Probe of Perata dealings quiet, but alive

OAKLAND -- Now several years old, the sprawling federal corruption probe of state Senate President Pro Tem Don Perata has spurred him to spend more than $1 million on legal defense, clouded his two decades in public life and swept up close associates and his adult children.

The investigation into the East Bay lawmaker’s political and business affairs has largely operated out of sight in recent years, although FBI agents have searched his home and his son’s.

But public records, subpoenas and interviews with officials and others contacted by the FBI show that it has remained very much alive.

A grand jury has heard testimony and issued subpoenas to numerous businesses and government agencies that dealt with Perata. And agents have talked to potential witnesses and collected records about many issues championed by the senator.

These include bond measures for seismic work on a Bay Area transit system, billboards along freeways and federal approval of an airport roadway.

One common theme is that campaign contributors and associates often stood to gain from Perata’s actions, and subpoenas and the FBI’s questions suggest that the government has been looking for any money that may have illegally flowed back to him or has not been properly disclosed.

Beyond pledging to cooperate with authorities, Perata has maintained silence, although his representatives have questioned whether partisan politics may have fueled scrutiny of one of the state’s most powerful Democrats.

“This investigation is unfortunate . . . unfair and wholly arbitrary,” said his spokesman, Jason Kinney. “We are confident that he has always operated appropriately and in the end this will be resolved in his favor. . . . There is no there there.”

One political expert says that such a long investigation cries out for resolution. “I think it is time for the feds to fish or cut bait,” said Barbara O’Connor, director of the Institute for the Study of Politics and Media at Cal State Sacramento.

Federal officials will not discuss their investigation, but legal experts say one question is whether Perata enriched himself through a quid pro quo deal. They also say corruption cases can take years to develop.

“Allegations swirl around political figures all the time, and the U.S. attorney’s offices and the FBI look into some of them and often conclude there is nothing to do,” said former federal prosecutor Rory Little, a professor at UC’s Hastings College of the Law. “And new allegations come in . . . and they look again. . . . You do not go up against a prominent politician until you have proof beyond a reasonable doubt.”

Political observers say the investigation does not appear to have weakened Perata’s leadership, although an indictment would dramatically change that.

“It may be chewing him up psychologically,” said Bruce Cain, director of the UC Berkeley Institute of Governmental Studies. “But it does not seem to be hindering him in his role.”

Each FBI sighting stirs rumors of impending indictment.

Agents who were apparently looking into Perata’s relationship with developers discreetly met Aug. 27 at a coffee shop away from the state Capitol with Peter Detwiler, staff director of a Senate committee. Detwiler said agents had a memo from a businessman that alluded to information Perata got from Detwiler. The FBI was looking for the 1999 letter containing that information.

“Perata asked some general land use questions . . . not with reference to any project,” Detwiler recalled, adding that such inquiries were routine.

Perata, a onetime teacher, rose from Alameda County supervisor to state legislator, became a prodigious fundraiser, developed a lucrative consulting business and helped his friends get political work. He inspires loyalty among allies and cultivates a roguish image. He kept a cardboard cutout of his favorite TV character, Tony Soprano, in his office.

“He has become like the Godfather, the go-to guy in the East Bay,” said developer and contributor Ron Cowan, who says he testified before the grand jury. “He understands authority and power, and he will listen to all sides and say, ‘This is the way it will be.’ ”

In 2000, the senator tried to help local government bodies speed federal approval of a roadway to connect Oakland International Airport and a business park partly owned by Cowan.

Records subpoenaed in 2005 said Perata urged the agencies to hire an advocate in Washington. They later paid $135,000 to lobbyist Dawson Mathis. The FBI evidently wanted to know whether Perata had received a kickback.

But Mathis was recommended by Perata’s predecessor, John Burton, according to Burton and Cowan. And Mathis said, “I certainly did not send any money to Sen. Perata.”

Federal interest in Perata appears to date to 2003, when the estranged boyfriend of an Oakland lobbyist who was a former Perata aide said in a court filing that the FBI was investigating her relationship with politicians.

The next year, a consumer group filed a complaint with a Senate ethics panel, based partly on a San Francisco Chronicle report that a business associate of Perata’s received hundreds of thousands of dollars from campaigns supported by Perata while paying the senator’s consulting firm for other work.

“Don Perata was . . . pocketing hundreds of thousands of dollars through his consulting business, based quite clearly on his position of power,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights. The group filed the complaint, which was rejected.

