Hart Denies Knowing of '84 Financial Improprieties : Newport Film Producer May Have Broken Donation Rule

Times Staff Writer

Democratic presidential candidate Gary Hart, responding to a report that his campaign received questionable contributions from a Newport Beach film producer, Wednesday denied any knowledge of financial improprieties but said he will "hold myself responsible for whatever happened."

The former Colorado senator was responding to a report in the Miami Herald that producer Stuart Karl may have violated campaign finance laws by advancing more than $96,000 to Hart in the closing days of Hart's 1984 presidential bid and by putting a Hart aide on his own payroll in 1986.

Federal law limits the amount an individual can contribute to a presidential campaign to $1,000. A person or his company can lend money to a campaign, but only if it does so in "the normal course of business" and the company reasonably expects repayment. Hart's campaign settled the debt last year for $9,600, or 10 cents on the dollar, but the Federal Election Commission has not yet approved the settlement.

Election laws also prohibit companies from providing employee services to a campaign. However, at the time the aide, Dennis Walto, worked for Karl, Hart was not yet registered as a candidate--leaving unclear whether the rule would apply. Also, Walto said Wednesday that he only worked for Hart in his spare time.

The cases mark the second time that questions have been raised about the relationship between Hart and persons who aided his 1984 campaign. Last spring, The Times reported that officials were investigating whether a Virginia media firm owned by a leading Hart supporter had violated campaign laws by advancing Hart nearly $900,000 in credit to buy advertising in 1984. That investigation is continuing.

Hart's campaign reported its debt to Karl in its required filings to the FEC on its finances. It said the loan was for video production, but the Herald reported that at least a portion of the money, $15,802, was used to buy goods and services Hart needed for the 1984 Democratic convention, including 800 foam rubber flying disks emblazoned with a Hart logo. If true, that would be a technical breach of FEC policy requiring accurate listing of the purpose of loans.

Confirms Signing Check

One of the signatures on the check for the foam rubber disks was that of Rama White, who was Karl's executive assistant. Contacted at her home in Irvine on Wednesday, she confirmed that she signed the check and that she was aware of Walto's relationship with the Hart campaign.

A former Hart aide told The Times that Karl's loan was only one of several instances in which the producer provided unorthodox assistance to the 1984 campaign. Karl contributed to Hart early in the race and soon became a major supporter, said the former aide, who asked not to be identified.

In February, 1984, at a time when the campaign was desperately short of cash, Karl bought most of the campaign's office furniture and then leased it back to the campaign, the ex-aide said. Records on file with the FEC do not indicate whether the campaign made lease payments for the furniture.

Hart, campaigning in New Hampshire, told reporters: "If any contributions were made--we don't know--that did not comply, then I will see that compliance is undertaken." While "obviously a candidate cannot know every detail," he said, "I will hold myself responsible for whatever happened and not shift any blame to anyone else."

Hart said he hoped his campaign would "go beyond minimum requirements (of the law) to meet our own very high standards."

Persistent Problem

Questions about the finances of Hart's 1984 White House bid have been a persistent problem for Hart, with more than $1 million in debts remaining from that campaign.

A number of companies that provided supplies and services in that race have complained bitterly of being left unpaid, and some have tried to seize Hart's current campaign funds. At the same time, federal election officials have raised concerns in other cases that some of Hart's debt settlements could have been disguised campaign contributions.

The FEC has yet to approve many of Hart's debt settlement agreements, in part because of questions over whether all rules were followed.

Walto, the Hart worker cited in the Herald story, began working for Hart's campaign full time in early 1987 and is now one of the candidate's chief aides and principal traveling companions.

Speaking to reporters in Iowa on Wednesday, he acknowledged that he did volunteer work in 1986 but asserted it was proper. "I had a job with Karl . . . I performed duties," Walto said. The Herald reported that former co-workers did not recall Walto doing any work for the company.

Produced Fonda Video

Karl, 34, well known as an entrepreneur in the home video industry, made his fortune in 1982 by producing the Jane Fonda "Workout" videotape. He started his business career delivering water beds in the mid-1970s, then started a series of journals, including Newport magazine, now the Orange Coast magazine, which he co-founded with Ron Guccione.

In 1984, Karl sold his company for several million dollars to industry giant Lorimar. Last spring, Lorimar ended its association with Karl and has since sued him, charging that he violated contracts. Rama White, along with more than 200 others, lost her job with Karl-Lorimar at that time. Karl and his attorney declined comment Wednesday.

Staff writers Ron Soble and William C. Rempel in Los Angeles and Dana Parsons in Orange County contributed to this story.

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