CALIFORNIA ELECTIONS / U.S. SENATE : Attacks Grow Stronger on Both Sides : Candidates bring spouses and staff into fray. Feinstein accuses her opponent of being racially insensitive in his hiring of advisers. Huffington ads attack business dealings of senator’s husband.

Far from taking a summer break, California’s U.S. Senate race raged at full boil Tuesday as both major campaigns exchanged some of the sharpest accusations of the contest, attacking staff members and spouses.

In angry and personal tones, Democratic Sen. Dianne Feinstein’s campaign charged that Republican challenger Michael Huffington “is a damn liar” for attacking financial investments made by the senator’s husband.

Feinstein officials also accused Huffington of being racially insensitive by hiring three strategists with controversial backgrounds in ethnic voting. The charge was prompted by Tuesday’s announcement that Huffington’s team has added Edward J. Rollins, a nationally known consultant who revealed--and then recanted--a strategy to suppress the black vote in last year’s New Jersey governor’s race. Rollins also ran Ronald Reagan’s 1984 reelection campaign.

In a campaign that has been a slugfest since polls showed the race growing tighter last month, Tuesday’s developments seemed to take things up another notch.

Huffington, a Santa Barbara congressman who has financed most of his campaign with money from his family oil and gas company in Texas, launched two more commercials attacking Feinstein, continuing their tit-for-tat, multimillion-dollar advertising battle.

One Huffington commercial, on radio, warned voters that Feinstein is known for negative campaigns. The second ad, on television, attacked the Democrat’s claim that she is tough on illegal immigration.

At the same time, Huffington was slapped Tuesday with a $20,000 fine by the Federal Elections Commission for not properly reporting all of the personal contributions he made to his 1992 House campaign.

Federal officials said they initiated the investigation after discovering that Huffington did not report a $250,000 contribution he gave to his own campaign before the November election, as is required. Huffington reported the contribution after the election.

Huffington counsel Benjamin L. Ginsberg criticized the FEC action, saying the error was minor and inadvertent and did not effect the election’s outcome.

But of all of the developments Tuesday, perhaps the most telling about the campaign’s direction were the personal attacks.

Feinstein’s husband, Richard C. Blum, has been scrutinized in previous campaigns for a private investment business that has earned him a fortune estimated at more than $50 million. In the past, Feinstein officials have bristled at the attention, saying it is inappropriate because Feinstein is not involved in her husband’s business deals.

But Tuesday, the Democrats seemed ready--if it meant the same attention could be paid to Huffington’s wife, Arianna Stassinopolous Huffington, a provocative and controversial best-selling author whose latest book talks about her unconventional search for spiritual meaning.

“This opens a new area--are (candidates) responsible for the activities of their spouse?” Blum said Tuesday. “We’ll take that one on.”

Huffington’s campaign charged in a news release that it was fair to call Feinstein and Blum “junk bond profiteers” since the Democrat’s campaign had called Huffington “an oil millionaire.” But Huffington provided no evidence that Blum had ever dealt with junk bonds, let alone profited from them.

The allegation stems from Blum’s role in helping organize about $100 million for a $3.6-billion purchase of Northwest Airlines. The five investors that made up the $100-million deal five years ago included First Executive Life Insurance Co., which was later seized by state regulators after extensive use of junk bond financing.

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But Blum said none of the funds used by First Executive in the Northwest investment came from junk bonds. “It is a total outright lie,” Blum said Tuesday. “We were a million miles away from that.”

Huffington campaign adviser Ken Khachigian did not offer additional proof, but said the charge was fair because Blum dealt with a company that used junk bonds in its other business deals. “A rose by any other name smells as sweet,” he said. He also defended the campaign’s attack on Feinstein’s spouse, saying Feinstein benefits from the profits and because she opened the door by questioning Huffington’s personal finances.

Khachigian also said it would be inappropriate for Feinstein’s campaign to raise issues about Huffington’s wife unless they are pertinent to the campaign.

“My feeling is generally that we ought to all tread relatively carefully in this area in dealing with spouses,” he said. “I would want to know what the relevance was to (Huffington’s) ability to conduct himself as a U.S. senator.”

Responding to the appointment of Rollins as a campaign adviser, Feinstein officials said it is one more example of indifference to ethnic voters by Huffington’s strategy team.

In addition to Rollins, Feinstein officials said two other top Huffington advisers have been involved in controversies regarding ethnic voters.

The producer of Huffington’s television commercials, Washington-based Larry McCarthy, crafted the controversial Willie Horton ad that helped defeat 1988 Democratic presidential candidate Michael Dukakis. The ad was derided as racially explosive because it centered on Horton, a black convict who raped a woman while on furlough from a Massachusetts prison during Dukakis’ term as governor.

Another Huffington adviser, Carlos Rodriguez of Sacramento, was the campaign manager for a 1988 Republican state Assembly campaign that hired uniformed guards to stand outside polling places in Latino neighborhoods of Orange County to deter voting by illegal immigrants. The action led to a civil lawsuit on behalf of Latino voters who said they were intimidated by the guards. It was settled out of court for $400,000.

Rollins was the lead consultant in the successful Republican campaign for New Jersey Gov. Christine Todd Whitman. After the campaign, Rollins told reporters the campaign spent $500,000 to pay campaign workers and ministers to suppress the black vote in Democratic areas. Rollins later said he fabricated his story and an investigation found no evidence that such payments were made.

But his hiring prompted Feinstein campaign manager Kam Kuwata to ask if Rollins had “come on to depress turnout in the African American community.”

“If it was one hire, that would be one thing,” Kuwata added. “But to have this group of all-stars that are assembled to try and decrease turnout, it speaks volumes. There is a pattern that emerges. These are all people with some effort to affect turnout in the minority community.”

Khachigian responded angrily to the allegation of racial insensitivity, saying “that is an irresponsible statement . . . that is using innuendo to suggest something very slanderous. . . . The fact is . . . you’ve mentioned three professionals . . . and there is nothing in this campaign that looks untoward. Unless that happens, (Feinstein) should just shut up. Those are cheap shots by panicking opponents.”