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Front-Runner Dinkins Faces Stormy Weather : Mayoralty: N.Y. Democrat comes under scrutiny over stock transfer to his son and a controversial payment to a community activist.

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TIMES STAFF WRITER

Manhattan Borough President David N. Dinkins has built a big lead in public opinion polls as he pursues his bid to become New York’s first black mayor. But less than three weeks before the election, his campaign suddenly is facing its first sustained stretch of politically stormy weather.

Reporters are questioning a stock transfer to his son and his campaign’s payment of $9,500 in primary day “walking around money” to a controversial community activist with a criminal record.

Even Mayor Edward I. Koch, who has pledged to support Dinkins, said Thursday that the issues being raised were legitimate.

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Koch, who was defeated by Dinkins in the Democratic primary and whose constituency Dinkins badly needs in the general election, also called on Dinkins to release an official city report by the Department of Investigation examining Dinkins’ failure to pay income taxes two decades ago. Dinkins, who subsequently paid the taxes with all penalties, has apologized for his failure to file.

In a move to deflect criticism and regain momentum, Dinkins released a highly unusual personal letter Thursday, attacking his GOP opponent, former U.S. Atty. Rudolph W. Giuliani, and his media adviser Roger Ailes, a key consultant in President Bush’s winning White House bid.

“I am determined not to let your consultant Roger Ailes do to me what he has done to other Democrats in other races, slandering their records and playing upon fear,” Dinkins charged.

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“I am challenging you one last time to stop the gutter politics. . . . You and Mr. Ailes may have bullied people in the past. But if you persist on your present course, you will learn something I learned in the Marine Corps: Marines aren’t very good at picking fights, but they certainly know how to end them.”

Giuliani’s advisers said Dinkins’ decision to play the “Ailes card”--to seek to make the controversial media adviser an election issue--was a sign that Dinkins’ campaign was in difficulty.

Peter Powers, Giuliani’s campaign manager, labeled the letter a “subterfuge” and charged that Dinkins was canceling public appearances and news conferences to duck the media.

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“I would suggest that he is adopting a bunker mentality,” he said. “Our television campaign has nothing to do with his current financial problem, and it is dishonest for him to even suggest that is the case.”

Giuliani has been airing a tough television commercial stressing, among other things, Dinkins’ past tax troubles and his campaign’s recent controversial payment to the community activist, including the tag line: “David Dinkins: Why does he always wait until he’s caught?”

On Thursday, Dinkins was scheduled to appear with Koch and other city officials at a building dedication in Brooklyn. But after being pressed by reporters at an earlier stop on the details of the stock transaction, the candidate skipped the ceremony.

On Thursday, New York Newsday reported that Dinkins’ 588 shares of privately held stock in Inner City Broadcasting Co. were worth at least $2.5 million when he sold them to his son for $58,000 in 1986. The paper said that by undervaluing the stock, Dinkins potentially could have avoided paying a substantial capital gains tax.

A lawyer for Dinkins said the candidate believed at the time that the value put on the stock was fair.

But in an interview with the New York Times published in today’s editions, Dinkins admitted that he had once placed a value of $1 million or more on the stock in a confidential form he filed with New York state in 1983. On a public disclosure document he filed with New York City the same year, he estimated the stock’s value at between $20,000 and $60,000.

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When asked about the discrepancy, Dinkins replied: “I really don’t know.”

Dinkins said he was consulting with advisers on how to handle any potential tax problems and had selected the lower value without talking to lawyers or accountants.

On Wednesday, after he canceled a news conference, Dinkins issued a statement saying it was a mistake for members of his staff, sitting in for him at Board of Estimate meetings, to vote on two occasions on issues relating to the broadcasting company. Dinkins, an early investor in the company, had been advised by the New York City Board of Ethics not to vote on any issues involving the company.

The issue of his payments to community activist Sonny Carson escalated Thursday when Carson called a news conference.

Carson, who was once convicted on a kidnaping charge and who organized a violent demonstration that forced police to close the Brooklyn Bridge last month, said the money he received was designed to help get out the vote and was not a payment to dampen down volatility.

Carson angrily told reporters he wasn’t anti-Semitic. “I’m anti-white,” he said.

That remark prompted a quick rebuttal from Dinkins.

“Sonny Carson’s comments represent the kind of bigotry and intolerance I utterly reject and have fought against my whole life,” Dinkins said in a statement. “Had such comments come to my attention, he never would have played any role in my campaign.”

Giuliani’s strategists hope Dinkins’ difficulties will begin to be reflected in the polls, which would make fund-raising easier. Even though President Bush raised $1.5 million at a dinner for Giuliani last week, finding substantial additional money has been hard.

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With less than three weeks before Election Day, various polls show Dinkins with a lead ranging from 19 to 24 points.

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