FBI Investigating Karl Contributions to Hart and Others

The FBI launched an investigation Tuesday into video entrepreneur Stuart Karl’s political fund-raising activities on behalf of Gary Hart’s 1984 presidential campaign and three other Democrats’ races.

Former employees of Karl, 34, of Newport Beach, who made millions marketing Jane Fonda workout tapes and Playboy home videos, have said he asked them to contribute money to Hart and others and then reimbursed them with cash. The allegations, if proved, would amount to a violation of federal election law.

“I’ve been contacted by the FBI,� Rama White Middell, a former senior executive assistant to Karl, said Tuesday. Middell has said that she and other employees felt their jobs were in jeopardy if they did not agree to Karl’s requests for contributions.

No Comment From FBI

Also confirming that an investigation is under way was Linda Cacia, another former employee of Karl at the now defunct Karl-Lorimar Home Video. She would not elaborate.

FBI spokesman Jim Neilson declined to comment on the matter.

Karl has not been available for comment.

Karl’s attorney, Michael Genovese, said Tuesday that he had no knowledge of an FBI investigation. He also would not comment on allegations by Karl employees that Karl funneled $40,000 to $50,000 in contributions to Hart’s 1984 presidential campaign and 1986 Democratic congressional campaigns of Orange County Superior Court Judge David O. Carter and Kathleen Kennedy Townsend of Baltimore. Both Carter and Townsend lost.

Allegations also surfaced that Karl contributed more than $6,000 to Massachusetts Sen. John F. Kerry, a Democrat. Federal law prohibits contributions of more than $1,000 by an individual to any single primary or general election.

Questions have also been raised about $96,000 in video and media services Karl told the Federal Elections Commission he provided to the 1984 Hart campaign and for which he later agreed to be reimbursed at 10 cents on the dollar. The FEC is reviewing the agreement.

Karl employees have said that instead of services, cash went toward the Hart campaign, for uses including materials for the 1984 Democratic National Convention as Hart made his last big push to capture the nomination from front-runner Walter Mondale.

Any vendor or his company can lend money to a campaign, but only “in the normal course of business� and in reasonable expectation of repayment. If any of the money lent is used for purposes other than those reported, it is a violation of FEC policy requiring accurate listing of the purposes of loans.

Questions have been raised, as well, of whether Karl’s advance was made with the reasonable expectation of payment.

Keith Glazer, a 1984 Hart campaigner who later moved to Orange County and who was in charge of some of the floor demonstrations at the convention, said Hart financial people had “some kind of business relationship where Karl was financing some of the convention events on the floor.�

Glazer, interviewed in Oklahoma City where he is now a businessman, said the materials provided by Karl “all fit in with the general hoopla of the campaign.�

“If I remember correctly, (it was) stuff that you use in demonstrations� such as beach balls, Frisbees, signs and poles, Glazer said. “As a production company, you produce things, shows, whatever. I assume you produce shows like this.�

But Middell, who said she talked to Glazer “at least 20 times� during the three-week period preceding and during the convention, said that Karl’s firm did not normally provide such materials. She said the campaign requested money from Karl to pay for materials it needed.

“The most I remember is the Hart people requested them (checks) and I wrote them to vendors, and most of them for vendors in San Francisco,� Middell said.

She said Glazer “had to have known we were not a vendor you could call and ask for a thousand balloons. We were not in the balloon business. . . . We were a video production company.�

Published reports have linked Douglas Rosen of Los Angeles, Hart’s 1984 finance director, to Karl’s fund-raising activities for Hart. But Rosen recently denied allegations that he had advised Karl on how to get around federal restrictions on contributions.

“Absolutely not. No and no way,� Rosen said.

Rosen, who later went into business with Karl, said Karl and others who raised money for Hart were well known in the campaign. Campaign workers “know who the big helpers are on the campaign. Everybody knows. . . . They would go try to get whatever they could out of everybody. Stuart said yes to everybody.�

A former employee of Karl at Karl-Lorimar Home Video, who spoke on condition that he not be named, said he made contributions to campaigns at Karl’s request. He said Karl told his employees, “Look, I’m responsible for gaining ‘X’ number of new pledges to this particular campaign and instead of making me go out and knock on doors, etc., if you could just write out a check, I will reimburse you.�

The employee, who said he voluntarily declined to be reimbursed for a contribution to Hart but was reimbursed for contributions to Carter and Townsend, said, “I’m sure of all the people who participated, I would be willing to bet only one or two understood� federal election laws.

Employees who participated in the reimbursement scheme could be liable under federal election laws, but it is unlikely they would be prosecuted if they cooperated in government investigations.

The employee said Karl was enamored of politics and hoped that if Hart were elected Karl would be named ambassador to England or some other European country.

“He was really a very, very naive person in actuality,� the former employee said of Karl. “He had mentioned if Hart was elected he would be out of the whole video business and he’d be in politics. He really had an ambition for that.�

He said Karl sometimes used to say that life and business were like a dart board, with shoe salesmen and others in the outer 10-point ranges and Hollywood near the center.

“And at dead center was politics,� the former employee said, remembering Karl’s analogy. “He already was at the Hollywood ring, and the next thing was bull’s-eye.