News & Views from 465 California Street

Anatomy of a Slush Fund

Clint Reilly

If one word has come to characterize the 2008 Democratic presidential campaign, it is “change.” The early success of the “change candidate,” Barack Obama, has been charged by Americans’ growing revulsion to negative commercials, libelous mailings and the practices of shadowy special interest groups that bend campaign finance laws in order to wage deceptive campaigns against political opponents.

Unfortunately, these practices are commonplace in many state and local campaigns. And without aggressive and balanced local media reporting to counteract them, illicit political activities often work. Here’s an example:

When former California State Senate President Pro Tem John Burton was termed out of office in 2004, he returned to his lobbying law practice with a $1.8 million fund raised between 1998 and 2004. Burton grew the fund during his years as Senate leader, poaching money from other accounts raised for purposes as diverse as voter registration, electing Democrats to state and federal offices, and advocating for an initiative to overturn term limits. The $1.8 million was spun into an entity called “Former Leaders for an Effective Government.”

In 1998 the account – inherited nearly empty from Burton’s Pro Tem predecessor Bill Lockyer – was refueled with a contribution of $1 million from the Senate Democratic Leadership Fund, the primary fund maintained by the Senate Pro Tem to elect Democrats. In 2000, Burton deposited $687,000 from the California Voter Registration Project, an account raised to register Democratic voters; $81,000 from the United States Democratic Senatorial Campaign Committee in Washington DC, a fund to elect Democrats to the U.S. Senate; and $50,000 from the Adam Schiff Campaign Committee. In subsequent years, Burton raised funds for a high-profile initiative to repeal legislative term limits. Over the course of his six years as Senate leader, the political action committee was used sporadically for various campaigns. When Burton was forced from office by term limits in 2004, he had amassed a surplus war chest of $1.8 million.

Two years later, under the guise of “Leaders for an Effective Government,” Burton financed an $800,000 campaign of television commercials, mailings and Internet ads promoting his former aide Fiona Ma’s campaign for the Assembly and smearing her Democratic primary opponent. I know, because Ma’s opponent was my wife, Assembly candidate Janet Reilly. In a blatant circumvention of state finance laws limiting individual contributions to $3,300, Burton’s committee spent hundreds of thousands alone on negative TV spots, Internet attack ads and slanderous mailings smearing Reilly’s children, neighborhood, attire, finances and husband.

To avoid violating state law, Burton claimed he had nothing to do with Leaders for an Effective Government, even though the group’s only other contributions since he left office two years earlier had been a relatively miniscule $35,000 to another Burton ally in the East Bay. Campaign disclosure reports for 2005 and 2006 show that Leaders for an Effective Government gave dozens of contributions, from $1,000 to $95,000, promoting Ma’s candidacy or attacking Reilly. All the while, Burton was active as a leader of Ma’s campaign and was limited to a personal contribution of only $3,300. As is often the case, Burton’s mudslinging worked and Fiona Ma was elected to the Assembly.

Some of the contributors who gave to Burton in his capacity as Senate leader were dumbstruck to see him use their contributions in 2006 to defeat Janet Reilly. One of those supporters, former Assemblywoman Kerry Mazzoni, gave to the voter registration project years before only to see the funds used on anti-Reilly mailers in 2006. Another Reilly backer, attorney Niall McCarthy, saw donations made years earlier for other reasons used for similar negative purposes. Never mind that McCarthy’s father, former Lieutenant Governor Leo T. McCarthy, was Chair of Janet Reilly’s campaign.

The theme of the 2008 Presidential campaign is “change.” Americans seeking real change are increasingly fed up with blatant manipulation of campaign finance laws and big lie campaign tactics.

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