Gore Strategist Controversial

When Al Gore needed to slim down his flabby campaign and snap his faltering candidacy into shape last year, some wondered why he turned to an ex-California lawmaker who left Congress a decade ago broke and disgraced.

On one level, the answer was obvious--Tony Coelho, networker extraordinaire who taught his party the art of raising gobs of money and is legendary in Washington for getting things done.

But Coelho is also a scandal magnet; much of what he touches gets investigated. He came to Gore’s presidential campaign last summer with more political baggage than a pack mule, and some of the vice president’s advisors waited for the proverbial second shoe to drop.

It did.

Coelho, 57, is now the target of a State Department probe into whether he misused government money when he ran the U.S. mission to the 1998 world’s fair in Portugal. Had he been just another Wall Street investor, the probe would have merited a blip in the news. But with the vice president’s campaign chairman as its focal point, it is a story with legs, and yet another reason for the media to trot out Coelho’s storied and sometimes stained past.

His trajectory as a young congressman from Merced who rocketed to power in the House crashed one weekend in 1989 when he resigned rather than face an inquiry into the purchase of a $100,000 junk bond. He moved on to Wall Street and made millions, but has continued to spend much of his career walking the line between controversy and cash.

Which begs two questions: Why would a man who made a graceful--although backdoor--exit from Washington investigators come back for more? And why would Gore, image-conscious down to his earth-tone suits, take a chance on a politician with a past?

“Politics is a rough business and a lot of prima donnas will tell you all the great things they can do and never get them done, “ said former White House chief of staff Leon Panetta, who served with Coelho as a congressman from Carmel Valley. “Tony can get it done.”

But not, it seems, without a public relations price. A recent State Department audit and various news reports of Coelho’s tenure in Portugal portray a big spender living high on taxpayer money.

He leased a waterfront apartment in Lisbon for $18,000 a month, complete with a swimming pool and a stock of Bacardi rum. His niece was hired as a $2,500-a-month assistant; the two stepsons of the U.S. ambassador to Portugal were similarly put on the payroll. The government was made liable for a $300,000 personal loan, which Coelho’s attorney says was repaid.

Coelho declined to be interviewed for this story. His lawyer, Stanley Brand, said Coelho took the job in Portugal for no salary and used his connections to bail out the government exhibition, only to be scrutinized by partisan critics.

“It’s part of the political landscape in this day and age, unfortunately,” Brand said.

Still, the reports of Coelho’s red-carpet conduct came as little surprise to some friends. Throughout nearly 12 years in Congress, he was a Type A among Type A’s, a tireless whirlwind who worked into the night, guzzling iced tea, arranging access, putting together deals and focusing more on the result than the path it took to get there, even if the corners he cut later were questioned.

Said one former Democratic congressman and Coelho friend: “He’s not sensitive enough at times to the problems that public scrutiny can bring, not focusing on conflicts of interest or the details of legal standards. Part of what Tony does is hire people’s children and whatever else it takes to develop relationships.”

Discussing the current probe, the friend said, “I’m sure he wanted it to be a first-class operation. Portugal has always been important to him.”

The grandson of Portuguese immigrants, Coelho grew up on his family’s 300-acre dairy farm in the Central Valley, rising at 2:30 a.m. to milk the cows. He once said almost everything in his life was dictated by his epilepsy. His parents, believing an old Portuguese superstition that epileptics are possessed by the devil, took him to faith healers who poured oil over him. The priesthood to which he aspired rejected him because of the illness. The state of California revoked his driver’s license.

At times he was suicidal. A priest sent him to work for actor Bob Hope, who befriended him and ultimately guided him into politics.

It became his new vocation. For 13 years, he worked as an aide on Capitol Hill to the hometown congressman, then succeeded him. And it was as chairman of the Democratic Congressional Campaign Committee in the 1980s that he made his mark, pressing traditionally Republican donors to contribute to the other party--the one that then controlled the House but had failed to take advantage of its fund-raising potential.

Some traditional Democrats were offended by what they considered pandering to philosophical enemies. But most of his colleagues credited Coelho with helping lift the party to high-tech efficiency. They rewarded him with the post of majority whip, third-highest in the House leadership; he was one of the youngest members to hold the job.

It all collapsed over the junk-bond deal and he resigned before the end of his sixth term, throwing himself a big party with a Dixieland band. With hardly enough money to cover a mortgage payment, he went home and cried, he said in an interview at the time. Then he pulled out his well-tended Rolodex, got a job for a Wall Street firm and brought in billions in investments.

He formed Coelho Inc., a goulash of businesses that ranged from funeral parlors to race tracks to a Las Vegas casino. Financial statements filed in 1998 showed him involved in some 30 enterprises and charities. He made himself wealthy, though many of his ventures failed, and some fell under federal investigation.

Still, the allegations hurled at Coelho have never stuck. The Justice Department ultimately cleared him of criminality in the junk-bond probe. And attorney Brand scoffs that the most recent allegations won’t amount to “a hill of beans.”

“The vice president is doing well and so people shine a spotlight on Tony,” said Rep. Gary A. Condit (D-Ceres), who holds Coelho’s old seat. “Sometimes where there’s smoke, somebody else has started a fire.”

Though his enterprises reach around the world, Coelho never really left Washington. He continued to advise the Clinton administration, most notably on the 1994 midterm elections that wound up being a Democratic rout that few, including Coelho, saw coming.

When he took the job as Gore’s campaign chairman, he and his wife had been talking about spending more time at the beach. His sister cried at the news of his job, Coelho said at the time, and his brother hung up on him. For no salary and no promise of a future political appointment, he dove back into the world that nearly ruined him but where he continued to command respect as a first-rate strategist.

“Once you get it in your blood, it doesn’t go away just because you’re in the private sector,” Panetta said. “I could see when talking to him in the White House that, given half a chance, he’d get back in. And Gore gave him that chance.”

Still, fund-raising scandals are precisely what Gore seeks to avoid as he distances himself from visions of fat cats in the Oval Office and Lincoln Bedroom sleepovers. Politically, Coelho’s past is a minefield and Gore will be the first to take shrapnel if anything blows.

For some, selecting such a controversial figure suggested that Gore wanted the presidency so badly he’d associate with anyone to get it. So eager was Gore to bring Coelho aboard that he waived the routine background check.

Coelho more than delivered, helping create a streamlined, revved-up campaign that demolished Bill Bradley and clinched the Democratic nomination.

But was it worth it?

“He’s like Gen. Patton. Sometimes you have to weigh whether the mistakes he makes are worth the leadership he brings,” Panetta said. “If Gore wins, no one will think five seconds about all this. If he loses, it will be Tony and everybody else who bears the blame.”

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Profile:

Tony Coelho

Vice president Al Gore’s presidential campaign chairman. A former California congressman.

* Born: June 15, 1942, in Los Banos.

* Residences: Alexandria, Va., and Nashville.

* Education: Bachelor’s degree in political science, Loyola University, Los Angeles, 1964.

* Career highlights: Gore 2000 campaign chairman since May 1999. Head of U.S. pavilion at 1998 world’s fair. Congressman from California, 1979-1989. President of own Washington public relations firm and member of corporate boards. Investment banker.

* Family: Married 32 years. Two daughters.