it on their own.”

This is the second time Indihar Giordano has been the recipient of laundered campaign funds. In 2015, the FPPC approved a $30,000 fine against Milpitas restaurateur Asker

Junaid after concluding he illegally used his employees to multiply his political contributions tenfold to the re-election bids of then-mayor Esteves and Indihar Giordano in 2012.

Similar to the last time, Indihar Giordano in this case denied knowing her campaign contributor — Preston — and asserted that she could not recall if she’d ever interacted with him during her time on the council.

Indihar Giordano, a Realtor, said she would not comment on having a reputation for being “pro-growth” and “pro-development.” But she did say she was surprised to hear about Preston and added that “I don’t have control of who I get the checks from, or who writes them.”

Still, at the City Council’s Nov. 3, 2013 meeting, during a public announcement of campaign contributions received by those with projects before the council and reported to former city attorney Michael Ogaz, Indihar Giordano, Gomez and Esteves noted monetary contributions from Michael Preston (Esteves); Preston Pipelines (Indihar Giordano); and KB Home and Preston Pipeline (Gomez), in relation to the KB Home and Preston Pipelines residential project.

At that meeting, former planning director Steve McHarris presented the proposed residential development project, located east of Main Street, bounded on three sides by transportation/rail uses. The parcels in question were zoned as heavy industrial, and the owner requested to change it to multi-family use to build 213 homes and to house 744 residents.

In the end, the council voted 3-2, with Indihar Giordano and Gomez dissenting, to deny the KB Home project on Preston property, thereby nixing it.
This week, Gomez said he’s known Preston for 15 years and was surprised to hear that he was being brought before the FPPC for campaign laundering.

Gomez added that he did not know why someone told Preston to donate to him because he is “pro-growth.”

“Every time I run, people generally give because they believe in my vision for the position and believe I am best suited for the job, not because there is something they expect,” Gomez told the Post.

Gomez said that he had not had any conversations with Preston about rezoning his property after receiving the donations. He added that he does not see every single check he receives as a candidate and asserted that there was no way for candidates to “tell if someone else reimbursed them for a check.”

“I don’t know that, just like I didn’t know in this case,” Gomez said.

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