IRS Probing Cranston Voter Sign-Up Groups

The Internal Revenue Service is investigating whether voter registration groups that received millions of dollars solicited by Sen. Alan Cranston (D-Calif.) violated their tax-exempt status by engaging in partisan activity, law enforcement sources said Wednesday.

IRS auditors in Los Angeles are looking into allegations that the ostensibly nonpartisan groups placed undue emphasis on registering more Democrats than Republicans. Possible violations would be civil, not criminal, said the sources, who requested anonymity.

The main group, the Center for Participation in Democracy, has been operated by Cranston’s son, Kim, in Los Angeles.

Cranston, who has come under fire for soliciting contributions from the owner of failed Lincoln Savings & Loan of Irvine, reacted angrily to a reference to his son in a New York Times report saying that the groups were being investigated by “federal law enforcement authorities.”

“It makes my blood boil to see attempts to smear my son and drag him into the mud,” Cranston said in a statement that he read at a news conference in Los Angeles. “I know personally from Kim of the exquisite pains he took to ensure that registration drives he was associated with were legal, proper and bipartisan.”

Cranston called on FBI Director William S. Sessions to find out who had leaked word of the inquiry. Cranston’s attorney, William W. Taylor III, suggested in a letter to Sessions that the anonymous sources were “motivated . . . by political rather than law enforcement objectives.”

It had been reported earlier that the FBI is conducting a separate criminal review of intervention by Cranston and four other senators on behalf of Lincoln S&L; owner Charles H. Keating Jr., who contributed heavily to their campaigns as well as to the voter groups.

Cranston solicited $850,000 from Keating on behalf of three voter registration groups at about the same time that the senator met with federal officials in 1987 to discuss regulatory actions involving Lincoln. Cranston has also received $47,000 in direct campaign contributions from Keating.

The other senators who participated with Cranston in the sessions with regulators--Dennis DeConcini (D-Ariz.), John McCain (R-Ariz.), John Glenn (D-Ohio) and Donald W. Riegle Jr. (D-Mich.)--received a total of about $475,000 in contributions from Keating.

The question of whether the five senators performed favors in exchange for Keating’s donations is being investigated by the Senate Ethics Committee, at the request of Common Cause, a citizens’ lobbying group.

The government seized Lincoln last April, more than two years after regional S&L; regulators had advocated a federal takeover. Its financial collapse will cost taxpayers an estimated $2 billion or more, making it the most costly thrift failure ever.

Cranston has raised a total of more than $7 million in recent years for six voter registration groups, of which five are tax-exempt.

The IRS inquiry focuses on indications detailed by The Times in October that the five tax-exempt groups backed by Cranston might not have lived up to their nonpartisan label.

Interviews, public records and even some of the working documents of the groups showed that special pains were taken to register voters who would be likely to vote Democratic.

IRS officials have said that it is permissible for groups to concentrate registration activities in certain areas as long as people are not pressured into signing up with one party over another.

Cranston has acknowledged that his groups targeted areas likely to produce large numbers of new Democratic voters, but he has insisted that potential Republican voters were not turned away.

In a 1986 letter soliciting funds for the first of his tax-exempt groups, Cranston cited “keeping my Senate seat in the Democratic column” as the first of four issues of “great national significance” at stake in the 1986 elections.

Terrie Monaghan, a former business manager at the Center for Participation in Democracy, said that leaders of the group “got upset if too many Republicans” were registered.

Center leaders expected that Democrats would make up about three-quarters of the names that each worker collected, said Monaghan, herself a Democrat.

Carl Pope, a member of the group’s board, said that about 70% of the 233,000 voters that the group registered last year were Democrats, with the rest divided among Republicans, independents and those who refused to state their affiliation.

Kim Cranston, a top aide to California Lt. Gov. Leo McCarthy, was on vacation Wednesday and could not be reached for comment on the IRS inquiry.

Staff writers Keith Love and Kenneth Reich in Los Angeles contributed to this story.