The settlement, made on the eve of the competitive 13-candidate mayoral race, is the largest ethics fine in recent San Francisco history. 

Ethics Commission Enforcement Director Olabisi Matthews wrote that the settlement reflected “the serious harm that was done to the public’s right to have timely and accurate information about how campaigns are funded” and “the severity of violating the $500 contribution limit, which is one of the most basic rules that all candidates have to follow.”

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Farrell, a Democratic venture capitalist with Republican leanings, said the settlement was over an “accounting error” that had been “corrected and publicly disclosed months ago,” as well as “over a disagreement about staff time allocation during the campaign.”

The ethics commission alleged Farrell’s PAC supporting Proposition D, a government reform measure that would reduce the number of commissions at City Hall and give the mayor more power over appointees, contributed $93,000 to his campaign committee. 

Unlike his mayoral campaign, the ballot measure committee is allowed to accept donations beyond the $500 per person ceiling that his mayoral campaign is limited to. The ballot measure committee brought in big contributions from people such as billionaire venture capitalist Michael Moritz, who donated $500,000 to the cause. 

Farrell’s two committees shared $239,099 in expenses. The ethics commission found that they did not refund one another for the expenses that they shared and that Farrell’s Proposition D committee was essentially subsidizing his mayoral run by accepting donations over the $500 limit.  

“Because Respondent Ballot Measure Committee did not receive full and adequate consideration for the money that it gave to the Mayoral Committee, the excess payments are contributions in violation of city law,” the settlement read.

The money spent under the guise of his Proposition D committee has not only made a mockery out of the individual campaign donor cap but prompted Farrell’s opponents Mayor London Breed and candidate Daniel Lurie to accuse him of running a “money-laundering” scheme.

While Farrell said he did not know about the misconduct, he took “ultimate responsibility,” according to the settlement. 

The agreement, signed by Farrell and Ethics Commission staff, is pending and requires the approval by the five-member Ethics Commission panel.

The settlement follows a series of reports suggesting that Farrell’s campaign played fast and loose with election laws and bent ethics rules. Local news outlets reported that he inappropriately asked Breed’s office to speed up home renovation permits and failed to disclose a $675,000 home loan in campaign documents.

Former Mayors Willie Brown, Art Agnos, and Frank Jordan sent a joint letter asking the attorney general and district attorney to open a criminal investigation into Farrell’s campaign.

Farrell has racked up numerous other ethical complaints stretching back to his time as supervisor. During his 2010 run, he was hit with a six-figure fine for alleged illegal coordination with an independent expenditure committee. He later settled and paid the city $25,000.

In 2016, Farrell used funds from his race for the Democratic County Central Committee to expense more than three dozen meals for unnamed guests after he had already been elected. He also kept his account open and accepted donations from groups that had business dealings before City Hall. 

Earlier this year, Farrell, who is a managing director of the venture capital firm Thayer Ventures, registered his occupation as a “small business owner” despite referring to himself as an investment banker or venture capitalist in public.

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A group of 14 small business owners in San Francisco challenged his job title after it was reported in Mission Local and said it was “purposefully designed to mislead voters.” 

He was allowed to keep the job designation on the ballot.