Patterico's Pontifications

5/24/2007

Lifestyles of the Rich and Elected

Filed under: Crime,Government,Politics — WLS @ 12:39 am

[Posted by WLS]

The LAT links through one of its blogs a stunning article — very well researched and documented — from the East Bay Express concerning the incredibly obscene use of campaign funds by East Bay State Senator Don Perata, the Democrat Leader of the California Senate. It must kill the LAT editors to see a small little local paper do this kind of political reporting, and the best they can do is to link the article in a blog. Maybe the blogger should go look at campaign finance reports like the real reporter named Robert Gammon did.

The Dems can raise hell all they want about Duke Cunningham — and he’s worthy of all the scorn heaped upon him — but they should be just as outraged at what Perata has done over the years with his campaign funds. First, some facts from the article as a set up:

Perata represents a district in the East Bay (Oakland-Alameda) when Dems have a voter registration advantage of 59.1% to 13.7%. No GOP candidate running against Perata in the general election has polled more than 16% in recent years. The only way he could ever lose his seat was in a primary race, but his power as Leader of the State Senate is shown in the fact the he hasn’t even had a token opponent in a primary election since 1998.

Yet, occupying the safest of safe seats, he still ranks at the top of the State Senate in campaign fund raising.

From January 2000 through December 2006, he collected at least $3.72 million for his personal reelection campaigns. That doesn’t include the $37.31 million raised by more than a dozen political action committees he’s been associated with during that period.

Now, its a well-established and accepted practice that prodigous fundraisers who have no need for the money due to the safety of their incumbency oftentimes use their excess campaign funds to assist allies in gaining election/re-election in the legislature, or local offices. Perata has a lot of money to spread around, and he does so quite effectively. But, nevertheless, he remains with a boatload of money in overstuffed campaign coffers, as well as accounts set up by campaign committees for various causes that Perata is attached to.

The reporter for the East Bay Express looked through a couple thousand pages of campaign spending reports looking for the evidence that Perata funds a tremendously extravagant lifestyle through these excess funds, and boy did he find a jackpot of evidence. Here are some nuggets:

Over the last 10 years, Perata’s various campaign accounts have spent a total of at least $119,000 on meal tabs (as with many of the figures in the article, the qualifier “at least” precedes the amount because there are $163,000 in credit card expenditures for which Perata’s various campaign accounts provided no explanation for what the money was spent on).

Consider that $120,000 over 10 years is $12,000 a year, or $1000 a month, every month, for a decade, that his “campaign” has spent to feed him. But, the true nature of these expenses is only revealed when you see where he was dining and what he was spending:

In the 2000 general election, for example, Perata squared off against an unknown Republican named Linda Marshall, who received just 11.5 percent of the vote, compared to his 83.4 percent…. Perata was awash in cash after the election.

And what did he do? He embarked on a massive spending spree. From late October through the end of that year, Perata dined three times at BayWolf, including one meal that cost $2,419. He took a trip to the Napa Valley wine country and dined at Tra Vigne in St. Helena ($1,199) and Rings Steak, Seafood and Chops in Napa ($199). He also enjoyed a $500 dinner at Trader Vic’s in Emeryville, and spent $2,226 at Lalime’s in Berkeley. He spent $1,329 at the Claremont Resort and Spa, and $2,134 at the Embassy Suites in Napa….

In little more than two months, Perata burned through $123,606 of campaign cash on these expenditures.

…. [In] another election year, 2004 … as legislators up and down the state were locked in expensive races, Perata sat atop a mountainous war chest looking down on Patricia Deutsche, a Republican few had heard of. Without breaking a sweat, Perata trounced her 77.1 percent to 15.6 percent. He had so little respect for Deutsche, in fact, that he started his partying well before November.

From July through September of that year, Perata racked up $82,802 in lifestyle spending, representing more than half the year’s total of $156,966. Within those three months, he ate twice at Biba, one of Sacramento’s best restaurants — one of the meals cost $2,418. He dined at Chops Steak House ($334), twice at Esquire Bar and Grill ($662), and once at the Riverside Clubhouse ($165), all in Sacramento….

Perata capped his pre-election spree with a $50,000 charter flight with Komar Aviation of Santa Ana. The state senator offered no explanation in his expense reports of where he went or whom he took with him, but it must have been one helluva party. According to an Orange County Register story a year later, Komar charges $10,626 to fly eight people from Los Angeles to Aspen. Perata’s bill was nearly five times that.

….

