Councilman Baker Faces Investigation Over Check

The Orange County district attorney’s office is investigating the circumstances of congressional candidate C. David Baker’s forced resignation from a local foundation after he allegedly wrote an unauthorized $48,000 check on the foundation’s account while waiting for a campaign loan to come through.

Baker put a stop-payment order on the check before any funds were transferred, according to his attorney, Paul S. Meyer.

Michael R. Capizzi, chief assistant district attorney, refused to discuss specifics but said Thursday that his office was investigating “some possible improprieties” in the accounts of the Irvine Health Foundation. Superior Court Judge David G. Sills, chairman of the foundation, said he requested the investigation on Saturday.

Baker, an Irvine city councilman, was executive director of the foundation, a nonprofit group that makes grants to health-care organizations. Baker ran the foundation out of his law office at Paul, Hastings, Janofsky & Walker in Costa Mesa. Sills said he asked Baker to resign on Friday and “advised the D.A. of the possibility of improprieties the next morning.”

Sources said the district attorney’s office was told that a secretary discovered two checks missing from the foundation’s checkbook about the middle of last week and notified Sills. Meyer conceded that Baker had written a check on the foundation’s account but said he put a stop-payment order on it within a day and that no money actually left the foundation’s account.

Meyer said Baker put the stop-payment order on the check “way before the board members confronted him.”

“It wasn’t really a transaction because no funds were transferred from the foundation’s account,” Meyer said. “In fact, there was no motivation personally for the benefit of David Baker.”

The check was written in the final days of Baker’s campaign in the bitterly contested Republican primary in the 40th Congressional District.

On Tuesday, Baker narrowly lost the GOP primary, which he had been favored at the outset to win. Despite spending roughly $500,000 on the campaign, Baker finished second by 1,172 votes to Newport Beach attorney C. Christopher Cox.

Baker was said to be out of town with his family on Thursday, and Meyer said that Baker would have no comment.

Sills said the foundation’s accounts are now being audited.

“Our preliminary check shows no funds are missing,” he added.

The check Baker allegedly wrote--and another check that was returned unused--required two signatures for disbursing money from the foundation’s accounts, according to sources familiar with the foundation.

One board member declined to discuss what other signature might have appeared on the check, saying that the board’s lawyers had counseled board members to avoid discussing personnel matters.

In the 40th District primary, Baker’s early advantage evaporated as Cox and Newport Beach businessman Nathan Rosenberg turned it into a three-way race. The three candidates not only scrambled for votes but for contributions. Federal campaign contribution and spending records showed that Baker trailed both Cox and Rosenberg in contributions received as late as May 18.

In the closing weeks of the race, Baker talked about selling his two-story Irvine home to finance a series of last-minute political mailers, John Nakaoka, his campaign manager, said. But Nakaoka said that he and several other campaign aides advised Baker against the move, persuading him instead to refinance his house.

Final approval of the loan was expected on May 27 but was delayed because of a problem with the appraisal on Baker’s Woodbridge house, a source close to the Baker campaign said. Approval did not come until June 2, just five days before the election.

Nakaoka said the campaign was never in any serious financial trouble. Although there were no major debts, Nakaoka acknowledged that without the money from the loan on Baker’s house, “we could not have sent the mail we did in the final days.”

In the final two weeks before the election, Rosenberg and Cox mailed numerous political circulars, but Baker held off until the final weekend because of a cash shortage.

“We weren’t out in the mail earlier because we lacked money,” said Baker campaign consultant Frank Caterinicchio. The campaign was banking on Baker’s loan to finance five mailers, including two that were sent to more than 100,000 homes each, in the last four days before the election. Money was also needed to finance an expensive Baker radio advertisement, featuring conservative commentator Bruce Herschenson.

“There is never a campaign that doesn’t talk about ‘what if we had more money,’ ” Nakaoka said. “We were not in financial trouble.”

Caterinicchio said he was unaware of Baker’s problems with the foundation until Saturday. He said he was “shocked” when Baker told him of the resignation.

Baker was the foundation’s only executive director and had held the office since the group was founded in 1986.