Federal Probe of Mattel, 2 Former Officials Yields Fines of $477,000

A day after state and city ethics investigators fined Mattel Inc. and two former representatives for campaign finance violations, the Federal Election Commission said Thursday that it has wrapped up a related probe by imposing fines of $477,000 against the firm and the two individuals.

The combined fines from the city, state and federal government total $931,000. The federal levy represents the third-highest cumulative civil penalties in the FEC’s history, the agency said.

Former Mattel Senior Vice President Fermin Cuza and political consultant Alan M. Schwartz admitted in settlement agreements with the FEC that, combined, they laundered $120,714 in political contributions by attributing donations from Mattel to other sources. Mattel admitted making prohibited contributions and contributions in the name of others.

The money in question from the El Segundo-based toy maker went to 23 candidate committees, two party committees and five political action committees.

Committees that received the laundered contributions included those for the presidential campaign of Al Gore, as well as campaigns for such other Democrats as U.S. Sens. Barbara Boxer and Dianne Feinstein of California and Hillary Rodham Clinton of New York; and Reps. Jane Harman of Venice, Adam Schiff of Burbank, Brad Sherman of Sherman Oaks, Loretta Sanchez of Garden Grove and Richard Gephardt of Missouri.

“The commission found no evidence that any of the recipient political committees were aware that Mattel was the true source of the contributions,” the federal agency said in a written statement.

Cuza and Schwartz used spouses, family members and others to make many of the contributions, the federal filing says.

Corey Rubin, an attorney for Schwartz, said his client cooperated with authorities and is pleased that the case has been resolved, even with the steep fines imposed.

“He knows that this was a big mistake, and he absolutely regrets it,” Rubin said.

Federal law prohibits corporations from making contributions from general treasury funds to candidates for federal office. The law also prohibits making contributions in the name of another person who is not the true source of the funds.

Mattel disclosed to federal, state and city ethics agencies last year that its own internal investigation had found that some of its money had been used by Cuza to reimburse campaign contributions made by others from 1996 to 2000.

A former U.S. Customs Department official, Cuza was hired to head Mattel’s customs department, and the company listed his “primary function” as “improving and streamlining [Mattel’s] customs clearance procedures and ... improving Mattel’s relationships with regulatory bodies.” He also developed and headed the firm’s government relations program. Cuza resigned in March 2001, after Mattel completed its internal investigation.

One subcontractor used for laundering contributions was employed by Mattel for “customs processing,” records show.

Heavily edited documents released Thursday as part of the FEC probe did not identify a specific issue that Cuza may have been trying to affect with the campaign contributions.

Mark E. Beck, an attorney for Cuza, said his client was generally trying to help Mattel by raising the political profile of the company’s representatives.

A spokesman for Harman said neither Cuza nor Schwartz requested legislation or help on any matter.

The agreements released Thursday show that Schwartz has agreed to pay $195,000 in civil penalties to the FEC; Cuza will pay $188,000 and Mattel will pay $94,000.

On Wednesday the state Fair Political Practices Commission and Los Angeles Ethics Commission released agreements signed by Cuza, Schwartz and Mattel representatives admitting the two men laundered $52,000 in political contributions from the company and that the firm did not properly disclose contributions. That money went to candidates for state and local offices.

The two men and the firm agreed to pay a combined $454,000 in fines to the state and city panels, although the agreements must be approved by each commission.