Perata’s spokesman Kinney maintained that lobbyists and the senator’s other dining companions “expect” to eat at fine restaurants. Perata, he said, derives no personal benefit, or even pleasure, from the expensive dinners and upscale parties; he would prefer to stay home and watch the Raiders on TV. “Don Perata is the consummate public servant,” Kinney said. “He leads an extremely modest lifestyle. He lives in a modest 1,200-square-foot home.”

When this “modest” Raiders fan travels, however, he lodges far from Motel 6. Perata has stayed at the exquisite Lodge at Pebble Beach ($343) and the Ritz Carlton in Half Moon Bay ($2,499). In Los Angeles, he usually checks into hotels where you’re likely to spot Hollywood celebrities. His favorites are the Four Seasons ($425 a night) and the Beverly Hilton (single room: $275; junior suite: $450).

The senator also enjoys posh hotels in the Bay Area and Sacramento, although he owns homes in both places. His total Bay Area hotel stays, including the Claremont Resort and Spa and the Waterfront Plaza Hotel, both in Oakland, were at least $6,007. In Sacramento, Perata has owned a condo not far from the statehouse since 1997, yet he repeatedly stays at the Hyatt and other nice hotels there. He spent $1,876 in the state capital for “candidate lodging” or “candidate travel.”

In addition to the overt expenditure of campaign money to finance a lifestyle which he could not otherwise afford on his legislature salary of $133,000, Perata made good use of the lax reporting requirements under California campaign finance laws — through the creative use of such terms as “office supplies” and “gifts to donors”.

When the busy politician doesn’t have time … he dashes over to his favorite neighborhood wine store, Montclair Village Wines, a few minutes from his Oakland house. Perata uses campaign funds to buy wine there several times a year. Kinney said most of it was for fund-raisers. Yet over the past decade, Perata has also labeled these purchases “office supplies,” “food,” “election party,” “meals and beverages,” and “meeting.” In all, he spent $6,814 at Montclair Village Wines, while his total alcohol purchases came to $11,738….

….

But a closer examination of other seemingly legitimate campaign expenses raises similar questions. For example, Perata charges his personal cell phone (Cingular Wireless, $17,046, and Cellular One, $8,226) to his reelection campaigns even though he hasn’t truly campaigned for elected office in nine years. Or consider the tens of thousands of dollars he has spent on basic office supplies. On the surface, these expenses may look legit — until you realize that Perata’s campaigns don’t have offices.

….

Perhaps Perata is buying supplies related to campaign mailers? Possibly. But consider the fact that his various campaigns paid his son, Nick Perata, more than $1.2 million from 2000 through 2004 to do his mailers and consulting work for him.

Let that sink in — over a period of four years, his son has been paid $400,000 a year to produce mailers and do consulting work for the campaigns.

Kinney said Perata used most of the office supplies to outfit his house, from stationery and pens to computers and other electronic gadgets. The supplies, he said, enabled the senator to write campaign letters and correspond with his donors, constituents, and colleagues from the comfort of his home. “It’s all perfectly legal,” he said.

It also must be one well-stocked and nicely decorated home office. Over the years, his “office” expenses have included $6,574 at two Oakland art galleries (Barloga et Fils Gallery and Dakot Art); $4,297 at Piedmont Stationers on Piedmont Avenue; $2,679 at Best Buy in Emeryville; $1,201 at CompUSA; $3,259 at Levenger.com fine office products; and $11,773 at Office Depot in Oakland. And then there’s the $1,826 in “office supplies” from Montclair Village Wines.

Finally, the article takes a long look at what Perata is buying with his generosity — although as the article notes, Perata’s generosity to his campaign contributors is expressed through his buying them lots of nice things with the money they contributed to his campaigns:

Although Perata’s list of donors is long and varied, there are a few loyal East Bay contributors whom he can count on to cut checks for at least $5,000, and sometimes as much as $50,000, nearly every time he launches a new campaign committee…. The top five among them are Ed DeSilva, roadbuilder and developer ($512,500); Ron Cowan, Alameda developer ($210,300); Jim and Michael Ghielmetti, owners of Signature Properties, and Jon Reynolds, owner of Reynolds and Brown, developers of Oak to Ninth, a giant condo project on Oakland’s waterfront ($175,800); T. Gary Rogers, chairman and CEO of Dreyer’s Ice Cream ($143,500); and billboard owner John Foster ($81,300).

