Fringe Party Wins Funds, If Not Voters : Politics: New Alliance group appeals to outsiders and the disillusioned. But its knack for bringing in money is envy of many rivals in the mainstream.

When the first federal matching funds for the 1992 presidential campaign were paid out late last year, Lenora B. Fulani received the third-largest amount, trailing only President Bush and Iowa Sen. Tom Harkin.

Longtime political observers discounted the accomplishment, noting that Fulani, who chairs the leftist New Alliance Party and ran in the Democratic primary in New Hampshire, simply had gotten her small fund-raising act together before better-known candidates.

But when the second round of matching funds was distributed late last month, Fulani’s share had grown to $763,928. This time, she came in fifth, but still ranked ahead of Paul E. Tsongas, Edmund G. (Jerry) Brown Jr., Patrick J. Buchanan and former Democratic candidate L. Douglas Wilder.

The large sums reflect one of the most effective, if unorthodox, fund-raising operations in modern American politics. Using tenacious street-corner and door-to-door solicitations followed up by aggressive telephone pitches, New Alliance targets electoral dropouts who consider themselves disenfranchised by the mainstream political parties.

But big contributions do not necessarily translate into big victories. When the votes were tallied in Tuesday’s New Hampshire primary, Fulani had received only 402 votes.

The meager showing may be attributable in large part to a general lack of voter familiarity with Fulani and the organization she represents. But it also points to the sharp controversy surrounding New Alliance and many of its principal figures.

New Alliance’s detractors, including its 1984 presidential candidate, say the party has cult-like characteristics, mixes psychotherapy with politics and serves as a front for an inner circle of extremists led by New York entrepreneur and former college teacher Fred Newman. In addition, the Anti-Defamation League of B’nai B’rith says the alliance is “tainted by anti-Semitism,” and critics accuse it of trying to infiltrate and take over rival leftist groups.

Fulani, Newman and other members of the party hierarchy deny the accusations, maintaining that such charges are attempts by discredited “Establishment” elements to prevent New Alliance from broadening its base of support.

Fulani acknowledges that New Alliance places a premium on fighting the two-party system. New Alliance hopes to eliminate laws and regulations that restrict access to ballots by independent and insurgent candidates, and to build a third party under the New Alliance standard. “The democracy issue is not a little thing,” she said.

The party also has a left-of-center platform, including the position that jobs, health care, housing and education “should be rights rather than privileges,” Fulani said. “We should have a constitutional amendment providing that no one in this country can be without a decent and affordable shelter.

“I have been leading a grass roots movement to challenge the bipartisan political monopoly that runs our country on behalf of corporate America,” she said. “My positions are the working principles with which I and tens of thousands of like-minded Americans are guiding the black-led, multi-racial, pro-gay, people-instead-of-profits, independent political movement for democracy and inclusion.”

New Alliance’s fund-raising prowess, based on techniques perfected by soap makers nearly 50 years ago and pursued with unusual perseverance, is remarkable. The party has raised “close to $1 million” from about 60,000 contributors so far during the current election cycle, said Madelyn Chapman, the campaign’s chief spokeswoman. That’s about as much money as New Alliance had received by the end of the 1988 campaign, she said.

An examination of the party’s filings with the Federal Election Commission shows that an unusually large number of contributions come from low-paid fund-raising personnel who work for New Alliance, or from businesses with which the party or affiliated concerns have dealings.

Jackie Salit, assistant campaign manager for Fulani, said the large share of funds raised internally should come as no surprise. “No doubt it comes about because our people are ideologically committed,” she said. “Since so much of the work done in the political field is mercenary, we pride ourselves in (having) people who work for their beliefs.”

But Dennis Berlet, a leading critic of New Alliance, said the list of contributors raises “substantial questions” about its operations. “The money tends to go in a circle,” said Berlet, an analyst for Political Research Associates, a Cambridge, Mass., organization that monitors political groups.

Founded in 1979, New Alliance is but one element of a mushrooming empire of affiliated enterprises--some profit, but most nonprofit--spawned by Fred Newman.

