Penalties Averted by DNC Donor, Records Show

The intimate gathering at the White House in September 1995 presented a rare opportunity that Sacramento developer Angelo K. Tsakopoulos was not about to pass up.

There Tsakopoulos sat, opposite the president of the United States, sipping coffee with nine other guests in a room where the course of World War II was charted. President Clinton began by asking how he could do a better job.

“I told the president . . . how the bureaucrats are going wild,” Tsakopoulos recalled. His complaint: Federal regulators were blocking development of prime California real estate to save wetlands and the microscopic fairy shrimp that lived in them.

Tsakopoulos knew the issue all too well. At the time, his company--AKT Development Corp.--was locked in a nasty fight over the tiny organisms on 800 acres of pasture in southern Sacramento County that he planned to convert to vineyards. Despite federal warnings, his work crews went forward--without the required permits.

Nevertheless, Tsakopoulos in the end received a series of accommodations from three federal agencies involved in the issue, records and interviews show.

The story of Tsakopoulos is an example of how big contributors who participated in the coffee klatches, overnight White House stays and other special “programs” offered by the Democrats during the 1996 presidential campaign could make their voices heard inside government in a way that others could not.

An assortment of the several hundred donors who helped raise $180 million for the Democratic National Committee in the 1996 campaign had major issues at stake before administration agencies at the time. White House officials have insisted the administration never exchanged a specific policy action for a contribution.

Clinton, responding to a question about donors invited to White House events, said at a January news conference, “What they get from me, I think, is a respectful hearing if they have some concern about the issues.”

‘Direct Line to the White House’

However, records and interviews seem to indicate that Tsakopoulos received far more from the administration than a sympathetic ear.

Most notably, an Environmental Protection Agency official in Washington directed the staffers in the department’s West Coast office not to press for major fines or criminal sanctions against the developer, according to interviews with three former and current EPA staffers.

One of the reasons for the deference, said one EPA staffer, was that “Mr. Tsakopoulos has a direct line to the White House.”

Those connections translated into “special preference” for Tsakopoulos throughout the regulatory process, said Tom Coe, chief of the California permit section of the U.S. Army Corps of Engineers. “He has clout, he has access. . . . We’re aware of it.”

Indeed, Tsakopoulos is a longtime Democratic fund-raiser--he donated $165,000 last year to the Democratic National Committee--who enjoys considerable access within the Clinton administration. In addition to meeting with the president at the coffee klatch, Tsakopoulos was invited to a White House state dinner for Greek president Costis Stephanopoulos on May 10 of last year and spent the night in the Lincoln Bedroom. In 1994, Clinton was the guest of honor at a fund-raiser at the developer’s home.

Tsakopoulos said in an interview that, even though he frequently voices concerns to government officials about policies affecting the development industry, he draws the line at using his influence to benefit his own business endeavors.

“As a rule, I will not take advantage [when] I have the opportunity to speak to people that are decision-makers for personal gain,” he said. “I will not do that.”

Garamendi, Others Became Involved

Yet at the developer’s request, former California Insurance Commissioner John Garamendi, who became a top Interior Department administrator in 1995, weighed in for Tsakopoulos with two other federal agencies on the development case. In addition, federal administrators wound up flying from Washington to Sacramento for a daylong meeting with Tsakopoulos about his regulatory woes. And in what one memo described as a “highly favorable” arrangement for Tsakopoulos, the U.S. Fish and Wildlife Service waived its own policy requiring landowners to restore wetlands they destroy.

“This is greenback regulation,” said Charles Lewis, executive director of the Center for Public Integrity, a nonpartisan watchdog group in Washington. “If you have the greenbacks, you don’t get regulated. . . . I think this is extremely serious.”

One White House official said the administration was not prepared to comment on the treatment Tsakopoulos received, but added: “We’re looking into the matter.”

Garamendi noted that Tsakopoulos did not get all that he wanted.

“He got nothing special that others didn’t get” in other cases, said Garamendi, a longtime political ally of the developer.

Tsakopoulos found himself at odds with three federal agencies--the EPA, the Corps of Engineers, and the Fish and Wildlife Service--over wetlands called vernal pools and the tiny fairy shrimp.

The first skirmish came in late 1993 when the Corps of Engineers served notice that he needed a Clean Water Act permit to deep-plow 440 acres for a vineyard on 8,000 acres of grazing land in southeastern Sacramento County called Borden Ranch.

While complying, Tsakopoulos complained that “overzealous bureaucrats” were violating his civil rights because “deep-ripping”--the practice of using large steel shanks to break up hardpan down to 10 feet--was permitted under agricultural provisions so long as wetland areas were avoided, which he planned to do.

The regulatory landscape became rockier in September 1994 when the government declared several varieties of the fairy shrimp--a distant relative of the “sea monkeys” that can be ordered through comic books--to be threatened or endangered. This ruling imposed additional regulatory permits before Tsakopoulos could build his vineyards.

