Councilmembers Constant, Khamis Call for Investigation of Health Care Nonprofits

Two members of the San Jose City Council are calling for an investigation into whether city funds were illegally used in local campaigns. Councilmembers Pete Constant and Johnny Khamis are asking the city manager and city attorney to “investigate whether any city funds that were provided to either Santa Clara Family Health Foundation or VMC Foundation were used to fund any campaign activities in any manner.”

“The Political Reform Act prohibits public financing of campaigns, except for elections in charter cities and counties,” notes the memorandum filed with the City Clerk’s office Thursday afternoon. “Additionally, Government Code Section 54964 prohibits an officer, employee or consultant of a local agency from expending or authorizing the expenditure of any local agency funds to support or oppose a ballot measure or a candidate.”

San Jose Inside reported on March 13 that VMC Foundation donated $289,000 and Santa Clara Family Health Foundation contributed $250,000 to the “Yes on A” campaign to raise county sales tax by 1/8 cent. Subsequently, the Yes on A committee gave $90,000 to the South Bay AFL-CIO Labor Council Issues Account and $10,000 to the Democratic Central Committee, two groups that were at the time working actively on behalf of candidates for office in addition to promoting the sales tax measure.

VMC Foundation Director Chris Wilder told San Jose Inside that the Measure A committee was headed by Santa Clara Family Health Foundation CEO Kathleen King, and that the other committee members were then-South Bay Labor Council chief executive Cindy Chavez and Cisco executive Sandra Wheatley Smerdon. Wilder said he was a volunteer but did not serve on the committee.

King confirmed that she headed the committee but declined to provide details about the health foundation’s board vote to fund the Measure A campaign. Chavez and California Assembly Speaker Pro Tempore Nora Campos serve as trustees of SCFHF.

Reached at her office this afternoon, King said she could not remember who was on the “Yes on A” committee that she chaired. “All my notes are at home,” she explained.

The council memo calls for more transparency and instructs the city manager and city attorney to “immediately report to the Rules & Open Government Committee if either the Santa Clara Family Health Foundation or VMC Foundation refuses to provide the city information needed to make the above determinations.” The memo, which notes that the city has given more than $6 million to the nonprofit foundations over the last three years, must still be approved by the city’s Rules and Open Government Committee and the City Council to take effect.

In addition to the San Jose, Cupertino, Los Altos, Milpitas, Mountain View and Sunnyvale and the County of Santa Clara provided funds to SCFHF.  Other funders include The David & Lucile Packard Foundation, El Camino Hospital, FIRST 5 Santa Clara County, The Health Trust, Kaiser Permanente and Rotary Club of San Jose.

“A recent newspaper report brought to light information documenting that funds from the Santa Clara Family Health Foundation and VMC Foundation made their way to campaign activities (phone banks and mail campaigns) of the South Bay Labor Council in 2012, by using Measure A’s campaign committee as an intermediary,” the Constant/Khamis memo states, referring to the San Jose Inside report that also appeared in the Metro Silicon Valley Newspaper.

“While the SBLC clearly has a right to fund campaign activities and volunteers, it’s impossible at this juncture to sort out which measures or candidates may have benefited from the volunteers’ political activities that may or may not have been funded with taxpayer dollars,” Constant and Khamis write.

“In response to media inquires, both organizations have refused to provide any information to verify whether or not public funds have been used to support political activities or who participated in decisions.”

The VMC Foundation raises donations to support Santa Clara Valley Medical Center and the Santa Clara Valley Health & Hospital System. The Santa Clara Family Health Foundation raises funds to support the Healthy Kids program and the Children’s Health Initiative in Santa Clara County “to help achieve the goal of providing every child in Santa Clara County with access to quality health care through insurance.”

Click here to read Pete Constant and Johnny Khamis’ nonprofit investigation memo.


  1. Sounds to me like business as usual for the council clowns.  Don’t do your homework, then inflate numbers, make false allegations (like you did against the unions).

    I guess Pete is taking Khamis under his wing and showing him how to make up lies and try to make yourself out to be a hero when really you are all a disgrace.

  2. March 22, 2013

    To:  Pete Constant, Councilmember, City of San Jose
        Johnny Khamis, Councilmember, City of San Jose

    CC:  Debra Figone, City Manager, San Jose
        San Jose City Clerk
        San Jose City Councilmembers

    Re:  Response to yesterday’s memo to Rules and Open Government Committee (signed copy attached)

    This memo provides background to the request of you to call for an investigation of the Santa Clara Family Health Foundation (SCFHF), of which I am the CEO.

