‘PAC Man’ Points Way to Power

In 1988, when big business wanted to get two pro-development candidates elected to the Huntington Beach City Council, they called one lawyer--Dana W. Reed.

Reed, a Costa Mesa attorney known to his critics as “PAC Man,” helped three political action committees--each heavily funded by Chevron Corp. and builders with interests in redevelopment--spend $165,000 to elect Jim Silva and Don MacAllister.

Despite a city ordinance limiting direct contributions from PACs to $1,500 per candidate, it was all perfectly legal.

To political insiders, that election had the earmarks of another smooth operation by campaign finance attorney Reed, whose law firm advises a hefty and influential list of political spenders in Orange County.

“He can make it possible for people to do things they never thought they could do,” said Assemblyman Gil Ferguson (R-Newport Beach). “A company comes to Reed and says: ‘I want to make sure this candidate wins, but I don’t want my name on the front page of the newspaper. Would you explain to me how I do that?’ He’s like the lawyer for the Godfather, but he’s honest.”

While perhaps best known for helping direct millions of dollars in transit funds as chairman of the Orange County Transportation Commission, Reed, 46, plays a far less visible but equally potent role in local politics.

To his clients, the self-assured lawyer has become the Mr. Goodwrench of campaign finance--the lawyer most turned to when the county’s powerful special interests want to maximize their financial clout on Election Day.

“He does a good job for us,” said Tim Carey, director of Southern California Caucus, a corporate-financed PAC that spent about $60,000 on the 1988 Huntington Beach race. “I present him with situations and I ask how to do something. He reviews all the rules and tells us how to do it correctly.”

But to his critics, such as longtime county activist Shirley Grindle, Reed is a shrewd back-room dealer whose talent for exploiting the weaknesses of local campaign reforms undermines the law’s intent to check the influence of money on politics.

“I call him PAC Man. He is definitely an architect of ways to get around the law,” said Grindle, who helped draft the county’s TINCUP ordinance, a campaign reform to limit the impact of political donations on the votes of the Board of Supervisors. “He provides legally safe advice. But ethically and politically, it is poor advice.”

Reed says he is just doing his job, looking for ways both clever and obvious to give his clients what they want while making sure they don’t run afoul of the state Fair Political Practices Commission, which monitors campaign-related activity.

“I try not to say no,” said Reed, a tall, stocky man who seems to fill a room when he stands. “I go to the cases and the law books and attempt to find ways for my clients to achieve their goals. That’s what a lawyer does.”

Frustrating political reformers, though, is the fact that lavish spending to influence a local election is still possible in Orange County and elsewhere with a combination of political action committees, individual campaign donations and independent spending on behalf of a candidate, Grindle and others say.

Such methods have been firmly entrenched in local politics with the help of Reed, whose firm is the largest of its type in the county. His staff of 14, including two other lawyers, handles about 150 clients and serves as campaign treasurer for 20 to 40 political action committees during election years.

Judging from his clientele and family, Reed is almost synonymous with the Orange County construction industry. His wife, Christine, runs the local Building Industry Assn., the trade organization for development companies. Many of those same interests and their political action committees--which are groups of contributors who have banded together to support various candidates or ballot measures--have sought his expertise.

In the 1988 Huntington Beach election, for example, Reed’s firm was treasurer for three PACs that contributed to the council race. Each committee was largely funded by many of the same corporate and construction industry sources, according to campaign finance reports.

In some cases, companies and their employees gave maximum allowable contributions to their favorite candidates, then gave thousands more to the political action committees, which also helped those candidates, reports show.

The spending of Southern California Caucus and the other pro-development PACs played an important role in the defeat of Planning Commissioner Geri Ortega, a critic of the current course of Huntington Beach’s downtown redevelopment.

Ortega was the target of two last-minute political mailings by Southern California Caucus, which was supporting Silva and MacAllister. One mailer, sent to slow-growth proponents, described Ortega as pro-development; the other, sent to proponents of development, painted her as anti-growth.

Carey, the executive director of the PAC, described the mailings as the local equivalent of the Willie Horton ads used by the Bush campaign in 1988.

The expenditures for the mailings and some of the contributions to the PAC were not disclosed to the public until after the election.

“The late disclosure techniques are used to hide who gives,” said Ortega, who was defeated by 251 votes after leading in the polls earlier in the race. “The PACs know how to do that and they have Dana Reed telling them how to do it.”

Citing attorney-client privilege, Reed declined to comment on anything that was said between Southern California Caucus and his office, except to say the PAC’s activities were proper.

“Under no circumstances would we represent a client who was purposefully breaking the law,” he said. “Our whole business would be destroyed if we did anything that was unlawful. If we’re involved, then we believe it is legal. We have to be able to sign, under penalty of perjury, that what we did was lawful.”

