Stuart Karl Fined $60,000 Over Illegal Contributions

Stuart Karl Jr., the millionaire producer of the Jane Fonda workout tapes, Monday was fined $60,000 and placed on 3 years’ probation in a federal case in which he was charged with making $185,000 in illegal campaign contributions to Democratic presidential candidate Gary Hart and other candidates.

“Your honor, I regret doing these things that brought me here today,” Karl, of Newport Beach, told U.S. District Judge Alicemarie H. Stotler in a 30-minute hearing in Santa Ana. “No amount of time or energy will get rid of the anguish and embarrassment that I have caused my family.”

Standing at the lectern with his lawyer, John W. Vardaman, Karl could not explain why he got involved in making the illegal contributions to Hart and congressional candidates in six states in 1984 and 1986.

“To be honest, I’m not sure why I did these things,” said Karl, whose boyish looks and enthusiasm made him a popular figure in Hollywood circles. “You’re attracted to the lure of being involved. People begin to make you feel important.

“I should have looked deeper and not done the things I did. I assume responsibility. I’m just looking to put this chapter behind me.”

Karl, 35, pleaded guilty Aug. 2 to two counts of conspiring to violate federal campaign contribution laws and pledged his cooperation in an FBI investigation of illegal campaign contributions to Hart and others. Karl had been accused of concealing excessive campaign contributions through people who were later reimbursed and making corporate contributions disguised as personal contributions.

Karl also was accused of making direct payment of certain of Hart’s campaign bills and disguising them as lawful services to the campaign.

Stotler could have imposed up to $275,000 in fines and 5 years’ probation, as well as requiring community service. A probation report urged, however, that in light of Karl’s cooperation with the government and his previous clean record, the fine be set at $20,000.

Karl’s attorneys also had asked that the fine be limited, saying he is $1.25 million in debt, including $717,000 owed to the Internal Revenue Service for taxes assessed in 1985 and 1986. According to court documents, Karl has listed his Newport Beach home, valued at $2.2 million, for sale at $1.8 million in order to pay the IRS.

Nancy Wieben Stock, assistant U.S. attorney, did not request the court to impose a specific fine but had asked that it be “substantial.” She said that while Karl “presents a financial picture that can at best be described as bleak,” he had made millions in the past on his video production firm, Karl Home Video, and had great earning potential.

Judge Stotler said that Karl’s “generosity has caught up with him” to cause his current financial problems. But she said she feared that the $20,000 fine recommended in Karl’s sentencing report would be viewed as “almost laughable” and would send the wrong message to others regarding the seriousness of his crimes.

Under terms of an agreement reached last August, Karl was spared jail time in return for his cooperation into ongoing investigation of an alleged campaign contribution laundering scheme involving others in the Hart campaign.

There was no indication that Hart himself was involved in the alleged laundering.

The FBI is also investigating the campaign financing activities of Laguna Beach developer David Stein, who was one of Hart’s major supporters in his 1984 and 1988 campaigns. There have been press reports that Douglas Rosen, Hart’s campaign finance director in 1984, is also being investigated.

Stock implied to Judge Stotler that Karl was “clearly in it”--the illegal campaign financing scheme--but was “at the foundation of a much higher pyramid.” She said Karl was “manipulated by certain individuals who were ambitious” in presidential politics and other political campaigns.

“Other parties more culpable than Mr. Karl were indeed involved in this activity,” Stock said. “It’s fair to say that Mr. Karl was taken up in a certain environment.”

She added, however, that while there was no evidence that Karl believed that he might directly benefit from his campaign contributions, he had in the past established through his political connections a “lucrative relationship” with Jane Fonda and knew that such connections could be valuable.

Stock would not say Monday how many, if any, other people might be indicted as a result of Karl’s disclosures. She said, however, that a 5-year statute of limitations will run out in early 1989 on some of the alleged illegal activity in 1984, which “certainly provides a stimulus” for concluding the investigation.

At the brief hearing before Judge Stotler, Vardaman described his client as “naive” and said his generosity inspired a near feeding frenzy among political sharks.

‘Took Advantage’

“The word got out that Stuart Karl was willing to make contributions,” Vardaman said. “It was as if a large group of people descended on him.” He said that these people were “more knowledgeable, more sophisticated” than Karl and that they “took advantage” of him.

Stock said Karl has been helpful in the FBI probe of campaign financing. Earlier, in a report to the judge, she said government investigators had been impressed with how Karl has undertaken the task of “laying himself out” for the investigation.

In a sentencing memo, Stock asked Judge Stotler to impose a large fine on Karl because his behavior “strips the electoral process of its integrity and adds further weight to the growing burden of public cynicism about the American political process.

“This is so because unlike other white-collar crimes, which victimize only a limited number of individual victims at a time, the present offense tears at the elective process as a whole.”