    Your memo of March 21, 2013, states that the action requested is being sought due to SCFHF’s failure to provide information to a media request about the nature of funds donated to Measure A in November 2012 by SCFHF.  This information is public record and can be easily reviewed by anyone.  Forms 460 filed by all parties who worked on or advocated for 2012’s Measure A demonstrate precisely what took place.  It is also significant to point out that SCFHF has not received any portion of the $6M referenced in your memo from the City of San Jose.

    A grant of $6.3M (referenced as $6M in your memo to the City of San Jose) was not given to SCFHF.  The funding for Healthy Kids of $2.1M each year was given to the Santa Clara Family Health Plan (Plan) and was restricted in total to San Jose children’s premiums.  This funding was used to provide medical, dental, and vision insurance for 2,035 San Jose children ages 6-18 (FIRST 5 has covered the 0-5 year olds) each year.

    Over the last three years, the only funds SCFHF received from the City of San Jose were from San Jose Councilmembers and each individual restricted the funds to be used for San Jose children’s premiums and that was how the funds have been used:

    9/3/10, Nancy Pyle for $100, check # 5015588, 1.16 months of coverage
    8/24/12, Rose Herrera for $240, check # 5071803, 2.8 months of coverage
    8/24/12, Don Rocha for $240, check #5071804, 2.8 months of coverage
    2/4/13, Kansen Chu for $250, check # 5080989, 2.9 months of coverage
    2/14/13, Sam Liccardo for $250, check #5080990, 2.9 months of coverage

    I hope this clears up any concerns that Hon. Khamis and Hon. Constant may have and I am available to both of them by cell phone at 408-605-5251, should they have any questions.


    Kathleen King
    Chief Executive Officer
    Santa Clara Family Health Foundation
    210 East Hacienda Avenue
    Campbell, CA 95008
    408/874-1998 ph
    408/874-1995 fx

    • Interesting that all the check numbers she lists are 50xxxx.  You have to believe they were written from the same account.

      So Ms. King description of the funds, “received from the City of San Jose were from San Jose Councilmembers” is misleading.  The operative part was “from the City of San Jose”.  I think all those councilmembers in Ms. King’s list need to ask what really happened to that money.

      Money if fungible.  So if you are the City of San Jose making a donation and it does go towards the foundation’s stated mission, it just allows the foundation to spend over a quarter of a million dollars of excess money on political campaigns.  That’s probably illegal, and if it isn’t illegal it’s certainly immoral.

    • King had a sleazy rep in Saratoga politics.  She deflects the issue here because the council identified the wrong fund.  The city should ask for an investigation even if city funds weren’t used.  The history if scandals suggest that if someone sleazy is involved, something inappropriate happened.  If King is involved, there’s a scandal.

  3. Okay, lemme see. Cindy Chavez is on the board of the family health foundation. They give money to Yes on A committee, which Cindy is on the board of. Yes on A gives money to SBLC, which employs Cindy, and to Ed McGovern, who runs her candidate campaigns (i.e. like the pro bono one for Xavier Campos).

    It’s pretty obvious what’s going on here. Cindy has a big conflict of interest. She is involved in the organization that accepts public funds and donates them to a campaign; she sits on the campaign committee that launders the funds. She is at every step of the transaction: the source, the middle, the recipient.

    How do we know that the phone bankers that were funded with money the Sobrato Family Foundation and Rotary Club intended for childrens’ health insurance programs weren’t being used to attack Rose Hererra and Magdalena Carrasco? Did the phone bankers keep time cards to segregate their activities? Did they mark the pizza boxes so that the Jimmy Nguyen volunteers weren’t eating the Tony & Alba’s pepperoni specials purchased for Measure A volunteers?

    Funny that Kathleen King forgets who was on the committee with her just a few months ago. Can you spell C-O-V-E-R-U-P???

    Let’s see some receipts for the mail and some phone records/reports to see how the money was really spent. Chavez is so dirty, I can’t believe she wants to be supe. I hope she runs. It will be an opportunity to expose this corrupt political machine. Given the recent revelations, people will be asking a lot of questions at the public forums and in the endorsement interviews.

  4. Thank You SJI once again.
    Finally, between Josh Koehn and Jennifer Wadsworth we’ve finally got some some real journalists in San Jose.
    And good for Councilmembers Constant and Khamis for failing to allow this story to simply go away- I’m sure the Democrats in City Council would prefer to ignore it.

    If SJI was correct in the original story and it turns out to be true that VMC Foundation gave 289K to “Yes on A” and Santa Clara County Health Foundation gave 250K to “Yes on A” then Measure A should be tossed out and the sales tax restored to it’s previous level.

    This “Government Of the Non Profits, By The Non Profits, and For The Non Profits” crap has got to stop.