Inside the California Money Machine : How Michael Dukakis Became an Unlikely Record-Holder in Campaign Fund Raising

NIKOLAS PATSAOURAS approaches political fund raising the way a shark approaches dinner. There’s no wasted motion, no angst , no indecision. He doesn’t worry if people consider him a pest or a nag. Every day he comes into the office of his West Los Angeles electrical engineering firm and flips through a Rolodex thickened by a decade of spadework in state, local and national politics. He measures his prospects and then, morning after morning, month after month, picks up the phone and implacably pursues them. In his role as Southern California finance chairman for Democratic presidential nominee Michael S. Dukakis, he is very, very successful.

On this overcast morning in early September, Patsaouras is making calls for a Beverly Hills fund-raiser at which the candidate will appear the next week. Tickets are $1,000 each--in relative terms, a bargain. Only a week earlier, the campaign extracted $5,000 a plate from a large group of major donors who had gathered in the spacious Bel-Air home of veteran Democratic activist Rosalind Wyman to munch on veal and hear Dukakis promise to get tough with Vice President George Bush. That night, while a gentle breeze shivered the trees and the state’s Democratic elite stood in line to shake hands with their party’s standard-bearer, Patsaouras sat at Dukakis’ table.

This morning, Patsaouras sits in shirt sleeves at a long table in a sparsely furnished conference room. The table is empty except for a telephone and a few sheets of paper on which he has scribbled some names. When Patsaouras picks up the phone, it appears almost too heavy to lift. His voice is as gray as the weather, his tone almost apologetic. “Well,” he says to one prospect, “we are making our last push for Dukakis. I promise you won’t hear from me again--but on the 15th we’re having a cocktail reception at $1,000 a person. Maybe you can make the final push and make a couple of calls.”

Dukakis often compares the presidential race to a marathon; this morning, Nick Patsaouras is approaching Heartbreak Hill. This upcoming cocktail party is the last fund-raising event the Dukakis campaign has scheduled for Southern California, and it has come none too soon. Patsaouras has been making these calls for Dukakis since early 1987. He has collared friends, business associates, political allies and strangers for breakfasts, brunches, cocktail parties and dinners. Including the nomination period and the general election, he has personally helped to raise more than $1 million.

“Fund raising takes discipline and commitment,” Patsaouras says gravely, his voice thick with the accent of his native Greece. “Every day, every day, no exception, whether there is a fund-raising event two weeks from now or two months from now, I make the calls. You become a candidate yourself. A full-time fund-raiser lives and breathes it; you go to a restaurant and you see who you’re going to hit; you go to a social event and you see who you’re going to hit. There is no event out of limits.”

Patsaouras has been a key player in a Dukakis financial operation that has shattered all Democratic presidential fund-raising records in California--a state so rich in potential political money that the scrambling for dollars is often called the First Primary in the race to the White House. And this year, when both parties are racing to raise at least $50 million each (as of Oct. 1, they were neck and neck with about $40 million apiece), the battle for California’s millions has been especially intense. As of Oct. 1, George Bush and the centralized state Republican fund-raising effort had amassed about $7.5 million in California for the general election, in addition to the $2.56 million that Bush collected for the primary. As of the same date, Dukakis and the centralized state Democratic fund-raising effort had raised about $7.9 million in addition to the $3.5 million that Dukakis had collected by the June 8 primary. That’s more than any Democratic presidential candidate has ever carried home from the state.

Dukakis’ feat is especially remarkable considering his position just two years ago. As vice president, Bush was known here and could draw upon an established base of generous Reagan loyalists. But when the Democratic presidential hopefuls first descended on the state, wallets open, expectations unbounded, Dukakis had virtually no supporters, no contacts, no history and certainly very little entree with the heavy hitters of the state’s much-courted political fund-raising community.

This is how Dukakis, starting from zero, broke the bank in California.

THE KEY PLAYERS HOOK UP

WHEN THEY FIRST began organizing their campaigns in 1986, all of the Democratic candidates had Nick Patsaouras in their sights. He was a natural target. Patsaouras came to Los Angeles from Greece in 1961 and learned English while earning a degree in electrical engineering. Energetic, ambitious and focused, he started an engineering consulting firm, became rich and began to look for ways to make a wider mark. In the late 1970s, Patsaouras began raising money for local politicians of both parties; in 1980, he ran unsuccessfully for a seat on the Los Angeles County Board of Supervisors. In February, 1981, Mayor Tom Bradley appointed him to the city’s Board of Zoning Appeals. That same month, Supervisor Michael Antonovich appointed him to the Southern California Rapid Transit District board of directors; as president of the board in the mid-1980s, he pushed for the construction of the Metro Rail subway. In 1984, Patsaouras took his first big step into national politics as a major Southern California fund-raiser for Walter F. Mondale.

