Politician’s Assistance Came After Donation

California Senate President Pro Tem Don Perata (D-Oakland) intervened in a dispute with regulators to help a West Hollywood company maintain lucrative billboards on freeways in Los Angeles and Orange counties, records show.

Perata intervened in 2001 the day after the company, Regency Outdoor Advertising Inc., reported giving a $25,000 campaign contribution to a Perata-backed initiative. The company’s co-owner said the contribution came in response to a request from the senator.

Later, as the senator and his aides made inquiries with the California Department of Transportation on Regency’s behalf, the firm gave an additional $300,000 in contributions and free advertising to political committees Perata controlled or influenced, records show.

At the time, the firm was in the midst of a multimillion-dollar dispute with Caltrans.

When Perata intervened on the firm’s behalf, he was a member of the Senate Transportation Committee, which oversees Caltrans. Caltrans officials treated the inquiries from his office as a high priority. As agency officials scrambled to gather information, they exchanged e-mails among themselves carrying the subject line: “Fire drill for Senator Perata.”

No law prohibits an elected official from soliciting a campaign contribution from a company and then taking action on the contributor’s behalf. State and federal law, however, do prohibit explicit deals in which campaign contributions are traded for an officeholder’s services.

Perata declined to be interviewed, but both a spokesman for the senator and a top Regency official said there was no such deal in this case.

FBI agents have contacted representatives of Regency to ask about the firm’s dealings with Perata. An attorney for the firm said he had been assured by federal prosecutors that Regency was not a target of any investigation.

Caltrans disclosed evidence of Perata’s intervention in response to newspaper requests for public records that the agency had turned over in February to a federal grand jury investigating Perata.

The documents turned over by Caltrans, and other Regency and Caltrans documents obtained by The Times, show that the senator contacted the agency often on a variety of matters affecting his Oakland district and only rarely on matters outside it. One of those was Regency’s billboards.

The grand jury, meeting in Oakland, began issuing subpoenas related to Perata last November. FBI and Internal Revenue Service agents are part of a team that appears to be looking into the senator’s official, private and campaign-related dealings in Oakland and Sacramento.

Federal law enforcement authorities have examined payments and communications involving Perata and his political advisors, friends, and son and daughter. Federal agents also have interviewed past and present aides to Perata in both cities. And they have contacted Sacramento lobbyists inquiring about Perata’s involvement in an array of issues, including finance and insurance legislation, gambling and Bay Area transportation matters.

Regency’s problems with Caltrans began in 2000 when the agency sued to force the company to give up 11 billboards the department had cited as illegally placed. The billboards were along the Santa Monica, Century, San Diego and Garden Grove freeways. Caltrans estimated that the billboards brought Regency more than $1 million per year.

Perata’s intervention came in 2001, soon after Regency had lost a key portion of the lawsuit: A Superior Court judge dismissed its contention that California’s restrictions on billboard advertising were unconstitutional abridgements of free speech. The day of the ruling, a Regency lawyer began inquiring about a possible compromise with Caltrans to settle the case, according to an e-mail made available to The Times.

Perata became involved about a month later.

On June 13, 2001, Regency reported its $25,000 contribution to an initiative promoted by Perata that would have changed the state’s term limits law to allow legislators to serve four additional years.

In an interview, Regency co-owner Brian Kennedy said that the contribution came after Perata, whom he did not know, called him and asked if he could visit him at his office.

In the meeting, Perata asked for a donation to the initiative campaign. Kennedy said he customarily gives to politicians who ask for campaign money and that, in this case, he wholeheartedly agreed with the term limits initiative.

During their conversation, Kennedy said, Perata asked him how things were going with his business. Kennedy said he told the senator that he was having difficulty with Caltrans, which had issued citations that could have forced him to remove some of his signs. Kennedy said he told the senator he was concerned about a former competitor who had joined Caltrans’ staff and appeared to have it in for him.

“I don’t know if it’s a level playing field,” Kennedy recalled saying.

Perata “said he was going to look into it and that was it,” Kennedy said. “There was no quid pro quo,” he added. “He asked me a question. He offered some help. Who am I to not accept help if it comes?”

Donald Heller, a Sacramento criminal defense lawyer who has represented public officials in past cases, said Perata showed “bad judgment” by soliciting a donation and offering in the same meeting to look into Regency’s problem with Caltrans.

