Ex-Assistant Accuses Kim of Slander

Rep. Jay C. Kim has been hit by a $1-million slander lawsuit alleging that he maliciously told the media that his former chief assistant was to blame for any irregularities in his 1992 congressional campaign or in his engineering business.

The lawsuit was filed this week by Frederick Schultz, former chief financial officer at JayKim Engineers Inc., who also served briefly as campaign treasurer during Kim’s 1992 run for the 41st Congressional District, which includes part of Orange County.

In the suit, Schultz charged that the Republican legislator falsely accused him of conduct that violated election laws and the Internal Revenue Service Code, including improper withdrawals from the company’s pension and profit-sharing plan. The lawsuit said Kim blamed Schultz “to divert attention and investigations of himself.”

The suit said Schultz followed the election laws and the IRS Code to the best of his ability “except where prevented by Kim from doing so.” He stated that “any discrepancies in campaign reporting were the fault of Kim.”

The suit also said that Kim falsely identified Schultz as the source of confidential information leaked to the media.

In his suit, Schultz alleged that Kim made defamatory statements about him to the Los Angeles Times and to listeners of C-SPAN.

Kim did not return phone calls seeking comment. But before a speaking appearance at the West End Republican Club dinner Thursday in Ontario, he said he would not comment on the lawsuit until he has been served with it.

Schultz left JayKim Engineers in May, about the same time Kim sold the company to a real estate entrepreneur, Sung Woo Min. Kim has since revoked the sale to Min and resold the company to a group of investors headed by Jaycee Kim, the father of Kim’s son-in-law, David Kim.

Kim said Thursday that despite the involvement of his son-in-law as chief financial officer of the company, the engineering firm is “not really” controlled by his family. He said the sale complies with his campaign promise to sell the firm to avoid conflicts of interest when the company bids on government contracts.

“I sold it, so I kept my promise,” he said.

Kim and the company are under investigation by the FBI, Federal Election Commission, IRS and Department of Labor. The investigations were sparked by reports in The Times in July that Kim had secretly used hundreds of thousands of dollars in corporate funds to pay some of his congressional campaign expenses. Corporations are prohibited by law from contributing money to federal campaigns.

Records obtained by The Times show that Kim’s corporation provided his campaign with free office space, staff and office supplies. The firm also paid Kim’s salary and expenses as well as campaign bills ranging from airline tickets to telephone service.

Kim denied wrongdoing, saying: “The truth will come out very soon. The sooner the better.” He said no investigative agencies have contacted him personally.

In an interview in July, Kim told The Times that he had instructed Schultz to keep track of how much the corporation spent on the campaign and repeatedly told Schultz to send the campaign a bill, but he did not.

In the lawsuit, Schultz said he was “instructed by Kim not to bill the campaign.”

Last month, Kim hired a prominent Republican Party accountant, J. Stanley Huckeby, to audit his campaign expenditures and company books. Kim said the review would be finished by the beginning of August. On Thursday, he said it is “almost done.”