Reed’s skill, which now brings him a salary in the low six figures, is the culmination of a political career that began in high school, when he decided to skip college and work on Ronald Reagan’s gubernatorial campaign. Reagan eventually appointed Reed to his Administration and, at age 25, the young man who used to attend city council meetings for fun became California’s deputy state controller.

Reed’s specialization in election law followed his graduation from law school in 1974, just as the Watergate scandal triggered a wave of campaign finance reforms across the country, including the first requirements that political contributors and the amounts they give be disclosed to the public.

Later, other reforms sought to limit the influence of individuals and corporations on politics by setting campaign donation limits and the terms under which they could give to certain candidates.

The legislation sparked a cottage industry for legal experts such as Reed. Soon, he and his colleagues became versed in the letter of the law and the weaknesses that can allow contributors to delay reporting their contributions and exert financial influence, in many cases, beyond the prescribed limits.

But it is between the letter of the law and its intent that Reed and his colleagues often find themselves, and, critics say, they repeatedly employ a variety of legal methods that frustrate campaign reform. Among them are:

* Independent expenditures. Under a U.S. Supreme Court ruling, no limits can be placed on money that is spent by a political action committee on behalf of a candidate as long as the funds are not given directly to the person.

* Late public disclosure of campaign contributions. Contributors--particularly those who don’t want publicity--can give to a candidate or a PAC just before the election. The donation does not necessarily have to be disclosed until after voters have gone to the polls.

* Political action committees. Many cities and counties do not have donation limits that apply to PACs.

* Avoiding state “earmarking” provisions. Contributors to a PAC who specifically request that their donations be passed from the PAC to a candidate must publicly disclose that the donation is a pass-through from the contributor. In that case, donation limits for individual contributions apply. But if contributors lobby the PAC leadership on the candidates they would like to see supported financially, it is not considered earmarking. In many cases, more money can be donated or unregulated independent expenditures can be used.

Reed and his partner, Cary Davidson, have helped deploy some of these methods for a host of developer-funded PACs, conservative groups, and the political action committees of the California Tax Reduction Movement started by the late Howard Jarvis. Jarvis was author of Proposition 13, which reduced state property taxes.

Reed was also hired to write Proposition 140, last year’s initiative to limit the terms of Assembly members and state senators to eight years, and was treasurer for a political action committee that opposed auto insurance reform.

“He can be an intense worker, and (that) showed up all the time,” said Vigo (Chip) Nielsen Jr., Reed’s former law partner, whose San Francisco firm is now the largest political law specialist in the state. “But he is more than a fine lawyer; he knows the crisis mentality of politics and the need to respond to the crisis in an extraordinary way.”

Among other things, Reed salvaged the nascent political ambitions of former Los Angeles Police Chief Ed Davis in February, 1980, after Davis missed the deadline for filing his candidacy papers for state Senate by a few minutes.

Undaunted, Davis hired Reed who in turn sued the secretary of state’s office. In court, Reed argued that Davis had read inaccurate information in a registrar of voters’ pamphlet and that no one would be harmed by his late candidacy.

Although the law was clear, the pamphlet was muddled about the deadline, prompting a Superior Court judge to add Davis to the ballot--an exceedingly rare action duplicated only one other time. Davis won the election and went on to a lengthy political career.

“He calls me Perry Mason,” Reed said.

Yet, Reed admitted, he doesn’t always feel like Perry Mason, whose cases often seemed so black and white. Attorneys in the field liken the thicket of political reforms to the Internal Revenue Service code, an ever-changing body of regulations fraught with weaknesses, gray areas, loopholes and differing interpretations. Reed himself calls the law “a moving target.”

He estimated that the state Political Reform Act alone has been changed at least “200 times” by the Legislature, regulatory agencies and ballot initiatives, making it difficult to enforce.

Nevertheless, several political observers and activists partly blame Reed and other inventive lawyers like him for undermining years of political reform. Campaign contributors, they say, can still spend as much as they want and keep it from the public until the last minute if they are determined and have the right legal advice.

“Nothing is concrete,” said Robert M. Stern, a former general counsel for the Fair Political Practices Commission and co-director of the bipartisan California Commission on Campaign Financing. “People are very smart and they try to get around the law. There is a need to keep changing and tightening the regulations every five or 10 years.”

Howard Adler, chairman of the Orange County Democratic Party, offered a different opinion. “I think they’ve distorted the process and have basically created a situation where they entrench incumbents because PACs dominate the financial process to such a degree and they are only accessible to incumbents,” he said. “PACs started out as a reform, but it’s a reform that hasn’t met any of its goals.”

