Many old-guard members of the San Jose Silicon Valley Chamber of Commerce’s political action committee (ChamberPAC) were disgruntled with the group’s decision to withold an endorsement from evangelical activist Larry Pegram in the race for the District 9 seat on the City Council.

So a month ago, Republican Councilman Pete Constant spearheaded the creation of an independent expenditure committee, the “San Jose Taxpayers for Reform 2010: Support Pegram/Oppose Rocha.”

Constant says he formed the group with the express purpose of raising money for Pegram’s effort to beat Democrat Donald Rocha for the right to represent San Jose’s Cambrian neighborhood.

The committee’s filings show a donor list that includes many members of the ChamberPAC. Committee members include immediate past ChamberPAC Chair William Baron, as well as prominent businessmen Bob Kieve, Bill Klein, Peter Carter, Bernie Vogel, John Moore, Dan Breeding and Jim Eller.

The group raised $20,500-plus for Pegram, much of which has been spent on a slew of anti-Rocha mailers.

Constant signed up as the group’s official treasurer starting on Oct. 6. However, he stepped down in that capacity on Oct. 14. He says that after consulting with City Attorney Rick Doyle about a potential conflict of interest, he decided to cut ties with the committee.

On Oct. 26, Don Rocha’s campaign filed a complaint with City Clerk Lee Price, asserting that “San Jose Taxpayers for Reform” violated campaign law by not properly reporting their late-election independent expenditures.

“Three mailers were sent within this last seven days without any filings showing expenditures as required by the City Code,” the complaint read.

They also questioned the legality of Constant’s involvement in the committee. The complaint states that he “continues to act jointly with this committee in making of expenditures [such as the mailers] or otherwise is exercising significant influence.”

However, the District 1 councilman says he has had little involvement in the committee since he ceased handling its money. The group’s treasurer is now building materials company owner Rolston Johnson. Johnson is also the group’s biggest contributor, having given $5,000.

Constant also says that candidate Pegram himself had no knowledge of the group’s formation or its operations.

“He probably found out about the committee when everyone else did—when the mail started hitting the mailboxes,” Constant says.

Garden City Casino owners Eric Swallow and Peter Lunardi donated $1,000 to the group through a subsidiary they own called Dolchee LLC. Though Dolchee LLC is listed in the committee’s filings as being based in Las Vegas, the company only holds a P.O. Box in that location. Dolchee LLC is actually a Hayward commercial printing firm owned by Swallow and Lunardi. 

San Jose City Ordinance 12.06.260 states that card room owners “may not make any contribution to candidates or candidate-controlled committees.” However, because the donation was made through Dolchee LLC to an independent expenditure committee, Constant says it does not violate law.

“The code is very clear,” Constant says. “It’s candidate-controlled committees, not independent expenditure committees or any other committee.”

Garden City Casino, which is located in District 1, has plans for expanding into a 600-room hotel and indoor theater on North 1st Street in San Jose.

“It’s clear that the owners of Garden City Casino are active in the Chamber of Commerce, and they’re very active in their PAC,” Constant says. “Larry is definitely the pro-business candidate in the race, and the pro-fiscal conservative in this race—which are areas of concern for a lot of people.”

The Values Advocacy Council, which Pegram heads, opposed Measure K. The ballot measure passed last June allowing Garden City Casino and Bay 101 to expand their gambling tables in exchange for increased taxes.