They include Washington-based Rainbow Lobby, which ranked among the 15 largest congressional lobbying organizations in 1988; the Castillo Cultural Center, a group of artists and writers who espouse common political views; the National Alliance, a leftist newspaper; Castillo International, a distributor of video and audio tapes; Castillo Communications, a public relations firm that books theatrical artists and lecturers; Fred Newman Productions, which produces entertainment projects and manages songwriters and performers, and the East Side Center for Social Therapy.

The social therapy center, which claims to be the largest group therapy operation in New York City, shares quarters in a second-story condominium loft in Soho with the newspaper, the cultural center, and Castillo International. Community Literacy Research Project, another part of the empire, owns the floor and leases the space to the tenants.

(The Castillo name, common to many of the endeavors, is in memory of Otto Rene Castillo, a Guatemalan poet and revolutionary who stressed the responsibility of artists and intellectuals to the poor. He was burned alive in Guatemala in 1967.)

Newman, by all accounts, is the guru of the movement.

A self-described “product of the ‘60s,” Newman, 56, is a bear of a man. His thinning hair is pulled back in a pony tail, he sports a goatee and mustache, and he appears for an interview wearing a rumpled gray sweater.

Newman holds a doctorate in philosophy from Stanford University. He once taught at City College of New York, but says he “dropped out” after giving A’s to all of his students “as a semi-anarchistic, anti-war protest.” He said he didn’t want to increase his students’ chances of being drafted by giving them lower grades.

In the 1970s, he organized Centers for Change, which promoted “alternative schools and alternative living arrangements” primarily in New York but briefly in San Francisco.

In 1973, Newman became involved with another left-winger, Lyndon H. LaRouche Jr. and his National Caucus of Labor Committees. By the following June, Centers for Change had disbanded, and Newman and some 50 others moved over to the LaRouche organization.

That association continues to haunt Newman and other New Alliance leaders, partly because of the LaRouche group’s penchant for violence and its subsequent move to the far right. LaRouche is now serving a 15-year federal prison sentence for mail fraud and tax evasion involving the use of political funds for other ends.

Newman, describing LaRouche and his followers as “recognizably kind of crazy, but not notably crazier than other elements on the left,” says that he and all but five of his former colleagues left the LaRouche organization in 1974--two months after they joined.

Critics of New Alliance, including Berlet and Dennis Serrette, the party’s 1984 presidential candidate, contend that Newman’s version of his relationship with LaRouche is a whitewash.

Serrette has accused Newman of using psychotherapy to “brainwash” and maintain control of the party’s inner cadre.

Allegations that the party has anti-Semitic tendencies are based in part on the refusal by Newman and Fulani to renounce Black Muslim leader Louis Farrakhan over his sharply critical comments about Jews and their religion.

The charge also reflects some of Newman’s own comments. A Jew by birth, Newman nonetheless characterized Jews as “the storm-troopers of decadent capitalism” in a 1985 party speech in Harlem.

“I think the statement is accurate,” Newman said when asked about the remark. He contended that Zionism--the movement to establish a Jewish homeland in Palestine--has caused Jews “to effectively make a deal with Washington to function in particular ways in the Middle East . . . in exchange for a great deal of dollars and a whole lot of protection.”

Unlike the charges that New Alliance and its leaders represent the political fringe, the fund-raising techniques employed by the party seem totally mainstream.

At a recent evening session in New York, nine New Alliance solicitors sat around a conference table analyzing and rehearsing telephone techniques.

“The key to this work is listening,” advised Bob Levy, an executive with Fred Newman Productions who ran the practice session.

“If someone’s in a hurry and you’re not sensitive to it, you’re going to lose it,” he said after one caller in a practice session kept an obviously impatient prospect on the line too long.

About 10% of New Alliance’s contributions are raised over the telephone and 90% in face-to-face soliciting in malls, on street corners and door-to-door. But those called are previous contributors. The party finds “cold calls” unrewarding, one fund-raiser explained.

Minutes after the half-hour practice session wrapped up, the callers were back on the phones, seeming even more persistent than they had in the dry-run.