The independent-expenditure (IE) committee set up to support Phil Angelides
gubernatorial bid remains alive–and has been taking in significant donations
from people not named Tsakopoulos.
Angelides’ longtime business partner and political benefactor Angelo
Tsakopoulos set up Californians for a Better Government in April with $5
million from himself, daughter Eleni Tsakopoulos-Kounalakis, and their
company, Sacramento-based AKT Development. They have since upped that total
to $8.7 million.
Other groups and individuals–all of whom have also given to Angelides
campaign–have added almost another $1.3 million. This includes groups like
the California Teachers Association (CTA) and the International Brotherhood
of Electrical Workers (IBEW), as well as individuals like developer Michael
D. Ray and attorney Joseph Cotchett.
All of this is legal. In California, IEs are the child of Proposition 34,
the 2000 ballot initiative that imposed contribution limits on state
“I don’t see any reason why people who have been longtime supporters of Mr.
Angelides [shouldn’t give], why it would be unreasonable that they would
want to support him again,” said Carroll Wills, a spokesman for the California
Professional Firefighters, one of the founding members of the IE. “Nobody
has any doubt that Arnold Schwarzenegger and his supporters are going to
muster a titanic fund-raising effort that would be hard for any Democrat to
match. Most of the tycoons are on that side.”
Donors supporting both campaign and IE
While Californians for a Better Government has been so closely identified
with Tsakopoulos that some refer to it as the “Tsakopoulos Committee,” it
was the firefighters and their union allies who approached Angelo
Tsakopoulos, Wills said.
The firefighters were the only non-Tsakopoulos donor to the IE at the
outset, giving $11,385.08. They also gave $12,300 to Angelides’ campaign.
Other firefighters groups have given $79,350 to the campaign as well.
Since then, other groups also have pumped money into both the campaign and
the IE. For instance, the CTA gave Angelides campaign $22,500–then pumped $1
million into the IE last month.
Local Union No. 11 of IBEW put $15,000 into the campaign and $50,000 into
the IE. Their Washington, D.C.,-based parent organization gave $100,000 to
the committee. The IBEW Union 340 gave $15,000 to the campaign, while yet
another IBEW branch, the Los Angeles-based IBEW Local 18 Water & Power
Defense League, gave the committee $50,000. In total, The IBEW and its
locals have given $30,000 to Angelides’ campaign and $200,000 to the IE.
At the end of May, Michael D. Ray gave $20,000 to Californians for a Better
Government. He is the president of Irvine-based Sanderson J. Ray Development
Corp., which is the driving force behind a $2 billion proposed development
in Indian Wells, in the Coachella Valley. The politically-controversial
development would put in over a 1,000 homes and condominiums, a shopping
mall and a renovated golf course.
Ray said that he met Angelides sometime before 1992, when Angelides was
California Democratic Party chairman. He has been an Angelides supporter
going back to his first unsuccessful run for treasurer in 1994. He gave
Angelides’ gubernatorial campaign $12,000 last year.
As treasurer, Ray said, Angelides helped him locate a low-interest loan for
the Orange County High School of the Arts via the state Infrastructure and
Development Bank. The loan helped the public charter high school in more to
location Santa Ana and triple in size, from 400 to 1,200 students.
“Without his help that school wouldn’t exist where it is,” Ray said. “He’s
one of the good guys.”
Ray said that he read about the committee in the news, then tracked it down
in order to give a donation. He also sees it as an antidote to the massive
amounts of money headed Schwarzenegger’s way.
“Personally I wish there was public funding of elections and everyone had
the same amount of money,” Ray said. “Arnold has more money than God.”
On June 5, Burlingame attorney Joseph Cotchett and his wife, writer Victoria
Cotchett, each gave $25,000 to the committee and $500 to Angelides’
Cotchett is a major Democratic donor and has been named one of the 100 most
influential attorneys in the country by the National Law Journal for the
past 10 years. He has numerous huge wins to his credit, including $1.75
billion for 23,000 plaintiffs in the Lincoln Savings Loan
Association/American Continental Corp. that made Charles Keating a household
name in the 1980s. He and his firm have filed suits in some of the country’s
biggest corporate scandals, including Enron and WorldCom.
Meanwhile, six members of the Tsakopoulos family and two Tsakopoulos-owned
businesses have given a total of $183,900 to Angelides’ campaign.
“It’s just further evidence that independent-expenditure committees are
being used as a way to evade contribution limits,” said Ned Wigglesworth, an
analyst with the campaign finance watchdog group TheRestofUs.org. He added
“We’re going to see a lot of this.”
Schwarzenegger also has benefited from outside spending. In April, the Los
Angeles Times reported that the New Majority, a Southern California group
involved in fund raising for Schwarzenegger, gave $1 million to the U.S.
Chamber of Commerce. The Chamber then used the money to run a
pro-Schwarzenegger ad, comparing the governor to what it said were the
failures of the Gray Davis administration.
Heading into the general election, Schwarzenegger already has a huge
cash-on-hand advantage over Angelides, who had to spend over $20 million to
defeat Controller Steve Westly in the primary. A multimillionaire from his
days at eBay, Westly put $32.5 million of his own money into the race.
