Fund-Raising Feats a Mixed Bag for Davis

By DAN MORAIN

July 31, 2001 12 AM PT

TIMES STAFF WRITER

SACRAMENTO — Methodically honing his techniques over decades, Gov. Gray Davis has become one of the nation’s premier political fund-raisers, amassing a fortune that scares off rivals even as it raises questions about favoritism and the mingling of public duties and private business.

Today, Davis will file his latest campaign statement, covering the first six months of 2001. It will show that he has put together a political treasury of more than $30 million, building his war chest at a clip of $1 million for each month he has been office.

Raising money has become a Davis trademark, the skill he is perhaps best known for since his election in 1998. His reputation as fund-raiser without peer precedes him when he crisscrosses the country, enhancing his national profile as he draws support from wealthy individuals and corporations.

A Times review of Davis’ political fund-raising shows he has often taken actions that have helped contributors, though he has also acted against donors’ interests. More broadly, the image of Davis that emerges from interviews with friends, supporters and rivals is one of a dogged solicitor, unavoidably intermingling state and political business in a single-minded pursuit of cash.

Friends say that unlike many politicians, Davis appears to enjoy raising money.

“It is concrete,” said Andy Spahn, Davis’ chief of staff in 1987 and 1988 and now an executive at DreamWorks SKG. “The world of politics is full of nuance and false handshakes. In fund-raising, the bottom line is real. The check comes in, or it doesn’t. It’s not ambiguous. You can measure your success and your accomplishment.”

Davis sets a relentless pace, taking advantage of the state’s absence of contribution limits to rake in large donations, night after night.

On Friday, for instance, as lawmakers struggled to approve a budget in Sacramento, the governor attended a fund-raiser in Long Beach. He made it to another on Tuesday evening in Sacramento, and still another Thursday in the Bay Area. He is scheduled to travel Wednesday to Washington, D.C., where he will attend still another. At each stop he raises $100,000, minimum.

Seven months before the March primary, candidates and their supporters are keenly focused on money as a reflection of politicians’ relative strength. As such, Davis’ fund-raising abilities are a source of both power and vulnerability.

Still, his extraordinary skill as a fund-raiser may not protect the Democrat against all his potential opponents. One of those considering a run is former Los Angeles Mayor Richard Riordan, a Republican whose personal fortune would neutralize Davis’ money, instantly leveling a playing field that the governor has sought to tilt.

Davis, 58, is a man without great personal wealth. He and his wife, Sharon, live in the same modest West Hollywood condo that has been their primary residence for 20 years. The sole investment he discloses on statements of economic interests he files each year is a State of Israel bond, worth no more than $10,000.

Davis consistently declines to discuss his fund-raising in detail, other than to dismiss suggestions that contributions affect his official actions.

“There is not a major supporter of mine who has not had at least one or two of their measures vetoed,” Davis said earlier this year. “I take each issue as it comes. If you look at the whole history of what I’ve done, you won’t find a single person--business, labor, the environmental community, the consumer community--that can’t point to several successes and several failures. That’s the way I intend to govern.

“I’m not going to affix my signature to anything that I don’t feel good about,” he continued. “I don’t care if it is my closest friend, my biggest legislative ally. If I don’t feel good about the bill, I’m not going to do it.”

Prospecting on the Affluent Westside

Davis began his career in politics in the early 1970s as a fund-raiser for Tom Bradley’s Los Angeles mayoral campaigns. Later, he took a hand in gubernatorial fund-raising when he was chief of staff to Gov. Jerry Brown in the 1970s. When Davis left the Brown administration to run for office, many of Brown’s donors became Davis’.

First elected to the state Assembly in 1982 from a district that includes Beverly Hills, Davis would prospect for donors where the money was, on the Westside. He’d play golf at the Hillcrest Country Club, preferring afternoon tee times so he could work the lunchtime crowd.

He’d show up at other lawmakers’ fund-raisers, where he would hand out business cards.

Even as a young official, Davis found big money by frequenting functions put on by Drexel Burnham Lambert, the now-defunct investment house of “junk bond king” Michael Milken. In 1989, as Drexel was collapsing and Milken was facing federal charges for securities law violations, most politicians ran. Davis remained loyal, publicly proclaiming his faith in Milken.

