Lawyers, Nonprofits Reap Unused Campaign Funds

Santa Ana Councilman Ted Moreno collected more than $65,000 in campaign contributions for his unsuccessful bid for mayor in 1998. But less than $4,500 of it actually went to his fledgling campaign.

Instead, Moreno saved the money until after the election and last year spent it to pay lawyers who are defending him against federal corruption charges.

Such spending surprised some contributors, but it is legal under existing state rules and is far from isolated.

In fact, a Times review of records found that hundreds of thousands of dollars in campaign contributions raised by Orange County politicians are lingering in bank accounts or have been spent on various causes that have little to do with the original intent of electing someone to office.

Politicians--notably former county supervisors--have used campaign funds for everything from gifts to their political parties to donations to community groups. Gaddi Vasquez, who resigned from the Board of Supervisors in 1995, still has a war chest of more than $280,000.

Two other former supervisors--William G. Steiner and Roger R. Stanton--spent a total of $34,000 in campaign contributions to pay attorneys defending them against civil charges related to the 1994 Orange County bankruptcy. Steiner closed out his account last year, but Stanton still has more than $120,000 available.

How politicians spend campaign funds has long been an issue among government watchdogs, and California voters in 1996 approved a ballot measure that further restricted how such funds are used.

Proposition 208 was intended to stop officials from keeping hefty war chests after elections by requiring them to quickly dispose of surplus funds by returning them to donors or giving them to a political party or government coffers. But the rules are in legal limbo, with a trial over the proposition’s constitutionality scheduled to begin this month.

The issue has taken on increased significance in Santa Ana, where Moreno announced he is resigning this summer to take advantage of an apparent loophole in the city’s term-limits law. By resigning now, Moreno can run for a third term--and begin raising campaign contributions again.

Moreno said he does not intend to spend additional campaign funds for legal bills. But with his case still months from being resolved, he isn’t making any promises.

“The future is never concrete,” he said.

Moreno defended the way he spent contributions from his mayoral campaign. He said he had every intention of mounting an aggressive run until three months before the election, when a federal grand jury indicted him and three others on conspiracy charges of extorting campaign funds from two local businessmen.

“Why would I spend [the contributions] on this mayoral race when I might need the money for something else down the line?” said Moreno, who strongly denies any wrongdoing. “I had no plan to spend it for that, but the feds came knocking on my door with grand jury indictments.”

Some donors to Moreno’s campaign expressed outrage when they learned how their money was ultimately spent.

“That’s bad,” said Elvira Mendoza, a Santa Ana housewife who donated $1,000 to Moreno’s mayoral campaign. “When people gave him money, it was to promote him and to promote his programs, not for his personal problems.”

Other contributors, however, said they didn’t have a problem with Moreno’s actions. “I support him 100%,” said Paul Xuan Le, who owns a lawn-mowing company.

Politicians Defend Their Use of Funds

State regulations allow officials to use campaign funds for legal defense if the charges arise from their conduct as public officials.

Because the allegations are that Moreno used his position as city councilman to extort money from the businessmen, he is likely able to make that argument, said Colleen McAndrews, a lawyer and former commissioner with the state’s Fair Political Practices Commission.

“This is a gray area, but for the fact that he was in the office, he wouldn’t necessarily be facing these charges,” she said.

The same argument applied to Stanton and Steiner when they faced civil charges of wrongdoing stemming from the county’s 1994 bankruptcy. The Board of Supervisors voted to pay most of their legal bills, but $34,885 came from their committee funds. The former supervisors were eventually cleared of all charges.

A review of campaign finance records shows that Steiner and Stanton as well as former supervisors Gaddi Vasquez, Marian Bergeson and Ralph Clark have given tens of thousands of dollars of surplus funds to local charities and community groups. Smaller donations were made to political parties.

The former officials say their giving is aimed simply at helping worthy causes. But some government watchdogs argue that using their war chests to dole out donations--even to charity--give the ex-supervisors a measure of influence.

“In politics, money is clout,” said Shirley Grindle, a local community activist and author of Orange County’s campaign-disclosure ordinance. “It is not their money and they should give it back. . . . If we made these guys give the money back we wouldn’t have to worry.”

Vasquez and other former officials disagree, saying they believe that campaign donors would approve of the way they are spending the funds.

“When people supported Gaddi Vasquez, they believed I was a good leader,” said the former supervisor. “I always tried to use wisdom, and I will continue to do that by supporting organizations that benefit this county.”

“In terms of the [political] clout [the donations might bring], my long standing in the community provides me enough of an opportunity to make a contribution. It is not contingent on dollars,” Vasquez added.

Vasquez left the board in 1995 with close to $300,000 in campaign funds. He is a vice president of public affairs for Southern California Edison and has not run for public office since.

He is barred from using remaining campaign funds to make contributions to any candidates in the state, but is allowed to donate to charitable organizations, political parties or candidates running in other states or for federal office. In the last five years, he has donated $17,520 to local nonprofit organizations such as the Salvation Army, the City of Orange Police Assn. and the Orangewood Children’s Foundation. He gave $10,000 to the California Republican Party.

“He’s giving to local causes that benefit the people locally,” said Frank Hall, vice president of resource development for St. Joseph Health System, which runs St. Joseph Hospital in Orange. A foundation that raises funds for the hospital received a $500 donation from Vasquez.

It is now up to a judge in Sacramento to determine whether the practice should continue. Some government watchdogs hope Proposition 208 is upheld.

“It is a breach of faith for the donors,” said John Knox, executive director of California Common Cause, an advocacy group for campaign-financing reform. “It better serves the intent of the donors to have that money utilized for the purposes consistent with the original donation as quickly as possible.”

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Leftovers

Hundreds of thousands of dollars contributed to Orange County politicians have lingered in bank accounts or gone to non-campaign expenditures.

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Amount left Current Samples of after last election Funds* Expenditures or time of retirement Santa Ana Councilman Ted Moreno $64,000 (1998) $2,000 More than $60,000 for attorney fees to defend against federal charges of corruption. (1999) Former County Supervisor Gaddi Vasquez $289,000 (1996) $281,000 $17,500 in donations to various local non-profits between 1996 and 1999. $10,000 to the California Republican Party in 1998. Former County Supervisor Roger Stanton $37,700 (1997) $120,000** $20,000 donation to the Fountain Valley High School Football Boosters in 1997. $2,500 to the California Republican Party in 1997. Former County Supervisor Marian Bergeson $25,000 (1997) $1,100 $16,700 in donations to various local non-profits between 1997 and 1999.

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*As of last reporting period, ending Dec. 31, 1999.

**In 1996, shortly before leaving his supervisor’s seat, Stanton transferred $109,000 to another committee to run for state superintendent of public education in the 1998 election. He did not run a campaign and the money has sat idle since. He has $112,389 in the superintendent’s account and $7,630 in the supervisor’s account.

Source: Filings with the California Fair Political Practices Commission.