Pattern of Perata’s donations scrutinized;

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Finance watchdog suspects senator’s aid, income linked

The San Francisco Chronicle

SACRAMENTO — A developer and longtime ally of state Sen. Don Perata opened a political committee last year to raise money for Democrats across the state. The fund quickly collected $135,000 from four corporations — all of which have donated generously to the Oakland lawmaker as well.

But state records show that $61,740 distributed by the group, Community Leaders for Neighborhood Preservation, was paid to a company run by Tim Staples, a Perata business associate and old college friend. And Staples paid Perata about $100,000 in consulting fees last year, the senator acknowledged.

The large corporate donations to the little-known political committee — as well as consulting fees Perata received from Staples — raise questions about whether Perata’s outside personal income is tied to political donors.

The biggest donor to the Community Leaders fund was Mercury General Corp., a Los Angeles insurance company that gave $75,000. Perata already has faced intense criticism for accepting donations into his campaign account from Mercury at the same time he was pushing through legislation on Mercury‘s behalf.

Perata, a onetime English teacher who honed his political skills on the Alameda County Board of Supervisors, is vying to become the Senate president pro tem, replacing John Burton, D-San Francisco, when he retires in December. Perata, whose district includes Oakland, Piedmont, Berkeley and Alameda, has a reputation for being a staunch liberal who has championed strict gun control laws, as well as the rights of the poor and minorities.

In separate interviews, Perata and Staples said there was no connection between the income Perata receives from Staples and the money Staples is paid from Community Leaders for Neighborhood Preservation. Rather, Staples said he pays Perata through a separate company for consulting on real estate transactions.

Staples operates two firms — Staples Associates, a business consulting firm that pays Perata, and Ascendent Solutions, a political consulting firm that is working with Community Leaders for Neighborhood Preservation. Perata said it would be misleading and inaccurate to suggest that he is enriching himself with campaign contributions passed through Community Leaders to companies owned by Staples.

‘It is not political’

Perata said he knows nothing about how Staples receives his revenue for his political consulting firm. And he said he did not know that Community Leaders had even hired his friend. Perata said he received $7,000 from Ascendent Solutions in 2002, before Community Leaders was formed and started a relationship with the firm, and now receives money only from Staples Associates.

“It is not political,” Perata said. “Frankly, because I have no spouse who has an income, I have just maintained a business relationship. We have a few little enterprises. The principal (Staples) does some political stuff, but I do not share in that at all. There is a firewall there.”

Perata said it would “be an easy conclusion to draw” that he was receiving money passed through Community Leaders, to his friend, and then to him. “It’s not true, but you brought up a good point,” Perata said in an interview with The Chronicle. “It’s a completely independent committee. I have never looked at their filings.”

But one campaign finance watchdog said the situation is suspicious. Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica has been critical of Perata for taking campaign donations from Mercury General. Heller said Mercury‘s additional $75,000 in donations to Community Leaders for Neighborhood Preservation last year — and Perata’s business relationship with Staples — merit further inquiry.

“Something about this is abnormal,” Heller said. “It certainly seems dubious ethically. And it deserves thorough investigation.”

Community Leaders for Neighborhood Preservation was started in May by an Oakland developer, Phil Tagami, whom Perata described as an old friend. The legal work establishing the fund was performed by the same law firm that Perata uses for his own campaigns. The fund also uses the law firm as its mailing address on state documents.

Tagami said he was not aware that Staples Associates was paying consulting fees to Perata, and he said he would look into it. He said his organization is designed to “promote what we think are good Democrats who are committed to issues that are important to us, which is infrastructure, education and public safety.” Tagami said he was tired of getting solicited for political donations and formed the group to raise money and help Democrats.

Tagami said he has known Staples for four or five years and hired him after interviewing several other fund-raisers. He said Staples’ second firm, Ascendent Solutions, has a plan to raise more money and already has helped with a radio campaign supporting Democrats. Tagami said he had little to do with soliciting money for the group, except signing letters to potential donors.

“We were really excited about Mercury‘s commitment,” Tagami said. “But I have to tell you I was really ignorant of anything they were involved in. … I haven’t had any direct contact with any of the folks with those companies.”

Few limits on outside income

It is legal for legislators to have careers and business interests outside of their work in the Capitol. The law places very few restrictions on outside income earned by legislators — primarily prohibiting them from receiving payment for giving speeches. As a state senator, Perata receives $125,000 a year in salary and daily expenses.

In addition to his duties as a lawmaker, Perata has run his own consulting firm, Perata Engineering, since 1994, the year he left the Alameda County Board of Supervisors to run unsuccessfully for state controller. He became an Assembly member two years later. Though the name of the firm is Perata Engineering, the company is a business consulting firm and does not do engineering work.

