U.S. Indicts Video Entrepreneur in Illegal Hart Campaign Funds Case

Orange County video entrepreneur Stuart Karl Jr. was indicted Thursday on charges of violating federal campaign finance laws by allegedly funneling nearly $200,000 in illegal contributions to former Democratic presidential candidate Gary Hart and congressional candidates from six states in 1984 and 1986.

U.S. Atty. Robert C. Bonner said the indictment was returned by a federal grand jury in Los Angeles after 13 of Karl’s former employees testified that they were reimbursed in cash for contributions made in their names to Hart and others.

Bonner said none of the employees will be prosecuted. But he said the investigation into whether unnamed Hart campaign officials may have “assisted” or “suggested” setting up the alleged scheme will continue.

Lawyer Contacted

A spokesman for Robert J. Perry, the Los Angeles lawyer representing Karl, said there would be no comment on the indictment.

“We have not seen the indictment yet,” the spokesman said.

Repeated telephone calls to Karl’s office brought no response.

In announcing the indictment--charging Karl with making false statements to the Federal Election Commission and with criminal conspiracy--Bonner said there was “no evidence that Mr. Hart or the other candidates knew of the illegal contributions by Mr. Karl to (their) campaigns.”

“It’s my understanding that this is the second indictment in history charging a contributor with a felony as a result of campaign finance violations affecting a campaign for federal office,” according to Nancy Wieben Stock, the assistant U.S. attorney who heads Bonner’s Orange County office.

Bernie Schneider, the Orange County lawyer who represents Hart’s campaign committees and is Hart’s personal lawyer, said staff members from the 1984 campaign have been questioned in the inquiry. But Schneider said he had no knowledge of whether any of the staffers had testified before the grand jury or had been offered or granted immunity from prosecution.

Karl, 34, is accused of violating laws that are designed “to limit the power and potential influence of big contributors,” Bonner said.

Grand jurors alleged that Karl asked employees to contribute up to $1,000 each--the maximum under federal law--to various candidates, with the promise that they would be reimbursed. They were repaid in cash, Bonner said.

The indictment also alleges that Karl paid for television advertising, printing and other election expenses for Hart before the 1984 Democratic National Convention and attempted to hide the nature of the payments.

Three other candidates received a total of $13,300 in illegal contributions, according to Bonner. They were Orange County Superior Court Judge David O. Carter, an unsuccessful congressional candidate in 1986; U.S. Sen. John F. Kerry (D-Mass.), and U.S. Sen. Timothy Wirth (D-Colo.).

Also receiving campaign funds--through an illegal $25,000 corporate contribution from Karl Home Video Corp. to a September, 1986, fund-raiser involving singer Barbra Streisand and comedian Robin Williams--were a number of Democratic candidates for the U.S. Senate, Bonner said. They included Sen. Thomas A. Daschle of South Dakota, Bob Edgar of Pennsylvania, Sen. Patrick J. Leahy of Vermont and Sen. Alan Cranston of California, Bonner said.

Bonner said federal law bars a person from contributing more than $1,000 per election to any candidate for federal office or making contributions through third parties or conduits. He said the law bans outright political contributions by corporations.

“According to charges filed today, Mr. Karl violated all three prohibitions of the federal campaign contribution law,” Bonner said.

A 1971 graduate of Corona del Mar High School, Karl struck it rich by persuading Jane Fonda to demonstrate her passion for fitness in a video cassette. The “Jane Fonda’s Workout” tape sold a million copies, and Karl made a fortune and helped start the video revolution.

In 1984, Lorimar Telepictures bought out his Karl Home Video, leaving him in charge of the new subsidiary. Karl resigned last year when the firm alleged that he had arranged to buy products from a firm in which he had an interest, allegedly a conflict of interest that involved more than $500,000. Lorimar sued Karl last November, alleging that he had violated his contract.

Stock said a “majority” of the 13 Karl employees named in the indictment as conduits had received immunity from prosecution and all had cooperated with the investigation.

Several of the Karl employees told The Times earlier this year that they felt forced to participate in Karl’s scheme.

One of the Karl employees who testified before the grand jury, Abraham Kantzabedian of Newport Beach, said Thursday: “We all made donations under superior orders. When your boss comes to tell you something, you do it.”