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O.C. Political Consulting Firm, PAC Named in Money-Laundering Probe

March 10, 1994|MICHAEL GRANBERRY | TIMES STAFF WRITER

NEWPORT BEACH — A prominent political consulting firm and a political action committee, both based in Orange County, are under investigation by San Bernardino County authorities as part of an alleged money-laundering scheme, officials said Wednesday.

The investigation led to the arrests Tuesday of a failed political candidate in Victorville and his chief supporter, who allegedly laundered more than $10,000 in campaign contributions through the Tustin-based political action committee.

Ten search warrants were served March 1 on various Orange County businesses, including the Corona del Mar offices of Ellis/Hart Associates, Inc., whose former client, Michael T. Gallagher, was arrested Tuesday and booked on suspicion of one felony count of perjury and four misdemeanor counts of failure to report campaign expenditures.

Gallagher, 44, was booked Tuesday and released on his own recognizance. A prominent developer in Victorville, he narrowly lost in his bid for election to the San Bernardino County Board of Supervisors in June, 1992.

Janet F. Early, 54, a Victorville printer who allegedly contributed more than $10,000 to Gallagher by laundering the money through the Non-Partisan Public Policy Advocates of Tustin, was arrested Tuesday and booked on suspicion of two misdemeanor counts of state campaign violations.

Despite the Orange County connection, no one from the Ellis/Hart company or the political action committee is likely to be charged with criminal wrongdoing, investigators said.

"But there are many details of the case yet to be looked at, and some we can't talk about, at least not now," said David Whitney, a deputy district attorney in San Bernardino County.

Whitney said the political action committee "seemed to be interested in pretending to be an independent organization but appeared, in fact, to be under his strings," meaning Gallagher.

He said that each of the Orange County businesses named in search warrants, including Ellis/Hart, are still being investigated.

David Ellis, a partner in Ellis/Hart, denied Wednesday that his firm is the subject of an investigation.

"A former client of ours was arrested for money laundering," Ellis said. "We can't control what our clients do. That client was charged. We were not. And we are not going to be. The (San Bernardino County) D.A. simply came to us and asked for files on our former client (Gallagher), which we were happy to turn over."

On May 29, 1992, just two days before he faced San Bernardino County Supervisor Marsha Turoci and two other supervisorial candidates, Gallagher allegedly wrote two checks totaling $10,758.25 to Early.

In turn, she wrote two new checks for the same amount and sent them to the Non-Partisan Public Policy Advocates.

The Tustin group then divided the money among various local subcontractors--printers, mailers, etc.--for the purpose of producing a "hit piece" that was distributed to San Bernardino County voters by this nonpartisan group, investigators said. The piece was designed to "smear" Turoci, who later won the election.

The group also used contributed monies to support and oppose other candidates in Orange County, one of whom--former Laguna Niguel Councilman Paul M. Christiansen--reported the alleged improprieties more than a year ago, investigators said.

If convicted, Gallagher faces a maximum penalty of two years in state prison and a $30,000 fine. The maximum penalty for Early would be two years in jail and a $4,000 fine.

Officers of the political action committee couldn't be reached for comment Wednesday.

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