Milpitas businessman fined $20,000 for laundering campaign contributions

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

On May 25, the California Fair Political Practices Commission voted unanimously to approve the 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 campaign laundering was discovered as part of a proactive effort by the enforcement division, where they look for patterns in jurisdictions that have campaign contribution limits, the commission was told on May 25.

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 Indihar Giordano and 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 had several of his workers at Preston Pipelines 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 asked his son and employees to contribute $4,000 to the campaign, Armando Gomez for Assembly 2014, the FPPC states.

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, the 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. At that same meeting, the council, with Indihar Giordano and Gomez dissenting, voted to reject the project.

Last month, Preston told the Post that he had “a misunderstanding of the rules” when it came to the political contributions.

“So when I found out there was an investigation, that there was an issue, I just wanted it resolved quickly,” Preston said previously.

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

Gomez on the other hand said he knew Preston for 15 years, and was surprised to hear he had been brought before the FPPC for campaign laundering.