Election Fund Allegations Revive Bitter Political Feud : Campaign: The battle that started with the race for 3rd District council seat has moved into the legal arena.

Last year’s City Council race between Doug Drummond and Jim Serles was surely one of the nastiest this town has seen in some time. Each accused the other of stealing campaign signs and buying votes. Serles sued Drummond for libel. Serles’ cat had to be shaved after someone wrapped it in Drummond bumper stickers.

It appeared that the candidates’ grudge match was settled at the polls in June, 1990, when Drummond handily won the 3rd District seat.

But now, 15 months later, it’s clear that the animosity between these two Long Beach public servants has merely moved from the political arena to the legal one. There, Serles, a former city planning commissioner and successful dentist, is accused of a variety of political misdeeds--virtually all of them based on information supplied by the Drummond camp.

The Los Angeles County district attorney, the state Fair Political Practices Commission and the federal Comptroller of the Currency that oversees national banks are reviewing allegations that Serles:

* Concealed $27,000 in campaign contributions by depositing them in his dental business account at International City Bank. The 1974 Political Reform Act requires that campaign funds be kept separate from personal accounts.

* Failed to report $15,175 in campaign contributions in apparent violation of FPPC laws requiring that all political donations be disclosed.

* Accepted $5,750 in campaign funds from contributors who had business pending before the Long Beach Planning Commission, which Serles then chaired.

* Attempted to extort campaign contributions from McDonnell Douglas in exchange for supporting the aerospace giant in his role as planning commissioner. According to court documents, Serles told McDonnell Douglas governmental regulations manager Robert Fleming in 1989 that without a campaign donation, “I am not sure I can continue to support McDonnell Douglas.”

The 50-year-old Serles, who has since resigned from the Planning Commission, was vacationing last week and unavailable for comment. He denied the allegations in a recent interview with The Press-Telegram, however, saying he never muscled McDonnell Douglas for a contribution.

Serles also said that if any campaign funds were improperly deposited, he was not aware of it. “I’ve got probably seven different accounts at the bank,” Serles said. “If it (an improper deposit) was put in, it was certainly inadvertent.”

He said he accepted some 700 campaign contributions and, to his knowledge, every one of them was reported in accordance with the law.

His resignation from the planning commission was not related to the allegations, he said, but to a heavy workload and travel schedule.

Drummond has refused to discuss the charges he leveled, saying that he prefers to “let the record speak for itself.”

No formal charges by a government agency have been filed against Serles. While the FPPC opened an investigation several months ago, the allegations are merely being reviewed by the district attorney to determine whether an investigation is warranted, said Deputy Dist. Atty. Gail Ehrlich.

A Sept. 3 letter from the comptroller of the currency in San Francisco confirms that information sent to the federal agency by the Drummond camp has been forwarded to bank examiners for review.

The intense governmental scrutiny ballooned out of the hostility-filled 1990 campaign between Serles, a three-time loser for the Belmont Shore-area seat, and Drummond, the dark horse, a retired police commander who beat him.

During all the campaign sniping in that spring of 1990, Drummond released a flyer accusing Serles of “vote-selling.” Serles responded with a $6-million libel suit.

Drummond said he asked his homeowners insurance company to defend him in the lawsuit and when company officials refused, Drummond sued them. When a judge ordered the insurance company to defend Drummond, the firm promptly settled the case for $50,000. Drummond strongly protested, maintaining that he had done no wrong and that the settlement suggested he had to resort to libel to win the election.

Now Drummond is suing his insurance company in an attempt to nullify the settlement. And part of the strategy of discrediting the settlement is to prove that whatever Drummond said about Serles was true, court documents show.

Drummond and his attorney, Douglas L. Mahaffey, forwarded much of the information they unearthed over the past year to the district attorney and the FPPC.

Drummond’s political consultant, Timothy Carey, filed the complaint that sparked the review by the federal comptroller.

Carey was named with Drummond in the $6-million libel suit. Although Carey was ultimately dropped from the suit, he never got over the sting of having been named, saying his professional reputation had been besmirched.

“The only way for my name to be cleared up is for Mr. Serles to be prosecuted,” Carey said. “This way, if a client asks me if I was ever sued for libel, I can say, ‘Yeah, but the guy who sued me was eventually fined for everything I said about him.’ ”

Asked if all this is an extension of a hateful campaign gone wild, Drummond said he has put his beef with Serles to rest.

“The stress level was extremely high when he (Serles) sued me. I am a person of relatively modest means, and everything I have accumulated took us a lifetime as a family to accumulate,” he said.