With that, Patsaouras popped up on the national radar, and messages fluttered in from names that, before, he had only heard on the evening news. Gary Hart, preparing his second bid for the presidency, stopped by to chat in the fall of 1986. Rep. Richard A. Gephardt (D-Mo.) came by for breakfast. Two state legislators supporting Bruce E. Babbitt urged Patsaouras to consider the former Arizona governor.

None of these encounters quite clicked. Then, in February, 1987, Kitty Dukakis called Patsaouras and asked him to help arrange a reconnaissance trip she was planning to Los Angeles in April. Patsaouras had met her husband at a breakfast the Massachusetts governor had sponsored for prominent Greek-Americans during the 1984 Democratic Convention. He had been impressed by Dukakis, and he was excited by the prospect of a fellow Greek seeking the presidency. He told Kitty Dukakis to count him in.

When she arrived in Los Angeles in early April, 1987, she was accompanied by Robert A. Farmer, her husband’s chief fund-raiser, and John L. Battaglino Sr., a white-haired businessman from Waltham, Mass., who has known and supported Dukakis for more than 25 years. Battaglino had been among the small group of supporters who had urged Dukakis to seek the presidency shortly after his reelection to a third term as governor in 1986. Having sold his college bookstore business earlier that year, Battaglino promised Dukakis that he would spend the next 24 months as a volunteer for his campaign, if he launched one. Dukakis went off to consider his options. Battaglino went back to his life.

The night before Kitty Dukakis was due in Los Angeles, Farmer tracked down Battaglino in Las Vegas, where he had gone to watch the middleweight title fight between Marvin Hagler and Sugar Ray Leonard.

“Kitty and I will be in Los Angeles tomorrow,” Farmer said. “Meet us at the airport.”

Battaglino, perhaps visualizing the prices on the fight tickets in his pocket, gave the only rational response: “Are you crazy?”

Farmer said, “Kitty would really like you to do it.”

Battaglino got off the phone and went upstairs to his hotel room. He sat on the bed and remembered all of his gallant promises of the previous winter. The next day, when Farmer and Kitty Dukakis got off the plane in Los Angeles, Battaglino was there to meet them.

The group spent the next two days following an itinerary arranged by Patsaouras; they conferred with Asian business leaders and Greek business leaders and labor leaders and Jewish community leaders and City Council members. Los Angeles looked to them like a lawn in the first days of spring: flecks of green that needed careful nurturing. When they were preparing to leave, Farmer ducked into Battaglino’s room at the Beverly Wilshire.

“I’ve got an idea,” Farmer said, as casually as he could. “Why don’t you stay a few days?”

Battaglino has been in California ever since.

THE LANDSCAPE OF THE CALIFORNIA GOLD RUSH

WHEN HE became financial ambassador to California for Michael Dukakis, Battaglino faced an unsteady political landscape. At that point, in mid-1987, everyone wanted a piece of Southern California money, but none of the Democratic candidates had anything like the profitable roots that Mondale had developed through decades of testimonials over chicken and kasha varnashka. Gary Hart began the 1988 campaign with the strongest financial base in the state. He had good connections in Hollywood and among young professionals, and his supporters had worked, with some success, to woo the business and Jewish communities. Then Hart sank out of sight, torpedoed by revelations about his relationship with model Donna Rice.

Of the other candidates--the initially indistinguishable Seven Dwarfs--Sen. Joseph R. Biden Jr. (D-Del.) showed the most appeal to the Southern California money elite. Biden attracted savings and loan executive Carl Rheuban, a major force in the Jewish community; attorney Lisa Specht, a rising figure in Westside circles, and producer / investor Ted Field, who, with his political aide, Robert L. Burkett, was rapidly emerging as one of the most accomplished Democratic money collectors in the country. In April, 1987--while Battaglino was still trying to figure out what freeway to take from his hotel to his office--Biden burst upon Los Angeles with a record-setting $435,000 fund-raiser at Field’s opulent home. Then, only a few months later, in September, Biden too was out of the race, the victim of disclosures that he had plagiarized a speech and exaggerated his law school record.

