The law firms – Gibson Dunn and Van Dermyden Maddux – concluded in a four-page summary of its findings that “it is more likely than not” that Mendoza engaged in “unwanted flirtatious or sexually suggestive behavior” toward six women who worked at the Capitol over the past decade. But the firm’s investigation cleared Mendoza of the harshest overall allegation he faced: the claim he fired three staff members in September in an attempt to squelch an investigation into his conduct. The probe found no evidence linking the firings and the filing of a report with the Senate Rules Committee that alleged Mendoza had repeatedly asked a young Senate fellow to come home with him to “look at resumes.” The investigation also found — except for one women who was kissed on the cheek — no evidence of physical contact between Mendoza and the women he hit on; and no evidence of retaliation against those who rejected his advances.

The Sacramento Bee broke the story last fall of allegations against Mendoza involving three former employees. Within a few days, state Senate President Kevin de Leon moved out of the Sacramento-area home he shared with Mendoza when the two Los Angeles County Democrats were in legislative session.

De Leon, who is running for U.S. Senate, has insisted he was unaware of any improper conduct by Mendoza, who is currently on paid leave.

The investigation included 51 interviews with 47 individuals. Mendoza, who is married and has four children, was among a few people interviewed twice. Last night, he issued a statement calling the investigation inadequate and a rush to judgment.

Report backs claim he gave alcohol to minor

While the report on Mendoza was far less damning than the allegations against Assemblyman Raul Bocanegra, D-Pacoima, and Assemblyman Matt Dababneh, D-Woodland Hills – who resigned late last year after being accused by several women of sexual misconduct – it contradicts Mendoza on the most serious harassment allegation against him. In 2008, according to then-19-year-old Jennifer Kwart, Mendoza provided the underage intern with alcoholic drinks from the minibar in a suite at a San Jose hotel that was hosting the California Democratic Party state convention. Kwart says Mendoza made plain he expected sex, leading her to concoct a family emergency and leave the following morning.

Unlike his responses to some of the allegations made against him, Mendoza dismissed Kwart’s claims as “completely false.” The lawyers hired by the Senate Rules Committee concluded otherwise, finding that it was “more likely than not” that Mendoza “offered and subsequently had alcoholic drinks with the intern in the hotel suite” and “engaged in unwanted flirtatious and sexually suggestive conversation with the intern.”

Mendoza, 46, a former elementary-school teacher, served as an Assembly member from 2006 to 2012. He was elected to the Senate in 2014 and was expected to coast to re-election this November. Even if the Senate chooses not to oust him, the allegations will be a headache for Mendoza going forward. The Los Angeles Daily News reported earlier this month that Rio Hondo College board trustee Vicky Santana, a risk manager with the Los Angeles County Probation Department, would definitely challenge Mendoza. The report also said Montebello Mayor Vanessa Delgado had pulled papers and was considering running. Both Santana and Delgado are Democrats.

Crafting regulation

According to Inside Bitcoins, Dababneh’s bill “broadly defines a ‘virtual currency business’ as any activity involving the storage of digital currency on behalf of others; the exchange of fiat money for digital currency and vice versa; and even the exchange of one type of digital currency for another. It applies to all businesses and organizations who perform these activities in relation to a California resident.”

Whereas other states, such as New York, have ensured an open comment period on similar legislation, AB1326 has skipped that step, raising the ire of longtime Bitcoin advocates and users. Capturing the sense of frustration in the air, Techdirt warned that “the bill would reverse decades of how Silicon Valley has lead the world in innovation — by switching from a world of rapid innovation and permissionless innovation, to one in which any startup even contemplating doing anything with Bitcoin would have to go plead their case to clueless regulators in Sacramento.”

Nevertheless, the call for state and federal regulations has become forceful enough that AB1326 may be able to ride its coattails into law.

Going mainstream

As digital currency like Bitcoin has caught on, lawmakers have often found themselves playing catch-up. Legislators nationwide have come under growing pressure to address the regulatory environment around so-called “cryptocurrencies,” which have been used in novel ways to skirt the law. Across the California border in Nevada, for instance, Bryan Micon, operator of the website Seals with Clubs, was charged in Las Vegas Justice Court with “one count of operating an unlicensed interactive gaming system,” reported the Las Vegas Review Journal.

“Defending Nevada’s worldwide reputation as the gold standard of gaming integrity is a paramount concern to tens of thousands of Nevadans employed by the industry and the 41 million tourists who visit the state each year,” said state Attorney General Adam Laxalt, according to the Review Journal. “Laxalt added that the charge, which carries a penalty of up to 10 years in prison and a $50,000 fine, marks the first prosecution of a poker site that used the digital currency.”

At the same time as digital currency has propelled events in criminal law, big finance has strengthened momentum for regulatory reform by pushing into the market. As IEEE reported, “Circle, a Boston-based Bitcoin startup, announced last week that it had completed a U.S. $50 million round of funding.” Investors included Goldman Sachs, marking “the first time that a major U.S. bank has taken the plunge into the Bitcoin startup scene,” according to IEEE.

California innovation

Adding to cryptocurrencies’ relevance in Sacramento, Tim Draper, the venture capitalist known for his Six Californias ballot initiative, recently led a $1 million-plus round of investment in Hedgy, a Bitcoin company with the potential to ensure the currency remains viable well into the future. In order to prevent currency debasement, access to the worldwide supply of Bitcoin was slowed by its creators through the use of a “mining” system. Users hoping to acquire Bitcoin without buying any already in circulation must prospect for it, a time-intensive undertaking increasingly expensive to maintain.

“Because of the increasing cost of mining, some miners are wary of continuing operations,” as VentureBeat explained. “What Hedgy serves to do is give miners certainty that the price of Bitcoin won’t drop so rapidly that they actually lose money on mining. … The elder Draper is very keen on cryptocurrency and on building out a [financial technology] scene on the west coast; he recently launched an incubator called Fintech Connection that resides at Hero City in San Mateo, California.”