Carpenter Is Indicted in Corruption Inquiry : FBI sting: The State Board of Equalization member is accused of illegally soliciting campaign contributions when he was a state senator.

Paul Carpenter, a State Board of Equalization member and a former state senator, was indicted Thursday on four counts of extortion, racketeering and conspiracy charging that he used his position as a legislator to illegally solicit campaign contributions from interest groups.

Carpenter, accused of engaging in a pattern of extortion that dates back as far as 1980, is the second elected state official indicted in an ongoing FBI investigation of political corruption in Sacramento.

In one instance, the Downey Democrat received $20,000 from federal agents who were pushing legislation as part of a sting operation in the state Capitol. Carpenter received $5,000 of the money personally from one undercover FBI agent who tape-recorded their conversation, prosecutors said.

Another time, the indictment says, Carpenter illegally solicited a payment from the Western Grower’s Assn. According to one source familiar with the investigation, that payment was allegedly in exchange for his vote to confirm the controversial appointment of David Stirling as general counsel of the Agricultural Labor Relations Board.

Other alleged victims of Carpenter include an association of state prison guards, a medical school in Los Angeles, a Santa Ana emissions control company and a Beverly Hills hospital firm, according to the federal grand jury indictment.

Carpenter, who is seeking reelection this year to a second term on the state tax board, denied any wrongdoing.

“The spurious charges by the Justice Department are as much an insult to those who know and have worked with me in the Senate as they are to myself,” Carpenter said in a statement issued by his office. “I have never violated my oath of office, or even remotely engaged in criminal acts.”

The charges against Carpenter come less than six weeks after then-Sen. Joseph B. Montoya (D-Whittier) was convicted of seven counts of extortion, racketeering and money laundering stemming from the same federal investigation--code-named Brispec, for bribery-special interest.

With the indictment of Carpenter, U.S. Atty. David F. Levi warned other legislators that investigators will continue in their effort to “root out” and expose the “criminal connection” between payments to politicians and legislative action.

“The Brispec investigation has already succeeded in many of its goals, and the investigation will continue,” Levi said.

The charges against Carpenter focus on six incidents in which he allegedly sought to extort payments from various interest groups. However, he was successful in getting money in only one of the six cases--the $20,000 he received from undercover FBI agents, prosecutors said.

Investigators had sought to uncover evidence that Carpenter had also attempted to extract payments from citizens and companies that came before the five-member State Board of Equalization, to which he was elected in 1986 as the representative of southern and central Los Angeles County.

However, none of the charges focus on Carpenter’s activities as a member of the tax board, which has responsibility for hearing income tax appeals, assessing the value of property held by utilities and administering business taxes such as the sales tax.

But board member William M. Bennett, a longtime antagonist of Carpenter, said the indictment “brings into question a lot of decisions (by the board) over the last four years. All of the quiet and unnoticed things which were contrary to law and based on money and contributions are now going to see the light of day.”

The indictment is likely to spark a strong challenge to Carpenter’s hold on the tax board job, which pays $95,052 a year. Five candidates have filed against Carpenter in the June 5 Democratic primary.

In recent months, Carpenter has said privately that he had suspected that the $20,000 payment was part of an undercover operation. But he took the money anyway, he said, believing that if he took no legislative action on behalf of legislation agents were promoting, they would have no case against him.

In fact, as the Montoya conviction illustrated, it is not necessary to carry out a promise of a vote or other action to be found guilty of attempted extortion.

In December, Carpenter met with Levi to discuss the case. According to one source close to Carpenter, he left the meeting convinced that he would not be indicted.

Carpenter is scheduled to be arraigned in federal court March 28.

At his trial, Carpenter is expected to face damaging testimony from his former aide, John Shahabian, who was a key prosecution witness in the Montoya trial. Shahabian has been cooperating with FBI agents since 1987, when he was caught for his role in funneling the $20,000 in payments to Carpenter.

Shahabian testified earlier this year that he negotiated the $20,000 payment from an undercover agent with the idea that Carpenter would receive $5,000 and the rest would be divided among three other key politicians.

But Carpenter decided “he would take it all,” Shahabian told the Montoya jury. Carpenter also agreed to work behind the scenes on behalf of the bill sponsored by FBI agents, which was supposed to help a shrimp exporting company set up a plant near Sacramento, Shahabian testified.

The indictment seeks the return of the $20,000 Carpenter received from the FBI sting. Each count of the indictment carries a maximum sentence of 20 years in prison, and the maximum fine on all the charges would be $750,000 if there is a conviction.

Unlike the charges against Carpenter stemming from the FBI sting, the remaining allegations are based on the statements of individuals who came forward after the existence of the undercover investigation became public.

None of Carpenter’s alleged victims would comment on the case.

But according to the indictment, one incident involves Hamilton Test Systems Inc. of Santa Ana, which in 1980 had the exclusive rights to perform state-mandated smog checks on cars sold in the South Coast Air Basin.

That year, legislation was introduced that would have taken the business away from Hamilton and divided it among scores of service stations--a plan that eventually passed the Legislature. Carpenter, according to the charges against him, solicited a payment from a representative of the company.

In 1985, Carpenter allegedly solicited a payment from the California Correctional Peace Officers’ Assn., the prison guards’ union that has long pushed for expansion of the state prison system.

In addition, the indictment charges that the senator sought payments in 1984 from the Charles Drew Postgraduate Medical School, which is affiliated with UCLA, and from American Medical International, a Beverly Hills health care company that at the time owned 48 hospitals.

And in January, 1984, at the time the Senate was considering whether to confirm the appointment of Stirling, Carpenter allegedly solicited a campaign contribution from the Western Growers’ Assn. of Irvine, which was pushing for Stirling’s confirmation. Stirling, a former Republican member of the Assembly, won Senate confirmation to the post. He is now a Superior Court judge in Sacramento.

In the statement issued by his office, Carpenter predicted that he will be acquitted of all the charges. “I have a strong faith in our judicial system and I am confident when all the facts are made clear in this case, I will be vindicated,” he said.

Levi, at a press conference to announce the charges, noted that four public officials have been convicted as a result of the federal investigation. In addition to Montoya’s conviction, former Yolo County Sheriff Rod Graham pleaded guilty to bribery; his former aide, undersheriff Wendell Luttrull, pleaded guilty to extortion, and former Republican Assembly staff member Karin Watson pleaded guilty to extortion.

“All citizens of the United States are entitled to be governed by elected and appointed officials who are responsible to them and who govern in the public interest, without corruption, self-dealing or favoritism,” Levi said. “We continue to be grateful to those citizens who care enough about our system of free government, that they have come forward to help protect it.”

Contributing to this story were Times staff writers Virginia Ellis, Daniel M. Weintraub and Ralph Frammolino.

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