Lowery Fund Controversy Raised Again

In a development that renews a controversy from his last campaign, Rep. Bill Lowery (R-San Diego) was among the public officials named by the U.S. Justice Department Wednesday as unknowing recipients of thousands of dollars in illegal corporate donations from a failed Texas savings and loan.

Along with such notables as former House Speaker Jim Wright, Sen. Alan Cranston and then-Reps. Tony Coehlo and Jack Kemp, Lowery improperly benefitted from the largess of Vernon Savings & Loan, according to a 38-count indictment filed Wednesday against Don R. Dixon, the thrift’s former owner. Vernon collapsed in 1987 and was later seized by the Federal Savings & Loan Insurance Corp. at a cost of about $1.3 billion--one of the most notorious thrift failures in U.S. history.

Lowery’s connection with Dixon first generated controversy in his 1988 reelection campaign, when it was revealed that he had received jet trips, yacht parties and a Del Mar fund-raiser valued at about $18,000 from the Vernon executive.

From the outset, however, Lowery has insisted that he believed that Dixon was spending his personal money, not corporate funds, on those occasions--a position bolstered by Wednesday’s Justice Department filings.

“There is no evidence that the campaigns and individuals named in the indictment as recipients of donations from the funds of a savings and loan engaged in any illegal or improper activity,” the Justice Department said. “As a matter of fact, there is no evidence that the named recipients of the campaign contributions had any knowledge of the illegal or improper activity alleged in the indictment.”

Karl Higgins, Lowery’s administrative assistant, said Wednesday that the Justice Department’s statement demonstrates that Lowery’s “campaign committee was defrauded, just as the taxpayers have been defrauded by the alleged wrongdoings of Don Dixon.”

Even before Wednesday’s indictment, bankruptcy records showed that Vernon’s corporate funds, not Dixon’s personal money, paid for the jet trips, yacht parties and Del Mar fund-raiser that Lowery received--only several of the many illegal contributions that Wednesday’s indictment charges were made to state and federal officials “for the purpose of currying favor and influence with them.”

Lowery could not be reached for comment Wednesday. However, in an October, 1988, interview, Lowery said that, on each occasion, Dixon “represented these things as being personal expenditures.”

The expenditures by Vernon Savings that were made in Lowery’s behalf include:

Three January, 1986 trips aboard Vernon’s corporate jet: a Jan. 16-17 round-trip from Carlsbad to Dallas for a fund-raiser, and a Jan. 20 trip from Palm Springs to Carlsbad.

According to Lowery’s campaign finance statements, his political committee reimbursed Vernon Savings $274 for air fare in March, 1986. However, based on figures included in affidavits and other records, Kripke has estimated that Lowery’s pro-rated share of the expenses for those trips totaled about $1,400.

A Dec. 7, 1985, fund-raiser at Dixon’s $2.8-million Del Mar beach house, for which Vernon Savings incurred expenses of $7,238.

In partial accounting of those expenses, Lowery reported receiving two non-monetary contributions of $1,000 each from Dixon and his wife, Dana, in January, 1986. Two months later, Lowery’s campaign committee paid Dixon $2,972 as a reimbursement for catering expenses.

In addition, in 1988, Lowery sent the Federal Savings & Loan Insurance Corp. a $4,000 check to cover Vernon’s costs associated with the fund-raiser. In an accompanying letter, Lowery’s campaign treasurer asked that the check be returned if the agency determined that Dixon, not Vernon, paid for the event.

Three 1986 parties aboard the Vernon yacht High Spirits, at a cost to the thrift of $9,549, according to bankruptcy records.

Court documents show that Lowery hosted 39 guests at one party and 24 at another, while the third event was a dockside party for Lowery and his staff.

Noting that one of the parties was for the press, Lowery said: “If we thought we had a problem or that there was anything wrong, do you think we’d have invited a couple dozen reporters?”