Former Espy Adviser to Plead Guilty, Lawyer Says : Probe: Lobbyist allegedly made illegal campaign contributions to Espy’s brother. Charges stem from inquiry of ex-Cabinet secretary.

James H. Lake, a prominent lobbyist who acted as a behind-the-scenes adviser to former Agriculture Secretary Mike Espy, will plead guilty Wednesday to making illegal campaign contributions to Espy’s brother, Lake’s attorney said Monday.

Lake’s admission comes in response to charges filed by Donald C. Smaltz, the court-appointed independent counsel investigating allegations against Mike Espy, who was President Clinton’s first agriculture secretary. Lake, a former senior campaign aide to both Ronald Reagan and George Bush, is the first person against whom Smaltz has brought charges in his 13-month inquiry.

Lake will admit that he helped engineer a plot to steer $5,000 in illegal corporate campaign contributions to help Henry Espy retire substantial debt from his unsuccessful 1993 primary campaign to win his brother’s Mississippi congressional seat, said Plato Cacheris, Lake’s attorney. Lake will plead guilty to one felony charge of wire fraud and two misdemeanor violations of campaign finance law.

In a letter dated Monday to the partners of his lobbying firm, Lake admitted violating the law. There was “no excuse for what I have done,” he said.

“I cannot explain my lapse of judgment, which is counter to the principles upon which the firm was founded, nor the fact that I did not reveal the illegal campaign contribution or the independent counsel’s investigation of my activity to you.

“Obviously, I violated not only the law, but the trust, confidence and friendship that you have shown me for many years.”

The charges against Lake, Washington’s foremost lobbyist for California agriculture, the chairman of the influential advocacy firm of Robinson Lake Sawyer Miller and a well-known Republican campaign strategist, reflect a broader focus of the inquiry: Mike Espy’s relationship with Sun Diamond Growers, a major California fruit and nut producer, and Richard Douglas, a senior president at the company. Lake was a longtime lobbyist for Sun Diamond.

Smaltz is examining whether Espy improperly accepted gratuities from Sun Diamond and, in turn, provided the company with governmental benefits, say sources familiar with the investigation. He has made Espy’s relationship with Tyson Foods Inc., the giant Arkansas-based poultry producer, the other major focus on his wide-ranging inquiry.

Neither Douglas nor Sun Diamond has been charged with wrongdoing. But Lake is cooperating with Smaltz and is expected to testify against Douglas and Sun Diamond, said sources familiar with Lake and the investigation. The sources said that Lake is not expected to testify against either Mike or Henry Espy.

Deputy independent counsel Charles G. Bakaly III, declined comment.

Smaltz charged in court documents filed Monday that Lake undertook the fund-raising scheme in conjunction with an unnamed senior executive for a large California agriculture cooperative. Sources familiar with the inquiry said that the reference was to Douglas, a close friend of Mike Espy since their college days together. Douglas employed Lake as a lobbyist for Sun Diamond and maintained an office at Lake’s firm.

Henry Espy lost a special Democratic congressional primary in March, 1993, and incurred considerable debts.

By March, 1994, the debt remained at $75,000 and Douglas and former California Democratic Rep. Tony L. Coelho, who also had ties to Espy and Sun Diamond, arranged a Washington fund-raising dinner. Coelho could not be reached for comment.

In court papers, Smaltz said that Lake and the unnamed associate agreed during a March 1, 1994, telephone conversation to use $5,000 from the associate’s firm to contribute to Henry Espy’s campaign. It is illegal to make corporate contributions to federal campaigns.

Lake then sought out four colleagues in his Washington office to agree to each make $1,000 contributions--the legal limit--with the understanding that Lake would reimburse them, which also violates federal campaign law, according to the document. Three agreed to do so.

Lake then submitted an expense voucher to the company’s parent firm, Bozell, Jacobs, Kenyon & Eckhardt Inc., for a fictitious $5,000 contribution on behalf of the corporate client to a dinner for a nonprofit Washington organization. Lake repaid the three associates, reimbursed himself for his $1,000 donation and pocketed the remaining $1,000, the document says.

The felony count is for wire fraud arising from the use of telephone communication to defraud the parent company of $5,000. Lake could face up to five years in prison and $250,000 in fines for that offense and lesser penalties for the misdemeanors.

Attorney John M. Dowd, who is representing Douglas, said that--if the unnamed associate is “Richard Douglas--it’s totally false. It never happened. And at the right time we will prove it.”

Dowd acknowledged that Douglas was involved in the fund-raising effort but he emphasized that “it was an open, honest, lawful effort to defray a campaign debt of Henry Espy.”

He added that Douglas has not been asked to testify before a grand jury or been interviewed by Smaltz’s investigators. Smaltz has requested voluminous records from Sun Diamond and Douglas.

Sandra McBride, vice communications manager for Sun Diamond, said: “We’re surprised by this current development regarding Jim Lake. . . . The company and its officers have conducted themselves in a responsible manner.”

Mike Espy’s attorney, Reid Weingarten, said that his client was not implicated in the charges regarding Lake.

“We’re surprised and saddened with news of the deal,” Weingarten said. “We’re not threatened by it because none of it has anything to do with Mike Espy.”

Henry Espy, who is mayor of Clarksdale, Miss., did not return several phone calls.

Lake had represented Sun Diamond in Washington at least since 1980 and was a leading proponent of Central Valley agriculture interests in general for many years as well.

A California native, he was communications director for both Reagan’s 1980 and 1984 campaigns and was deputy campaign manager of Bush’s 1992 reelection bid. He was active in California Gov. Pete Wilson’s abortive bid for the 1996 Republican nomination as well.

Lake resigned from Robinson Lake Sawyer Miller on Monday. He had run the 40-person Washington office, which does public relations, advertising and lobbying. The name of the firm was changed Monday to Robinson Lerer Sawyer Miller. Ken Lerer was one of the firm’s founders.

“For all of us who have known and worked with Jim Lake, the revelation that he had this aberrational lack of judgment was a shock,” Linda Gosden Robinson said Monday. “What he did was against the principles and policies of the firm and out of keeping with his own character. . . . We are profoundly sorry that our professional association with him has to end in this manner.”

Times staff writer Robert L. Jackson contributed to this story.