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GOP Hid Insurance Firm Donations in Tight Races

Six state Republicans won with cash funneled from 21st Century to local groups.

March 06, 2003|Virginia Ellis and Dan Morain | Times Staff Writers

SACRAMENTO — With only days left before the November election, state Republicans solicited nearly $1 million from a Los Angeles insurance company and channeled it to key races around California in a way that hid the source of the contributions.

On Oct. 21, Woodland Hills-based 21st Century Insurance Group wrote checks ranging from $25,000 to $200,000 to the California Republican Party and GOP committees in 15 mostly rural counties.

The money was given one business day after the deadline for public disclosure and moved around the state in circuitous routes that circumvented campaign contribution limits.

The county committees made substantial donations to one or more of six Republican legislative candidates, all of whom were in tight races they subsequently won. Most of the committees gave money to candidates in districts outside their counties.

Some committee chairmen said they were even unaware that donations had been made in their names.

"It comes as news to me that money was funneled through my county," said San Joaquin County GOP Chairman Rick Veldstra, adding that he was "speechless" to learn that $23,500 went to help a candidate about 450 miles away. "We're not used to dealing with numbers like this."

The money enabled the candidates, most running neck and neck in the polls, to pay for last-minute phone banks, mass mailings and television advertisements. All six won in November, giving Republicans two additional seats in the Assembly and one in the Senate -- their first gain since 1994 -- and preventing Democrats from winning the two-thirds majority that would have allowed them to pass budget bills without Republican support.

Had 21st Century made its donations only one business day earlier, the contributions would have been publicly disclosed under the business' name before election day. Instead, the insurance company did not have to report its contributions until Jan. 31.

The company, still smarting from Democratic legislation two years earlier that cost the insurance giant more than $50 million in Northridge earthquake claims, said its goal had been to help Republicans, and it relied on the party to recommend when and where to place its money. "The CRP [California Republican Party] said, 'Would you please give political funding here,' '' said company spokeswoman Fiona Hutton.

The strategy for Republicans, said a party spokesman, was to keep the last-minute infusion of $950,000 secret from the Democrats, who would have fought back by putting more money into their legislative candidates.

"In the heat of an election, you don't provide any more information to your opponent than is required by law," said spokesman Rob Stutzman. "To the extent that you can go stealth, you're going to do that. We did it and the Democrats didn't, and they've got sour grapes about it."

Typical of how the strategy played was the race for the 12th Senate District in the Central Valley. Democrat Rusty Areias, a former head of the state parks agency, was in a tight battle with Republican Jeff Denham, a 35-year-old agricultural businessman in Salinas.

The district does not include Kern County. But days before the election, the Kern County GOP made six contributions totaling $67,000 to Denham. The San Joaquin County committee, also outside the district, kicked in $12,500. Two other county committees that are in the district -- Merced and Monterey -- gave $2,500 and $46,167.

"If we had been able to identify the money ... it certainly would have been an issue," Areias said. "The public had the right to know the insurance industry was putting that kind of money behind a candidate." Areias lost by 1,843 votes out of more than 152,000 cast, the tightest Senate race last fall.

Denham declined to comment.

Kern County Republicans also gave generously to two other Republican campaigns outside their borders, donating $38,000 to Shirley Horton, now an assemblywoman from Chula Vista, and $30,984 to Guy Houston, her colleague from Livermore.

While they were helping those Republicans singled out by the state party, the Kern County GOP spent just $1,000 in the campaign's closing days on its own Assembly candidate, Dean Gardner, a general contractor and manufacturer of custom gun stocks in Bakersfield. He lost by 266 votes.

"We knew we were in a really close race," said Gardner, who was unaware that the committee had sent so much money out of the district.

Kern County's GOP chairman referred questions to a Republican consultant who did not return calls.

Other winning Republicans who benefited from 21st Century contributions were Assembly members Bonnie Garcia of Cathedral City, Greg Aghazarian of Stockton and Alan Nakanishi of Lodi.

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