Feinstein Agrees to Pay $190,000 for Violations : Campaign: Fine is for failing to comply with finance disclosure rules in 1990 governor’s race. State watchdog agency says errors were unintentional.

In the largest cash settlement against a candidate for statewide office, U.S. Sen. Dianne Feinstein agreed Monday to pay a $190,000 fine to the state Fair Political Practices Commission for failing to comply with campaign finance disclosure rules in her unsuccessful 1990 race for governor.

While agreeing to the settlement, the commission found no evidence of “intentional misconduct on the part of Sen. Feinstein, her committee or staff,” said the political watchdog agency’s executive director, Wayne Ordos.

The announcement comes on the heels of a settlement with the Republican victor, Gov. Pete Wilson, who agreed last month to a $100,000 fine for reporting violations in the hotly contested campaign.

FPPC Chairman Ben Davidian said that the commission, which approved the Feinstein penalty in a closed-door session Monday, intended to send a warning to politicians throughout the state by levying fines in both cases.

“This agency takes these reporting laws very, very seriously and politicians must do so as well,” Davidian said. “People have a right to know who is giving what to whom and when. And they have a right to know how a campaign is spending the money and when they spend it.”

When the FPPC made the allegations in April, Davidian had said: “This was no simple act of forgetfulness” and called it “an outrageous case of gross negligence that permeated the campaign.” But in announcing the settlement, he said that the commission came to a different conclusion--there was “no intentional misconduct.”

Feinstein had no statement on the settlement, said the director of her office in California, Kam Kuwata.

“We’re glad that it’s over,” Kuwata said. “It is a very time-consuming and diverting process. And litigation is an expensive proposition. At some point you want to put these things behind you so that she can focus all of her attention as a member of the U.S. Senate. We’re glad that there was recognition on the part of the FPPC that this was unintentional.”

Kuwata also said he did not want to “fan the flames,” reviving what had become a bitter dispute between the Democratic candidate and the FPPC, which filed suit against Feinstein on April 1, early in her campaign for the Senate.

Her opponents for the Senate seat, including Democrat Gray Davis and Republican John Seymour, sought to make an issue of the allegations in the suit--that she and her campaign committee had failed to properly report $8.4 million in campaign receipts, loans and expenditures.

Central to the civil suit was that the candidate and her campaign committee failed to fully disclose a series of bank loans totaling $2.9 million. The commission charged that Feinstein neglected to report that her husband, financier Richard C. Blum, was the co-signer on the loans and that the largest one, for $2.4 million, was from the Bank of America.

The FPPC also charged that Feinstein and her political advisers had failed to itemize $3.6 million in campaign expenses, failed to report completely $1.4 million in contributions, and neglected to notify large donors of special reporting obligations.

As part of the settlement, Feinstein took responsibility for negligence in reporting the financial details of her gubernatorial campaign. And, for its part, the FPPC agreed that neither she nor her campaign had intentionally violated the Political Reform Act, the campaign policing statute enacted by voters in 1974.

“When all is said and done, even when you have professional lawyers and professional accountants, even pros make mistakes and the candidates have to take responsibility,” Kuwata said.

Davidian said: “She just did not have a good enough system in place to deal with the huge amounts of money she should have anticipated receiving and spending.”

The campaign rules for fund raising shifted significantly for Feinstein and Wilson just six weeks before the November, 1990, election when a federal court threw out campaign contribution limits approved by voters two years earlier.

The ruling resulted in a flood of sizable contributions to both candidates and accounted for some of the errors in both cases.

But Davidian said that there were clear differences in the two campaigns that explain why Feinstein’s penalty was higher than Wilson’s. Generally speaking, Wilson had “an extremely well-run campaign,” Davidian said.

He said the Wilson campaign failed to report in detail how it spent $7.1 million in campaign funds, but did report that the money went to television and radio advertising.

But Feinstein’s campaign failed to account at all for $3.5 million in spending “until almost two years after the election,” despite numerous warnings from the secretary of state that the information must be reported, Davidian said.

Both campaigns could have been fined an amount equal to their reporting failures--$8.4 million for Feinstein and $7.4 million for Wilson.

But Davidian said that the maximum fines were not considered in either case and that he was pleased with both settlements.

He pointed out that the appointed commission has four members, including Davidian, a Republican, and three Democrats. The settlement required three commission votes for approval, he said.

California Common Cause praised the settlement. “It sends a very strong message to all candidates and officeholders in California that violations of the Political Reform Act will not be tolerated,” said Common Cause lobbyist Kim Alexander.

She said that Feinstein’s failure to reveal the detailed nature of her campaign loans was important politically “because she had always said that her husband’s finances and his wealth did not have any influence on her decision-making as an elected official, and here he was the person who secured the loans for her.”