Derouin: Reject the Phillips GoFundMe ethics report

If this council, however, approves the decision, and the opinion of counsel on behalf of Mr. Phillips, it will be accepting the outlandish argument that council members and their appointees can receive unlimited “personal gifts” from anonymous donors, regardless of who they are, without the need to disclose them.”

Jim Derouin, Scottsdale resident

As a citizen of Scottsdale, and the person who recommended in 2005 the creation of what is now known as the Scottsdale Ethics Code, I urge that the Scottsdale City Council reject the panel decision in the Guy Phillips GoFundMe matter.

I say this because the panel decision would create two giant loopholes in the city’s ethics code.

The “benign purpose” loophole

The panel holds that any member of the Scottsdale City Counsel (and, thus, any member of a city commission, board, committee or task force) may receive limitless gifts from a GoFundMe account from anonymous donors without the need to disclose the same to the city if the account is established for something the panel calls a “benign purpose.”

The term “benign purpose” is not defined by the panel nor is it found in state law or the ethics code. Significantly, the panel, does not require that the donations be spent for the “benign purpose.”

The anonymous funds only need to be raised for a “benign purpose.” That is goofy logic.

In this case the “benign purpose” was ostensibly to pay bills for “medical, illness and healing” purposes. The problem is that only one of the five bills paid by the account was for a medical purpose.

The other bills paid appear to be for non-medical business or personal expenses. This makes no sense as a policy and should not be approved by the council.

If the council accepts the panel’s decision, gifts to members of the council (and members of its boards, commissions, committees and task forces) will be proper (a) in unlimited amounts, (b) from anonymous donors, (c) without any obligation to find out who the contributors are and (d) without the duty to disclose the gifts.

All that needs to be done is to funnel the donations through a conduit (such as GoFundMe) that represents that it is raising donations for a “benign purpose” even though there is no obligation to spend the funds for the “benign purpose.”

That standard will become the accepted norm in Scottsdale if the City Council approves the decision. That is a standard that would make Las Vegas blush.

The “personal gift” loophole

The panel finds that there are such things as “personal gifts” to members of the Scottsdale City Council (and to members of its boards, commissions, committees and task forces) that do not need to be disclosed.

Now that will be a real surprise to citizens of Scottsdale. Counsel for Mr. Phillips (the immediate past Scottsdale City Attorney who left office less than a year ago) argued that, because of administrative burden and privacy, “personal gifts” (another undefined term) do not have to be disclosed.
Counsel argued, and the panel agreed, that this is the “current practice” and “reflects the council’s policy preferences.”

Counsel also argued, and the panel concluded based on such argument, that this is the “norm” applicable to our elected and appointed officials today.

I don’t think that is true and the City Council should not accept it as true.

Note that the term “personal gifts” is not found in the ethics code or state law. Members of the council and its boards, commissions, committees and task forces do not need to disclose gifts from siblings, grandparents and other members of their immediate families.

If this council, however, approves the decision, and the opinion of counsel on behalf of Mr. Phillips, it will be accepting the outlandish argument that council members and their appointees can receive unlimited “personal gifts” from anonymous donors, regardless of who they are, without the need to disclose them.

Scottsdale voters will not, and should not, accept this standard as applicable to the conduct of its elected and appointed officials --- which it another reason why the decision should not be approved.

Conclusions

Scottsdale would be better off without an ethics code than to live with the shambles of what is left of its code in light of what the panel did. Whereas the complaint has been resolved in favor of Mr. Phillips, other than the decision with respect to Mr. Phillips, the report itself should be rejected because of the gigantic, comical loopholes that would be created if it were accepted.

Approving the report would mean that there are no ethical rules applicable to the members of its City Council (and to the members of its boards, commissions, committees and task forces). The approved “norm” for proper conduct in Scottsdale would become unethical and corrupt.

In summary, the panel decided that passing approximately $2,400 in gifts from intentionally anonymous sources through a GoFundMe account is proper and that such contributions did not need to be disclosed.

The irony is that the funds didn’t even need to be spent on the “benign purpose” for which the Phillips GoFundMe account was established. And, besides that, they were just “personal” in nature.

This comedy of errors should not become precedent in Scottsdale, but it will if the council approves the decision.

The council should, as a result, by separate motion, accept the conclusion of the Panel, no matter how poorly reasoned, that: “On this record and under these ordinances in their current form, however, we do not find an ethical violation.”

The report itself should either be rejected or held in abeyance until the council can make an appropriate review of this matter including (a) a review of the ambiguities identified by the panel and (b) the ramifications of the “benign purpose” and “personal gift” findings, which I think are neither legally nor politically acceptable.

I am confident that Scottsdale voters would conclude that both should be rejected.

Once the matter of the complaint against Mr. Phillips is resolved, there is no urgency to consider the report, but the task of clarifying the ethics code can proceed.

Certainly, approving the decision would make Scottsdale the laughing stock of the west. The process did not work; the situation should not be worsened by adopting the “benign purpose” and “personal gift” loopholes as precedent in Scottsdale.

Editor’s Note: Jim Derouin is a lawyer who has lived in Scottsdale since 1985. He proposed, in 2005, the Scottsdale Ethics Code applicable to all employees of the City including the Mayor and City Council. He represents no clients before the City of Scottsdale.