In return, the senator has done right by them. DeSilva, for example, stands to be the biggest Bay Area beneficiary of the $20 billion statewide transportation bond Perata sponsored last year (see Full Disclosure, page 4). As for Cowan, Perata was instrumental in getting a $40 million road — which DeSilva built — constructed between Oakland International Airport and Cowan’s flagging business park (“Road to Nowhere,” feature, 3/1/06). Foster, meanwhile, made millions after Perata twice carried state legislation that let him erect a series of billboards next to the Oakland Coliseum (“Fishing for Revenues,” Full Disclosure, 2/21). Finally, Signature Properties and Reynolds and Brown could gross nearly $2 billion after Perata pushed legislation that let them buy sixty-plus acres of public waterfront property for less than half its likely value (“Oakland Can Do One Hell of a Lot Better,” City of Warts, 8/16/06).

The Perata Cup, an annual golf tournament hosted by Perata at the exclusive Ruby Hill Golf Club in Pleasonton, is where Perata gets to play Santa Claus to his contributors on Christmas Eve. “The more money they give,” explained one source, “the better presents they get.”

Perata uses campaign cash to pay between $17,000 and $35,000 per tournament — the price includes eighteen holes of golf and a banquet dinner at the villa-style clubhouse for his guests. “The strange thing is that he doesn’t golf,” said a source familiar with the tournaments. “He just drives around in a cart and hands out cigars and golf shirts that say ‘Perata Cup’ on them.” Stranger still is the fact that Perata is using his donors’ own money to buy them gifts, dinners, and rounds of golf.

The Ruby Hill tournaments are usually half party, half fund-raiser, the source said. None of the guests pay directly for the golf or the dinner, but out-of-town donors are expected to write checks to one of Perata’s campaign accounts. For his most loyal contributors, the ones who have donated heavily to his campaigns, the Perata Cup is just a “big thank-you party,” the source explained.

Sometimes, in fact, it appears to be more of a thank-you than a fund-raiser. In October 2003, Perata spent $45,141 on a Ruby Hill event, including gifts and prizes. But his campaign statements show no contributions originating on that day, and none from his usual stable of contributors in either the month before or the month after the tournament. “Are they really events for fund-raising purposes?” asked Heller of the Foundation for Taxpayer and Consumer Rights. “Or is he just socializing on the campaign’s dime?”

But, all of what I’ve included above was just the lead-in for what comes at the end of the article:

Senator Perata may no longer need to campaign for reelection [he is termed out], but he does have costs that go beyond his lifestyle — such as the legal defense fund he formed after the FBI began investigating him for corruption. But since donors don’t particularly like to give to such funds, one fund-raising alternative is to create a campaign committee based on some dubious pretense.

In August 2005, the state senator launched Taxpayers for Perata, a committee he said would cover his run for the state Board of Equalization in 2008….

…. Within sixteen months of launching the committee, Perata had raised more than $1 million, and he has already spent more than two-thirds of it. Not a penny, however, was spent campaigning for the Board of Equalization. Instead, he transferred nearly half of the total — $464,000 — to his legal defense fund. Much of the rest was eaten up by his lifestyle expenses. In the last three months of 2005, for example, Perata made three trips to Montclair Village Wines ($719), bought cigars ($173), dined twice at BayWolf ($260), scored furniture from Fenton MacLaren in Oakland ($430), and charged all of it to Taxpayers for Perata.

From the same coffer, Perata made the previously mentioned Apple Store gift purchase, spent $1,347 at T. Shipley, and hosted a $22,758 golf tournament at Ruby Hill. He took at least three trips to Los Angeles, where he stayed at the Beverly Hilton ($218), the Hotel Bel Air ($667), and the Sheraton ($147). In Beverly Hills, he dined at Maestro’s Steakhouse ($450) and the Peninsula ($537).

Donors sometimes tire of contributing to the same campaigns over and over, so in 2005 Perata made things easier by creating another committee, Rebuilding California, to support a series of statewide bond measures the following year. The committee raised $9.2 million, but because success wasn’t a sure thing this time, Perata had to spend most of it on actual campaigns. He did, however, siphon off $35,670 for living large.

This year, Senator Perata has indicated he plans to mount at least three more campaigns for the February 2008 primary — a healthcare initiative, a term-limits extension measure, and a referendum on the Iraq war. If past practice is any indication, these campaigns should provide Perata with plenty of dinners, hotel stays, wine purchases, and gift giving. “When one campaign dries up, you simply open up a new one — this looks like more of living the high life,” Heller said.

And now, for the truly venal — this anecdote is at the top of the story:

State Senate boss Don Perata throws impressive parties, and this one was a doozy. The guests, some of Perata’s best donors among them, feasted on buttery Dungeness crab and sipped California Chardonnay. Then they settled into their plush luxury box seats to watch the Oakland Raiders play the New York Jets in a game with playoff implications.

It was mid-December 2000, and the state senator had just dropped $43,600 on an oversize luxury suite at the Oakland Coliseum for a single afternoon of festivities. At the time he said he was trying to convince East Bay business leaders to buy suites of their own….

