Stein Allowed to Avoid FEC Questioning : Judge Cites Ongoing FBI Investigation of Developer’s Hart Ties

Orange County developer David Stein, the target of an FBI investigation into possible campaign finance violations in his support of Democratic presidential candidate Gary Hart, does not have to answer questions on the same matters posed by the Federal Election Commission, a federal judge has ruled.

In a 20-page opinion issued Wednesday, U.S. District Judge Pamela Ann Rymer agreed with Stein’s attorneys that he could rely on his Fifth Amendment rights against self-incrimination in refusing to answer questions in the FEC’s civil probe.

“Stein confronts a substantial danger of incrimination in that he has been identified as a ‘potential subject’ of a ‘federal grand jury investigation into alleged campaign finance violations,’ ” Rymer wrote.

Won’t Have to Answer

The ruling in Los Angeles means that Stein will not have to answer questions posed in FEC depositions last spring about a variety of matters, including a computer Stein leased in 1984 to the campaign of Hart, the former Colorado Democratic senator; a $30,000 check from Stein to video entrepreneur Stuart Karl, who last month pleaded guilty to conspiring to violate federal campaign contribution laws in the 1984 Hart campaign, and the activities of Hart campaign officials.

The Justice Department has been investigating allegations of illegal campaign contributions to the Hart campaign and congressional candidates in six states. That investigation led to the federal indictment of Karl, 35, of Newport Beach.

When Karl pleaded guilty, he publicly pledged his cooperation in the FBI investigation. He faces a $350,000 fine and probation but no prison.

Stein, 40, of Laguna Beach was not available for direct comment on Rymer’s ruling. However, his attorney, Edward M. Medvene of Los Angeles, issued a statement in which Stein said he was “pleased that Judge Rymer’s decision is consistent with and substantiates the orderly approach” to the investigations.

Stein has said he will respond to questions first from the Justice Department, then the FEC and, finally, the press.

In the statement from Medvene, Stein also repeated that he is “not aware of any wrongdoing, either ethical or legal, on my part.”

In her ruling, Rymer said FEC questioning of Stein can be reopened “at such time as he (Stein) is no longer a target of a criminal investigation” or after the statute of limitations on any possible criminal violations has expired.

Among the matters of interest to both the FEC and the FBI is the $30,000 payment Stein made to Karl in May, 1984. Medvene previously told The Times that Stein did, in fact, make the payment, which he characterized as “a loan.”

However, Medvene said, the payment was “not made by him for the benefit of the Gary Hart campaign or for any other political purpose.”

In addition to protecting Stein from being required to answer questions orally at depositions, Rymer’s ruling dealt with another matter of importance: the production of any materials or documents in Stein’s possession regarding Hart’s campaigns.

In particular, the FEC wants:

- Information regarding two Hart campaign officials--Keith Glaser, now of Oklahoma City, and Douglas Rosen of Los Angeles. Glaser was a key Hart organizer at the 1984 Democratic National Convention. Rosen was Hart’s 1984 national finance director.

- Information about a computer that Stein leased to the Hart campaign in the closing months of the candidate’s 1984 effort. Questions have been raised as to whether the leasing arrangement Stein had with Hart constituted an in-kind contribution that exceeded the $1,000 maximum allowed in federal campaigns.

‘Blanket Assertion’

Stein’s attorneys had sought to bring these materials under the same Fifth Amendment protection as Stein’s oral testimony. But Rymer ruled that Stein’s “blanket assertion is too broad.” She asked his attorneys to provide to her, by Oct. 18, an inventory of documents and an explanation of why producing them would be incriminating.

In the ruling, Rymer also denied Stein’s request to end the FEC’s investigation of the lease-back arrangement of the computer provided for Hart’s 1984 campaign.

Stein’s attorneys had argued that starting such a probe on the basis of newspaper reports about the computer constituted “a novel extension of the commission’s investigative authority.”

“On the contrary, to require that the FEC ignore a published account which puts campaign-submitted information in a different light would unduly circumscribe its statutory mandate,” Rymer wrote.