Perata spokesman Kinney said the senator disclosed all his outside income and stopped his consulting work -- which he reported had earned him at least $100,000 in 2003 -- to devote himself to the Senate presidency.

In the last three years, the government has issued at least 10 subpoenas for documents from local and state agencies, including Perata’s Senate e-mails spanning six years.

Agents have examined whether Perata was receiving money directly or indirectly from consultants on billion-dollar Bay Area Rapid Transit District bond measures in 2002 and 2004 for seismic repairs that the senator supported. Three years ago, the government subpoenaed BART records involving the Oakland lobbyist, Perata’s business associate, his political advisor and his children’s businesses. This year, the FBI interviewed several BART officials.

Agents also have talked to Alex Evans, who did polling for BART and earlier for Perata. “They asked about different jobs and how we got them,” Evans recalled. “They asked whether some people hired you because of your relationship with Don, and I said yes. . . . I guess the question was whether he was compensated and failed to disclose it.” Evans said Perata was not paid.

Disclosure was at the heart of a mail fraud conviction won this year by the same office that is investigating Perata. A former mayor of Colma, just south of San Francisco, received an 18-month sentence for failing to report plane tickets from a casino that benefited from his actions.

During the Perata investigation, the U.S. attorney leading the inquiries was ousted in the Bush administration’s controversial removal of eight federal prosecutors, and the government lawyer handling the grand jury was appointed to a state judgeship. Such disruptions could have impeded the Perata case for months, according to former agents and prosecutors.

Meanwhile, former staff members say Perata kept the investigation from becoming a distraction in his office. “There were questions in the [Democratic] caucus: Is Don going to stay pro tem or get hauled off to jail?” recalled Larry Sheingold. “But it was compartmentalized and never reached us.”

Records show that Perata’s legal defense fund has spent about $1.3 million.

Perata’s lawyer, George O’Connell, who was the U.S. attorney in Sacramento during the political corruption stings of the 1990s, is a master at heading off indictments, according to Loyola Law School professor Laurie Levenson.

“My guess is plenty is going on behind the scenes,” she said, noting that attorneys often agree to waive the statute of limitations in long-running probes.

Last year, the FBI sought Port of Oakland records about billboard advertising. Legislation by Perata in 2001 had altered state law to allow electronic billboards near the Oakland Coliseum. Local officials later awarded the right to build them to a company co-owned by John Foster, a longtime friend whose firm has been a major Perata donor.

Foster’s attorney, Bart Williams, said that there was no improper deal with Perata and that the government was not targeting Foster.

The FBI has also contacted former Oakland schools Supt. Dennis Chaconas, who, according to a 2004 Times report, received an e-mail from Perata that invoked a scene from “The Godfather” to express displeasure about being denied a favor.

Although Chaconas did not recall what prompted the 2001 e-mail, he said Perata had asked him to meet with the senator’s friend and consulting client, who represented a company interested in selling waterless urinals to Oakland schools. The proposal was later rejected.

Perata spokesman Kinney said the senator is a big fan of “The Godfather” and “The Sopranos,” and as an Italian American politician, he mentions them in a tongue-in-cheek way. “For those who think Don is willing to break the rules . . . to get things done, they are just looking in the wrong place,” he said.

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tim.reiterman@latimes.com

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(BEGIN TEXT OF INFOBOX)

Figures in inquiry

As part of the federal corruption investigation into state Senate President Pro Tem Don Perata’s business and political activities, a grand jury has subpoenaed documents regarding these associates of the senator, as well as others.

Timothy Staples -- A college friend of Perata and a professional fundraiser. He received business from campaigns the senator supported and hired Perata’s consulting firm for other work.

Sandi Polka -- A Sacramento consultant and political advisor to Perata. Her company worked on his campaigns and on ballot initiatives he supported, including last year’s successful state infrastructure bond measures.

Lily Hu -- A prominent Oakland lobbyist and former Perata legislative aide. Her clients include developers who donate to the senator.

Nick Perata -- Perata’s son, a direct mail specialist. His companies have done work for his father’s campaigns and one rented office space from him, which the senator’s spokesman said was rented at fair market value.

Becca Perata-Rosati -- Perata’s daughter, a public relations consultant. Her companies have worked on campaigns Perata supported.

Staples, Hu and Perata-Rosati denied wrongdoing through attorneys; attorneys for Polka and Nick Perata did not return phone calls.

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Sources: Bay Area Rapid Transit District, California Fair Political Practices Commission, Secretary of State, Oakland Ethics Commission, interviews, published reports.

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Los Angeles Times