Nevertheless, documents show that the developer’s crews went ahead and plowed 250 acres in November 1994, prompting the Corps of Engineers to issue a “cease and desist” order. The crews deep-ripped an additional 800 acres without a permit in September 1995--and that same month Tsakopoulos shared his frustrations with Clinton at the White House.

At the coffee, the president listened attentively but made no commitment, Tsakopoulos said. “His comments were that it is very difficult to change the mind-set of the bureaucracy.”

Two months later, a team of staff members in the EPA’s San Francisco region recommended that Tsakopoulos be fined and considered for possible criminal prosecution, said two agency officials who asked not to be identified.

EPA Asked to ‘Extend the Olive Branch’

In a Dec. 7, 1995 conference call, EPA staffers brought their initial recommendation to Gregory E. Peck, deputy director of the wetlands division at Washington headquarters. But, citing Tsakopoulos’ ties to the administration, Peck asked the region to “extend the olive branch” and consider other options, said the two EPA officials.

“The gist of the message was that Angelo’s a big player and is well-connected, and we have to meet him halfway,” said Tony Lewis, a former EPA employee who made the recommendation and has since left the agency. “We’d have to extend ourselves to make this work.”

Added one EPA official: “We were just stunned. Everybody’s mouth dropped open at this conference call.”

Minutes kept in Washington of the conference call note the change in regulatory direction as well.

“Although the Region was moving towards a formal enforcement action in two of these cases (including the Borden Ranch property owned by Angelo Tsakopoulos), we suggested that the Region hold off at this time and instead pursue a strategy that could enhance the potential for compliance without the need for formal enforcement,” the note reads.

Peck said Friday that he had “never been asked, now or ever, to extend a political favor to anyone at any time.”

The following month, on Jan. 23, 1996, Tsakopoulos reached out to Garamendi at the Interior Department, records show.

After-the-Fact Permit Granted

“He just said, ‘Can you help me? I’ve got this problem down here and need to get it resolved,’ ” Garamendi said.

Garamendi is a former California legislator, insurance commissioner and gubernatorial candidate who has known Tsakopoulos for 25 years. Garamendi had attended fund-raisers at the developer’s home and said Tsakopoulos was “of great help” financially in 1992 when Garamendi ran Clinton’s election campaign in California.

A week after hearing from Tsakopoulos, Garamendi wrote to EPA and corps officials saying he had been “briefed” about the dispute and offered to help. He did this although his department had no official jurisdiction.

In an interview, Garamendi said he merely outlined the developer’s concerns and did not interfere. “I decided it wasn’t the place for me to be,” he said.

But Charles Lewis, of the Center for Public Integrity, said Garamendi did “exactly the opposite” by sending the memo. “This is a sub-Cabinet official . . . saying ‘Don’t go near this guy,’ ” Lewis said.

In February 1996, a dozen regulatory officials from various government agencies met with Tsakopoulos in Sacramento to discuss how he could make amends for the destruction of vernal pools. During the meeting, one participant leaned over to a federal Fish and Wildlife official to inquire why the developer’s case was creating such a fuss.

“John Garamendi is his buddy,” the wildlife official, Cay Goude, scrawled on the back of a sign-in sheet.

At this meeting, regulators offered Tsakopoulos a “highly favorable” compromise, according to a Fish and Wildlife Service memo. Tsakopoulos would set aside about 50 acres of wetlands scattered among 1,400 acres of highlands. And the Fish and Wildlife agency would waive its requirement that the developer fix or create twice the number of vernal pools destroyed.

The following month, Tsakopoulos donated $100,000 to the DNC. (He gave an additional $65,000 the day after the November election.)

On May 1, 1996, the EPA signed an order that retroactively approved the unauthorized ripping with an after-the-fact permit. The developer signed the order without admitting or denying he violated the law.

“If they sweet-treated me, I got news for you,” Tsakopoulos said. “That is absolutely not true.”

Felicia Marcus, head of the San Francisco EPA office, declined to discuss the case Friday. But in a written statement she said the order was the “result of the best professional judgment by the Regional office, not preferential treatment.”

Despite the compromise, the truce between regulators and Tsakopoulos appears to have been short-lived. Federal officials have been alerted once again that Tsakopoulos’ crews have been moving dirt on the ranch without a permit, and the agencies are investigating whether the developer has committed another violation of the Clean Water Act.

Last month, EPA officials wrote to their counterparts at the Corps of Engineers: “The actions contradict previous agreements and may create difficulty in achieving the long-term beneficial and mutually agreeable resolution we hoped to achieve.”

Researcher Edith Stanley contributed to this story.

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Paper Trail

In February 1996, regulatory officials from various government agencies met with developer Angelos Tsakopoulos to discuss how he could make amends for the destruction of wetlands known as vernal pools. During the meeting, one participant asked a federal Fish and Wildlife Service official why the case was creating such a fuss. “John Garamendi is his buddy,” the wildlife official, Cay Goude, scrawled on the back of a sign-in sheet.