Davis remains friends with Milken, often attending Milken’s charitable events in Los Angeles, and sometimes visiting Milken at his home in Incline Village, Nev.

At the same time, Davis parlayed his connection with Milken into a cadre of loyal, and generous, supporters. Reaching out to the onetime financial advisor’s many associates and proteges, Davis built a new set of donors.

One is Carl Lindner, whose holdings range from the Cincinnati Reds and Chiquita bananas to an insurance company. Lindner has given $125,000 since Davis took office.

Another is Ron Perelman, a billionaire whose holdings include Revlon, a California savings and loan, and the nation’s largest cigar manufacturer. Perelman’s companies have given $150,000 to Davis since he was elected, plus $300,000 in the 1998 campaign.

Los Angeles venture capitalist Gary Winnick, another former Milken colleague, is a six-figure donor to Davis, including $100,000 last August. Davis took time to join Winnick in November when the financier dedicated the new headquarters of his company in Beverly Hills.

Stewart Resnick, owner of a major agricultural concern, Paramount Farms, and Martin Wygod, an investor who is chairman of WebMD, have been involved with Milken’s business and charitable endeavors. Both are major donors to Davis.

The pursuit of other people’s money takes the governor to the most lavish locales in California, from the Pebble Beach golf course to the most exclusive private homes.

He is a frequent dinner guest of Haim Saban, co-owner of the Fox Family Network, Saban said. Billionaire Ron Burkle regularly invites the governor to his homes, including the storied Green Acres estate in Beverly Hills, decorated with museum-quality Impressionist art. Most recently, Burkle hosted a fund-raiser for Davis on June 24 at his home in La Jolla. Davis’ condo is within walking distance of Burkle’s office.

The two watch videos together, said Burkle, who made his money in the supermarket business.

“He is a friend; he can come over any time,” he said in an interview.

Even donors who are not friends get personal treatment. According to donors, former Davis aides and other politicians, the governor is a consummate salesman, cultivating donors by getting to know something about their families and them before broaching the subject of money.

He remains attentive to them after they give. He sends major donors a regular newsletter called the Davis Digest detailing his activities. Some donors say he takes time to handwrite notes. Some say he sends their children birthday cards.

Davis’ handling of Michelle and Joseph Costello is typical. Joseph is chief executive officer of a Silicon Valley software firm, Think3. His wife is active in the anti-gun Million Mom March movement. Neither had been large campaign donors until last year.

But during former Vice President Al Gore’s campaign in April 2000, the governor shared a table with the Costellos at a fund-raiser in Atherton, a wealthy Bay Area suburb. After chatting for most of the evening, the governor suggested that they get together.

A campaign aide made arrangements, and the governor visited the couple’s Los Altos home that June. He stayed for three hours, talking about everything from schools to gun control, Michelle Costello said.

“We didn’t agree on everything,” she said, noting that she is a more avid gun opponent than Davis.

At the end of the evening, Davis asked if they would host a fund-raiser. In her view, he seemed uncomfortable asking and she didn’t feel as if he were making a sales pitch. But they agreed.

The Costellos invited friends to their home for a fund-raiser in October. The governor and his wife stayed for 2 1/2 hours, talking about a range of issues, including what then was the emerging energy crisis. Michelle Costello donated $100,000.

“They aren’t pushy; they’re not forceful,” she said. “The reason we gave is that we feel this is a man who should be in office.”

Official Trips and Fund-Raisers Coincide

Davis’ fund-raising is often intertwined with governing--leading to the charge that tending to one takes away from the other. Trips across the state and country to conduct California’s business often include stops to solicit cash. Indeed, some past aides say, trips are planned specifically with fund-raising in mind.

“Who he had breakfast with, or lunch, or dinner, or drinks, who he played golf with, was determined by fund-raising,” said a former Davis aide who requested anonymity. “It was always outreach to potential contributors.”

On May 21, a Monday, Davis’ official duties took him to Chicago, where he and local officials discussed how the city handles blackouts. Afterward, Davis said that based on the Chicago policy of providing advance warning about blackouts, he would decree that California give notice when outages are likely.

