In a preliminary decision, a California judge has ruled the governor broke a state law during the last weeks of the recall race when he took out bank loans to help his cash-starved campaign.
If the preliminary ruling is upheld, Governor Arnold Schwarzenegger could be forced to pay back the loans out of personal funds.
An attorney had sued in October to try to stop Schwarzenegger from funding his campaign with $4.5 million in loans that could be paid back by donors after the election.
At issue is a borrowing limit that keeps candidates from loaning more than 100-thousand dollars to their campaigns. The restriction is meant to prevent a candidate who wins election from using his position to solicit special-interest money to repay the loans.
Lawyers for the governor say he relied on a ruling by the Fair Political Practices Commission that indicated the restriction does not include bank loans.