FEC Papers Show Inquiry on Developer Includes Hart

Orange County developer David Stein sought Monday to avoid a subpoena in a court hearing at which it was revealed that the Federal Election Commission is investigating former presidential candidate Gary Hart for possible violations of campaign finance laws.

According to FEC documents disclosed at the hearing, a commission investigation of Stein of Laguna Beach and video mogul Stuart Karl of Newport Beach also includes Hart and other high officials in his 1984 and 1988 presidential campaigns. The commission voted unanimously on March 30 to investigate Karl, Stein, Hart and seven former Hart aides, according to the documents.

In addition, the FBI has demanded to see Stein’s personal and corporate banking records and lists of employees, according to documents made public in court Monday.

In its March vote, the FEC found “reason to believe” that Gary W. Hart violated federal law prohibiting a candidate from knowingly receiving illegal contributions, the court documents say.

An FEC spokeswoman and lawyers in the Washington office of the commission declined to discuss the status of Hart or any other aspect of the investigation, saying federal law requires that it remain secret until resolved.

Nonetheless, the court documents made it clear that the March vote did initiate a formal FEC investigation, and an FEC source said that inquiry still is under way. Such an inquiry generally concludes with another FEC vote, at which time the commission decides whether to file civil charges, according to FEC spokeswoman Sharon Snyder.

A vote of four of the six members is required before a formal court action can be filed.

On Monday, Stein’s attorney, Paul E. Sullivan of Washington, asked U.S. District Judge Pamela Ann Rymer to quash a subpoena issued by the FEC, which wants to see documents relating to Stein’s political activities.

5th Amendment Invoked

In April, Stein repeatedly invoked the Fifth Amendment privilege against self-incrimination in declining to answer questions posed by FEC investigators, according to court documents.

Specifically, Stein refused to answer questions about his purchase of a computer from the Hart campaign in 1984, the documents show.

Stein could not be reached, and his lawyers declined to comment.

The Stein investigation is part of a wider inquiry into campaign financing abuses that has already seen Karl indicted for alleged violations of federal law. Karl, a prominent Hart backer, has pleaded guilty to conspiring to violate federal campaign contribution laws and has pledged to cooperate with a federal grand jury.

The FEC probe of Stein centers on the amounts of his contributions and the nature of his financial support for Hart, according to court documents.

Stein paid $20,000 for a computer and then leased it to Americans With Hart Inc., the former Sen. Hart’s 1984 campaign organization, according to court papers, eventually collecting a total of $2,842.32 in rental payments.

The transaction occurred “the day after the Iowa caucuses,” kicking off the campaign for the nomination and generating FEC concern that the deal might have been a disguised contribution.

“Reports filed with the commission by AWH show that while lease payments were made to Stein, they were far below any conceivable fair market rate and were suggestive of preferential treatment,” according to court papers filed by the FEC.

“Hence, the commission is investigating whether the transaction, ostensibly structured as a typical commercial sale-leaseback arrangement, was actually a fund-raising device for the (Hart) committee,” the papers say.

The deal might violate federal law limiting contributions to individual politicians by single backers to $1,000 a year.

In addition, the FEC is investigating the possibility that Stein contributed a total of $38,750 to various unnamed candidates in 1983-84, thus violating a related yearly cap of $25,000 in contributions by any individual.

Possible Violators Named

In arguments Monday, Stein’s lawyers said the FEC is seeking evidence about particular conversations Stein may have had with Douglas Rosen of Los Angeles, Hart’s 1984 finance director, and Keith Glaser, a 1984 Hart staffer who worked on Hart’s campaign in Orange County.

The paper in the court file documenting the FEC’s March vote was certified by Marjorie W. Emmons, secretary to the commission. In addition to Stein, Karl and Hart, it names the following as possibly violating election laws:

Keaton C. Granger, treasurer of Americans With Hart Inc.; Stephen D. Alfers, treasurer of Friends of Gary Hart-1988 Inc.; Glaser; Rosen; Abraham Kantzabedian, Karl’s executive secretary; Lorimar Home Video Inc. and Lorimar Telepictures Corp., both firms with which Karl once was associated, and Rama White Middel, former senior executive assistant to Karl.

In the federal indictment returned earlier this year, Karl was charged with funneling $159,500 illegally to Hart’s 1984 campaign through employees of his video firm and by covertly covering campaign expenses.

In addition to arguing that the FEC subpoena should be quashed at the Monday hearing, Sullivan challenged the FEC’s authority to investigate his client because no formal complaint has been filed.

Rymer took the case under submission and did not indicate when she will rule.