Letter to Senate Rules Committee

February 17, 2004

Honorable John Burton, Chair
Senate Rules Committee
State Capitol, Room 113
Sacramento, CA 95814

Re: Questions About Senator Perata’s Personal Enrichment Should Be Investigated

Dear Senator Burton:

The possibility that a California State Senator may have funneled contributions through a political committee to enrich himself deserves an immediate and thorough investigation.

According to the San Francisco Chronicle (“Pattern of Perata’s Donations Scrutinized,” February 17, 2004), an Oakland-based political committee, which had received a series of political contributions made by four corporations, has used most of its money to pay a consulting firm with long standing ties to Oakland Senator Don Perata. The consulting firm and another company owned by the same individual, Tim Staples, has paid Senator Perata’s private firm hundreds of thousands of dollars in recent years.

The appearance of this scheme goes beyond an ethical violation and may be an illegal laundering mechanism that has been used to enrich an elected official.

Senator Perata acknowledges that he has earned private income from Staples’ firms and that he has solicited contributions for Community Leaders for Neighborhood Preservation. State records also show that Community Leaders has paid or owes one of Staples’ firms, Ascendant Solutions, $67,740 (fully half of all the money the committee has raised).

The four firms that contributed to Community Leaders have all contributed to Perata’s campaigns in the past and Perata was the author of controversial legislation sponsored by Mercury Insurance, Community Leaders’ single largest donor. That legislation, SB 841, which was vigorously opposed by advocates for the poor and consumer groups, was recently overturned by a Los Angeles Judge as an illegal amendment to the voter-approved insurance reform law known as Proposition 103. After Perata carried the legislation on behalf of the insurance company, Mercury donated tens of thousands of dollars that appear to have made its way into Perata’s own pocket.

Senator Perata claims not to know anything about the movement of the money from Communtiy Leaders to Ascendant Solutions, nor, he claims, is there any connection to the money that Staples’ firms have paid Perata’s private consulting firm Perata Engineering.

The veracity of his claim must be investigated in a manner that leaves no doubt among Californians about the legality of these contributions and payments. Certain questions must be answered:

• Did Senator Perata use his official duties and powers for his own personal enrichment?
• Were Perata’s political allies asked to contribute to Community Leaders in order to avoid campaign finance limits or to deceive the public about the extent of certain contributors’ support of Perata?
• Was the relationship between Community Leaders and Ascendant Solutions established as a scheme for laundering money to Perata, either for personal reasons or, perhaps, to advance his effort to become Senate pro Tempore?

In order to answer these questions and to restore the public trust, those involved in the donations, including people affiliated with Community Leaders, Ascendant Solutions, Staples Consulting, Perata Engineering, the donors, including executives with Mercury Insurance and Ameriquest, as well as Senator Perata himself, should be required to testify under oath in order to explain what connections if any may have existed.

Senator Perata, who is the Senate Majority Leader and is vying to become Senate pro Tempore told the Chronicle that politicians are always going to face scrutiny for raising money. He said: “If you are in leadership, it’s a responsibility you accept. And with that responsibility comes criticism.”

To characterize criticism of what appears to be a scheme for personal enrichment from corporations whose interests the Senator has advanced and advocated in his public duties as merely a “burden of leadership” impugns the integrity of the Senate. We believe that the possibility of a connection between the donors to the committee and Perata’s acceptance of personal payments mandates a comprehensive investigation.

Thank you for considering these disturbing revelations.

Sincerely,

Douglas Heller

Cc: Fair Political Practices Commission
Members, Senate Rules Committee