Photo of Davis raising funds was taken at a private residence.
By Margaret Talev -- Bee Capitol Bureau
Published 2:15 a.m. PDT Thursday, October 10, 2002
In a second day of embarrassment for Republican Bill Simon's gubernatorial campaign, photos that Simon said would show Gov. Gray Davis illegally raising money in a state office building instead were determined to have been taken in the private residence of a Santa Monica home builder.
Bruce Karatz, chairman and CEO of KB Home, on Wednesday identified the den in his former home as the background in 4-year-old photographs circulated a day earlier by the California Organization of Police and Sheriffs.
COPS issued an apology -- but not to Davis.
"We regret the impact this erroneous information has had in the Simon campaign and on the distraction of their message to the voters of California," it read.
In a statement issued early Wednesday, Simon was unapologetic about accusing the governor of a crime without examining the photos himself.
Simon said Davis still should be investigated by law enforcement officials "even if the specific claims made by (COPS) are not sustained."
Late in the day, he issued a second statement acknowledging that the complaint was "unfounded." He declined interview requests.
COPS, in its unsigned statement, said the group released the photos and filed a complaint with the state Fair Political Practices Commission "in good faith," but that "it now appears our original belief was erroneous." COPS said it would withdraw its complaint.
The group also apologized for "questioning the character" of its former director, Al Angele, who was pictured in the photos with Davis.
The Democratic governor, speaking on KGO radio in the Bay Area on Wednesday, described the situation as "just a sorry reflection of a campaign that's just falling apart," and he called on Simon to withdraw from the race.
"He should drop out," Davis told radio host Ed Baxter, according to a transcript provided by the Governor's Office. "His whole campaign has been an embarrassment."
Meanwhile, an attorney for the Davis campaign fired off a letter to the lawyer representing COPS and the state Republican Party, advising that campaign strategist Garry South was considering a defamation lawsuit.
COPS and Simon on Tuesday had unveiled and touted the photos as evidence that on Jan. 31, 1998, while still lieutenant governor, Davis accepted a $10,000 contribution in his state office from Angele.
COPS backed Davis in his first gubernatorial bid but struggled with internal battles. Angele left, and the group's new leadership endorsed Simon. Most other law enforcement groups have endorsed Davis.
Finance records show the Simon campaign and its consulting firm have paid COPS and its lobbyist hundreds of thousands of dollars, for inclusion on candidate mailers. Mailers are put out by various organizations encouraging citizens to vote for particular candidates.
Davis' staff from the outset denied that any money changed hands in a state office in 1998. Initially, South said he did not know where the photos were taken and would not dignify Simon's accusations by tracking the information down.
By Wednesday, the campaign said it had checked unpublished schedules and determined that on the date in question Davis attended an 8 a.m. breakfast event at Karatz's home with supporters and financiers of his first-term bid for governor. COPS' Angele was among them.
When Davis created the Commission on Building for the 21st Century two months after taking office, he appointed Karatz as a member.
Karatz was traveling Wednesday and could not be reached for comment. But a spokesman said he recognized the modern art visible in the shots as "Red Lick," a painting by Los Angeles artist David Amico that Karatz owns.
While the law prohibits politicians from accepting campaign donations in state offices, there is no prohibition on raising money in private homes.
On Wednesday, critics piled on against Simon, a first-time candidate and investment banker who has noted with pride his experience as a former federal prosecutor.
Jim Shore, president of the California Prosecutors Association, said his group would endorse Davis and that Simon had "demonstrated a willful disregard for the facts and exhibited the type of leadership that California does not need."
Trailing the governor by at least seven percentage points in polls taken before Monday's gubernatorial debate, Simon scrambled to redirect questions about his own credibility to that of Davis, who has been dogged for years by reports that he is obsessed with fund raising.
"The location where the governor received this campaign contribution is now in question," Simon said in a statement released before Karatz's home was identified as the site.
"However, even if the specific claims made by (COPS) are not sustained, this outcome should not deter the (Fair Political Practices Commission), other law enforcement agencies and the media from investigating Gray Davis' aggressive and shady fund-raising practices."
The fund-raising allegations were guarded by COPS and Simon strategists for weeks until they were floated Monday during the only scheduled debate between Simon and Davis.
Simon told debate viewers that raising money in state offices is illegal and asked Davis whether he had ever done so. Davis replied that he had always acted within the law.
Badgered by reporters after the debate, Simon let slip, in a stronger fashion than his campaign had planned, that he had evidence showing Davis had taken money in a state office.
He pointed to a complaint COPS had filed that day with state regulators alleging Davis had accepted the check from Angele in his public office.
Angele said he never visited Davis in the lieutenant governor's office and could only recall giving Davis a check at his campaign office, as the law permits. Angele has since said he would meet with a lawyer to consider litigation. Skepticism followed the photos' release, as reporters visited the lieutenant governor's office at the Capitol and saw that windows, doors and artwork there did not resemble the setting in the photos.
Simon, in Wednesday's statement, said he had "no reason to question" COPS when the group approached his campaign about the 1998 check. Sources said he never saw the pictures until Tuesday afternoon.
"They were reporting the charge to the government enforcement agency, and they claimed they had documented proof," he said.
In a final, if tangential, disappointment for Simon late Wednesday, Democratic state Attorney General Bill Lockyer rejected a request by his Republican challenger to investigate Davis for improper fund raising.
Attorney general candidate Dick Ackerman last month presented Lockyer with 21 instances of fund raising, reported in newspaper accounts, that Ackerman argued should be criminally investigated.
Writing on Lockyer's behalf, Chief Assistant Attorney General Robert Anderson said Ackerman had provided no "credible evidence" that Davis' policy decisions were influenced by campaign contributions.