Baugh Gave Cash Back to Campbells : Disclosure: New O.C. assemblyman acknowledges repaying $1,000 donation in Democratic rival’s home. Such an act is illegal, but he says he thought the sealed envelope contained a check.

Newly elected Republican Assemblyman Scott Baugh acknowledged through his lawyer Wednesday that he personally returned in cash a $1,000 contribution from the husband of onetime Democratic challenger Laurie Campbell.

Baugh made the cash payment to the Campbells at his house, handing over a sealed envelope to them on the evening of Sept. 21, the day that Campbell entered the race, said Ron Brower, Baugh’s lawyer. Brower said he was speaking for the assemblyman.

Brower said the legislator was unaware that the envelope, which had been given to him by campaign treasurer Dan Traxler, contained $1,000 in cash rather than a check.

A Sacramento judge ordered Campbell removed from the 67th Assembly District ballot a month before the election amid allegations that she was a “stealth candidate” recruited by GOP leaders seeking to siphon votes from Baugh’s chief Democratic opponent, Linda Moulton-Patterson. Republican leaders and Baugh have repeatedly insisted that they had nothing to do with her candidacy.

It is illegal in California for a campaign to receive or make any payments in excess of $100 in cash, according to a spokesman for the Fair Political Practices Commission.

“Baugh does not know what’s in [the envelope],” Brower said. “He does not think, ask or know, or pay any attention to the contents of the envelope.”

Baugh (R-Huntington Beach) also acknowledged on Wednesday--through his lawyer--that he has known and been friends with the Campbells since 1987, when they lived in the same apartment complex in Sacramento. During the campaign, Baugh at first said he did not know Laurie Campbell, then indicated the two had a passing acquaintance through their church, Mariners in Newport Beach.

Robert Rinehart, a lawyer for Traxler, disputed Baugh’s version of events.

“I have no information about whether [Traxler] places $1,000 in an envelope,” Rinehart said. “My client obtained the funds in cash. He gave it to Mr. Baugh for the return to Mr. [Rick] Campbell. He got cash because Baugh told him to get cash.”

Baugh, previously a political unknown, launched his candidacy this summer in the recall campaign to replace Assemblywoman Doris Allen. He was backed by the recall campaign’s honorary chairman, Rep. Dana Rohrabacher (R-Huntington Beach).

Relying on an aggressive and expensive mail campaign to woo absentee and high propensity voters, he also won three dozen key endorsements from leading Republicans officials, including Assembly GOP Leader Curt Pringle and Gov. Pete Wilson.

All the while, opponents charged he was hiding his links to Campbell.

Now, it is known:

* Baugh and Laurie Campbell worked at the same Sacramento law firm in 1987 and 1988.

* The two lived in the same Sacramento apartment complex.

* Rick Campbell gave the Baugh campaign $1,000 early in September.

* The contribution was returned in cash the evening of Sept. 21, the day Laurie Campbell filed her petitions and paid a $699 filing fee.

* The contribution was omitted from the campaign report filed Oct. 19.

* The contribution was omitted from the amendment of that campaign report, filed Nov. 6.

* The contribution was omitted from a campaign report filed Nov. 17.

* The contribution was reported Nov. 28, three hours before the polls closed and too late to affect the election.

The dispute between Traxler and Baugh over the return of the contribution is the backdrop for expected visits to the Orange County district attorney’s office next week by Baugh and Traxler.

The district attorney’s office is investigating Campbell’s candidacy and Baugh’s potential links to it. Campbell was removed from the ballot in October after a Sacramento Superior Court judge ruled that her nomination papers had been falsified. While she signed under oath that she had gathered nomination signatures, the judge found that she had not circulated them. The petitions had actually been circulated by two unidentified men, an investigation by The Times found.

Supervising Deputy Dist. Atty. Guy Ormes has also said the office is investigating Baugh’s campaign disclosure statements.

At the heart of Baugh’s statements, made through his attorney on Wednesday, is his previous failure to disclose the contribution from Rick Campbell, which came in a check to the campaign. Baugh’s Republican and Democratic opponents contend that he hid the contribution because his campaign fostered the Campbell candidacy and needed to conceal the links between the two.

Baugh did not report the $1,000 check from Rick Campbell throughout the three-month race, then revealed it in a campaign finance report filed late on election day. In the report, Baugh wrote that the contribution had previously been “inadvertently omitted.”

Bill Press, California Democratic Party chairman, called on the Fair Political Practices Commission to investigate Baugh, suggesting that uncovering the “tangled web of money laundering would take both the FBI and Scotland Yard working together.”

A spokesman for the FPPC declined to say whether the agency is investigating Baugh, but noted that the “premise of the Political Reform Act is that the voters are entitled to know what contributions are received and how that money was spent.”

Spokesman Gary Huckaby said that in general filing an amendment on election day to hide a campaign event “would probably come under the heading of aggravating factors and would relate to whether we took a case and how it was settled.”

Penalties for violations are misdemeanors and carry up to a $2,000 fine per incident, he said.

Brower said that Baugh relied on Traxler to prepare his four campaign finance reports correctly and promptly.

Baugh learned “late in the day on Sept. 21 that [Laurie] Campbell was running,” said Brower, and told Traxler in a telephone call “we have to give [Rick Campbell] his contribution back.”

During the phone call, Baugh “directs Traxler to do that,” Brower said.

“Without Baugh being present, he, Traxler, in turn writes a check to cash. He, Traxler, signs and cashes the check,” said Brower. “That night, he, Traxler, takes the money in a sealed envelope to Baugh.”

Baugh “did not ask for cash or instruct the payment to be made that way,” he said.

The first version of the campaign report attributes the $1,000 contribution to Baugh rather than Rick Campbell, saying it was returned to Baugh as cash.

Baugh did not see that error in the first report due in mid-October, Brower said. It bears his signature, which Baugh contends was put there by Traxler, said Brower. Traxler has said that he left the report at campaign headquarters and later picked it up already signed.

In the second report, the contribution changes to a loan from Baugh that was repaid. It was signed by Baugh, but “he did not read it,” said Brower.

When Baugh learned a week later about the continued omission of the Rick Campbell contribution, he ordered on three successive days that it be corrected and, when it wasn’t done, Baugh wrote Traxler a memo, Brower said.

“In light of all the press coverage over the Campbell candidacy, an amended report may be politically embarrassing. However, it is more important to me that our reports accurately reflect what happened that it is to avoid political embarrassment,” the Nov. 16 memo reads.

Traxler has offered a different version of the reporting of the $1,000 contribution. Traxler has previously said he originally listed the $1,000 contribution as coming from Baugh because Baugh told him he made the contribution himself in cash.

The $1,000 stood out, Traxler has said, when he was reviewing campaign banking records while preparing the original report. The $1,000 “appears as a deposit along with a $3,500 deposit and I could only find $2,500 in checks to correspond with it,” he said.

Traxler said he asked Baugh about the remaining $1,000. “Scott remembers it as cash” he gave to the campaign, Traxler said.

Traxler said he issued the corrected versions as soon as Baugh gave him the details. Asked why it took nearly two weeks from the issuing of the memo to the filing of the election day report, Traxler said: “I reported it as soon as I was given the corrected information.”

Times staff writer Eric Bailey contributed to this report.