For the other candidates, the resulting vacuum created both opportunities and frustrations. Many donors were disenchanted after seeing the candidates in whom they had invested knocked out of the race before any votes were cast. “Once Hart and Biden got out, there was a cooling-off period before people in California began to get active again,” says Terence R. McAuliffe, who was national finance chairman for Gephardt’s campaign. “People were turned off on politics altogether. They weren’t rushing to go back for any candidate.”

Instead of being deluged by checks when they came to Los Angeles, the candidates found that they were required to present themselves for inspection before the city’s wealthy and powerful. “The fact that we were all unknown meant that most of the time you had no chance at all of asking directly for money,” former Arizona Gov. Babbitt recalls. “Round One was making your pitch and getting their attention and becoming known--burning up enormous amounts of time in the process.” In the city of the casting call, none of the candidates could get past the first audition.

THE HIDDEN DUKAKIS EDGE

DUKAKIS, THOUGH, had a natural base that none of the others could match: the affluent, largely conservative Greek community. Yet, when he announced his bid for the presidency on April 29, 1987, Dukakis was “not terribly well known” in the California Greek community, says Aris Anagnos, a liberal Greek fund-raiser and real estate developer. But the ethnic attraction was immediate and irresistible. Republican or Democrat, Greeks flocked to Dukakis. “Blood,” says an envious aide to one of Dukakis’ competitors, “was thicker than party.”

With the Greek base to build on and Battaglino in place to cultivate his opportunities, Dukakis began to parlay his limited California contacts. “I felt like a Fuller Brush salesman,” says Battaglino, who had spent about 72 hours in California before moving here for Dukakis. “I’d just go from office to office. I literally called every single person that anyone asked me to call.”

Gradually, the calls began to produce results. Businessman Don L. Gevirtz, who had emerged as a supporter of Jimmy Carter but faded since, met Dukakis in the early 1980s after he published a manifesto on economic policy. Gevirtz stayed in touch and, like Battaglino, was among those who urged Dukakis to run. Gevirtz proved to be an energetic fund-raiser, particularly in the crucial early months of the campaign.

Beverly Hills clothing retailer Harold Kapelovitz, a veteran Democratic giver, received a call from a friend in Iowa, where the candidates had encamped for the first primary, urging him to consider Dukakis. Kapelovitz said he would think about it. Battaglino came out to see him. Kapelovitz said he’d think about it. Battaglino came back. Battaglino called. He left position papers. Kapelovitz listened, read and enlisted. With Gevirtz and another supporter, Kapelovitz hosted Dukakis’ first Southern California fund-raiser, a lunch at his Beverly Hills home on May 19, 1987. Dukakis walked out of the room with $50,000 and began building a pile that would reach $1.55 million before the first votes were cast in Iowa the following February.

THE SYSTEM IN ACTION

FROM THE START, Dukakis’ national campaign treasurer, Bob Farmer, approached fund raising as a business. Unlike most of his competitors, Dukakis didn’t rely on a few fund-raising divas or a handful of mega-banquets. Throughout the country, the campaign filled its coffers slowly, steadily, through small, bite-size events.

“They were so much better organized than anyone else,” says investment banker William M. Wardlaw, a leading Democratic fund-raiser. “Starting in late 1987, every time he (Dukakis) came out here I got a call from Patsaouras. I said no every time until May. Patsaouras was never angry but he was just damn persistent. I think that is reflective of a discipline that permeated the entire structure: They had their lists and it was just a matter of systematically finding the people . . . and when they found them they exploited them.”

Once a prospect displayed even a flicker of interest, the campaign enveloped him. “I only consider myself to be as involved as somebody who is terrifically busy gets involved in a campaign, and I still got, say, 40 calls from them,” says producer John Davis. “They came out and saw me a number of times before they wanted anything. Then John Battaglino would call long distance and, when he was in town, come out to the studio and just hang out. Then they paraded the campaign finance director, Bob Farmer, out here. Then when it came to having an event, they brought a young woman from Boston out and stationed her in my office to make calls with me. It was unbelievable . . . completely unlike any campaign I’ve ever seen.”