Adler and others contend that the increasing use of political action committees has substantially undercut public disclosure provisions by creating a “huge, monumental bureaucracy” between PAC contributors and the candidate who gets the money.

“It becomes a paperwork nightmare for the average citizen to find out what is going on, to even find out what county the PAC operates out of,” Grindle said.

Grindle, who has monitored Orange County’s TINCUP ordinance since it was passed by voters in 1978, is one of Reed’s harshest critics. The ordinance, which she co-wrote, has been called illegal by Reed, who says he has advised clients to use PACs as a way to avoid TINCUP entirely.

“It is not always safe to be right legally,” Grindle said. “You need to appear to be right morally to your constituency. He can’t judge both sides of the issue.”

Reed has repeatedly questioned the constitutionality of TINCUP, which stands for Time Is Now, Clean Up Politics, contending that it is really a limit on an elected official’s right to cast a vote rather than a ceiling for donations.

“To say you can give as much as you want and put the burden on the official is unconstitutional. I’ve been talking about this for years,” Reed said. “TINCUP tries to regulate the behavior of the supervisors. But not very well. Public employee PACs give big money and the board still votes on matters that affect their membership.”

The blame for TINCUP’s drawbacks and the flaws of other campaign reforms, Reed says, should rest with the authors of that legislation and those who approved it. He believes reforms have done some good, but frankly admits that they are probably ineffective because they are poorly written.

If TINCUP and other campaign reforms are revised in the future, Reed suggested that contribution limits be established on a per election basis rather than a yearly basis to prevent incumbents from raising funds throughout their terms. Historically, challengers have been at a disadvantage because they have no more than a year from the time they declare their candidacies to raise funds.

Candidate-to-candidate contributions should be eliminated, he said, and full disclosure of donations and campaign support should be required. He said it is difficult, though, to limit individual contributions to PACs and independent expenditures because the U.S. Supreme Court has said that certain election-related spending is free speech.

“There are some effective laws. We can go farther, yet we have all these papers here before us today,” Reed said as he pointed out campaign disclosure forms scattered across his cluttered desk. “If they’d hire me, I’d write a reform initiative and get it right.”

BACKGROUND

A Times Orange County Edition series last month showed that political action committees have increased their giving in county supervisors’ races dramatically. Since 1977, the year before a county campaign law went into effect, PACs have contributed $821,532 to supervisors and supervisorial candidates and their annual contributions have jumped by 684%, a Times computer analysis found. PAC contributions represent a particularly controversial brand of giving in Orange County because the local conflict-of-interest law, known as TINCUP, requires supervisors to abstain from matters involving their major contributors. But the law doesn’t mention PACs, so supervisors can accept those contributions without having a conflict. Campaign reform advocates now want TINCUP revised to cover PACs.

Campaign Finance Tactics The following is a page from a campaign disclosure statement filed on Aug. 2, 1990, by Southern California Caucus, a Los Angeles-based political action committee funded by many of Orange County’s development interests. The committee’s treasurers have been Dana W. Reed and his law partner, Cary Davidson. The page shows the candidates Southern California Caucus supported locally in the June 6, 1990 election. But it also illustrates four legal ways to avoid disclosure of contributions and to spend large amounts of money in ways not regulated by campaign donation limits.

POLITICAL ACTION COMMITTEES Southern California Caucus is one of them, and campaign reform laws in many cities and counties do not restrict the amount of money a PAC can contribute to or spend on behalf of a candidate. INDEPENDENT EXPENDITURES Spending of this type, which has been upheld by the U.S. Supreme Court, is not a contribution given directly to an office-seeker, but funds spent by a PAC on behalf of a candidate for mailers, polling, canvassing or other election-related items. Candidates are not supposed to request that independent expenditures be made for them or have a say in how those funds are spent. The method is particularly useful in Irvine where Southern California Caucus spent $999 each in support of council candidates William A. (Art) Bloomer and Barry J. Hammond--more than six times the contribution limit. Under city law, a PAC cannot give a candidate more than $160 in direct contributions per year. Also, state law does not require the supervisorial and city council candidates to report independent expenditures as donations on their own campaign disclosure statements. THRESHOLD AMOUNTS Under state law, campaign donations and independent expenditures of $1,000 or more must be disclosed to the public within 24 hours in the final days of the campaign. But spending $999, as shown for seven of the eight candidates listed, avoids that requirement. TIMING OF DONATIONS Independent expenditures or campaign donations made shortly before an election usually do not have to be reported to the public until months after voters have gone to the polls. In the case of Southern California Caucus, it made independent expenditures of $999 for each of seven candidates all on May 29, 1990, about a week before the election. Under state law, the PAC did not have to file its final campaign disclosure statements for that election until Aug. 2, 1990.

Source: Orange County reistrar of voters