CALIFORNIA ELECTIONS : U.S. SENATE : Huffington Accuses Feinstein of Improper Votes : Ad says senator supported bills that benefited a firm partly owned by her husband, who terms the charge outrageous.

After months of complaining that his wife was an unfair political target, U.S. Senate candidate Mike Huffington focused Monday on Sen. Dianne Feinstein’s husband in a blistering television commercial that accuses Feinstein of improperly voting on bills that benefited the couple.

Specifically, the commercial accuses the incumbent Democratic senator of casting four votes on education bills that benefited a “fraud-ridden” program whose largest shareholder is Richard Blum, Feinstein’s husband. The ad, which began airing statewide Monday, also charges that Blum and the Irvine-based company--National Education Corp.--have received “millions from taxpayers.”

“Feinstein,” the ad concludes, “a senator who serves special interests . . . and her own.”

Feinstein’s campaign manager and Blum immediately attacked the commercial as outrageous.

“They are saying Feinstein votes certain ways to benefit her and her husband. The fact is they lost money. The say the company received (more than $100 million) since she became a senator. The facts are NEC did not receive this money from the federal government. . . . They are loans that go to students,” said campaign manager Kam Kuwata.

Blum called the ad “a desperation attempt by a politician who, frankly, is out of control. And I deeply resent his taking a totally distorted shot at National Education Corp.

“I have sat by for six months while both (Huffington) and, on occasion, his wife, have absolutely distorted everything my wife has ever stood for. . . in what has been absolutely the most malicious campaign I have ever seen,” Blum said.

Huffington’s campaign stood by the allegations, which were to be aired in both 30-second and 60-second spots, the latter the longest negative ad aired so far by Huffington.

Although the commercial clearly implies that Feinstein’s husband is profiting from her government service, Ken Khachigian, Huffington’s senior adviser, insisted that its intent is not to attack her husband but to show Feinstein’s conflict of interest.

“Dick Blum is not the issue. The issue here is Dianne Feinstein voting on an issue that directly benefits her financially,” Khachigian said. “It is one thing for Mr. Blum to have financial interests. It is quite another for her (Feinstein) not to . . . know there is a conflict and decline to vote.”

The most potentially damaging accusation centers on the alleged profit made by Blum because of votes cast by Feinstein in her two years in the Senate.

According to the commercial, NEC has received more than $100 million in federal funds since Feinstein became a senator.

But Feinstein’s campaign pointed out, and Huffington’s spokesman admits, that NEC has received federal funds for student loans for years, perhaps decades. In addition, the funds were part of multibillion-dollar appropriation packages approved by Congress with no specific allocation to NEC.

Those funds were provided to students, not directly to the schools.

Blum insisted that his company’s investment in NEC has actually lost about $12 million during his wife’s tenure in the Senate.

The commercial also charges that “some controversial schools are run by the National Education Corp., whose largest shareholder is Richard Blum’s company.” Later, the ad claims that NEC employees pleaded guilty to 23 counts of defrauding the government and have been investigated by federal officials.

Huffington’s campaign claims that those investigations were handled by the Department of Education’s Office of Inspector General. Blum acknowledged that three employees at one NEC center in Houston did plead guilty to forging documents to receive about $300,000 in federal loans.

But Blum added that the misdeed took place in 1988, shortly after his company acquired some shares in NEC only because it had purchased another company he owned.

Blum also disputed claims that his company is NEC’s largest shareholder. It owns about 3.5% of NEC’s shares, he said, but controls a limited partnership that owns another 18% of the company.

But the Huffington campaign says the ad is accurate.

“If she had not voted for the appropriations, I would be hard-pressed for us to make a case that there would be a political issue here,” said Khachigian.

“In this case, I think what is clear is that Dianne Feinstein should have been all the more vigilant about her votes in support of this (program) given not only that there was a financial conflict of interest on her part but that it was a conflict involving a program that certainly was not exactly receiving kudos” from federal officials.