On the same trip, Davis was feted at a fund-raiser by Jim Levin, who owns a fence company in the Chicago suburb of Skokie. Levin attracted attention during Hillary Rodham Clinton’s run for the U.S. Senate in New York last year, when it was revealed that he had slept in the Lincoln Bedroom during the Clinton administration and was reportedly a past owner of a strip club. Levin did not return calls from The Times.

Before returning home, Davis made one more stop, this one in Dallas. The purpose: a fund-raiser.

Dismissing charges that fund-raising interferes with official duties, spokesman Steve Maviglio said: “The governor routinely puts in 60-hour weeks. He doesn’t hesitate to schedule meetings at 10 o’clock at night. I can’t imagine trying to squeeze more work out of him. His days go from 8 in the morning to 10 at night, seven days week.”

Even at the most hectic times, Davis often manages to raise money.

September, for example, is one of the busiest months. That’s when he must sign or veto about 1,000 bills sent to his desk by the Legislature. Former Gov. George Deukmejian said he would “absolutely never” schedule political events during bill signing.

“One, it is a very, very busy time,” said Deukmejian, a Republican. “Secondly, it would be rather unseemly to be receiving funds from any group that might have legislation on the governor’s desk.”

On Sept. 20 of last year, Davis flew to New York to give a keynote speech at an annual cable television foundation dinner. While there, the California Cable Television Assn. and AT&T;, a major cable operator, held a fund-raising breakfast for him. AT&T; Chairman C. Michael Armstrong gave opening remarks; the telecommunications giant gave Davis $100,000. The cable association and various cable companies combined to give him $140,000.

Back in California, Davis signed 17 bills of interest to the cable industry, on only one of which the cable industry took a strong position. In that case, Davis sided with the industry, barring new Internet taxes.

Decision Benefits a Contributor

Last week, Angelo Tsakopolous helped host a fund-raiser at his daughter’s home in a gated enclave overlooking the American River. In 1999, six months after Davis took office, Tsakopolous gave $100,000 to Davis’ 2002 reelection campaign. He was one of the business leaders who accompanied Davis on his trip to Europe and the Middle East in 1999.

In February, Tsakopolous reached agreement with the Davis administration to house the headquarters of the California Department of Parks and Recreation at one of his holdings, an office building 10 blocks from the Capitol.

According to the lease, the state will pay market rates in rent for nearly 60,000 square feet. Although the rate does not differ from what any large renter might expect to pay, the decision to take that space reversed the state’s earlier plan, which had been to lease space that was 50% cheaper about five miles from downtown.

Rusty Areias, Davis’ parks director, said Tsakopolous’ donations had nothing to do with the decision to lease the space: “Not one iota, not one.”

Areias, whose wife is the governor’s main paid fund-raiser in Sacramento, said he pushed to lease the downtown building because of its location--close to the Capitol and transit lines, next to the Sacramento River and Old Sacramento.

There are other instances in which Davis has taken action that aided donors. Some examples:

* Davis vetoed consumer-oriented legislation by Assembly Speaker Bob Hertzberg (D-Sherman Oaks) last September that would have required credit card companies to disclose how long it would take customers to pay off their debt if they make only minimum payments.

Hertzberg, pushing a scaled-back version of the bill this year, would not comment, but one of Davis’ major donors is Citigroup, among the nation’s largest credit card issuers.

Citigroup, its subsidiaries and executives donated $125,000 to Davis during his first two years in office and hosted fund-raisers at its Manhattan headquarters last summer, and again in February.

Providian Bancorp Services, another major credit card issuer, has given $104,000 to Davis.

Both have been donating to him since before he became governor. In his veto message, Davis, using language similar to the banking industry’s letter opposing the bill, said he would sign legislation if it were more narrowly drawn.

* The governor signed a bill last year allowing card clubs to operate banked table games. He had vetoed similar legislation a year earlier, but approved the new bill after a Beverly Hills firm, Core Partners, which provides professional card players to card rooms to run the banks, gave him $50,000.

* In February and March 2000, Metabolife, a San Diego firm that is the leading manufacturer of ephedrine-containing products, gave Davis’ reelection campaign $100,000. The company also made a tax-deductible contribution last summer of $50,000 to a nonprofit entity established by the governor to pay for a party at the Democratic National Convention.