Schwarzenegger has pledged to raise $75 million.
Like Angelides’ campaign, the IE is currently nearly tapped out. It listed
$263,425 cash-on-hand as of its most recent May 25 filing, but Wills said
the actual number is now less. However, it is likely to continue as a way of
countering the money that could be coming in from around the nation to
“It’s pretty obvious that Arnold Schwarzenegger is going to be a priority
for the national Republican Party because he is so visible,” Wills said.
FPPC complaints will live long past race
The sheer scale of Californians for a Better Government–and the widespread
belief that it helped tip a close race Angelides’ way–have invited scrutiny.
After Angelides fell behind by 11 points in an April field poll, it fought
back with a $5 million TV buy on Angelides’ behalf. He ultimately won the
primary with 48 percent of the vote, compared to 43 percent for Westly.
Westly endorsed Angelides the day after the primary. But their race will
live on in the form of three complaints filed by the Westly campaign with
the Fair Political Practices Commission (FPPC). By law, the FPPC must
investigate the complaints–and Westly is powerless to retract them.
All three were filed by Ronald Turovsky, an attorney representing the Westly
campaign with the Los Angeles-based firm Manatt, Phelps and Phillips. This
first complaint, dated April 27, alleged improper coordination between the
Angelides campaign and Californians for a Better Government. On the same
day, Angelides filed a complaint accusing Westly of using money from his
last controller campaign for his race for governor.
In May, Westly filed two additional complaints. A May 25 complaint
references the additional $3.7 million that Tsakapoulos put into the IE. A
third complaint, dated May 31, cites over $40,000 in reimbursements for
travel and other expenses from the Angelides campaign to Tsakopoulos made at
the same time he was giving money to
the IE. The complaints state that three
of these reimbursements came during the time period when Tsakopoulos was
launching the IE and running pro-Angelides ads.
These payments followed $6,505.82 in reimbursements in the 2003-04 cycle.
Standing Up For California, a PAC created by Angelides, lists $4874.40 in
payments to Tsakopolous for the same reasons.
“It’s pretty humorous to argue that Angelo Tsakopoulos has nothing to do
with the Angelides campaign when he’s being paid by the campaign,” said
Westly campaign adviser Garry South. Later he added, “The advertising by the
IE always seemed to make up the difference precisely between what the
Angelides campaign itself was spending on broadcast TV and the higher level
at which we were spending. It’s amazing how that came together week after
week with no coordination at all.”
A representative from the Angelides campaign decline to comment, except to
say the FPPC is still investigating all of the complaints.
IEs will affect campaign strategy
South said that Angelides turning to IE money so soon will likely have one
key negative effect.
“By not speaking up about this massive so-called ‘independent’ expenditure,
Democrats have forfeited any possibility of raising a ruckus over all of the
IEs that are probably going to be waged on Arnold’s behalf in this
campaign,” South said.
California has all of the ingredients that lead to extensive use of IE,
Wigglesworth said. That is, it’s a big, high-stakes state that combines
donation limits with expensive costs for running campaigns. The only other
large state with similar circumstances is Florida, he said, where use of IE
has rapidly expanded in recent years.
Recent moves also seem to lay out a clear strategy of “bankrupt and mollify”
by the Schwarzenegger campaign, in that he is moving to placate the very
groups he attacked in last year’s special election. While the governor lost
every initiative he sponsored, he forced labor unions to spend millions.
These same unions will still give money to the Tsakopoulos IE, Wigglesworth
said–witness the CTA’s $1 million–but might choose to hold on to their
remaining cash if Angelides falls behind by double digits in the polls.
Meanwhile, the governor has largely been giving these unions what they want
in recent months. For instance, he has sought to placate the CTA by raising
“He has taken great pains to mollify the greatest sources of funding for
Angelides,” Wigglesworth said.
Other money: Donors also giving freely to PACs
Many of the same donors who have supported the IE also have given to a pair
of PACs created by Angelides. AKT gave $238,402 to the Friends of Phil PAC,
in 2003, after giving $6366.02 in 2000. The CTA befriended Phil to the tune
of $10,000 in 2003 and $50,000 in 2000.
In 2004, AKT gave $500,000 to another Angelides PAC, Standing Up For
California. Ray gave $25,000 that year, as did Stephen Cotchett’s law firm,
Cotchett, Pitre, Simon & McCarthy. Eleni Tsakopoulos-Kounalakis gave
$250,000 this past October.
And money moves around between the campaign and the PACs. Friends of Phil
has given Angelides 2006 $9,878,944.50 in transfers and expenditures since
the beginning of 2003. Angelides 2006 has paid Friends of Phil $124,667.20
for campaign workers, fundraising, and office expenses.
With his own campaign barely begun, Schwarzenegger’s side has been moving
money around as well. The New Majority has also given $700,000 to
Schwarzenegger’s PAC, the California Recovery Team, on top of the $128,800
it gave his Total Recall Committee. The U.S. Chamber gave $500,000 to the
Schwarzenegger-sponsored Prop. 75 effort last year. Schwarzenegger’s
California Recovery Team transferred $44,600 into his campaign in February.