Farmer understood that most wealthy people want to feel as if they are part of something more significant than a real estate killing or a leveraged buyout. Fund-raisers were given cards, pins, titles; the Mouseketeers didn’t distribute as much club paraphernalia as the Dukakis fund-raising campaign. At $10,000 raised, you became a member of the National Finance Committee; at $25,000, part of the Board of Directors; at $100,000 a trustee; at $500,000 a managing trustee. The biggest collectors were brought back to Boston to confer with Dukakis and the senior campaign staff.

All this was aimed at building a network as large as possible so that the responsibilities for the vast majority of fund-raisers could be kept small. “I’d rather have 25 co-hosts each raising $10,000 than one responsible for $250,000,” Farmer says. “That way I spread my risk. The average successful businessman can’t raise more than $5,000 to $15,000 . . . but there are an awful lot of people who can raise $10,000 if they put their mind to it.”

Battaglino lived by that philosophy in California. He combed through communities that candidates usually fly over: the San Fernando Valley, Sacramento (where developer Phil Angelides organized several large early events), even tiny San Martin, near the Northern California town of Gilroy. In Los Angeles, the Dukakis campaign ventured beyond the Democratic enclaves of the liberal Westside and Hollywood. Only four of Dukakis’ more than 40 fund-raising events during the primaries drew principally from the movie world.

Still, some familiar Hollywood and Westside figures wrapped gilded arms around Dukakis: Fox Inc. Chairman Barry Diller was an early supporter, holding a fund-raiser in October, 1987, and Disney President Frank G. Wells co-sponsored a breakfast in March. But Dukakis’ support, as often as not, came from fresher faces: Robert G. Rehme, co-chairman and chief executive officer of New World Pictures, co-sponsored an event last January with producer Davis and Jon Feltheimer, president of New World Television productions. Feltheimer hadn’t worked for a candidate since he knocked on doors for George S. McGovern; Rehme’s last political involvement had come 20 years ago when he managed a City Council race in Matawan, N.J.

More important, Dukakis became the first presidential candidate to systematically mine Los Angeles’ rising Latino and Asian communities. Patsaouras’ contacts, the support of key elected officials such as City Councilman Richard Alatorre and, not incidentally, Dukakis’ facility with Spanish, opened doors across East Los Angeles. Art Gastelum, principal administrative coordinator in Mayor Bradley’s office and a leading Latino fund-raiser, signed up after Patsaouras invited him to see Dukakis at an event last fall. When Dukakis saw Gastelum’s name tag, he cornered him and conducted an entire conversation in Spanish. “I was impressed,” Gastelum says. “I was touched.”

Among Asians, Dukakis had several calling cards. One was that his wife had worked with refugees from Southeast Asia. Another was his immigrant background, which instantly “created a relationship that everybody in the Asian community can understand,” says attorney Albert C. Lum.

Lum became involved in the campaign in April, 1987, when Patsaouras asked him to sponsor a meeting for Kitty Dukakis with Asian businessmen. The following October, he organized a breakfast that raised $35,000. A second group of about 30 predominantly Chinese entrepreneurs and professionals that coalesced around Maria L. Hsia, administrative director of an immigration law firm, and attorney Frederick W. Hong also gravitated toward Dukakis. The group had first raised money for representatives and senators with influence on immigration issues; gradually they expanded to become major contributors to the national Democratic Senatorial Campaign Committee.

As 1988 arrived, they saw in the presidential race a chance to raise the Asian community’s political profile. “The black and Hispanic communities have votes, and the Jewish community has money,” Hsia says matter-of-factly. “That’s why we have to work to gain our status--that’s why I’m working so hard.” That purposeful ambition worked for Dukakis: Last May, the group helped fill a fund-raiser that packed almost 900 Asians into a Chinatown restaurant and raised $140,000.

Hsia came to Dukakis after Hart, her initial favorite, dropped out. That pattern worked to Dukakis’ advantage throughout the contest. After the race had narrowed to Dukakis and Jesse Jackson, Dukakis attracted most of the mainstream Democrats. Once Jackson emerged as a serious national competitor, he demonstrated more fund-raising power than ever before, in California as elsewhere. But most traditional Democratic givers, however uninspired they had been by Dukakis earlier, settled on the Massachusetts governor as the race sharpened.

In Southern California, Dukakis’ biggest catch came on the day before Super Tuesday in March when Ted Field and Bob Burkett, Field’s political aide, signed on. In the seven weeks between the New York primary that made him the presumptive nominee, and his final victory in the California primary, Dukakis collected almost $1.6 million in the state to reach his primary total of $3.5 million. Much of that was not so much a contribution to Dukakis as tribute for the party’s nominee. Its arrival signaled the beginning of the next stage in the checkbook race.

