Group Charged With Campaign Finance Violations

The city attorney has charged a conservative political group and several gaming interests with breaching an ordinance limiting campaign contributions in last fall’s council election.

The misdemeanor complaint charges that the Business and Taxpayers Good Government Committee, led by Stephen Sheldon of the Anaheim-based Traditional Values Coalition, raised $46,000 through large contributions from major gaming companies and conservative businessmen.

The contributions ranged from $5,000 to $15,000 and were given in the last weeks before the November election for two open City Council seats. A city ordinance, however, limits individual donations to candidates and political committees to $1,000.

Campaign disclosure reports show that $32,000 of the contributions was spent in the Anaheim race to print and distribute fliers and mailers attacking two moderate Anaheim council candidates.

One of the candidates, Councilman Frank Feldhaus, was defeated. The other, Shirley McCracken was elected.

The literature published by the committee urged voters to cast their ballots for Lucille Kring, an Anaheim Chamber of Commerce board member. On Tuesday, Kring denied knowledge of or involvement with the committee.

Groups such as the one formed by Sheldon, known as independent expenditure committees, have been used for years throughout California as a way to circumvent campaign spending limits. Until this year, when campaign finance reform law Proposition 208 went into effect, no state law regulated contributions to such committees. Perhaps half a dozen cities in the state, including Anaheim, have their own laws limiting the groups.

While no state agency or private group tracks legal action against the committees, the charges filed by Anaheim are believed to be the first criminal complaint ever filed against one, said Gary Huckaby, spokesman for the California Fair Political Practices Commission.

Elizabeth Lambe, government affairs director of the Los Angeles office of Common Cause, said, “These independent committees are the classic way to get around campaign expenditure laws. It’s real cloak and dagger stuff, but it is very, very unusual that they are brought to task--in fact a criminal complaint against them is almost unheard of.”

According to the Anaheim complaint and to campaign records filed by the Sheldon committee with the secretary of state’s office, between Oct. 9 and Nov. 1, 1996, the committee accepted $20,000 in contributions from a political action committee called Californians for Local Control. The PAC was funded entirely in 1996 by two gaming interests, Hollywood Park Inc., a racetrack in Inglewood, and the Commerce Club, California’s largest poker casino.

Last year, separate records filed with the secretary of state’s office show, the Commerce Club paid $20,000 to the Rex Company, a political consulting firm owned by Sheldon, for helping defeat a casino ballot measure in Irwindale. Sheldon, the son of right-wing political activist the Rev. Lou Sheldon, also works as legal counsel to the Traditional Values Coalition.

The documents also show contributions to the committee of $21,000 from MedTrans, a Santa Ana-based ambulance service, and of $5,000 from Container Supply Company Inc. of Garden Grove. The company’s owner, Rob Hurtt, is Republican leader in the state Senate.

Anaheim City Attorney Jack L. White said the charges are “meant to close a loophole.”

“It’s a significant violation of our ordinance, and it had the potential to put one committee or contributor at an unfair advantage in the election process,” White said. “Everyone has to abide by the same rules of the game.”

Ed Hall, a Santa Ana attorney for Sheldon and another man named in the complaint, Lake Forest lawyer Leo Brady, called the alleged violations “an oversight,” and said he may challenge the constitutionality of the Anaheim law.

“Sometimes people do act negligently in good faith, but it turns out they violated the letter or spirit of something,” Hall said. “. . . We’re talking about a relatively new ordinance. We’re talking about a climate that’s very sensitive to political reform right now. We are confident we are going to reach an early resolution of the matter.”

The Anaheim City Council members who were the subjects of the mailers and fliers said the criminal complaint cemented suspicions they began having in the election’s final days, when the committee spent the bulk of its funds.

“It makes it an unfair campaign when there’s that kind of money being collected at the very end,” McCracken said.

Some of the fliers were distributed by the thousands at local churches, including her own church, she said.

“The things they attacked me on were things I couldn’t defend,” McCracken said. “There were pictures of me with Mr. Citron--I’ve never even met the man.”

Feldhaus said he still doesn’t understand why the contributions were made.

“I don’t know why they would put in that kind of money. That’s a lot of money,” Feldhaus said.

Sheldon and Brady are scheduled to be arraigned in Municipal Court in Fullerton on Aug. 27. If convicted of the misdemeanor charges, they could face $5,000 each in fines and six months in jail.