San Jose Mayor Matt Mahan has agreed to pay a $27,500 fine to state regulators for failing to disclose to the state on time more than $2.3 million in donations made to nonprofits at his request, according to a settlement agreement released by the Fair Political Practices Commission on Friday.
Of those late disclosures, 37 payments totaling almost $1.97 million went to Back to Basics California, a 501(c)(4) advocacy organization where several of Mahan’s staff members “held decision-making roles,” according to commission investigators. Donations to the group ranged from $5,000 to a single $1 million contribution.
The list of donors included tech and crypto executives, corporations such as PG&E and Calpine Corporation, as well as Mahan’s official campaign, Neighbors for Matt Mahan. Another delayed disclosure involved a $400,000 payment to the local arts organization Cinequest. The reporting delays ranged from four months to almost two years.
While the agency found 16 counts of negligence, which focused on the largest amounts, it determined there was no intentional misconduct or attempt to deceive the public. As a result, Mahan’s penalty is much lower than the $80,000 maximum he could have faced.
“In this case, evidence indicates that Mahan’s violations were not intentional and appear to be the result of negligence,” the commission’s investigators noted. “Although ultimately responsible for the actions of his staff, it appears his staff failed to properly track and disclose the behested payments.”
The fine stems from an investigation that was prompted after Mahan discovered the disclosures were not filed and self-reported them to the Fair Political Practices Commission, the watchdog group overseeing California’s campaign, lobbying and conflict-of-interest laws. State law requires elected officials to report donations of $5,000 or more made at their request within 30 days.
Legally known as “behested payments,” these are donations made to an organization at the request, suggestion, or solicitation of a public official.
Back to Basics is a San Jose-based organization named after a phrase commonly used by Mahan to describe his governance approach. According to its website, the group is dedicated to “holding our elected leaders accountable every day — so our government is delivering on the basics, like addressing the homelessness crisis, getting smarter about fighting crime, cleaning our streets and creating an economy that works for all of us.”
The commission is expected to officially adopt the findings at its Sept. 17 meeting. Although commissioners hold the power to adjust the fine or reject the agreement entirely, such moves are rare.
Mahan blamed the oversight on a former aide who he said failed to submit the filings by the deadline.
“These dollars helped put on beloved annual events and fund nonprofits doing good work in San Jose — and the public deserves to know exactly where they came from,” Mahan said in a statement. “I trusted a longtime aide to ensure that was the case. As soon as I became aware of the error, I immediately self-reported and have put in place stronger oversight processes to ensure all reporting is done correctly at both the local and state level.”
The commission noted that the donations were reported locally to the city of San Jose, but they were not reported to the state.
While Mahan did not explicitly name the staffer, the commission identified Mahan’s former chief of staff, Jim Reed, in its findings as the person responsible for tracking and filing behested payment reports at both the local and state levels.
“However, due to staff confusion about the required disclosures, 37 payments made from 2024 to 2026 by approximately three dozen donors to the nonprofit at Mahan’s behest were not disclosed as required by the Act,” the commission said in its findings.
Reed left Mahan’s office as chief of staff last December to lead Back to Basics.
In a statement to this news organization, Reed took accountability for the oversight.
“This is 100% on me, not the mayor. While we sought to regularly file our behested payment disclosures fully and accurately through the city’s public process, it’s my fault we didn’t disclose the same information to the state,” Reed said. “It’s a painful and embarrassing lesson learned for me, and I’m sorry that the mayor has to suffer for my mistake.”
Although Mahan avoided the maximum penalty, investigators determined his case did not qualify for the commission’s “streamline settlement” program, which could have reduced the fines to just hundreds of dollars per violation.
In denying that leniency, investigators cited the sheer number of late payments, the large dollar amounts, and the lengthy delays. They also pointed to “the involvement of Mahan’s campaign manager and staff in the nonprofit,” concluding that “the extent and gravity of the public harm in the aggregate is more than minimal.”
Commission filings identified campaign manager Adrian Rafizadeh — who managed Mahan’s 2022 mayoral race and recent gubernatorial bid — as the founder and CEO of the nonprofit.
Mahan’s spokesperson Tasha Dean emphasized that the nonprofit operates independently, noting the mayor “is not a decision maker when it comes to who sits on the board of this organization or who works at it.”
She said the donations are used for charitable giving and issue advocacy.
So far, she said, the funds have supported many charities, benefiting local arts, emergency response teams, the National Coalition of 100 Black Women, the Vietnamese Roundtable, and “a recent backpack drive for San Jose kids.”
Dean pointed out that the practice is not exclusive to San Jose and called it “incredibly common for a mayor to fundraise for a nonprofit and have a C3/C4 organization formed in alignment with their goals.” She pointed to executives who have utilized similar setups, including former San Jose Mayor Sam Liccardo and San Francisco Mayor Daniel Lurie, arguing the arrangement is entirely “legal and ethical.”
Former commission chairperson Dan Schnur told this news organization that while staffers having dual roles in the soliciting and receiving organization is “eyebrow raising,” it’s “entirely legal.”
He noted that other state officials also have similar arrangements.
“There have been a number of proposals to restrict these donations or to prohibit these donations,” Schnur said. “But none of those have passed.”
Schnur said that behested payments have long been a controversial topic in politics.
“Critics of the program argue that it’s a way for politicians to get around campaign contribution limits,” Schnur said. “But almost everyone would agree that most of these contributions are given to worthwhile causes, and that many of them would not be given if the politician was not making the request.”
Calling the disclosure of these donations critically important, Schnur added: “That is the one area where the two sides can agree — that voters, if elected officials are given the ability, have the right to know about it so they can come to their own conclusions.”
However, he noted that filing mistakes are also frequent among elected officials throughout the state.
“These types of administrative errors are fairly commonplace,” Schnur said. “If the commission had felt that there was some type of malicious intent involved, they would have leveled a much higher fine.”
Gov. Gavin Newsom was also fined more than $31,000 by the same commission earlier this year for similar violations related to $5.5 million in donations tied to the Los Angeles wildfires.