Perata said he is paid about $100,000 a year from Staples for their work together. Documents on file with the state Fair Political Practices Commission show that Perata and Staples have a business relationship dating to 2000. Perata reported receiving between $10,000 and $100,000 in annual income from Staples’ companies to his consulting firm. Perata said Staples is his only client.

In an interview, Staples said Perata helps him on development deals.

“He has a general knowledge of the Bay Area and of business in general that is very helpful,” Staples said. “I am the business guy, but I don’t understand trends and things that occur in the Bay Area. He has that kind of general expertise about the way things are going.”

Campaign disclosure statements show Ascendent Solutions received $61,740 in fees from Community Leaders, out of the $91,121 in total payments the group has made, for what Staples and Tagami said was management and fund-raising work. The documents show that Community Leaders owes Ascendent another $6,000.

Perata said he helped solicit a single contribution for Community Leaders from Ameriquest Mortgage, a subprime mortgage lender based in Orange, but said he has no control over how Community Leaders distributed the contributions.

“Other than the fact that I raised money for that group, and Tagami is an old friend of mine, I have no control over it, nor do I know how they expend their money,” Perata said. “I try to stay completely away other than soliciting. They have an event, and I will solicit for it. I don’t know what money comes in, who contributes, nor how they spend their money.”

Staples said he solicited the donations for Community Leaders from his own list of contributors that he has used in previous elections. “More recently, since (Community Leaders) has been established, I have had nothing to do with Perata,” Staples said. “I have two separate paths.”

Last year, Perata carried a controversial bill that allowed insurance companies to levy surcharges on drivers who lacked previous insurance or allowed their coverage to lapse. Critics said the measure violated Proposition 103, saying it would provide small discounts for a few drivers and increase costs for many others.

Then-Gov. Gray Davis signed the measure in August. A Los Angeles County judge threw the law out in January after finding it violated Prop. 103.

As Perata’s insurance bill was making its way through the Legislature, Community Leaders received two donations from Mercury of $25,000 each. The company gave the fund another $25,000 Dec. 10.

Besides Mercury, other donors to the Community Leaders fund were Ameriquest, which gave $25,000; PG&E Corp., the parent company of utility Pacific Gas and Electric Co., which also gave $25,000; and Zenith Insurance Co., a workers’ compensation insurance specialist in Woodland Hills (Los Angeles County), which gave $10,000.

Executives at Mercury, Ameriquest and Zenith did not return telephone calls seeking explanation for the reasons they gave to the fund. A call to the PG&E executive in charge of government relations was returned by a company spokesman, who said the executive was unavailable.

In August 2002, as the end of a legislative session neared, Perata also considered a bill to prohibit municipalities from passing local anti-predatory lending laws, like the one that had just been adopted in Oakland. The Oakland law was opposed by Ameriquest. Perata dropped the idea after an outcry from community, consumer and low-income groups.

Funds directly to campaign

In addition to the donations to Community Leaders, the corporations have donated to Perata campaigns. Ameriquest gave $50,000 to Perata last year. Mercury gave him more than $30,000 over the past two years. Zenith gave $6,400, and PG&E Corp. contributed $10,000 in 2002.

Perata has run afoul of elections regulators in the past. The Fair Political Practices Commission fined him $10,500 in 1999 for failing to report $65,000 in income from six clients to Perata Engineering.

Of that, $15,000 was money from financier Calvin Grigsby, a political supporter of Perata’s who held the contract to manage the Miami port. Grigsby was indicted on federal charges of misusing $1.5 million in Port of Miami funds. He was later acquitted.

As for his fund raising from Mercury, Perata said he didn’t pay attention to who was donating money. He said any politician who must raise large amounts of money to win elections is going to face scrutiny. “If you are in the leadership, it’s a responsibility you accept,” he said. “And with that responsibility comes criticism.”

Questions have surfaced about a series of campaign contributions to a committee formed by Phil Tagami, a political ally of state Sen Don Perata, D-Oakland, and revenue that Perata receives from a consulting firm he owns.


Mercury General Corp.     $75,000
Ameriquest Mortgage Co.   $25,000
Zenith Insurance Co.      $10,000
PG&E Corp.                $25,000


Community Leaders for Neighborhood Preservation reports $135,000 in revenue from these four contributors in 2003.


Of the $91,121 spent by Community Leaders for Neighborhood Preservation, Ascendent Solutions is paid $61,740 in 2003 for consulting services. Ascendent is owned by Perata friend Tim Staples.

Staples Associates, a second firm owned by Tim Staples, hires Perata Engineering.

Perata Engineering is owned by Don Perata.

Staples paid “about $100,000” to Perata Engineering in 2003.

Source: Documents on file with the Secretary of State and Fair Political Practices Commission and Chronicle interviews
E-mail the writers at [email protected] and [email protected]

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