Possible Laundering of Campaign Funds : Irvine Co. Contributions Target of Inquiry by D.A.

The Orange County district attorney’s office is investigating possible laundering of political contributions by the Irvine Co. to two unsuccessful pro-growth candidates in Irvine’s June municipal elections.

Thomas H. Nielsen, vice chairman of the Irvine Co., said in a press release Thursday that the company has asked the district attorney’s office to investigate a report “that one or more Irvine Co. consultants may have submitted invoices for services rendered which may, in fact, have been for reimbursement of political contributions in the recent Irvine city election campaign.”

Nielsen said the company will conduct an audit to determine if it had reimbursed consultants and subcontractors for campaign donations they had given.

The district attorney’s office Thursday confirmed that the Irvine Co. had requested an investigation Wednesday of at least $560 in contributions from a subcontractor that allegedly were reimbursed through the Irvine Co. or one of its subsidiaries. Deputy Dist. Atty. Maurice Evans said he “would vigorously pursue the investigation.”

State campaign laws require that the true source of all campaign contributions be publicly reported. If a firm makes a political contribution in its name and later is reimbursed, the true identity of the contributor is hidden. Such a practice is commonly called laundering.

In addition, the City of Irvine has an ordinance limiting contributions by any individual or company to a candidate in a single campaign to $283.

Neither the district attorney nor Irvine Co. spokesmen would identify the candidates who received the funds or the subcontractor involved in the alleged reimbursement. But sources said the money went to City Council candidates Hal Maloney and Tom Jones, both of whom were defeated in the June 3 election.

Contacted by telephone, Jones said, “This is news to me. It’s not a surprise to me that they would want to clear up any impropriety. The best of my knowledge is that they are an honorable company.”

Maloney said he would cooperate fully with the investigation. “Oh my goodness. It never ends, does it?” he said, referring to the controversial June election.

The Irvine Co. press release said the company has “a strict policy against reimbursing consultants, contractors or employees in any manner or form for political contributions.”

“If the incident or incidents occurred, they occurred without the company’s knowledge. It was wholly inconsistent with our policy,” Nielsen said.

“If any reimbursement incidents did occur, we regret them very much,” Nielsen said. “We totally support the campaign laws, and if there was any violation of them we can only speculate that it was the result of a lack of knowledge of the laws by the individuals involved.”

Subcontractor Denies Charge

According to a source, one subcontractor received a telephone call last April from an executive of the Irvine Pacific Co.--the building arm of the Irvine Co.--asking that the firm contribute to the two candidates. The checks were made out to the candidates and mailed to another Irvine Pacific executive.

The source said the subcontractor later was reimbursed through a work-order invoice labeled “field observation.” One of the partners in the subcontracting firm told The Times that the source was incorrect and that his company never was reimbursed for “work it hadn’t done.”

The Irvine Pacific Co. was active in fund raising for the two pro-growth candidates, according to an informal survey of some of the contributors to their campaigns. Many Irvine Pacific Co. employees made telephone calls to company subcontractors and asked that they become involved in the election by contributing money to Maloney and Jones.

Survey of Contributors

In a partial survey of contributors listed on required campaign disclosure reports filed by Maloney and Jones, The Times found that almost all of them were doing work, or had done work, for the Irvine Pacific Co. or one of the Irvine Co.’s other subsidiaries.

Irvine Mayor Larry Agran, the council’s most vocal critic of the Irvine Co., called the company’s decision to take the case to the district attorney “an exercise in damage control.”

“What may have gone on here,” Agran said, “is a subtle or not so subtle effort on the part of the Irvine Co. to effectively bankroll its candidates. . . .

“What we do know, of course, is that the company was engaged in the systematic rounding up of thousands of dollar from contractors and subcontractors who do business with the company. While this activity is not per se a violation of the law, it borders on what I would call legalized extortion.”

The June election featured a crowded field of 10 candidates who battled it out for two seats on the City Council, which was already divided on Irvine’s most talked-about issue: the rate of the city’s future growth and development.

Agran and his ally, Ed Doran, were the top vote-getters in the race.

Jones, an attorney with ties to the Republican Party from his days as an aide to then-Gov. Ronald Reagan, placed third. Maloney, an administrative analyst for the country’s health care agency, placed fourth.