Casino Campaign Donations Questioned

Fueling an already heated debate over gambling, the Legislature’s legal advisor has issued an opinion warning that lawmakers could face federal criminal sanctions if they accept campaign donations from Indian gambling operations deemed to be illegal.

The opinion, obtained Thursday, comes as Native Americans battling to operate casinos on reservations emerge as a major political force in the capital. Among the largest campaign donors in California, they have given Democrats and Republicans more than $1 million so far this year.

Opponents of the expansion of gambling on reservations immediately seized on the opinion, saying lawmakers who support the tribes’ position should immediately refrain from taking any additional money from them.

“I wouldn’t take it,” Sen. Quentin Kopp, a San Francisco independent, said, adding that he intends to introduce legislation next week to prohibit contributions from such sources. “I’d advise anyone not to accept such contributions in the future.”

Several state legislators and candidates for the Senate and Assembly have taken five-figure donations from various tribes. But the implications of the opinion by the legislative counsel extend to the races for governor, attorney general and other statewide offices; in those campaigns, some candidates have accepted hundreds of thousands of dollars.

“Nothing but a legal opinion,” said Sen. Richard Polanco (D-Los Angeles), one of the main proponents of the tribes’ position and a large recipient of their donations. “[The casinos] are functioning today. If they were out of compliance, they would be shut down. They have not been shut down. The courts have not ruled.”

The legislative counsel’s opinion acknowledges that many aspects of the issue are not settled.

Federal prosecutors across the state have filed civil suits seeking to shut down the gambling operations. However, courts have not held conclusively that the operations violate state and federal law.

Still, the opinion raises the possibility that lawmakers who take money from illegal gambling operations could be forced to return the money, whether or not they know the operations are illegal. If they know that the operations violate the law, candidates who take donations could face prison time, the opinion stated.

Citing federal laws against money laundering and racketeering, the opinion says that “money that is generated at an Indian casino from gambling activities that are illegal under state or federal law is potentially subject to seizure by federal authorities.”

The opinion also says that “any person who knows that the underlying activity is illegal and nonetheless participates in a financial transaction involving that money in excess of $10,000 may also violate [federal criminal law], and consequently be punished by up to 10 years in prison.”

Legislative counsel opinions generally do not become public. They are intended to be confidential, between lawmakers and their in-house attorneys. This document was leaked anonymously to The Times and other publications.

Underscoring the intense lobbying and the high stakes involved in the fight over gambling, the opinion was dated June 26, indicating that it was circulated among legislators as they prepared to vote on legislation to ratify a gambling compact negotiated by Gov. Pete Wilson and the Pala Indians, a pact that was denounced by several other tribes that want greater rights over the future of their gambling enterprises.

The major gambling tribes won an initial victory this week when the pact was voted down in an Assembly committee, although the issue is expected to be voted on again this summer.

Nevada gambling interests are among the main opponents of the California gambling tribes, mounting a major lobbying effort in Sacramento. Nevada casinos want to limit the expansion of gambling in California to protect a major part of their customer base: gamblers from this state.

In the gubernatorial campaign, Lt. Gov. Gray Davis, the Democratic nominee, has accepted more than $125,000 from Indian gambling interests, while Republican Atty. Gen. Dan Lungren, the Republican nominee, is not accepting the money.

Garry South, Davis’ campaign manager, said: “Let’s not lose sight of one fact here--this alleged illegal gambling activity is only that because Pete Wilson has refused to negotiate and bargain in good faith with the Indians. This is playing with semantics and tricky definitions here.”

Lungren’s campaign issued no comment on the opinion.

In the race for state attorney general, Dave Stirling, the Republican nominee and Lungren’s chief deputy, took $300,000 from Indian gambling interests during the primary. The Democratic nominee, Sen. Bill Lockyer, has taken only minimal sums in the past, and did not accept any such contributions during the primary.

Lockyer said the opinion raises “sufficient questions about the priority of relying on this funding source to cause concern.”

However, Stirling’s campaign manager, Sal Russo, dismissed the opinion: “This is all about the Nevada casinos protecting their economic stake in gambling, to the detriment of Native Americans in California.”

In a related development Thursday, a memo by attorney Joseph Remcho, an expert in initiative law, was leaked. It said that an initiative pushed by several tribes to allow them greater rights over gambling is probably illegal.

The memo, obtained from one of the competing factions involved in the gambling fight, says the initiative is improper because it seeks to authorize gambling activities prohibited by the state Constitution. The attorney said such a change would require a constitutional amendment, not an initiative.

“To the extent that the Constitution prohibits a type of gaming, the state cannot authorize such gaming by statute or compact alone, but only by amending the Constitution,” the memo says. “The initiative does not include a constitutional amendment. Thus, any gaming [activities] authorized by the initiative . . . are subject to these constitutional restrictions.”

George Forman, an attorney representing several of the tribes, dismissed Remcho’s opinion: “He’s wrong. . . . He’s real good in some stuff, but not so good in others.”

Times staff writer Max Vanzi contributed to this report.