Washington Confidant Falls From Grace, Into Courtroom

When Agriculture Secretary Mike Espy announced his resignation a year ago amid allegations that he had illegally accepted football tickets and other small gifts from agribusinesses, friends and critics wondered aloud how a successful public figure could seemingly risk so much for so little.

The predicament of James Lake, a trusted associate of former Presidents Ronald Reagan and George Bush and a high-powered Washington insider, has raised similar questions. Lake will plead guilty today to wire fraud and violations of election law in connection with a scheme to raise $5,000 in illegal corporate campaign contributions for Espy’s brother, Henry.

On Tuesday, a day after the charges and planned guilty plea were announced, the usually self-assured Lake had few answers himself.

“I don’t know why I did it,” Lake told The Times. “I’d never done it before. It violated my own standards of ethics.”

To a friend, he confided that the situation became “like a hangnail that grew into cancer.”

His reputation severely damaged, his name unceremoniously expunged from the politically connected advocacy and communications firm that he helped found, Lake will appear in federal District Court today to admit committing a felony and two misdemeanors. He will enter the plea in response to charges brought by Donald C. Smaltz, the independent counsel who has been investigating the accusations against Espy for 13 months.

Sources said that Smaltz’s prosecutors and Lake’s attorney have agreed to ask U.S. District Judge Ricardo M. Urbina to assess a fine of $150,000 and to leave open the question of any prison time, tying it to the cooperation that Lake provides to Smaltz. The Bakersfield native has agreed to assist the independent counsel.

Lake’s fall stems from a convoluted scheme to help reduce the campaign debt of Henry Espy, who lost a 1993 special Democratic primary election for the Mississippi congressional seat that Mike Espy previously had held. He needed to raise $75,000 in early 1994 to pay off a bank debt that had come due, sources said.

Lake’s associates said Tuesday that he agreed to solicit the illegal corporate donations at the behest of Richard Douglas, Mike Espy’s closest friend and a senior vice president of Sun Diamond Growers, a major agricultural cooperative in Pleasanton, Calif. Sun Diamond has employed Lake as a lobbyist for 15 years.

Sun Diamond has denied any wrongdoing. John M. Dowd, Douglas’ attorney, said that his client raised funds for Henry Espy but that the effort was “open, honest, lawful” and that the allegations against Douglas are “totally false.”

Lake acknowledged that he approached three associates in Robinson Lake Sawyer Miller--Mark Helmke, president of the firm’s Washington office, and Lake’s two sons, James Lake Jr. and Michael Lake--to make contributions of $1,000 each to Henry Espy’s campaign in March, 1994. Lake also gave $1,000, the legal maximum.

At the same time, Lake submitted a bill to his firm’s parent company, Bozell Worldwide Inc., for a “fictitious” donation of $5,000 to a nonprofit corporation on Sun Diamond’s behalf, according to court papers and interviews. Lake used the funds to reimburse the three donors and himself.

Lake has agreed to plead guilty to making an illegal corporate campaign contribution, to illegally reimbursing campaign donors and to wire fraud.

Times staff writer Ronald J. Ostrow contributed to this story.