Companies that sell products containing ephedrine claim that the supplements control weight and enhance athletic performance. Critics, including physicians and pharmacologists, say ephedrine, a stimulant, is linked to heart attacks and strokes and is used to manufacture illegal methamphetamine.

In September, Davis vetoed legislation that would have required a more direct warning on the products, contending that such warnings are the responsibility of Congress.

Ephedrine “is speed,” said state Sen. Jackie Speier (D-Hillsborough), who is pushing a stronger version this year. “We put kids in jail for using speed.”

A Metabolife spokesman said the donations had nothing to do with issues related to the company’s products. Rather, the spokesman said, company founder Michael Ellis made the donations “because of the stance the governor was taking on education; that’s why Michael made the donation.”

Davis’ aides say there is no link between contributions and any of his decisions to sign or veto bills. Garry South, his chief campaign consultant, said the governor does not even know the specifics of who gives him money and how much.

Davis and his political staff “do what we do with a great deal of caution and care and concern for the appearances that some people may believe are left,” the governor said.

Davis and South both note that the governor has taken actions contrary to the interests of campaign donors. He vetoed legislation last year that would have created tax breaks for some businesses in Compton. Worldcom, a telecommunications company that donated$26,000, would have been a beneficiary.

Most prominently, he clashed with the California Teachers Assn., which had spent $1.3 million helping Davis win election in 1998. In his first months in office, the governor angered the union by pushing for a merit-based system of pay for teachers, increased testing of students and public ratings for schools.

The union gave him no money in 1999.

“Probably our expectations were a little higher,” union President Wayne Johnson said. “He was a bit on the conservative side.”

By last year, however, the 300,000-member union had lauded several steps Davis took. He signed legislation raising teacher pensions, earmarked $1.8 billion for teachers’ pay raises, increased beginning teachers’ salaries and took a high-profile stand against a private school voucher initiative that was defeated.

At a teachers conference last fall, Johnson likened the first-year acrimony to “a family argument” that was being resolved. Union leaders remain troubled by the Davis-backed policy of giving money to schools where student test scores rise. But there is a truce, and in December the union donated $50,000 to the governor.

In part, Davis’ defense against charges that he favors one donor or another is that he raises money so aggressively, from so many interests, that he does not favor any single donor or group.

“No one donor stands out as having disproportionate influence,” South said.

Today’s filing will report the contributions raised in the last six months. During his first two years as governor, according to his most recent filing six months ago, he raised $26.5 million.

A Times analysis shows that organized labor, including unions representing state workers, was his biggest source of campaign money in his first two years, accounting for nearly $3 million, or about 11%. The entertainment industry was next largest--at $2.2 million, or 8.3%.

Other groups that gave large sums range from gambling interests, including Indian tribes that operate casinos, at $900,000, to oil companies, which gave $611,000. Utilities and independent energy producers accounted for $600,000. The health care industry, including physicians, health insurers and pharmaceutical companies, accounted for $1.7 million. Insurance companies contributed about $1.5 million.

Davis’ donors insist that they give not to curry favor or to urge specific approval of bills. Rather, some describe their contributions to the governor and others as a means of ensuring access to decision-makers.

Dennis Mangers, a former lawmaker who is senior vice president of the California Cable Television Assn., compared it to a poker game.

“No one would take anyone seriously if they sat at a game without anteing,” Mangers said. “There is a similar ante in the game of politics.”

Some Donors Weary of Persistent Pleas

Although he has worked to master the art of political fund-raising, Davis’ future is not assured.

Some Democratic donors say privately that they are weary of his persistent pleas for money. Some business donors are holding back, angry about his handling of the energy crisis, fearing that the state’s entry into the power-buying business will cost them huge sums in higher utility rates. Some are waiting to see whether Riordan, Los Angeles’ former mayor and before that a well-known lawyer and venture capitalist, enters the race.

“I think [Davis] is afraid of Dick Riordan,” said Beverly Hills lawyer Sheldon Sloan, a Republican who is a friend of both men. “He ought to be. Riordan can write a check for $20 [million] to $30 million, if he wants.”

