Don Perata - Political Controversy

Political Controversy

In early 2004 The San Francisco Chronicle reported that Perata's friend and associate, Timothy G. Staples, had received $313,000 in business from political campaigns initiated or supported by Perata. At the same time, Staples had paid Perata $100,000 per year in consulting fees that supplement Perata's Senate salary, according to financial records and interviews with the senator. After this disclosure The Foundation for Taxpayer and Consumer Rights sent a letter to the Senate stating that Perata's payments for consulting work looked "like a complex and illegal money-laundering mechanism."

That same week the Senate Ethics Committee began an investigation into the matter, but dropped it the following month concluding that the dealings did not violate the Senate's standards of conduct or conflict-of-interest rules.

Later that same month the Chronicle reported on another dealing by the Senator. Since 1999, Perata's campaign fund and various other political committees had paid Exit Strategies more than $743,000, according to campaign finance documents. Exit Strategies, a political direct mail firm, was launched in 1999 by Perata's son, Nick, and based at his father's Alameda County home. By their own accounting, Exit Strategies paid the senator nearly $138,000 during the same period for rent and consulting fees. The Senate Ethics Committee again ruled that this was not an actionable violation, but it raised questions into the propriety of the relationship.

Additional stories by The Chronicle during this time insinuated that Perata had carried a bill on behalf of Mercury Insurance, which may have allowed the company to circumvent Prop. 103. Mercury, in turn, donated $50,000 to a political committee run by Oakland developer Phil Tagami, who later hired Staples, who had previously paid Perata as a consultant.

In early November 2004, Perata became the official target of a probe by the Justice Department under Republican President, George W. Bush. The FBI, the US Attorney's Office, and a federal grand jury investigated whether Perata took bribes or kickbacks from friends and campaign donors in exchange for his help.

In 2006, Perata was associated with money from Indian tribes while sponsoring a bill to expand Indian gaming.

That same year, Perata was also criticized when he described as "crackers" - a disparaging slang term for poor Southern whites - some San Diego-area residents who stridently opposed a bill to give illegal immigrants the ability to obtain driver's licenses.

In May 2007, the East Bay Express, an alternative weekly in the Bay Area, published a two-part investigation of Perata. The articles suggested that between 1998 and 2007, Perata spent more than $1 million of campaign cash on parties and high-end lifestyle expenditures, amounting to more than one-quarter of the total he raised for his reelection campaigns in that time. The same free publication also alleged that Perata had manipulated liberal causes, such as antiwar sentiment, for his own political ends. and had used campaign donations to support his lavish lifestyle.

The FBI investigation lasted five years. No arrests or indictments occurred, and in early 2009, Justice Department officials closed the case and announced they would not be filing any charges.