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Corruption: FBI Presence Shadows California's Democrats

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  • Corruption: FBI Presence Shadows California's Democrats

    SACRAMENTO — For the first time since the Capitol's "Shrimpgate" scandal more than a decade ago, California legislators open their session today knowing that the FBI is hovering not far away.

    By issuing subpoenas, conducting searches and convening grand juries in Oakland and Sacramento, the feds have made their presence unmistakable as they investigate dealings by the new state Senate leader, Don Perata, and Secretary of State Kevin Shelley, a former legislator. Both men are Democrats.

    The scope of the inquiries, which are not connected, is not known. But interviews and documents that have become public suggest that the FBI is examining Perata's business and political activity in Oakland, his hometown, and Shelley's procurement of state money for a nonprofit group when he was an assemblyman from San Francisco.

    Shelley's troubles revolve around a politician's stock in trade: delivering "pork barrel" spending to his district and collecting campaign donations from political supporters. And an aspect of the Perata inquiry involves something that hits home hard: family. Like many elected officials, Perata has family members — his son and daughter — who work on his campaigns.

    Perata, confirmed last month by his fellow senators to be their leader, holds one of the most powerful posts in California government. Under the pressure of a criminal investigation, he will still be expected to help shape the state budget, exercise life-or-death power over legislation and raise campaign money for fellow Democrats.

    Shelley, who is responsible for ensuring that California elections are fair and who had been a rising star, is so wounded that his political survival is in doubt, several experts said.

    For Democrats, who control both houses of the Legislature, the investigations are an unwanted intrusion at a particularly bad time. Legislators face weighty issues as they return to work today, chief among them how to close the estimated $8.1-billion budget gap.

    Adding to the pressure, Gov. Arnold Schwarzenegger is expected to propose a major overhaul of state government, calling for a special legislative session to focus on a state spending cap and legislative redistricting. If he fails to win legislative approval, Schwarzenegger will invoke his power to call a special statewide election to deal with the issues and ignore the Democrats.

    Although no charges have been filed, the investigations are "a cloud that hangs over everything," said Republican campaign consultant Wayne C. Johnson.

    Assemblyman Mark Leno (D-San Francisco) cautioned that it's too early to know what the investigations might yield. But the situation gives people in politics pause.

    "Careers are made and broken on hints and whispers," Leno said. "We live with it daily. One needs to be ever vigilant, alert and knowledgeable."

    If the inquiries continue to attract public attention, Shelley and Perata "could become poster boys" for the need for an overhaul of state government, Johnson said.

    Johnson managed the campaign for the 1990 ballot initiative that put term limits on state legislators and high officials. Voters approved that initiative two years after the FBI raided Capitol offices in a sting operation aimed at state legislators.

    Agents posing as out-of-state businessmen spread money around Sacramento to win passage of phony legislation to create a fictional shrimp processing plant. By the time "Shrimpgate" was over, 14 Democratic legislators, lobbyists and others had been convicted and sent to prison.

    It was last summer that Shelley's difficulties began, after the San Francisco Chronicle reported that as an assemblyman in 2000, he secured $492,500 in state tax money for a political supporter's group. The funds were to pay for construction of a community center — but no such center was built.

    Authorities believe that Julie Lee, the head of the group, and her associates helped divert at least $125,000 to Shelley's campaign for secretary of state. Shelley, who like Lee has denied wrongdoing, returned $125,000 to the state and put an additional $80,000 in an escrow account pending the outcome of the investigation.

    Meanwhile, a highly critical Bureau of State Audits report issued last month said Shelley used millions in federal money intended for voter education for apparently political purposes, including hiring consultants who attended partisan events and wrote speeches for him. The audits will be the focus of a legislative hearing set for Jan. 11.

    Shelley, a 49-year-old attorney who served six years in the Assembly, declined to comment for this article. But spokeswoman Caren Daniels-Meade said he remains "fully engaged" as secretary of state.

    "In the midst of the investigations," Daniels-Meade said in a statement, "he still managed to oversee and guide a flawless presidential election with the highest number of voters in the history of this state."

    Shelley has few fellow Democrats defending him, unlike Perata, who has friendships with politicians that date back almost 30 years. The son of a former San Francisco mayor and congressman, Shelley is known for shouting at his staff and sometimes at legislators, a trait that has left him with few allies in Sacramento.

