Court Documents Tie Developer Stein to Illegal Donations

Laguna Beach developer David Stein, a key Democratic activist, allegedly participated in a plan to circumvent federal election laws through illegal contributions to former U.S. Sen. Gary Hart’s presidential campaigns, according to federal court documents.

Stein, an ardent supporter of Hart’s presidential runs in 1984 and 1988 allegedly violated election laws barring contributions of more than $1,000 to a single candidate and limiting total contributions in a single year to $25,000, according to Federal Election Commission documents obtained in Los Angeles.

The FEC is seeking a court order forcing Stein to comply with a commission subpoena to answer questions about his contributions and fund-raising activities on behalf of the former Colorado senator.

Stein’s attorneys are seeking to quash the subpoena and so far have advised Stein not to comment on the FEC’s probe, which is a civil proceeding.

In court documents filed on Stein’s behalf in U.S. District Court in Los Angeles, attorney Paul Sullivan said that his client also is a “potential target” of an FBI criminal investigation into campaign-funding violations and that his testimony sought by the FEC might contain “self-incriminating information.”

‘Aware of Investigation’

Stein, an uncommitted delegate to the Democratic National Convention in Atlanta, said in a statement that he was “aware of a broad investigation” being conducted by the Justice Department and the FEC into possible violations of federal campaign laws that includes several individuals who were involved Hart’s 1984 presidential campaign.

But, he added, “I am not aware of any wrongdoing, either ethical or legal, on my part. I, therefore, look forward to answering any questions related to my political activity.”

Stein, a major south Orange County developer, said that, on the advice of his lawyers, he would respond first to the Justice Department, second to the FEC with regard to any civil proceedings, and then to the press.

“Accordingly, beyond this statement, I have no further comment,” he said.

Spokesmen for the FBI and FEC would not comment Tuesday on their separate investigations.

Besides Stein, the FEC documents revealed that Newport Beach video promoter George Stuart Karl and Hart campaign staff member Dennis Walto of Santa Monica are also under investigation for violations of FEC regulations.

Last month, Karl was indicted by a federal grand jury on charges that he illegally donated almost $200,000 to political candidates, including Hart.

In Stein’s case, the FEC is alleging that he engaged in a “design” that led to a “systematic infusion of money” into the Hart campaign, including a $20,000 payment to the senator’s election campaign in 1984 for computer equipment.

Court documents state that Hart sold the computer to Stein the day after the Iowa caucuses “to generate funds at a crucial time” in the campaign and kept the proceeds of the the sale while “retaining a possession of this vital asset.” Stein then leased the computer hardware back to Hart for three years at $710.33 a month, a figure that the commission said was “far below any conceivable fair market rate” and was “suggestive of preferential treatment.”

The transaction is now being investigated as “fund-raising device” for Hart’s campaign.

The commission also alleges that Stein contributed at least $38,750 for the 1984 election, and only $10,000 was refunded, putting Stein in violation of election laws that allow an individual to donate no more than $25,000 in a single year.

Contributions made by Stein in 1984 include: $1,000 to Hart’s Americans With Hart Committee; $25,000 to the Democratic National Committee; $1,000 to the Democratic Congressional Dinner Committee; $1,000 to then-Rep. Jerry Patterson (D-Garden Grove); $500 to Democratic Sen. Alan Cranston of California and $500 each to Massachusetts lawmakers Rep. Edward J. Markey and U.S. Sen. John Kerry, both Democrats.

The commission also cited additional “in-kind” contributions from Stein to Hart, such as payments for printing and distribution of campaign material.

If federal officials determine that Stein has broken any election laws, it could impose civil fines up to $10,000 and 200% of the amount involved if the violation were found to be intentional.

Staff writers Claudia Luther in Atlanta and Kim Murphy in Los Angeles contributed to this story.