Fong Taps Connections for Funding

If state Treasurer Matt Fong topples U.S. Sen. Barbara Boxer in November’s election, he can thank in part the generosity of fellow Asian Americans and the persistent fund-raising of William P. Foley II.

Foley, the energetic chief executive of two major Southern California corporations, is Fong’s top rainmaker. He pulled in more than $180,000 for the Republican hopeful, mostly from his employees at Fidelity National Title and the Carl’s Jr. fast-food chain. Even his children, ages 12 to 22, wrote $1,000 checks to Fong.

Asian Americans, ranging from corporate executives to grocery store owners, provided more than $1.4 million to Fong’s campaign, according to an analysis performed for The Times by the Virginia-based Campaign Study Group. That amounts to nearly a quarter of the money Fong collected from individuals through Oct. 15.

Fong’s campaign also has been fueled by hundreds of thousands of dollars from the real estate and development industry, banks, lawyers and securities dealers. Fong also attracted campaign contributions from political action groups representing the tobacco, oil and restaurant industries.

As with previous state treasurers, Fong received several hundred thousand dollars in contributions from employees of companies that do business with his office, among them attorneys, accountants and finance experts.

Federal election records show that Fong had collected $7.8 million through mid-October.

Ultimately, his biggest contributor could be the Republican Party, which by law can contribute $3 million to his senatorial campaign. So far, the party has given a fraction of that, prompting concerns among some California GOP leaders.

Boxer, by contrast, has received $2.5 million from the national Democratic Party, helping balloon her total to about $13 million.

With strict federal limits on campaign contributions, people who can round up donations are vitally important in a high-stakes Senate race. And perhaps no one has more zealously pursued contributions for Fong than Foley, his friend and campaign chairman.

“Bill Foley’s job was to set the high-water mark,” Fong said. “It has given us a chance to win.”

Calling In All Favors

Foley, 53, has tapped employees, business acquaintances, golfing buddies, neighbors. Foley has ties to three of the top five firms whose employees have given to Fong, including Orange County’s Stradling Yocca & Carlson, which does legal work for Foley’s two corporations. He also has helped host Fong fund-raisers in Santa Barbara, Los Angeles and Orange County.

All but three of the two dozen directors and top executives at Foley’s companies have given Fong’s campaign at least $1,000. More than 60 Fidelity employees have contributed a total exceeding $114,000 to Fong, far more than any other company.

“I felt the best thing I could do for Matt was give him exposure to senior management, and hopefully they would contribute,” Foley said.

While several employees say they gave willingly to Fong, one former Fidelity manager said he was pressured into contributing $500.

Harry Langston, Fidelity’s former Phoenix manager, said his immediate supervisor told him he had to give to the Republican candidate at a fund-raiser in May at Foley’s Indian Wells weekend home.

“I said, ‘Who’s Matt Fong?’ I had never heard of him,” said Langston. “He said, ‘Harry, are you listening to me? You will bring your checkbook and write a check.’ ”

“It was like an order. I was never asked. I was told,” said Langston, who said he was fired several weeks later without being given a reason.

Under federal election law, it is illegal for an employer to force a worker to give to a candidate.

Langston’s former boss, Darryl Tyson, declined comment. Andrew Puzder, Fidelity’s executive vice president, said the firm considers Langston “a disgruntled former employee who we believe is not accurately relating the facts.”

He said he could not discuss Langston’s termination except to say that he was given written warnings and was informed of the cause.

Foley, meanwhile, said he is careful not to pressure his employees into giving, but recognizes that could be the unintended effect. Prompted by Langston’s complaints, Foley recently dispatched a memo telling Fidelity donors they could get their money back from Fong, no questions asked, if they felt uncomfortable.

Langston wasn’t the only out-of-state Fidelity manager who gave to Fong. Charles Wimer, the firm’s New York statewide manager, said he contributed $500 both out of “respect for Bill Foley” and because “Matt Fong is a good man.”

Foley’s four children have donated $1,000 each to Fong, whom they met at their family home. Foley said the children, who listed their occupations as students, decided on their own to make the contributions and used their personal bank accounts.

While a U.S. senator can help shape federal issues affecting the title insurance and restaurant industries, Foley said his push for Fong has nothing to do with his own businesses.

Foley said they have much in common: Air Force service, degrees in business and law, moderate Republican political values.

“I don’t get along with the conservatives, and he’s much closer to me than he is to them in terms of positions,” Foley said. “I’ve never asked a favor of him and I don’t intend to.”

‘Natural Pride From the Community’

After the national fund-raising scandal erupted during the 1996 presidential campaign, there were predictions it would sour many Asian Americans on political participation. Fong was drawn into the affair for receiving--and later returning--$100,000 linked to an Indonesian businessman with ties to China. But the episode has not seemed to hurt Fong, especially in Asian enclaves.

“His mother was secretary of state and she’s from our village in China,” said William Gong, a grocery store owner in the Central Valley town of Sanger who has held several Fong fund-raisers. “He stands for what we believe in on taxes.”

Fong sees the support as the outgrowth of “a natural pride from the community, no different than the Armenian community supporting George Deukmejian when he ran for governor.”

Fong’s fund-raising also has benefited from the support of his mother, former Secretary of State March Fong Eu, and from his aggressive role as an advocate of closer financial ties to Asia.

As state treasurer, Fong held a Los Angeles conference on the Pacific Rim in 1996, and a year later led a delegation of California business leaders and pension fund representatives to Asia. The journey gave Fong a high-profile pulpit for sharing his vision of California as the centerpiece of the Pacific Rim.