    "There are very few friends of Kevin Shelley on the Democratic side of the aisle," said a veteran Democratic consultant who works for several officeholders and requested anonymity. "There is party loyalty. But there is very little sympathy for the way he has handled the office."

    In a sign of the depths of Shelley's political problems, one fellow Democrat, Sen. Debra Bowen of Marina del Rey, recently broke an unwritten rule by announcing her candidacy for secretary of state, even though Shelley could seek reelection in 2006. Bowen says Shelley is so weakened that "the likelihood of there being a difficult battle" with him is low.

    The Perata-related investigation became public in November, when a federal grand jury issued more than a dozen subpoenas seeking documents related to the 59-year-old senator, his son and daughter, some of the senior Perata's associates and their corporate entities.

    Federal authorities refuse to discuss the case. But the investigation apparently began more than a year ago, when the estranged companion of one of Perata's former aides, Oakland lobbyist Lily Hu, presented the FBI with what he claimed was evidence of kickbacks involving East Bay politicians. The companion, Frank Wishom, has since died.

    FBI agents searched Perata's home in Oakland last month and, as reporters and photographers watched, agents conducted an unusually high-profile search of the home of Nick Perata, the senator's grown son, with whom he has a business relationship. Agents seized records from both men.

    Perata, who maintains a private consulting business, has had extensive dealings with other individuals named in the subpoenas. One is Timothy Staples, his college roommate and former business partner.

    In 2003, Perata carried legislation that would have imposed a fee on diaper sales to create an estimated $11 million in recycling programs in the state. The firm pushing the recycling technology, Knowaste, had retained Staples to generate business.

    Perata, a former high school teacher and the son of a milkman, has denied wrongdoing. He declined to be interviewed for this article, but his aides and attorneys have said there was nothing illegal about his business with Staples and others.

    "Sen. Perata," said his spokesman Jason Kinney, "is focused like a freight train on one thing: getting Senate Democrats armed and ready to make progress in this legislative session on issues that matter to Californians."

    As Senate leader, Perata must play a central role in the political and policy fights.

    "People are sober and are bracing themselves for the times ahead," said Sen. Carole Migden (D-San Francisco). But, adding that she detected no second-guessing about the Senate Democrats' selection of Perata as their leader, Migden said: "We're trying to pull ourselves together as a team."

    Perata generally is well-liked in Sacramento, though he has his share of rivals and enemies in Oakland, where he is compared to an old-fashioned machine-style politician. Even some Republicans are hesitant to disparage him.

    "There is smoke," said Assemblyman Ray Haynes (R-Murrieta), among the Legislature's more outspoken partisans. "The question is, 'Is there any fire?' "

    Tony Quinn, a Republican who co-edits a nonpartisan analysis of state campaigns, said many moderate legislators and lobbyists are hoping Perata can survive. Unlike many partisans, Perata has a reputation for being willing to strike compromises.

    "He is a professional pol," Quinn said. Many legislators "aspire to be that."

    Some old Capitol hands expect that the investigations will amount to little. They cite repeated investigations of former Speaker Willie Brown, who left the Legislature in 1995 unscathed after three decades of service.

    More recently, Republican Insurance Commissioner Chuck Quackenbush resigned in 2000 after a legislative investigation revealed that he allowed insurance companies to escape major penalties stemming from mishandled Northridge earthquake claims. But he faced no criminal charges.

    In 2002, during the Gray Davis administration, an investigation of an administration software contract fizzled.

    "People are a little inured to these things," said attorney Barry Broad, a veteran labor lobbyist.

    And legislators tend to gain a sense of invulnerability once they take office, Quinn said. People open doors for them, treat them to meals, give them donations.

    On the other hand, he noted: "There is always a feeling that, 'There but for the grace of God go I.' "

    http://www.latimes.com/news/local/la...=la-home-local

  • #2
    Nothing wrong with investigations. If they've committed crimes I hope they're caught...
    No man is free until all men are free - John Hossack
    I agree completely with this Administration’s goal of a regime change in Iraq-John Kerry
    even if that enforcement is mostly at the hands of the United States, a right we retain even if the Security Council fails to act-John Kerry
    He may even miscalculate and slide these weapons off to terrorist groups to invite them to be a surrogate to use them against the United States. It’s the miscalculation that poses the greatest threat-John Kerry

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