State Controller Kenneth Cory repaid only $82,000, not the $524,597 he reported paying, on a controversial 1974 campaign loan, a state Fair Political Practices Commission audit has concluded.
At issue is a $525,000 campaign loan that Cory received from Orange County millionaire Richard O’Neill and Louis J. Cella, a physician later convicted of embezzlement in an unrelated matter.
Cory has maintained that he repaid the loan not with cash but by giving up his interest in a ranch that he owned with O’Neill and Cella. Since then, Cory has drawn about $300,000 from his campaign fund to reimburse himself for his share of the ranch.
The commission audit contends that the property given back to O’Neill and Cella had a value of only $82,000.
Cory, a Democrat who unexpectedly announced last month that he would not seek reelection to the post he has held since 1974, was reported out of the state and could not be reached for comment.
Deputy Controller Peter Pelkofer, a Cory spokesman, Wednesday denied that Cory had done anything wrong, contending that the problem stems from the way in which loans must be reported on campaign disclosure forms.
The FPPC audit prompted Dan Stanford, a Republican candidate for state controller, to renew his call for Cory’s resignation.
Stanford, who resigned as chairman of the FPPC to run for controller, said that if the commission’s findings are correct, Cory could legally have repaid himself only $82,000, not the $300,000 he has reported taking from his campaign fund.
Transaction Called Illegal
Stanford, who leveled similar accusations against Cory in February, said he is convinced that the transaction enabled Cory to illegally pocket the $300,000 the controller reported withdrawing from his campaign fund.
Calling Cory’s dealings “an outrageous violation of state law,” Stanford said: “I believe the attorney general has an obligation to the people of California to commence a thorough and vigorous investigation and criminal prosecution.”
Pelkofer said Cory had supplied the commission with documents bolstering his argument. But he said Cory will not release them publicly “because it’s private, and it’s his own private business.”
“He’s retiring (from public office), and he’s not going to go into this,” Pelkofer declared. “It’s not public information.”
Pelkofer argued that Cory’s interest in the ranch property included equipment and other items that were worth far more than the $82,000 reported in the audit.
“We disagree (on the value), and that is the situation,” Pelkofer said. “As far as we’re concerned, we’ve made our statement, and that is as far as (Cory) wants to go.”
Stanford earlier asked the commission and Democratic Atty. Gen. John Van de Kamp to investigate his allegations. A spokesman for Van de Kamp said the request was returned to the commission as the proper authority to handle the matter.
Commission spokeswoman Lynn Montgomery said the commission has not taken any action.
Stanford said he will resubmit his official request for an investigation to Van de Kamp’s office.