Complicating Davis’ reelection bid, many of his major supporters are friends of Riordan’s. Eli Broad, for one, is a six-figure donor to Davis and one of Riordan’s most reliable Los Angeles allies. Burkle also is close to Riordan, as is Winnick.

The California Correctional Peace Officers Assn., one of Davis’ most generous and effective backers in 1998, plans to hold off on an endorsement until it interviews nominees from both parties.

“I’ve got to answer to our membership,” said Don Novey, president of the guards union. “I think Gray understands that.”

Last year, Democratic donor William Brandt, after hosting a fund-raiser for Davis in Chicago, was effusive about the governor: “I’d do an event for Davis any time, any place, anywhere. If he has aspirations beyond the Golden State, he can count on me.”

More recently, Brandt, whose business is helping firms through bankruptcies, said that “like everybody else, I am vexed by the energy crisis.” While he remains a Davis fan, he also admires Riordan.

“I am now aware,” Brandt said, “that there are a number of people who would not jump at a chance to participate [in a Davis fund-raiser]. There are people who write big checks and get behind campaigns early, who will wait to see how it turns out.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

A Little Help From His Friends

As politicians go, Gov. Gray Davis is a loner. But a few Californians, most of them longtime friends, are important to the governor’s fund-raising operation. Here are some, along with the amounts they have given or helped raise.

Roland Arnall, owner of Ameriquest Capital Corp., a financial services company in Orange that focuses on lending to people with poor credit or with low income. Davis appointed Ameriquest Chief Operating Officer Judith Hopkinson to the UC Board of Regents.

Amount:* $143,000, plus $25,000 to a Davis nonprofit corporation set up to throw a party for delegates to last year’s Democratic National Convention.

Jeremiah Hallisey, San Francisco attorney, who represents timber interests and is a Davis appointee to the California Transportation Commission.

Amount: $12,750. Often working with James Kellogg of the plumbing unions, one of Davis’ closest labor allies, Hallisey regularly organizes fund-raisers for Davis, including one last Thursday.

Ron Burkle, managing partner of the Yucaipa Cos., an investment firm in West Hollywood. Burkle made his fortune in the grocery business.

Amount: $217,557, plus $158,000 for a dinner for former Mexican President Ernesto Zedillo. Like Haim Saban, co-owner of Fox Family Network, and KB Homes Chairman Bruce Karatz, Burkle regularly holds fund-raisers for Davis, including one on June 24.

Darius Anderson, founder of Platinum Advisors, a Sacramento lobbying firm. A former aide to Ron Burkle, Anderson was finance chair of Davis’ 1998 campaign and opened his lobbying business after Davis won. Anderson has a blue-chip clientele that includes Pacific Telesis, Pacific Gas & Electric, Andersen Consulting and others. His firm reported billings of $4.7 million between January 1999 and April 2001, making it one of the top firms in Sacramento.

Amount: $12,455. Platinum Advisors clients have donated $875,000.

Gary Condit, Democratic congress-man from Ceres, now enmeshed in the mystery surrounding the dis-appearance of intern Chandra Levy. Condit was among the first to endorse candidate Davis in 1998, and was contemplating returning to state government.

Amount: Zero. But Condit has helped Davis tap agricultural interests in the San Joaquin Valley, hosting a fund-raiser for Davis last year in his Modesto district, and appearing with Davis at other agriculture-related events. Davis appeared at a Condit fund-raiser in April at the home of a Sacramento lobbyist.

Keith Brackpool, CEO of Cadiz Inc. of Santa Monica and Sun World Inter-national, a farming company. Brackpool is among Davis’ closest advisors on water policy issues.

Amount: $74,289, plus $50,000 to a Davis nonprofit corporation set up to throw a party for delegates to last year’s Democratic National Convention. He has held several fund-raisers for Davis.

Don Novey, president of the California Correctional Peace Officers Assn., the state prison guard union. Novey also is allied with some Indian tribes that are involved in casino gambling and are major donors to various state officials.

Amount: $391,000, including proceeds from the annual Governor’s Cup golf tournament and fund-raiser. Golf fund-raiser donors include Sacramento interests ranging from tobacco and oil companies to the health care and gambling industries.

* Amount donated in Davis’ first two years in office, according to Davis’ campaign finance statements.