O.C. Democrats Fined for 1986 Race Violation

Two of Orange County’s most prominent Democrats agreed Friday to pay $10,000 each to settle civil charges they failed to disclose the source of $89,000 in campaign loans in 1986.

Former State Democratic Party Chairman Richard O’Neill and former U.S. Rep. Jerry Patterson acknowledged Friday that they did not properly disclose that O’Neill had co-signed two bank loans for Patterson’s 1986 race for supervisor.

Patterson called the civil charges politically motivated to help Orange County Dist. Atty. Michael R. Capizzi, who announced the lawsuit and settlement Friday.

O’Neill could not be reached for comment, but Patterson charged that Capizzi was seeking publicity in acting four years after the campaign-law violation, which he called “super-technical.”

Noting that Capizzi is in a hotly contested runoff election, Patterson said: “I think it’s press-motivated. . . . I don’t understand why it went on so long and then just three weeks before this (June 5) election, it came up.”

Capizzi, a Republican, rejected Patterson’s contentions. “I hold a nonpartisan office and will apply the law in a nonpartisan fashion,” he said. Capizzi was recently appointed to his office by the Board of Supervisors and faces opposition in November from Chief Deputy Dist. Atty. James G. Enright.

In the settlement signed Friday by Superior Court Judge Leonard Goldstein, both defendants admitted that they did not properly report the loans in financial disclosure statements during Patterson’s campaign for the county supervisorial seat now held by Don R. Roth.

It was one of the only times the county district attorney’s office has ever pursued civil sanctions against election-law violators where there was no evidence of criminal wrongdoing, said Deputy Dist. Atty. Ken Chinn, who negotiated the settlement. The lawsuit charged that the defendants had “negligently or inadvertently” filed erroneous forms.

“This probably signals that we will utilize the civil process where appropriate and not just leave that to the (state Fair Political Practices Commission),” Capizzi said in an interview. “This permits substantial fines in cases where it doesn’t appear that criminal remedies are necessary.”

Dana Reed, an election-law expert who prepares campaign finance reports for several Southern California candidates and contributors, said that the settlement of $10,000 for each defendant was high and that the state usually charges about $2,000 for each reporting violation.

Since two loans were involved in this case, Reed estimated the state would have imposed a fine of about $4,000.

Capizzi responded, however, that “we thought this was an appropriate fine . . . (and) apparently all the parties agreed that this was an appropriate conclusion to this case.”

The complaint stemmed from Patterson’s 1986 campaign for supervisor against Roth, then mayor of Anaheim, and Jim Beam, then mayor of Orange. Patterson, the only Democrat running for the nonpartisan office, finished third in the June primary, after which Roth won the seat in a runoff election.

Roth and his 1986 campaign manager, Harvey Englander, said Patterson was a serious candidate in the race because he had represented much of the district in Congress before he was defeated in 1984 by Robert K. Dornan (R-Garden Grove).

The violation was first flagged in 1988 by state auditors doing a routine random audit of campaign statements. Both O’Neill and Patterson filed corrections to their statements after they were notified of the infractions by the auditors.

County Democratic and Republican officials said Friday they did not believe Patterson had intentionally altered his finance report. They also said it was well-known that O’Neill, a wealthy Orange County developer, was strongly backing Patterson.

“I don’t think he did it on purpose,” Englander said. “We just always assumed that Dick O’Neill was a guarantor or a source of those loans. That was common knowledge.”

Roth said that Patterson is now a friend and supported him in his successful reelection earlier this month. He also said the close campaign in 1986 was raucous.

“Even breathing was a campaign issue,” he said. “Every day was a crisis.”

Santa Ana attorney John Hanna, former chairman of Orange County’s Democratic Party, was surprised that Patterson and O’Neill had agreed to pay a fine.

Calling both “men of integrity,” Hanna said: “I don’t know exactly what transpired. It appears to me . . . what they did they did unintentionally, without intent of violating any law. And they were wrong. And they’re paying the price for it. If I turn in my income tax return and I’m wrong, I’ve gotta pay the price.

“It’s not like these guys are dirtbags,” he added. “You go through 10 years of Congress, and (Patterson) doesn’t have a blot on his record.”

As a brief description of the accusation--and settlement--was read to him, Hanna seemed sympathetic to O’Neill’s and Patterson’s plight, blaming it in large part on the complexity of laws governing political campaigns.

Greg Haskin, executive director of the Orange County Republican Party, also sympathized regarding the complexity of election laws. “Many of these campaign finance laws are very complicated and very technical in nature,” he said.

“Often a person can try as hard as humanly possible to comply and still find themselves out of compliance,” Haskin said.

He added, however, that “the amount of the fine is some kind of an indicator whether or not there was any intentional wrongdoing. And a $10,000 fine is fairly significant, especially if it were agreed to out of court.”

Said Hanna, a longtime Democratic activist as well as a former Patterson aide who worked in his congressional office from 1976-1980: “The only thing I can say is that it appears the problem was a reporting one and not the substance of the loan. It was fairly well-known . . . that O’Neill was a major supporter of Patterson’s at the time.

“The implication one may have--that they were trying to hide the fact that O’Neill was involved--was hardly the case. O’Neill was encouraging him to run.”

Also, Hanna said, “there was, during this time period, some uncertainty about the law--what loan is personal, what loan is political. Apparently there was a violation here. That’s why all parties wanted to settle.”

Hanna noted that he could still remember Patterson’s race fairly well because “when Jerry ran, I told him not to do it.”

At the time, Hanna said, Patterson “was coming off a tough loss in ‘84,” when he lost his congressional seat of 10 years to Dornan. Hanna said he had been hoping Patterson would save his energies for a bid to reclaim his congressional seat in 1988, but Patterson decided instead to make a run for supervisor.

“It was an expensive election,” Hanna said. “I don’t remember how much.”

Haskin noted that he didn’t want to make any negative comment about Patterson. “The guy’s been sort of out of politics for enough years. . . . I wouldn’t want to kick the guy in the teeth.”

As for O’Neill, Haskin said, “it is a bit surprising that Richard O’Neill would get tangled up in a situation that would result in such a large fine. He’s very experienced in political affairs. It’s one of those things that somebody . . . should have known better.”