Perata paid for the box, and the bash, from the treasury of one of his political campaigns. Since the state senator often transfers cash from one campaign to another, it is difficult to determine its exact origin, but public records suggest that most of it came from the Three Rs, a fund-raising committee Perata formed with then-Mayor Jerry Brown a year earlier to improve Oakland schools. The same month as the Raiders party, Perata transferred the remaining $32,668 from the Three Rs into his main Senate account and paid for the luxury box. In other words, money raised to help Oakland schoolchildren likely was spent on crab, wine, and football for a bunch of rich people.

Nice. Donate money to Don Perata and Jerry Brown’s campaign initiative to improve the woeful Oakland schools, and Perata ends up using your money to pay for an all-you-can-eat Dungeness crab feast in a luxury box at a Raider game for a bunch of Bay Area elites who probably send their kids to private schools.

Here’s the kicker to this whole fiasco — all these lifestyle extravagences that Perata enjoys?? They come tax free. He’s the recipient of “gifts” in the form of lodging, dining, fine wine, etc., and not a dime of it comes from his pockets and not a dime of it is paid for with money on which he’s paid any taxes.

The Express article calculates that Perata has effectively increased his annual income by more than $100,000 by funding his lifestyle with campaign funds.

One thing the article neglects to mention, however, is that California legislators are paid a per diem of $162 per day to cover food and lodging every day the legislature is in session. The per diem stops whenever the legislature is out of session for three or more consecutive days. To avoid being cutoff, each house convenes for “routine” business at least every third day, and then promptly adjourns. That’s $162 a day, tax free, seven days a week — or almost $5000 a month.

Here’s a pdf of the Excel Spreadsheet prepared from his spending reports. http://www.eastbayexpress.com/art/media/DonPerataLivingLarge1997-2006.xls.pdf

[By WLS]

27 Responses to “Lifestyles of the Rich and Elected”

  1. I agree that Petra is a bad guy and the LA Times just sat on its collective middle finger and reported on nothing. But looking only at LA, the stomping ground of the LAT, we have the County Board of Supervisors. I will just pick one: Zev Yaraslovsky who ran for LA City Council back in the 60s as a near broke young kid who had “earned” his living playing cards in Gardena. He has never had any job outside of city and county government for the last forty years, and the top salary for any of them was less than 100K for a lions share of the time. So on short money the guy is a multi-millionaire. How? Well I know for a fact that not a shovel can be turned in his district til he says it’s OK; in a city where construction is everywhere. No zoning variences can be obtained without Zevs approval and he now represents West Hollywood, THE place where at least 70% of the expensive restaurants are located. Trust me, the county and city governments are as corrupt as Petra.

    Howard Veit (4ba8d4)

  2. I was in high school with Yaroslavsky. He was a glad-handing schmuck even back then.

    the friendly grizzly (82ada0)

  3. I’m well on the road to believing that Rachel Lucas, who’s recently resumed blogging at http://www.rachellucas.com has it right:
    They (all politicians, no matter the party).
    Are.
    All.
    The.
    Same.

    Diffus (24f498)

  4. Excellent post, WLS. Being in Illinois where the FBI has twelve times the agents in its corruption investigation unit that it has in any other state, I understand exactly the situation you portray.

    nk (835ea1)

  5. Patterico:

    Your link to the original article is incorrect (http://earticle); it should be http://www.eastbayexpress.com/2007-05-23/news/living-large/

    Great post! And good grief!

    Dafydd

    Dafydd (445647)

  6. …his various campaigns paid his son, Nick Perata, more than $1.2 million from 2000 through 2004 to do his mailers and consulting work for him. Let that sink in — over a period of four years, his son has been paid $400,000 a year to produce mailers and do consulting work for the campaigns.

    Nit-picking error: $1.2 million / five years = $240,000 a year.
    Or if it’s four years: $1.2 million / four years = $300,000 a year.

    Or am I missing something? Does his son only work for his campaign during election years?

    aunursa (39fdb7)

  7. What I’ve noticed is that getting elected leads to getting rich – almost universally. It probably has something to do with all that insider information.

    Jane (5a66ce)

  8. Interesting that he gets the NYTimes but not the SF Chronicle, LATimes, or any other local/state paper.

    Gabriel (6d7447)

  9. Don Perata is a pig. If there were any justice he would be struck by lightning.

    Mark (e7967d)

  10. Perata is so important politically, no one within the Party dares to take him on. The checks and balances have to come from another branch. That’s what the Grand Jury is for, and I’m sure they are keeping busy.