FROM LONER TO THE PARTY’S MAN: THE PAYOFF

FOR BETTER OR worse, 1988 may be remembered as the year when the candidates never left the treadmill. Previously, the presidential candidates invariably gave themselves and the nation a few weeks off after the final primary or the party conventions. This year, they never stopped campaigning--or raising money. Under the campaign-finance reform laws of the 1970s, the presidential candidates theoretically stop raising money after they are nominated, financing their general election campaigns instead through public funds. But this year, utilizing a loophole in the law more aggressively than ever before, the two parties are locked in an unprecedented race to raise millions of dollars unfettered by rules that limit personal contributions during the primaries to $1,000.

Long before they settled on nominees, both parties laid plans to supplement the $46.1 million they receive in public financing for the presidential race. In July of ‘87, the Democrats established a “Victory Fund ‘88” to collect those checks and began courting the party’s wealthiest donors: San Diego Padres owner Joan Kroc gave $1 million; San Diego hotelier M. Larry Lawrence wrote a $100,000 check.

When Dukakis became the nominee, Farmer absorbed the Victory Fund into his financial operation--in effect, assuming control of the party’s fund raising for the presidential campaign. Farmer announced that he intended to raise $50 million for the fund, by seeking donors through the mail, shuttling Dukakis to 30 major events and canvassing the party’s wealthiest donors for $100,000 each. (Dukakis wouldn’t be comfortable taking any more than that from one individual, Farmer says.)

To the Republicans, the media and, most of all, Farmer’s fund-raisers, these seemed like very large numbers. But the money piled up at a rate that surprised even Dukakis’ partisans. Within a few weeks, Battaglino found that he was “getting these people to write out $100,000 contributions like it was a $1,000 check.” Euphoria helped: In the heady days of July and early August, Battaglino had something to sell that was, for the Democrats anyway, unique: a presidential candidate who looked like a winner.

By late August, when the polls turned on Dukakis, the campaign had already collared most of its $100,000 givers. “In our trustee program, we hit right before the convention and right after the convention,” Patsaouras says with unaffected frankness. “We were very cognizant we wouldn’t be going into September or October with a 17-point lead, so we had to be practical.”

DRAWING WATER FROM A DRY WELL

PATSAOURAS WAS RIGHT. By early September, with the first debate still two weeks away, Dukakis was trailing Bush in the polls and sinking beneath a barrage of attacks from the vice president. So, on this early September morning, donors are besieging Patsaouras with their doubts. Patsaouras pleads patience. “You’ve been there,” he says to one prospect. “You know things go up and down.” Though his confidence in Dukakis appears unshaken, he seems weary of assuaging these anxieties.

He seems to be deeply weary of the entire exercise. “I have to admit the well is getting very dry,” he says after another inconclusive call. “I don’t care how excited people are, how much money they have, there is a psychological saturation point. They start to think, how many times is that son of a bitch Nick going to call me--he’s been calling me for two years.”

So it is with some relief that Patsaouras stands in the driveway of the Beverly Hills home of Bud and Evie Spound a few nights later waiting for Dukakis to arrive for the last fund-raiser his campaign has scheduled in Southern California. “It feels good,” Patsaouras says as a steady stream of people moves into the Spounds’ elegant garden. He smiles. “We’re getting a lot of suggestions on how the campaign should be run.” Then he’s off to greet the candidate.

Later that evening, Patsaouras is waiting for his car outside Norman Lear’s home in Brentwood. Inside, Dukakis has just addressed more than 200 luminaries from the movie industry, hoping to inspire them to lend a hand in the final weeks of a campaign that has consumed Patsaouras for 21 months. Patsaouras watches as an enormous limousine waiting for Barbra Streisand and Don Johnson pulls in front of the curb. He looks across the street at the paparazzi disengaging from Rob Lowe. He is asked whether his work in the campaign is done.

“Tomorrow, I’m not going to make any calls, that’s for sure,” he says briskly. After a moment, the valet arrives with Patsaouras’ Mercedes and opens the door. He looks at it without moving; he’s not quite ready to go home. “But there is still money to be raised,” Patsaouras says, as if reminding himself. “There are still possibilities.” Porsches are lined up around him like minnows. Yes, indeed, the ocean is still teeming with possibilities.