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GOP's Resurgence Throws Limelight on O.C. Rep. Cox : Profile: But the attention that comes with new powers isn't all favorable, as securities fraud bill demonstrates.

March 06, 1995|GEBE MARTINEZ | TIMES STAFF WRITER

WASHINGTON — Power surfing through the marbled corridors of the Capitol on a recent February morning, Christopher Cox was in a mood to do a little name dropping.

"Newt" called him at home to seek counsel about the free-falling Mexican peso; House Speaker Newt Gingrich and House Majority Leader Dick Armey joined him in a recent meeting with 20 of the nation's governors; Gov. Pete Wilson and the Newport Beach Republican set the agenda for a meeting with other California Republicans, and at Gingrich's request, Cox would host a briefing by new Treasury Secretary Robert Rubin for all GOP members of the House.

Perennially frustrated by the second-string status accorded to Republicans in a previously Democrat-controlled House, the 42-year-old Cox has risen from obscurity to become a member of the House leadership team in one of the greatest power waves to roll through Washington.

Ah, it's finally great to be a Republican in Washington.

And for Cox, having emerged as the highest ranking Californian in the new Republican-controlled Congress, his days of inconsequential political labor are over.

"I got my wish," said Cox, who once believed his only path to greater power was through the U.S. Senate. "It's the same result through serendipity."

With his dispassionate exterior, wrapped in a pressed gray suit, perfectly combed hair and straight-toothed smile, Cox is the guy most likely to emerge from a wind tunnel unruffled.

Like his Republican colleagues, however, Cox, who was a White House lawyer in the Reagan Administration, is learning that power does not come without a price: At the behest of Gingrich, Cox is carrying a controversial securities fraud litigation bill that has made him a target for trial lawyers who are accusing the congressman, a former securities lawyer, of conflict of interest.

The bill, scheduled for a House floor vote this week, would make it tougher for investors to prove securities fraud in federal court. The proposal is a key plank of the Republican "contract with America," yet an unsettling position for Cox, whose Orange County district is suffering a municipal bankruptcy caused by failed security investments.

Last December, when U.S. Sen. Barbara Boxer (D-Calif.) contended that the bill could apply to the small investors in the failed Orange County investment pool, Cox said he did not know the bill affected current cases and removed the politically damaging clause. In a sharply worded letter to Boxer--who holds the seat many believe Cox will seek in 1998--Cox accused her of attempting to "exploit the tragedy in Orange County."

A month later, trial lawyers attempted to show that the bill could hurt Cox's own constituents by strategically placing in the Commerce Committee hearing room some investors who had money in the Orange County fund.

More recently, Cox grew testy over news reports about his past relationship with William E. Cooper, a once-prominent Orange County businessman who was recently sentenced to 10 years in prison for defrauding thousands of mostly elderly clients of $136 million. The fraud was carried out by First Pension Corp., owned by Cooper and two partners.

Cox said recently that he did not know Cooper well, a characterization corroborated by the businessman.

During the mid-1980s, however, Cox helped prepare securities offerings for a First Pension entity. He said the work was unrelated to the Cooper scam.

In a lawsuit recently filed by investors against First Pension and Cox's old law firm, Latham and Watkins, the congressman was mentioned but not named as a defendant.

Cox also worked in 1984 on Cooper's attempts to acquire a California bank. And after Cox won his first primary race in 1988 for Congress, Cooper contributed $2,000 to his campaigns and hosted a 1991 fund-raiser for Cox at the businessman's $700,000 Villa Park home. (Lawyers at the Latham and Watkins firm, which specializes in banking and securities law, also donated almost $126,000 to Cox's four congressional races.)

Last week, Cooper said Cox and his firm knew nothing about the First Pension fraud.

"We purposely kept the information (about the fraud) away from Latham, because they wouldn't have represented us if they knew," Cooper said during an interview at a Santa Ana restaurant. "It's not the kind of thing you run in and tell your attorney about."

Cox said the First Pension lawsuit was distributed to Capitol Hill reporters in an attempt to embarrass him for sponsoring the bill that would help put an end to frivolous lawsuits.

"This is the most outrageous smear I have ever seen," Cox said. "I am sorry I ever shook hands with Cooper. I would spend my own money to make sure he spends an extra five years" in prison.

Michael J. Aguirre, the San Diego attorney who filed the investors' lawsuit, said it is ironic that Cox, "the congressman from Orange County, which just had the greatest bankruptcy because of securities fraud, now comes back and says, 'We need to weaken the securities fraud laws.' "

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