    JTFR, I voted for a splinter-party candidate over Perata. Even yellow-dog Dems have their limits.

    Andrew J. Lazarus (a98486)

  11. Are campaign contributions considered taxable income?
    They should be.

    MayBee (eb1824)

  12. No, they are not taxable income.

    That’s why their use is supposed to be limited to campaign expenses.

    Unless your Don Perata.

    wls (c109e2)

  13. Unless your Don Perata.

    I highly doubt the misuse is limited to Don Perata.
    That’s why I think they should be taxable.
    We should tax the contributions they receive, then let the pols deduct anything they legitimately spend on campaign expenses.

    MayBee (eb1824)

  14. WLS:

    My apologies; somehow I missed that this was by you and not Patterico. Mea culpa!

    Still, you need to correct the link in the post. It should link to http://www.eastbayexpress.com/2007-05-23/news/living-large/ rather than to http://www.earticle/ (which isn’t even a valid web address).

    Dafydd

    Dafydd (445647)

  15. Also, it should be “you’re.” Unless MayBee is enslaving a Don Perata. In which case I’m aghast, and denounce her unequivocally.

    Dan Collins (1e2e08)

  16. In which case I’m aghast, and denounce her unequivocally.

    What? A girl can’t keep a little Don Perata for herself anymore? I want my Don Perata, Dan Collins! Don’t you judge me.

    MayBee (eb1824)

  17. Dafydd — I know I’ve got link problems, but I’m not in a position right now to edit them. I need to get to another computer — the one I’m using now has “issues” with active links. Not sure why, I’ve never been able to make them work right.

    wls (c109e2)

  18. Sorry, MayBee. I’m Catholic. It just makes us all “judgy.”

    In other words, I can’t help it. STOP JUDGING ME!

    Dan Collins (1e2e08)

  19. The last I heard, the FBI had served search warrants on Perata, & his son – homes and offices (but not his Senate Office IIRC). If the USA up in NorCal has something, I sure hope they hit this POS like an 18-wheeler rolling over a skunk.

    From what I’ve heard, he really fits in in the Senate: His rude, self-centered behavior is a tradition among Senate leadership.

    Another Drew (758608)

  20. Link fixed.

    Patterico (eeb415)

  21. MayBee #14,

    I believe that is already the rule pretty much. If a politico commingles campaign funds with his own or spends them on himself they are considered personal income and must be reported and the taxes paid. (Assuming the campaign laws of his jurisdiction allow it in the first place otherwise he has bigger problems.)

    A second point: I pretty much reflexively opposed McCain-Feingold but this horror story makes me wonder whether it is all that bad a law after all.

    nk (835ea1)

  22. Now, really, you’re just a poor silly bunch of ethical people. There’s no taxpayer money involved here, so why should you be complaining? If the contributors don’t mind (and obviously some of them at least didn’t mind), what business of it is yours? If Perata didn’t vote their way after they paid him, they can always sue him for breach of contract. But how else do you expect Perata to make a living? Do you actually expect him to live on $162 a day, like he was a Mexican or something? He’s a politician, after all. What did you expect? Honesty and integrity?

    kishnevi (6273ad)

  23. Ha Ha Ha. Well it is good to see that the PRI – Northern branch, aka the California Democratic Party, is out there doing the work of the people.

    [what is the “PRI?: the PRI, Mexico’s “official” party, was the country’s preeminent political organization from 1929 until the early 1990s. In terms of power, it was second only to the president, who also serves as the party’s effective chief. Until the early 1980s, the PRI’s position in the Mexican political system was hegemonic, with opposition parties posing little or no threat to its power base or its near monopoly of public office. This situation changed during the mid-1980s, as opposition parties of the left and right began to seriously challenge PRI candidates for local, state, and national-level offices.]

    So you think Mexico’s bad? One party in power was a key factor in its corruption. I am SURE that Nancy Pelosi and Rahm Emmanuel are just ITCHING to end the corruption and stop this man…..Oh, wait. He’s a Democrat. Never mind.

    Californio (c07aa3)

  24. LIFESTYLES OF THE WEALTHY WELL TO DO LIBERALS AND DEMACROOKS AND SUPPORTERS OF THE NEW WORLD ORDER AND THE NORTH AMERCAN UNION AND THE CFRs SINISTER PLANS TRAITORS ALL

    krazy kagu (1f0194)

  25. Seems to me I remember reading somewhere that a lot of the money from campaigns gets used personally and a lot of it stays with a candidate even if he/she loses? Or am I wrong. But, if I’m not, then that would explain in part why so many run for an office they have no chance in hell of attaining.

    Sue (a32e93)


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