State Sues Campbell’s Wife, Former Aide : Fees: Attorney general accuses ex-state senator’s wife and her business partner of wrongfully useing their connections to collect $427,000.

The wife of former state Sen. William Campbell and his former legislative aide wrongfully used their connections to collect several hundred thousand dollars that would have otherwise gone to charitable services sponsored by Campbell’s annual conferences on women, the state has alleged in a lawsuit.

Atty. Gen. Dan Lungren alleges in a lawsuit filed in Orange County Superior Court this weekthat Margene Campbell and her business partner, Karen Smith, violated state law when they collected payments that were above market value for organizing Sen. Campbell’s Conference on Women in Anaheim in 1987 and 1988. At the time, Smith was also then-Sen. Campbell’s district coordinator for his Orange County offices.

The nonprofit annual conferences offered women tips on personal development and career advancement. Money raised from the conferences was to be used to underwrite future conferences and workshops.

However, the state alleges, the net surplus received from the conferences in 1987 and 1988, which totaled $427,000, was instead used to pay Margene Campbell, Smith and their firm, West Coast Seminars of Laguna Niguel, for consulting work.

The firm collected “a sum far in excess of the fair market value of services” provided the conference, the lawsuit states.

“Smith and Campbell unduly and wrongfully used their respective influence as Sen. William Campbell’s field organizer . . . and spouse to obtain” the contracts for their firm, the suit alleges, and “to unjustly enrich (West Coast Seminars) for their own financial benefit.”

The suit also names as a defendant John J. Costello, former president and member of the conference’s board of directors. It alleges that he neglected his duty by signing contracts “out of loyalty” with Margene Campbell and Smith, instead of obtaining other competitive pricing bids.

The lawsuit seeks compensatory damages and recovery for investigation and litigation costs.

Smith, Costello and the Campbells could not be reached Friday for comment.

The lawsuit is a culmination of investigations conducted by the state attorney general’s office in 1988, when reports surfaced that Campbell’s wife and his staff members received payment from the conferences.

Almost immediately, Campbell, who represented parts of Orange and Los Angeles counties, withdrew his name from the popular conference, which he had sponsored since 1984. Campbell retired from office in 1989 and is now president of a lobbyist group in California.

According to court documents, early in 1987 Smith, who was an officer and director of the conference, began organizing the conference, as she had the year before.

On April 13, 1987, Smith and Margene Campbell became partners in the newly created West Coast Seminars. Two days later, Costello signed a contract with the firm for consulting services. By then, most of the preparation for the April 19 conference had been completed, court records show.

The firm was paid $185,000 for that conference, which was held in Anaheim.

In early 1988 Smith--again as the senator’s legislative aide--organized that year’s conference, also held in Anaheim, court documents said. On Jan. 25 of that year, Smith and Margene Campbell renewed their West Coast partnership.

Costello signed a contract with their firm for advisory services a week later, according to court documents. Again, the suit says, by the time Costello hired the firm, preparation for the April 4 conference was nearly completed. West Coast was paid $242,000 for its services, according to the suit.