But the senator probably did not cross the line into criminality, Heller said. “The proximity may be suspicious, but in and of itself, that is not a criminal act,” Heller said.

But Perata’s actions did appear to generate attention at Caltrans.

The day after Regency reported its campaign contribution, one of Perata’s top aides began a flurry of telephone and e-mail communications with Caltrans executives asking about the agency’s relationship with Regency.

Perata’s aide later faxed copies of Caltrans responses to her e-mails to Regency’s other owner, Drake Kennedy, Brian’s brother, according to a copy of the fax made available to The Times.

In those e-mails, Caltrans officials told Perata’s aide that Regency could expect a settlement offer.

Three weeks later, in July, when the offer was made, Regency learned that Caltrans was willing to allow it to keep only three of the 11 signs in dispute if Regency lowered them or made other adjustments.

The next day, Perata met with Caltrans Director Jeff Morales to get a detailed briefing on the dispute, records show.

The senator also met with the Caltrans lawyer handling the case, Regency executives and a Regency lawyer, Paul E. Fisher.

Fisher and Regency have since parted company and are now at loggerheads in a series of civil lawsuits.

In a recent interview, Fisher said that Perata talked about the possibility of holding up Caltrans’ budget if the agency did not cooperate. Brian Kennedy disputed that, saying no such remark was made in his presence.

Regency never formally responded to the Caltrans settlement offer, a Caltrans lawyer said. But Brian Kennedy said he continued to try to get his own meeting with top Caltrans officials.

Perata set one up for him in the Capitol, Brian Kennedy said, but the officials showed up hours late, after Perata was long gone. The officials, whose names Kennedy said he couldn’t remember, said they “would look into” Regency’s complaints.

Fisher, at the time still Regency’s lawyer, cited that meeting in a letter to Perata in August, thanking him “for taking the time to assist Regency Outdoor.... “ Then, in October 2001, with its dispute still unresolved, Regency reported donating $10,000 to Perata’s reelection campaign.

Brian Kennedy said that the donation came about after he got a call from someone whose name he could not remember asking him if he would be a sponsor of a golf tournament. Only after agreeing did he receive a flier in the mail and realize that he had agreed to make a $10,000 contribution to Perata’s reelection.

Perata spokesman Jason Kinney said there was no connection between the donation and the senator’s effort on Regency’s behalf.

“Sen. Perata makes his policy decisions on one factor and one factor only: what is in the best interests of his constituents and the people of the state of California,” said Kinney.

Noting that Perata carried legislation on behalf of other small billboard companies, Kinney added: “It is public knowledge that he has long believed that small family-owned advertising companies are often discriminated against at the expense of mega-corporations.”

Regency is the largest family-owned outdoor advertising firm in Southern California.

On Feb. 15, 2002, Caltrans and Regency finally agreed on the first of two settlements. A week after the initial agreement, calling for all the signs to remain in place pending a Regency appeal, Regency reported giving $295,000 worth of billboard space to advertise Proposition 45, the ultimately unsuccessful term limits initiative backed by Perata and several other legislators.

Brian Kennedy said this decision was unconnected to Perata. He said he and his brother Drake, hard hit by a recession and other factors, were sitting with about 200 of 500 signs devoid of advertising. He said he proposed -- and Drake agreed -- to post “Yes on 45” advertisements they designed on 15 or 20 of their billboards. A lawyer helped them decide how much the donation was worth for campaign reporting purposes.

That gift and the others to that initiative and to Perata accounted for more than a third of the $908,000 Regency reported giving to politicians and their causes in 2001 and 2002.

Regency ultimately abandoned its appeal and negotiated a second settlement with Caltrans in 2003. Michael Tidus, the Regency attorney who negotiated it, said only two of the disputed signs were ultimately removed while three were lowered or otherwise adjusted. Six remain as they were, although the fate of two of them is in the hands of an arbitrator.

Brian Kennedy said some Regency officials had been contacted by federal investigators regarding Perata months ago, but that he had not been interviewed.

He made his contribution to Perata’s campaign because he liked him personally, Kennedy said.

“He didn’t do me any favors,” he added, “let alone any huge favor. In essence, one meeting was set up, and nothing came out of it.”