Developer Fined for Illegal Campaign Funding : Election law: FPPC says Arnold Construction funneled money, then reimbursed employees. Company says it didn’t seek favors.

The California Fair Political Practices Commission fined an Orange County developer $10,000 on Thursday for laundering campaign contributions to a variety of candidates in city, county and statewide races.

During 1989 and ‘90, Anaheim-based Arnold Construction funneled $2,880 in campaign contributions through two employees, then reimbursed them with money drawn from three development partnerships associated with the firm.

The company, which specializes in shopping center development, is solely owned by Arnold D. Feuerstein, who also has controlling interest in two of the three partnerships that ultimately supplied the campaign cash.

Although the commission felt the violations were “very serious” because the public was denied information on the true source of the campaign funds, it did not find evidence of “a specifically planned or orchestrated money laundering scheme,” according to Jeanette Turvill, an FPPC spokeswoman.

Among those who got the campaign cash were Gov. Pete Wilson, Assemblyman Mike Gotch (D-San Diego) and Anaheim Councilman Irv Pickler, who got $1,000 to help him hold onto his seat by a slim 152-vote margin in the November, 1990, election. None of those who received the money has been accused of any wrongdoing.

Most of the candidates who received money from Arnold Construction were vying for political seats in areas where the development firm does business--Orange, San Diego or Riverside County.

Feuerstein denied any wrongdoing, saying the firm has “never looked for political favors” in return for campaign contributions and that the FPPC fine came as “a real surprise” because he was unaware it might have been violating the state’s political finance rules.

He suggested the firm could have prevailed if it had pressed the case in court, but decided to pay the fine rather than get embroiled in a protracted legal battle.

“If I had nothing else to do we probably would have appealed the thing,” he said. “But to tell you the truth, we’re so busy and so tied up with so many things we decided just to settle it.”

The FPPC complaint alleged that two employees of Feuerstein’s firm--his son, Elliot Feuerstein, and son-in-law Richard S. Rudolph--made six contributions during 1989 and 1990 in their own names and were reimbursed by Arnold Construction. In each instance, the development firm then withdrew like sums from the accounts of the three development partnerships--Brookhurst Shopping Center, Mira Mesa Shopping Center and Perris Property Partnership.

By making a campaign contribution in the name of another person, the firm undermined the campaign disclosure provisions of the state Political Reform Act and deprived the electorate of “essential information” about who was supporting a candidate, the FPPC said in a press release.

Feuerstein said the company opened its books to FPPC investigators, but that the watchdog agency “really must have a misunderstanding of how our bookkeeping works.” He said what the agency construed to be laundering was actually just “an administrative misapplication” that probably came about because “some temporary help misapplied a reimbursement” to the employees.

“There was no bad intention or anything like that,” he said. “It’s an innocent situation. It’s not a big deal. I hope the state puts the money to good use.”