Shelley Starts Legal Aid Fund

Secretary of State Kevin Shelley has opened a legal defense fund to fight a political scandal involving himself and various associates.

Unlike other campaign funds, Shelley’s account can raise money from donors in unlimited amounts, as long as the money is used exclusively for legal costs involving problems arising from his government duties.

Shelley’s legal troubles began in the summer, when the FBI and state Atty. Gen. Bill Lockyer opened investigations into the origin of donations to Shelley’s 2002 campaign. In addition, the state auditor is examining his awarding of no-bid contracts to political associates.

“We thought the smart thing to do was create the fund,” said Sam Singer, a spokesman for Shelley. “Many of Kevin’s supporters have called up and said, ‘What can we do to help?’ ”

Donations to the Shelley account -- simply called Legal Defense Fund -- must be reported quarterly to the secretary of state. Shelley’s office declined to name recent donors, if any, but said that they would be shown on the fund’s first required report in January.

Shelley, who is married with two children, earns $131,250 a year as the state’s top elections official. Property records show that he has a large mortgage. In late 2001, Shelley took a $764,000 loan from a family trust to buy an $800,000 home in San Francisco, the records show.

Singer said Shelley is “doing fine” financially and opened the legal defense account because of requests from friends. He said Shelley would not actively solicit funds for the account, but would direct people there if they asked how to help him.

“Things are going very, very well for the secretary of state’s office,” said Singer, citing the lack of serious problems during the November election.

Investigators are looking into what happened to a $492,000 state construction grant that Shelley, a former assemblyman, helped get from the Legislature for a community center in San Francisco. Several individuals and companies that received money from the center later donated similar amounts to Shelley’s campaign -- $125,000 in all. Only one of them did pre-construction work warranting payment, Lockyer’s office has said.

In addition, former Shelley employees have said that they did political work for him and other Democrats. California law prohibits government employees from doing political work on state time.

Shelley’s daily calendars showed that staff members were routinely scheduled to attend events such as campaign fundraisers, rallies and other political gatherings sponsored by Democrats and Shelley’s supporters.

It is not uncommon for politicians to open legal defense funds when faced with lawsuits or investigations stemming from their actions. State records show eight active funds for California politicians, including one for Lt. Gov. Cruz Bustamante.

The lieutenant governor opened an account when he was accused of improperly transferring campaign funds during the 2003 recall campaign. The Fair Political Practices Commission eventually fined him $263,000 for funneling $4 million to his failed gubernatorial campaign.