Assemblyman Used Election Funds as Loan

Democratic Assemlyman Gerald R. Eaves of Rialto borrowed $11,000 from his campaign committee last year--an unsecured loan at no interest that the lawmaker said he needed for a divorce settlement.

The loan may violate a 5-year-old statute barring the personal use of campaign funds. However, no elected official ever has been prosecuted under the law, which carries a penalty of up to two times the unlawful expenditure.

Eaves drew a cashier’s check from his campaign account last June in anticipation that he would need the money to pay his wife her share of property equity in their settlement.

“I just needed to pay her off,” Eaves said. “As it worked out, I didn’t even use the money. I just held the cashier’s check and put it back in the (campaign) account.”

Returned to Treasury

The money was returned to the campaign treasury four months after Eaves borrowed it, records show.

The loan was reported by Eaves in campaign committee reports filed with the secretary of state last year and brought to the attention of The Times this week.

Senior Assistant Atty. Gen. N. Eugene Hill, who is responsible for enforcing the personal-use ban, would not comment on whether the Eaves loan violated the law. But he said that in general, an interest-free, unsecured loan “doesn’t sound good.”

He added, “There is no guidance in the statute for these kinds of things.” Hill is one of several lawyers in the attorney general’s office who has written a series of opinions and advice letters that have helped to define restrictions on expenditures for officeholders and candidates.

Prohibited Expenditures

The statute specifically prohibits expenditure of campaign funds for “payments for professional services or personal debts, including, but not limited to, personal income taxes and settlements of civil actions, and related attorneys fees,” unless the candidate can show “a reasonable relationship to political, legislative, or governmental purposes.”

The attorney general’s office has viewed the use of surplus campaign funds for loans as a permissible investment, providing that there is security for the loan and a reasonable rate of return.

Loans made by campaign committees should “be judged first as an investment matter and the normal criteria for investments should be applied,” Hill said.

Eaves said he did not seek legal advice on whether he could use campaign funds for the personal loan.

The Eaves campaign committee also made a series of smaller, interest-free loans to other individuals, including $1,000 to the assemblyman’s district field representative, John Longville. Eaves’ campaign records show that Longville received the loan in January, 1985, and repaid it last November.

The San Bernardino County Democrat is one of many incumbent legislators who had only token opposition in 1986 and, as a result, had surplus campaign funds at their disposal, much of it transferred to candidates in contested races.

The Friends of Jerry Eaves campaign committee spent more than $200,000 last year, compared to less than $4,000 by his Republican opponent, Carol M. Turner. Eaves was handily reelected with 65% of the vote last November.

The ban on personal use of campaign funds was put into place in 1982, after revelations that some elected state officials had used campaign funds to purchase cars and furnish their houses and, in one case, to pay for a divorce settlement. Others simply pocketed surplus cash when they were defeated or retired from office.

While ending many of the worst abuses, the personal-use ban finally approved by the Legislature was purposely written to give officeholders and candidates wide latitude in spending the money.