Of more than a dozen private-sector participants on the trip, half have donated to Fong’s Senate race, adding more than $31,000 to the election war chest.

Fong said there is “no nexus” between the contributions and the trip. “I don’t find it surprising,” he said, “that people who believe in the same vision of California as a leader in the Pacific Rim would want to see me carry that vision to the U.S. Senate.”

Fong has espoused Asian investment as a member of the California Public Employees Retirement System, the $120-billion pension fund for state workers. During the last year, the market value of CALPERS investments in Pacific Rim countries has fallen $2.8 billion as of June 30.

“At a time when there were ample warning signs that the Far East was in store for some tough times, Matt Fong just plowed ahead,” said Jock O’Connell, a Davis-based international business consultant and former analyst at the state Commission for Economic Development.

The Times previously reported that Fong advocated $325 million in CALPERS commitments to Lombard/Pacific Partners for direct investments in Asian businesses. Lombard, a San Francisco-based firm whose leaders and their spouses have donated $12,000 to Fong’s Senate campaign, has collected more than $7 million in fees from the deal. So far, the firm has yet to show a profit.

Fong noted that he is one of 13 voting members on the CALPERS board. But he also defended Asian investments as a sensible strategy for globalizing the pension fund’s investments.

“Yes, there’s some rocky, troubled waters ahead in the Pacific Rim,” Fong said. “But the future growth of our state will depend on our success in those markets.”

Links to Businesses

An examination of finance reports shows that numerous employees of firms that have sought to do business with Fong’s office also have donated to his campaign.

Imperial Bancorp’s top officers have poured $34,400 into Fong’s Senate run. During his treasury tenure, the bank’s share of state deposits increased from $15 million in 1994 to more than $200 million this year.

“Matt Fong has been a supporter of Imperial in the treasurer’s office,” said Richard Baker, Imperial’s general counsel.

But a treasurer’s spokesman, Roger Wildenmuth, said there is no competition for the state’s deposit money, which is placed with more than 300 qualifying banks upon request. “No one is getting a special deal.”

Fong has also reaped campaign cash from developers who each year compete for $40 million annually in tax credits handed out by a board Fong heads to help finance affordable housing.

Although Fong has instituted a lottery to remove any hint of favoritism from the selection process, many developers of affordable housing have given to his Senate campaign.

The focal point for those fund-raising efforts is a special committee Fong formed in 1995 to give him advice on housing issues. The committee members--a collection of contractors, developers and lawyers--have held fund-raisers for Fong and given generously on their own. Current and past members of the committee have contributed more than $30,000 to his Senate campaign, records show.

One key donor and fund-raiser is Michael Novogradac, a San Francisco accountant who represents numerous applicants seeking affordable housing funds. Novogradac, who did not return phone calls from The Times, was accountant for a 48-unit apartment project in the Gold Country town of Sonora.

Sonora, which ultimately scuttled the project after a legal battle with the developer, filed a complaint with the state Fair Political Practices Commission last fall alleging that Fong violated state law by voting on tax credit applications being pushed by his campaign contributors. The city alleged that Fong’s tax credit committee had become mired in “politics and inside dealing,” noting that Novogradac and other participants in the Sonora project had contributed to the treasurer.

The FPPC, however, declined last month to pursue an investigation.

Fong defended his efforts to help finance affordable housing, saying that using a lottery selection process eliminated any hint of inside dealing. “Contributions don’t influence my votes or decisions,” Fong said.

Among the top 10 law firms whose attorneys have given to Fong, half have been selected by the treasurer to help with state bond deals.

Two of the biggest are Sheppard Mullin Richter & Hampton, where Fong worked until he was appointed to the Board of Equalization in 1991, and Orrick Herrington & Sutcliffe, the San Francisco firm that handles much of the treasurer’s office financial business. Sheppard attorneys have contributed $37,650, while Orrick has given more than $10,000.

The Campaign Study Group of Virginia contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Major Benefactors of Fong Campaign

Officials and employees of the following companies are top contrib-utors to state Treasurer Matt Fong’s campaign for U.S. Senate:

Donor: Fidelity National Title Insurance

Amount: $114,100

Business: Financial Services

****

Donor: Stradling Yocca & Carlson

Amount: $38,300

Business: Law

****

Donor: Sheppard Mullin Richter & Hampton

Amount: $37,650

Business: Law

****

Donor: Imperial Bancorp

Amount: $34,400

Business: Banking

****

Donor: Carl Karcher Enterprises Inc.

Amount: $30,240

Business: Food

****

Donor: A.G. Spanos Cos.

Amount: $25,000

Business: Development

****

Donor: Cruttenden Roth Inc.

Amount: $24,850

Business: Investment

****

Donor: Gibson Dunn & Crutcher

Amount: $18,475

Business: Law

****

Donor: O’Melveny & Myers

Amount: $17,550*

Business: Law

****

Donor: Robertson Stephens & Co.

Amount: $17,250

Business: Investment

****

Donor: American Title Insurance Co.

Amount: $15,500

Business: Financial Services

****

Donor: Irvine Co./Irvine Apartment Communities

Amount: $14,000*

Business: Real Estate Development

****

Donor: Computer Associates International

Amount: $13,000

Business: High Technology

****

Donor: Diversified Collection Services

Amount: $12,500

Business: Financial Services

****

Donor: Crouse Beers & Associates Inc.

Amount: $12,000

Business: Civil Engineering

* Includes funds from political action committee.

Source: Campaign statements filed with Federal Election Commission

Compiled by: Campaign Study Group of Virginia